Japan-Mauritius: Moving Africa up the Value Chain webinar 15 December 2021
17 Dec 2021
The Economic Development Board, in collaboration with the Japan International Cooperation Agency (JICA) and the Embassy of Japan in Mauritius organised the ‘Japan-Mauritius: Moving Africa up the Value Chain’ webinar on 15th December 2021 in the margin of the 2nd Japan-Africa Public Private Economic Forum (JAfEF). This event goes in line with the Japan-Mauritius-Africa Thought Leadership Series, facilitated by Radhakrishna Neelayya, Manager (Japan Desk) at EDB.
Vinay Guddye, Director - Global Outreach led the webinar and positioned Mauritius as an undeniable value-added partner for Japanese investment into Africa. In light of the forthcoming TICAD8, it was highlighted that Mauritius-Japan Trade and Investment cooperation will be further reinforced. EDB will facilitate closer interactions between JICA, JETRO, JOI, UNIDO-ITPO Tokyo and Mauritian businesses.
Junko Masuda, Director General - Africa Department of the Japan International Cooperation Agency (JICA) highlighted the commitment of the Government of Japan to promote Japanese private sector investment in Africa through the Tokyo International Conference on African Development (TICAD7). JICA, as a development agency, contributes to private sector development in Mauritius and Africa mainly through three initiatives;
- Next Innovation with Japan (NINJA) to support entrepreneurs in Africa who are developing businesses to solve social challenges,
- The African Business Education (ABE) and Kaizen initiatives for development of industrial human resources and improvement of productivity and competitiveness in Africa; and promotion of Japanese investment for sharing of technology and know-how, job creation and income enhancement in Africa.
- JICA facilitated the implementation of some 200 projects Africa over the last decade. To promote and showcase investment opportunities in Mauritius, JICA is conducting a Survey on the Mauritian business environment and sectoral opportunities for Japanese investment in Africa.
H.E Kawaguchi Shuichiro, Ambassador of Japan to Mauritius spotlighted the consolidation of bilateral relations between Mauritius and Japan and qualified Mauritius as the most democratic and transparent country in the region. H.E additionally points out that Mauritius shares same values as Japan. The value proposition of Mauritius in terms of safety, security, and certainty, along with a low and effective tax regime were cited as being very attractive to Japanese investors. The Ministry of Foreign Affairs of Japan will further facilitate connection of public and private sectors from Japan and Mauritius through a forthcoming event.
In his keynote address, Mr Ken Poonoosamy, Chief Executive Officer of EDB apprised that Regional Organisations in Africa are now engaging in initiatives on industrialization. For example, COMESA, EAC and SADC have industrialization strategies, independently and as part of their Joint Tripartite Free Trade Area arrangement. Member States, including Mauritius, have agreed to act collectively to implement effective strategies to boost the productive capacity of the region’s constituent economies. The initiative includes developing and upgrading regional value chains which would enhance production capacity and competitiveness.
Mauritius which is strategically located between Africa and Asia with strong economic ties to the Euro area is well positioned to be an economic hub bridging regional value chains. The island, known for its robust port, airport, logistics and industrial infrastructure has further developed leading expertise and knowhow in specific areas, such a Textile and Sugar whereby Mauritius has played an integral part in setting up a complete regional Value Chain. Mr Poonoosamy thus cited Tianli Spinning (Mauritius) Ltd which started operations in 2003 as an example. Tianli is today one of the largest spinning mills in Mauritius that produces cotton yarn for both the local and regional markets. It main success story around the setting up of a full value chain in the production of 100% cotton yarn. Since 2013, the company started cotton cultivation in Madagascar covering an area of around 60,000 hectares to produce 30,000 MTS lint Cotton for spinning in Mauritius. The raw material, cotton fibre is thus carded and spun into the final product which is 100% cotton yarn.
In the same vein, and for Mauritius to remain competitive and retain or increase its market share, regional value chains are perceived as a key strategic approach. Subsequently, other sectors earmarked for the development of a proper regional value chain are namely the Seafood Value Chain (Ocean Economy), the Sugar Value Chain and Precious Stone Value Chain.
Japan’s ability to innovate and to drive technology & intelligence based projects, coupled with the regional repute and advantages conferred upon Mauritius, could be a driving force in moving Africa up the value chain.
