Can we choose our dreams? From an individual perspective, this is a fascinating question and surely a difficult one to answer in a few short words. However, from a collective perspective, the answer to the same question, in a location like Mauritius, is a resounding ‘yes’. Why is such an affirmative response pertinent to Mauritius in particular? The rationale is clear and simple, when examined from the societal viewpoint.

As a reputable and region-leading International Financial Centre at the gateway to the African continent, the Republic of Mauritius is a microcosm of banking, professional and investment services. The island nation’s response to the Covid-19 pandemic has been one of unprecedented support and this has set the tone for how Mauritius is looking to its future. The dream or vision of that future is positively informed by an increasing appetite for and focus on environmental, social and governance (ESG) issues by the government and businesses in Mauritius.

Why Mauritius holds ESG close to its heart?

Although ESG is undoubtedly a rising theme all over the globe as we look to our post-pandemic world, Mauritius’ position as an island nation empowers us in particular to see just why these issues are so vital, and why they are firmly on the agenda of the Mauritius International Financial Centre.

Indeed, Mauritius is an island that sits amongst the unrivalled beauty of the Indian Ocean, with flora and fauna that is in many instances unique and exceptional to the locality. There could be no more visibly engaging reminder to international business of the importance of enshrining the need to protect this biodiversity and natural environment through commerce as well as through policy.

Environmental commitment is no longer exclusively the mandate of the philanthropic sector. The answer to addressing global problems lies in global solutions. After all, rivers and oceans know no boundaries and the flows of international business account for how strategic and commercial decisions have a wider impact on society and the environment. Consideration for these factors is encompassed within the stakeholder approach: mapping and then factoring in the impact and effect ‘in the whole view’ of commercial decisions.

Providing a framework for ESG

Addressing societal and environmental (not to mention good governance) needs and concerns cannot be haphazardly approached. Mauritius’ development in this regard looks to the framework of the United Nations Sustainable Development Goals or Global Goals. These are a collection of seventeen interlinked global goals designed to be a “blueprint to achieve a better and more sustainable future for all”. Notwithstanding that they were only formulated in 2015, they are intended to be achieved by the year 2030. That means there is actually very little time for making the dream a reality. This is precisely why private businesses will need to step up to lead alongside governments and charities.

In terms of the key steps taken to date along the path to sustainability in the financial sector, the Mauritian Government announced in the Budget 2020-21 that the Bank of Mauritius would come up with a framework for Blue and Green bonds, which led to the publication of a Guide on sustainable bonds by the Bank of Mauritius in June 2021. This Guide seeks to provide an overview of the requirements and process for the issuance of Sustainable Bonds and the listing of these Bonds on Exchanges licensed in Mauritius on the one hand, and to ensure the integrity of the sustainable financing ecosystem on the island on the other, to guard against ‘greenwashing’.

The Guide also highlights that one important lesson that can be learnt from the coronavirus pandemic is that ESG factors, sustainability and resilience are very important, both for markets and economies. It underlines that Sustainable Bonds are therefore more relevant than ever to help channel sustainable finance towards recovery and long-term resilience in a post-COVID world.

How the private sector is supporting such efforts?

More broadly, Mauritius is actively seeking to bring environmental and societal themes into its framework for international business. Not just looking internally within the island itself – Mauritius’ proximity to and business access for Africa means it necessarily and altruistically has a regional view in setting the tone here. Beyond steps taken for Blue and Green bonds, ethical indices, and sustainable pledges, one of the most forward-looking steps Mauritius is taking is encouraging private business to play its part.

In practice this may comprise the amendment of a company’s constitutional documents to provide for a stakeholder approach; or resourcing supplies locally in an effort to bring positive returns to local business and community. These are self-fulfilling practices, and they make for a positive vision, which is also a necessary one for humanity and planet Earth.

The science is clear in its stark prediction of how we will all be impacted by rising sea levels. Mauritius is all too aware of that, being an island nation. The local community is behind the ethos; evidence by citizen-led efforts to clean up oil spills and other similar self-starting initiatives. Such a praiseworthy local philosophy will increasingly filter through to the world of commerce. This is why an ESG approach is not just good for the planet and society, but also in tune with the substance of the locality. That makes for much more meaningful business.

