Mauritius’ financial services sector – domestic and global business — contributes a little over 12% of GDP. Non-bank financial services account for more than half of it. In the latter category, Global Business, which usually contributed 6% of GDP, has of late been witnessing a small drop in its contribution to GDP, now around 5.7%.
The provision of international financial services is an internationally highly competitive segment of activity. There are places, such as London and New York, where financial services constitute the main plank on which other economic activities rest. Thus, a financial centre like London has drawn to itself a whole range of other businesses – professional services such as legal advice, accounting, auditing, media activities, retail, property, construction, manufacturing, tourism and technology. The combined effect of all this is to make London a major contributor to the UK economy – something like 22% of the UK’s GDP.
Given its international standing, London has drawn to itself the most prominent global players to set up business in the City in each sector of activity it undertakes. Its openness and ready welcome to all sorts of business practitioners of different nationalities has kept adding to the critical mass and quality of its business. Rules made for the good governance of business are not changed overnight or, contrary to what happens in some much less developed jurisdictions, they are not politically-driven. The English law of contracts, for example, is among the best in the world. Financial regulation is impartial, non-discriminating and expertly driven, with an eye always to the future.
Little by little, the financial heart of the City has built itself up over more than three hundred years now. It has always managed to lead all new developments in finance – banking, money markets, broking, pensions, private insurance, reinsurance, investment banking, investment management, private equity, wealth management, funds, stock exchange, global currency market, headquarters, derivatives, gold, commodities, bullion, and, now, FinTech. This inexhaustible cluster of activities, manned by the highest skilled in each department of activity, has made it into the world’s most dynamic and innovative financial centre. There’s no product you can’t have or develop in it.
Mauritius may not be able to compete with a highly sophisticated long-established place like London. But we made a start sometime in the late 1980s and early 1990s. We attracted some new types of business, on the promise we’ll not deviate from established principles. As in the case of other successful international financial centres, the objective was to go on adding to the existing mass of our financial activities, based on a solid reputation for harbouring sound business and fostering attractive living conditions for expatriates having the skills to expand the scope of our global business.
We did attract to our shores the skills and connections we were lacking to increase our scope for doing international financial business. Many legislations and regulations were introduced to provide the necessary framework for developing business and instilling the necessary confidence in operators. International finance being an intensely competitive business, it hasn’t been easy for us to get the critical mass and diversity of business one would have wished for. But we’ve made some inroads despite the tough international competition.
If there’s one thing international finance operators dislike terribly, it’s instability caused by political interference. Since 2015, we’ve actually been providing more of this type of instability than creating opportunities for increasing the scope of business. Not many other jurisdictions would shoot themselves in the foot as much as we’ve been doing of late, on issues that could have been disposed of firmly but discreetly. It seems no altar is sacred enough: the political elephant has kept inviting itself into the dining room, undoing even the little that has been achieved in the financial sector so far.
At the top of the league of international financial centres we have today London in the first place, followed by New York in the second place and Singapore in third place. It may look surprising that Singapore is No 3, far ahead of the other important European jurisdiction known for its sophistication and efficiency, notably, Luxembourg (No 18 globally).
Not only does Singapore provide the best modern amenities to skilled expatriates it welcomes with open arms, it also gives their children the best in global education and state-of-the-art healthcare services. It is known for the discipline of its public servants and the high security it ensures in public places by day or by night. No arbitrariness allowed by any public institution whatsoever.
Even more, Singapore became a fast-learning and forward-thinking jurisdiction, which helped it capture the latest products and refine them before others had a go at them. It thus rivalled Hong Kong as an efficient competing centre for certain financial products, such as Exchange Traded Funds (ETFs) lately.
Mauritius has lacked this kind of steady enhancement of the scope of its global finance. People in international finance shy away from the kind of immaturity some of our decision-makers have displayed of late. The best we can now do is to give the sector the environment it needs to truly develop and, who knows, eventually contribute to our GDP one day the 22% London contributes to the GDP of the UK?