BTG Management December Newsletter.

 

 

Mauritius Peer - to - Peer Lending.

 

 

If the world of finance was not innovative enough with Cryptocurrencies, FinTech’s and Crowd-funding, along comes another innovation to this mix called Peer to Peer Lending. So, what exactly is a Peer-to Peer Lending you may ask?

For starters, say you have a company in Mauritius that is trading in Africa. The company may need to borrow funds for working capital purposes (for example, purchase goods from China which will be sold in Africa). The traditional lending bank model in Mauritius may require 100% liquid collateral with the bank before providing any trade finance. However, keeping 100% liquid security comes at a cost and there is a long process to getting approval for the loan involving credit committee assessment, risk assessment etc. The company may try to borrow from family and friends or the angel investors piecemeal which is not efficient. However, there could be another solution -  Peer-to-Peer Lending Platforms.

A Peer to Peer Lending Platform basically an innovative way in which companies can raise finance through internet-based platforms. In this context, "platform" refers to the online portal that brings together investors or lenders with companies seeking investment or to borrow, and also refers to the platform owner which makes the necessary arrangements to bring those parties together.

Many of the activities carried on by these platforms are regulated in the UK under the Financial Services and Markets Act 2000 (FSMA). Now, following the announcement made in the Mauritian Budget Speech 2017/18 the Financial Services Commission, Mauritius (The FSC Mauritius) has issued a draft “Financial Services (Peer to Peer Lending) Rules 2017” (P2P Rules) for consultation.

The aim of the P2P Rules is to establish a sound and conducive automated environment or platform for the offer and execution of alternative peer to peer lending, other than bank lending, for the benefits of borrowers and stakeholders in the non-banking sector of Mauritius.

The foundation of the Peer to Peer Lending Rules is based on the premise that the Mauritian non-banking sector can leverage on the power or efficiency of the Peer to Peer networks for offering equivalent and sound alternatives in terms of lending opportunities (which are not bank related) in Mauritius.

P2P Operators will be entitled to accept lenders and borrowers on their P2P platforms. The rules allow for operators to accept both legal and natural persons respectively, as lenders and borrowers on the P2P lending platforms. 

This is a great opportunity for Mauritius in terms of fundraising for operations in Africa.

These P2P Rules, together with an explanatory memorandum, can be consulted at the link you'll see at the bottom of this article.

 

 

Offshore Investments by South Africans

 

 

When we talk about Offshore investments, some people are not sure of what this space pertains to, but everyone's aware that there is a global economy that is far superior than South Africa's flagging one.

There are many different investment opportunities in South Africa, but are they really delivering in the returns they offer? When dealing with investments in South Africa there are a few routes people go including, equity funds, a property portfolio, tax-free saving plans, fixed deposits, and retirement annuities. There may be a few others including Bitcoin, gold, silver etc. 

The important aspect with all these investment strategies are ROI, the return on investment. In South Africa inflation is around 6% which means for your investment to make money, you need to exceed this figure. Running through each strategy and the actual ROI that is received, most South Africans often don't see great returns over and above inflation.

Looking outside of South Africa, the global investment space is truly on another level. Because you are performing on a global scale and being up against the largest investment house in the world makes sure that only the best of the best is involved in managing your investment. The South African focused investment strategies & firms just can’t compete.

There is a whole world that investors can take advantage of, yet they decide to keep it in South Africa. Investing in hard currency like Dollars, Euros, or Sterling is a great hedge against the volatile Rand, and can create great international exposure.

However, with investing offshore comes a degree of complexity in terms of local and foreign taxes, estate duty, death duties, forced heirship rules, unscrupulous traders etc.

One non-financial hedge against this barrage of complexity is having a professional trustee to manage investments through a trust or a private foundation. This form of estate planning assists with centralising all the investor’s assets, having a prudent fiduciary oversight on the investments prevents undue tax burdens and helps the investor’s family and loved ones in the event of unforeseen circumstances such as death, incapacity, or spendthrift children.

The international market is foreign for most South Africans, but in a truly global economy, it need not be.

P2P Rules, FSC Mauritius

 

Mauritius 'Paradise Papers' Statement

 

 

The recent new leak of data called the infamous Paradise Papers has caused a stir globally in various Financial Centres. After a flurry of documentaries and articles doing the rounds, most Financial Centres issued a clear statement highlighting their position, including Mauritius.

The Mauritian Government and the Financial Services Commission (FSC) position has always been that Mauritius is fully transparent and collaborative on all global transparency requirements and adheres to the best international norms and practices. This has contributed to the jurisdiction being recognized globally as an International Financial Centre of choice and substance for cross border investments.

International standard setters have recognized it, the latest being the Compliant rating bestowed by the OECD Global Forum on Transparency and Exchange of Information for Tax Purpose that Mauritius upholds its exchange of information practices in line with the best international standards.

The FSC is closely monitoring reports published in the media. They are also collaborating with its international counterparts under existing exchange of information agreements, as well as with other relevant stakeholders.

Despite the negative press, the reasons capital is attracted to centres like Mauritius is ease of doing business and a good fiscal regime. Whether onshore jurisdictions can complete depends largely on their own strong economic growth, ensuring they have little or no corruption, remove red-tape and are not over- taxing their already income-strapped citizens (and then squandering the taxpayer’s hard-earned money)!

 BTG Management Services (Mauritius) Limited.

 

BTG Management Services (Mauritius) is a full service Management Company located in Mauritius licensed by the Financial Services Commission under section 77 of the Financial Services Act of 2007.

 

Contact Info

Head Office: MAIN OFFICE, Nautica Commercial Center, Royal Road Black River,  Mauritius

Phone: (+230) 483-1212

Fax: (+230) 483-1313

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