Mauritius to forge ahead in its ESG journey

This entire field is a still a new one when it comes to harmonised international standards and there is a need for global regulations and legislation to clarify, platform and empower people and businesses looking to embrace this approach.

But every journey starts with a first step – and it is clear that Mauritius is a sound starting point to pursuing our collective dream of a more positive environmental and societal future for all.

Published on 19 August 2021 in Mauritius Economic Development Board

In striving for harmony – or balance – of that whole, we must consider all the factors affecting African private clients. Identifying them enables us to consider what impact those factors are or should be having on the rest.

At the outset, it is important to keep in mind that African families face all the usual challenges that their counterparts do in any corner of the world. These range from the fundamental concern of wealth preservation, through to planning income requirements, and considering succession.

However, apart from the usual issues, there are further pressures or regional factors affecting African families in particular. Let us go over each of these factors one by one.

Governance: Making place for the old and the new

The strength and success of an African family business is often tied to the entrepreneurialism and endeavour of a patriarchal founder. More often than not, his tireless pursuit of his mission has resulted in success, with established social and business status, and the ensuing wealth.

This means that the business structure is inherently hierarchical. Cultural norms of respect for elders and tradition favouring certain categories of family members, such as first-born children, compound this issue. Societal norms arising from multiple marriages or complex customary relationships also need to be accounted for.

Finally, patriarchs send their children to the UK, USA and Australia for education and career development. Upon returning home, the youth bring fresh ideas, an innovative spirit and a loyalty to family that is also characterised by the pressure of “large shoes to fill” or a family name to “live up to”.

Engaging with the second and third generation is key. Planning for their ideas to be considered and integrated into the business will motivate them. Harnessing the passion of their ideas and fusing those with the family business can also achieve diversification. Good governance uses loyalty and ideas to generate value. Suppressing or ignoring such energy brings the risk of conflict (personal and professional). Such conflict can become entrenched – making succession planning more difficult than it needs to be.

Organisation: Making sense of diversified structures

The opportunistic character of investments built up by African clients over a long period of time means they have very varied business interests and assets which do not necessarily focus on one sector. Rather, they reflect the opportunity presented to the patriarch to invest. Such opportunities may have ranged across industries, decades and jurisdictions. A typical family conglomerate might include construction, retail, industrial and real estate investments – instead of being entirely focussed on one sector, such as energy.

A good first step is to reorganise shareholdings and implement an ultimate holding structure, with reporting lines, responsibilities and segregation of joint ventures away from the core business and private family assets. In Africa that often entails identifying what belongs to whom in the family (and which are business assets) since those lines blur in practice.

The advantages of completing this exercise include streamlining compliance, organising ownership records and empowering executives in the group to focus on priorities. This generates value across the group and opens the door to sustainability and innovation.

Risk management: Mitigating geopolitical risks

The geopolitical countenances of the continent prompt the need to mitigate currency fluctuation, local inflation, the risk of asset sequestration and the ability to move investment monies across borders.

Settling wealth and asset planning arrangements such as trusts or incorporating investment vehicles can help. Efficiency lies in taking advantage of double tax treaties, such as those between Mauritius and African countries. Mauritius supplements that fiscal advantage for African clients with accessibility to qualified, friendly and multi-lingual fiduciaries and administrators whose skilled labour is accompanied by insight and expertise.

It is a false economy to cut corners when retaining such services. Some African clients have discovered that the hard way, after being side-lined as high risk by their service providers or even, in the worst-case scenario, defrauded by them. The sophistication of the Mauritian market means that it now offers expert insights from professionals who not only understand the cultural norms and dynamics of African families but who actually have a passion for working with African clients and supporting them in fulfilling their aspirations.

Balancing the wheel of life

In the ultimate analysis, the key to keeping a wheel spinning is as simple as ensuring its balance and infusing proactive effort into the exercise.

By starting with an understanding of the family and its mission and harnessing the power of good governance and working with best-in-class professionals, a sustainable approach to wealth and business succession planning is one that is well within reach for clients from Africa.

Published on May 2021 in Issue 1 of Mauritius Finance – Page 40