The Mauritius-India Double Tax Avoidance Agreement (DTAA) has played an important role in our financial services industry for the last two and half decades, and still plays significant part today. Initially this allowed numerous Indian companies with their operation in Mauritius to benefit from the treaty when they did business with African countries having preferential trade agreements with Mauritius.

However, on the creation of the global business sector and the liberalization of the Indian economy, Mauritius became the most attractive investment platform for foreign investment into India via the use of global business companies. By 2008, foreign direct investment (FDI) by this route had reached a staggering US 310 billion representing 44% of total FDI into India, and 70-80% of financial services business in Mauritius. The mechanism of the attraction laid in the fact that global business companies do not pay capital gains and by application of the DTAA the global business company resident in Mauritius paid zero tax in either India or Mauritius. Needless to say that this state of affairs sparked off jealousy and attention, which in turn inflamed a series of administrative, legal, political and social objections in India. The persistent heat of continued objection gradually created uncertainty for future investors, who consequently moved to more predictable jurisdictions whilst our share of FDI into India slowly but surely trickled away. To the dismay of the industry this has pressured the Mauritian government into accepting a renegotiation of the DTAA, which brings us up to our present status.

Now however, the Mauritius government seems visibly upset with the Indians for the time being taken for renegotiations, the departure from what was initially promised, and that the amendments proposed announce more or less the end of the treaty benefits, followed by a further postponement.

The writing has been on the wall long before negotiations even started. We were all aware of the Indian press cuttings pushing in this direction: accusation of roundtripping without any real opposition from us. Our main competitor Singapore along with others have been persistently cutting into our market share. We saw however the years the Indian government has been moving closer to the G20 countries, the OECD, the IMF and the World Bank. On the other hand, we have refused to notice that this old friend has been moving further away from us. Under these circumstances, any renegotiation should have been strongly resisted, but instead we naively decided to send a small delegation of civil servants from the Ministries of Finance and Foreign affairs, having limited knowledge of global business.

They were not assisted by professionals in international treaty negotiations nor by veterans the global sector, but rather they seemed to be guided by diplomatic and economic nostalgia, and the blind belief that our cousins on the Asian continent would respect their undertakings and always act in our economic favour.

It is now high time that we wake up to new global realities, and comprehend that our future and salvation lies squarely on the African continent. Fancy marketing from the Board of Investment will not suffice, we now have to walk the African walk and talk the African talk. We have to accept a new mind-set, a new attitude, and embrace Africa without restriction, as Africans. There is no point being “first in Africa” if we cannot do business like Africans. That is why despite all our trade agreements and treaties, we still fail to perform on our continent in financial services. If you want to do business in Africa, then do so as an African. The concept is not alien to us, as many Mauritian groups, such as CIEL and BAI to mention but two have made impressive inroads. It is not a question skin colour, community or religion. It is a question of accepting who we are and where our umbilical cords are buried.

Our financial institutions must be managed by Africans for Africans, Mauritians or otherwise. Enough of these “experts” from the European, Asian, and Australian continents, who act more like agents for the G20 countries, the OECD, the IMF, and the World Bank, bent on overburdening us with layers of paranoid compliance and surveillance, engendered from their own crises, failures and fears. Enough of these “Yes Minister” nominees, content to dance blindly to the pipes and tunes of external post-colonial masters.

The way forward is almost a new struggle for “Independence” beyond the Mauritian identity towards a true African identity. Our goal should not be “to be first in Africa” but rather “to lead Africa as Africans”, proudly and without any complexes. Regarding financial services the starting point must be with a total review of the financial services regulation in Mauritius.

Business Year Book – special issue of Business Magazine (March 2014)