CROSS BORDER CORPORATE BANKING OPPORTUNITY
Cross-border corporate banking, including deposits from investment vehicles, accounts for 32% of the IFC’s economic value add. This equates to US$~480 million in banking revenues, 70% of which is cash management and the rest a mix of corporate lending, structured lending, trade finance and payments. The main clients are cross-border structures, regional treasury and procurement centres serving African corporates, MNCs, and state institutions.
The Mauritius IFC aims to become the African finance and treasury hub with initiatives to attract corporates to establish regional headquarters, regional treasury centres, and corporate procurement centres. It has underpinned its growth with special initiatives, e.g., headquarters and treasury activities with tax incentives and other assistance.
The sheer size of the Africa cross-border cash management opportunity makes it a very attractive IFC activity. It is expected to grow 13% p.a. to a US$9.5 billion banking revenue market by 2030, driven by the increasing number of regional players in Africa and the expansion of existing players, especially in cash-rich industries (30% of African and MNC regional players are in, e.g., retail, FMCG, telecom and services).
Although small today, rapid growth is expected in this segment. Three main activities underlie this opportunity: pure export/import financing to regional procurement centres; letter of credit (LC) discounting to African corporates and state organisations looking for affordable hard currency; and commodity financing.
Relative to its regional competitors, Mauritius has a compelling value proposition: free capital flows, availability and convertibility of foreign currency, attractive tax regime, and a relatively stable political climate and economy.
Value Propositions in the Cross-Border Corporate Banking Business Segment.
The Mauritius IFC has created its value propositions namely two specific licenses for SPVs.
- The Global Headquarters Administration Scheme and
- The Global Treasury Activities Scheme.