Many prominent companies, including African Rainbow Capital Investments, MTN International, and Seacom, selected Mauritius as their headquarters instead of South Africa.
Many other South African companies have a presence in the Indian Ocean island nation, and thousands of South Africans have moved there permanently.
It raises the question of what makes Mauritius, with only 1.3 million people and best known for island holidays, such a popular business destination.
Asking companies why they selected Mauritius as their base instead of South Africa is usually met with a bland, sanitised corporate response.
Seacom, for example, said they are “unable to disclose confidential operational details” when asked why its headquarters are in Mauritius.
ARC Investments, in turn, quoted their pre-listing statement saying it is “led, managed and controlled in Mauritius” and that they hold all board meetings in the country.
To better understand why Mauritius attracts top local companies, Daily Investor spoke to Brenthurst Wealth director Magnus Heystek.
Heystek is closely linked to Brent Wealth Management, a Mauritius-based investment advisory, and lives on the island for a large part of the year.
He is, therefore, well positioned to comment on the business environment in Mauritius and why South Africans find the island nation attractive.
Heystek said Mauritius’ business-friendly policies, stable political environment, and low tax rates make it attractive for South African businesses to set up shop on the island.
The business-friendly environment results from the Mauritian government’s drive to grow the services sector of the economy.
Mauritius implemented a prudent development plan backed by political stability, solid institutional frameworks, and low levels of corruption.
There was a strong focus on growing the services sector, including banking, financial services, trust companies, and offshoring headquarters.
The development plans worked exceptionally well. Mauritius’ economic growth rate far outpaced its peers in Southern Africa, and its GDP per capita increased from $2,500 in 1990 to $11,000 in 2019.
“From 2005 to 2020, the Mauritian economy grew twice the rate of South Africa, and income per capita was double that of SA,” said Hyestek.
The government slashed taxes to a maximum of 15% for individuals and companies. In some instances, taxes as low as 3% are possible.
There are also no capital gains taxes, no dividend taxes, no donation duties and no exchange controls in Mauritius.
“Mauritius is the economic nirvana any businessman dreams of,” said Hyestek.
South African companies realised the advantages of setting up their headquarters in Mauritius or moving some of their operations to the island.
“Mauritius is particularly suited to setting up regional headquarters to do business into Africa and the Middle East, with daily flights to Kenia, Dubai, and Qatar,” Hyestek said.
The country’s Economic Development Board (EDB) created an environment that welcomed and attracted businesses.
Today Mauritius is the top-ranked country in Africa in The Heritage Foundation’s Index of Economic Freedom, 82 places above South Africa.
It has a vibrant economy with numerous new infrastructure projects, a good education system, and low levels of crime.
“Brenthurst has been on the island for almost five years now. When I asked my team whether they wanted to return to South Africa, it was met with a resounding no,” Heystek said.
Magnus Heystek is the founder and director of Brenthurst Wealth, one of SA’s leading boutique wealth managers.