Standard Bank bets on Mauritius

Standard Bank has expanded its Mauritius offshore offering for companies looking for a stable macroeconomic environment that stands in contrast to many African countries. 

The bank is building on its long-standing presence on the island, which has historically focused on global multinationals and large listed companies through its Corporate and Investment Banking (CIB) arm since 2001.

Smaller, family-owned businesses will now have access to all the benefits that Mauritius, as the leading International Finance Centre (IFC) in Africa, has available.

This will be done through the introduction of a dedicated Business and Commercial Banking (BCB) offering. 

Tunde Macaulay, Head of Africa Regions and Offshore, for Standard Bank Business and Commercial Banking. 

“Our clients will be able to enjoy the full benefits of operating from an IFC that facilitates international activity and operates under a strong regulatory framework,” the head of Standard Bank BCB Africa Regions and Offshore, Tunde Macaulay, said. 

Macaulay said Mauritius offers several advantages over other African markets for corporates, both large and small. 

The key reason companies look to set up shop in Mauritius is its political and economic stability, particularly in relation to other African countries. 

The opening of Mauritius for BCB clients is an extension of the services that Standard Bank already offers through its Jersey and Isle of Man operations, which serve many African clients.

Mauritius offers the added attraction of its strategic positioning between India and China, two of the largest trading centres for African businesses.

“Mauritius’s stable macroeconomic environment stands in contrast to Africa’s present macroeconomic challenges,” Macaulay said.  

“Significant currency devaluations, inflationary pressures and liquidity challenges have been experienced in several sub-Saharan countries, negatively affecting the operations of our clients in a range of sectors.”

“For African businesses, Mauritius is, therefore, a place for protecting wealth and working capital against the present challenges being faced in some African markets.” 

The expansion of the bank’s Mauritian business is part of its expansion deeper into the African continent, where it sees better growth opportunities than in its home country of South Africa. 

Standard Bank CEO Sim Tshabalala has been clear that the bank will invest in parts of the continent that offer the best growth potential and that these currently lie outside of South Africa. 

“We’re absolutely focused on total shareholder, absolutely focused on it and on managing our portfolio of businesses with discipline,” Tshabalala told Daily Investor. 

“Clearly, the fastest-growing parts of the African continent are the countries outside of Africa and, in particular, East Africa, which is growing at an annual rate above 5%.” 

“Therefore, you want to be allocating your capital to these faster-growing parts of your business for obvious reasons – to grow lending, insurance products, and making acquisitions.” 

The key factor is the rate at which the economy is growing. South Africa is expected to grow at just over 1% in 2024, while other African countries will average greater than 3% growth. 

“What does this mean? It means that we are losing our national competitive advantage. We need to grow faster and get people healthier and wealthier,” Tshabalala said

“Other countries are growing much faster. Where do you think that money is going to go? It is going to go to other countries and not South Africa.”

Tshabalala said all of this can change if the government implements its reform agenda speedily, and the entire investment landscape will shift. 

“There is a beauty in having a portfolio of countries. South Africa is an absolute giant in the portfolio.”

“You might say its economic growth is pedestrian, but if the country suddenly grows at 2% or 3% then the base is significantly bigger, and it makes sense to allocate more capital to the country.” 

“So, we are sanguine about this, and we are not religious about where growth is. We will pursue that growth, servicing our clients and providing them with solutions.” 

“The summary is that we will follow GDP growth and client activity. We will have strict discipline in how we allocate capital and keep going where we can grow the most.”