TrustQore’s John Blake explores the growing trend of international investors using Mauritius funds as part of their strategy for investing in Africa.
In this article, I build on my colleague Sebastien Flak’s insightful introduction to the idea of Mauritius as a “Bridge to Continental Africa” https://trustqore.com/mauritius-a-bridge-to-continental-africa/ with some reflections of my own.
Based in the UK, I frequently meet impact investors, venture capitalists and private equity firms – many of whom focus on sustainable finance and ESG opportunities in Africa. The message I hear often is that, while there is significant interest in investing across the continent, investors remain cautious about how to proceed from a secure financial standpoint. Traditional international hubs such as Singapore or Switzerland are attractive but come at a high cost. More importantly these jurisdictions often present banking challenges when the word “Africa” is mentioned.
Let us explore this a little further by considering a UK-based firm that focuses on venture capital and ESG investments in Africa. The investment opportunities across the vast continent are among the most promising in the world, rivalling any emerging market in Asia or elsewhere. Africa’s more advanced nations offer infrastructure projects in areas like transport, energy, residential and commercial real estate and increasingly technology-driven investments. For businesses with a focus on ESG, continent-wide opportunities abound in solar, wind and hydropower projects as well as sustainable agribusiness, food production, healthcare and education.
When considering an investment structure, firms typically seek a tax-efficient, well-regulated jurisdiction with, crucially, ready access to African markets. Mauritius offers a range of cost-effective solutions, including traditional company and trust vehicles. However, the growing use of Mauritius funds should not be overlooked. And for good reason.
Investors are presented with several options when establishing funds in Mauritius. Open-ended Collective Investment Schemes range from “expert” funds – ideal for sophisticated investors committing upwards of US$100,000 – to retail funds available to the public. Closed-ended funds for private equity and VC investors benefit from a fixed investment period with capital locked in until maturity. Professional Collective Schemes are available again only to professional investors with a minimum investment of US$100,000.
Perhaps of greater interest still is the Variable Capital Company (VCC) Fund structure. This is a flexible vehicle that allows for multiple sub-funds under a single legal entity. Each sub-fund may conduct separate investment strategies following individual risk profiles. In a comparable way to protected cell structures, the segregation of assets and liabilities between the sub-funds provides investor protection. These arrangements are ideal for fund managers seeking a scalable and diverse investment structure – and by reducing administration – in a cost effective, well-regulated environment.
When considering fund structures, it is worth recalling why Mauritius offers the ideal “bridge” for inward investment into Africa, particularly when compared to other jurisdictions. The country’s strategic African location has led to the development of deep economic ties to all parts of the continent. An English-speaking jurisdiction, with a legal framework based on English common law, French is also widely spoken meaning that investment into the francophone countries of West Africa is also made easier.
Mauritius is a signatory to 29 Investment Promotion & Protection Agreements (IPPAs). Moreover, Mauritius funds within a Global Business Licence structure may benefit from the country’s network of double taxation agreements – nearly fifty in total – further enhancing the country’s attractiveness for investment, especially when compared to jurisdictions like the Cayman Islands and Singapore, which lack similar treaty networks.
Mauritius is positioning itself as a hub for ESG-focused funds that align with the country’s stance on sustainable development. It has embraced digital assets, FinTech and AI initiatives, making it even more attractive for investors in these exciting new sectors.
Corporate tax is levied at 15%, but with partial exemptions, the effective rate for funds can drop to just 3%. Mauritius also has no capital gains or withholding tax on dividends. The incorporation process is streamlined, and the absence of exchange controls facilitates profit repatriation. A robust regulatory framework overseen by the Financial Services Commission ensures transparency and investor protection. The variety of fund types available allows for flexible structuring tailored to different investor profiles. Compared to jurisdictions like Luxembourg, Mauritius offers lower fund establishment and administrative costs, with reduced professional service fees for audit and legal support.
Sebastien mentioned in his piece that Mauritius benefits from a growing network of local and international banks, many of which have developed enviable connections across Africa. Over the years, TrustQore has developed a good working relationship with all of them.
As highlighted in the Study on Africa as a Jurisdiction for Domiciliation of Investment Vehicles (commissioned by the Mastercard Foundation and released in December 2024), https://trustqore.com/fund-domiciliation-in-africa/ Mauritius offers a compelling option for overseas investment firms looking to invest in Africa. The combination of tax efficiency, a well-regulated environment, and cost competitiveness, makes Mauritius an ideal base for establishing funds that will operate successfully across Africa and other emerging markets.
In future articles, I will delve further into the specific fund types available in Mauritius. In the meantime, if you would like further information or an initial consultation on a no obligation basis please get in touch with me: [email protected]