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The recent invitation by China to South Africa to join the BRIC group of major emerging economies, to create the “BRICS” acronym, has heralded a new dawn, not only for the nation of South Africa, but arguably for the continent of Africa as a whole, with large parts of the African Continent now beginning to see real economic growth and development. Many African countries have taken bold steps to break the cycle of corruption and poverty by moving towards political stability and economic openness. This in turn has brought economic and social advancement as well as an unprecedented receptiveness to foreign direct investment (“FDI”). In addition to this, with increasing global demand for raw materials and commodities, many African countries are seeing renewed attention from the main industrial nations, in a 21st Century “Scramble for Africa”. India and China have been particularly active in Africa as they seek access to the resources essential for their own economic growth and take advantage of the continent’s under penetrated markets and business opportunities.
As well as growth in the mineral and energy sectors, economic expansion in the continent, particularly in Sub-Saharan Africa, is being supported by a broad base of other sectors including agriculture, technology, telecommunications, media and financial services. These industries are attracting massive FDI, a large chunk of which is coming through private equity investments. Flows of FDI to Africa have been increasing significantly during the last decade and the Cayman Islands and Mauritius both have an important role to play in the investment process.
In a world of economic uncertainty, the jurisdictions of Cayman and Mauritius, each in their own right, provide investors and investment managers with much needed comfort and certainty. When investing into Africa in combination with each other, the jurisdictions provide a stable, well regulated and tax efficient platform which can be relied upon.
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Private Equity Investment into Africa: The Cayman and Mauritius Route