“Investment War”

By Dr Hans Seesaghur

International Affairs Specialist and Sinologist | Former China Chief Representative at the Mauritius Economic Development Board Representative Office in Shanghai | Former Economic and Commercial Counsellor at the Embassy of Mauritius to Beijing

While the new administration in the United States is shaking the global stage with a tariff and trade war, a silent yet intense battle is unfolding on the African soil. The continent has become the epicenter of a fierce “investment war” where global powers and multinational corporations are relentlessly competing to seize strategic economic strongholds.

At the heart of this battleground lies the Southern African Development Community (SADC), an economic bloc offering vast untapped resources, a rapidly expanding consumer base, and surging foreign direct investment (FDI) and FDI stock inflows. With billions of dollars flowing into SADC economies, industrial growth is accelerating, creating millions of jobs across various sectors. However, despite this massive influx of investment, many investors face significant hurdles, including high taxation, complex regulatory frameworks, and challenges in repatriating profits.

These barriers increase investment risks and reduce overall profitability, forcing investors to seek alternative financial structures that optimize tax efficiency and capital mobility. In this landscape, Mauritius has the opportunity to position itself as the preferred financial jurisdiction for SADC-bound investments.

Mauritius: The Game-Changer in the “Investment War.”

While SADC nations continue to attract foreign capital, high corporate tax rates remain a major deterrent for investors. South Africa imposes a 28% corporate tax rate, Angola stands at 25%, Tanzania at 30%, Zambia at 35%, and Zimbabwe at 24%. In contrast, Mauritius maintains a flat 15% corporate tax rate, making it one of the most competitive financial jurisdictions for structuring FDI stock.

Beyond its tax advantage, Mauritius has established a strong Double Taxation Avoidance Agreement (DTAA) network, which minimizes withholding taxes, streamlines profit repatriation, and enhances tax planning across multiple jurisdictions. These features make Mauritius an optimal jurisdiction for international investors looking to maximize returns while minimizing tax liabilities.

However, despite its clear fiscal advantages, Mauritius remains underutilized as a financial hub for the SADC region due to a lack of focused promotional campaigns. While some FDI stock source countries have already structured their investments through Mauritius, many global investors have yet to capitalize on its full potential. The primary reason for this missed opportunity is the lack of a research-driven and targeted approach to position Mauritius as the premier investment jurisdiction for the top five or ten FDI stock source countries in SADC nations.

Revamping Mauritius’ Investment Promotion Strategy

For Mauritius to fully assert itself as the financial hub of choice within SADC, a proactive and strategic investment promotion strategy must be implemented before conducting outbound missions. The outdated practice of government delegations traveling abroad for generic investment promotion efforts must come to an end. These missions, often conducted without specific objectives or measurable outcomes, have failed to attract significant investment inflows. Instead, strategic investor engagement must be prioritized, ensuring that each mission is tailored to attract high-value FDI stock inflows.

A structured and phased approach should be adopted to maximize the effectiveness of investment promotion efforts. The first step should be to identify five to ten key FDI stock source countries across five targeted SADC nations in the initial year. The next step would involve engaging the economic sections of the embassies representing these same key FDI stock source countries, inviting them to attend an investment event and extend invitations to their multinational corporations already investing in the region.

Given that Mauritius has approximately 210 management companies, an initial selection of 15 management companies, chosen in alphabetical order, could be invited to participate in each of the five targeted outbound missions. A total of 15 investment missions across 15 SADC countries would involve approximately 225 management companies in the long run. This technical and strategic selection process would ensure that each mission is highly specialized, value-driven, and designed to generate concrete FDI stock inflows, rather than simply being an exercise.

With the “investment war” poised to intensify in the coming years as new global players emerge, Mauritius must rethink its investment promotion strategy.

There is a need for outbound investment missions to go beyond the usual government representation and incorporate management companies that specialize in structuring FDI stock inflows and cross-border investments through Mauritius. These firms possess the technical expertise and financial acumen that government delegations alone often lack. Their deep understanding of international investment structuring makes them far better positioned to demonstrate the financial advantages of Mauritius as an investment conduit.

One area where this lack of structured investment promotion is evident is the Variable Capital Company (VCC) structure, which Mauritius introduced in 2022 as a replica of Singapore’s VCC model. Despite its strong potential, the Mauritian VCC structure has only managed to attract eight licensed funds at its introduction, due to regulatory uncertainties surrounding its implementation. In contrast, Singapore’s VCC model has thrived, benefiting from strong government backing, extensive industry engagement, and well-coordinated marketing strategies. Nevertheless, Mauritius has been able to generate approximately forty licensed funds last year, due to the adequate investor outreach by management companies.

By incorporating private sector professionals who can articulate the technical benefits of structuring investments through Mauritius, these outbound missions would become significantly more effective, result-oriented, and attractive to global investors, further solidifying Mauritius’ position in the ongoing “investment war.”

The Power of Inbound Investment Missions

While Mauritius continues to rely on traditional outbound missions, Rwanda and Kenya have recognized the inefficiencies of this approach and have hence shifted their focus towards hosting high-profile events that attract global investors. Instead of spending resources on outbound missions with minimal returns, their governments have actively organized inbound missions, positioning their countries as key business hubs where investors, policymakers, and corporations converge.

According to the recent International Congress and Convention Association (ICCA) 2024 Report, Kigali, Rwanda, ranks second on the African continent, hosting 32 high-level international gatherings. Nairobi, Kenya, secures third place with 29 international meetings, reinforcing its role as a leading business and political hub for East Africa. In contrast, Mauritius ranks 15^th, having hosted only five international meetings. By establishing platforms that facilitate direct engagement between global investors and local stakeholders, Rwanda and Kenya have significantly enhanced their investment ecosystems, which could lead to increased FDI inflows over the long term.

With the “investment war” poised to intensify in the coming years as new global players emerge, Mauritius must rethink its investment promotion strategy. Rather than relying solely on outbound missions with limited tangible returns, the country could envisage to strategically position itself as a premier investment destination by hosting international business forums, high-level investment summits, and networking events.

Mauritius now stands at a critical juncture in this evolving “investment war.” The choice is clear: Mauritius can either remain a passive player or take decisive steps to assert its role as the financial powerhouse of the SADC region.