This is where an extension to the current South-South Cooperation (SSC) into a Triangular Cooperation may eventually lead to the ‘Triple Wins Japan-Mauritius-Africa Partnership for African development’:
- Japan wins through the Export of Japanese Technology & Infrastructure
- Mauritius wins by providing the Risk Mitigating and Enabling Platform for Africa’s development
- Africa wins through its Industrialisation, Job Creation and Going Up the Value Chain
Kevin Ramkaloan, Chief Executive Officer of Business Mauritius, provided an overview of key focus areas for improving Japan-Mauritius-Africa economic ties. The importance of Trade in Services was discussed, and emphasis laid on economic cooperation and the potential for Mauritius to be used as a logistics hub for the distribution of Japanese brands and products already in Mauritius to other parts of Africa. The attractiveness of the regional economic dimension of Mauritius through the Regional Economic Communities (RECs) to which the country belongs, namely African Union, COMESA, SADC, IORA and IOC, bilingualism (English and French), an ever evolving and budding R&D ecosystem for industry-academia collaboration, an exclusive Economic Zone of 2.3 million square kilometres, the Mauritius IFC’s repute, efficiency and cost effectiveness along with its adherence to global standards and best practices and the robustness of the Mauritian ecosystem, build on a successful public-private sector collaborative spirit, for sustainable and inclusive development were cited as key advantages of Mauritius.
Transformation of the key pillar sectors which is also providing tools for regional transformation, namely in the Agro-industry, Manufacturing, Financial Services, sustainable Tourism, ICT/BPO. These specific sectors are also key focus areas of the Mauritian business sector. To that end, Japanese expertise could benefit Mauritius and the region comprise emerging and new sectors, namely circular economy and renewable energy, ocean economy, education hub, silver economy, Industry 4.0, AI and Technology, R&D and I-Textiles, Pharma and Healthcare and Fintech. The continuous evolution of the Mauritian economy towards higher value added products, sustainable development and addressing environmental vulnerabilities have been cited as areas for further collaboration with Japan.
In the Stakeholders Dialogue session of the webinar, experts from the Mauritius Economic landscape shared latest developments and views on how the Japan-Mauritius-Africa triangular platform will benefit Japanese investors and African investment.
Ms. Jenny Chan, Vice President of the Outsourcing and Telecommunications Association of Mauritius (OTAM) and Managing Director of Astek Mauritius Ltd, a French company with operations in Mauritius in software, mobile apps and web development, shared the latest developments towards enhancing the ICT/Digital ecosystem in Mauritius and why Mauritius is conducive to Japanese companies in the ICT/Digital sector?
Participants were apprised that the ICT-BPO sector has been experiencing a sustained growth since the early 2000’s and is today a major pillar of the economy and a major driving force of economic growth in Mauritius. The sector which comprises over 850 companies contributes around 7% to GDP and last year has experienced a growth of 3.9% despite the COVID-19 pandemic. Investors come from various parts of the world - Europe, Asia, United States, Southern African region, Australia and locally as well.
Jenny Chan further emphasised that sustained growth has not only been in terms of capacity but also in the offering, which has over the years matured and up the value chain through a tactical diversifying of service offerings. Subsequently, activities in the ICT-BPO sector are now ranging from BPO, KPO, FinTech, Mobile applications, web development, Big data, AI, Cybersecurity, Cloud services, Managed services, Consulting and E-commerce to R&D.
Additionally, Mauritius has developed a solid reputation in the service level and the quality and skill of the resources are undoubtedly perceived to match the very best globally.
Mauritius, therefore, stands out in the IT/BPO offshore services through the high quality of delivery and the high level of skills and maturity of our Mauritian resources. Another major differentiating factor is the multilingualism, especially French and English which are also widely used in Africa.
Coming to key enablers, Ms. Chan highlighted that Mauritius is now connected to the globe through three submarine optical cable networks and that the island has a 100% coverage of fibre optics cables. Making Mauritius a vibrant jurisdiction for the sustained development of the ICT/Digital sector.
Another important enabler is the legal framework, whereby as an example; in reaction to the GDPR, the Data Protection Act 2004 was amended to be fully compliant with this new regulation, thereby allowing the ICT/BPO sector to continue to serve its clients in the EU whilst developing new lines of business.
For the past years, there has been a lot of focus on the African region, with many Mauritian companies now having physical presences in several countries of francophone and anglophone Africa such as Madagascar ,Rwanda and Burundi.
Mathieu Mandeng, Chief Executive Officer of Standard Chartered Mauritius shared insights on moving upward the value chain and engagement with Africa by Japan.
Mr Mandeng explained that in TICAD6 a focus was made in 2016 by African countries for shifting from Overseas Development Assistance (ODA) for which Japan has been a true champion into more Trade and Investment as a game changer in African development. It was earmarked for USD 200 billion worth of Japanese investment to materialise into the continent.
However, at TICAD7 in Yokohama, the Japanese business community apprised that in their engagement with Africa, they faced numerous challenges in doing business in Africa. Additionally, the risk perception, accompanied by the hardship, the complexity and inefficiency in doing business in mainland Africa has been deterrent in achieving their investment objectives.
To that end, this is where the Mauritius IFC comes into play, mitigating the hardship, complexity, and inefficiency in mainland Africa. Mauritius through its numerous accolades as leader on continent in Ease of Doing Business, Good Government and as the only Investment Grade IFC in Sub Saharan Africa can be the risk mitigating platform for structuring investment and trade in Africa. Five pillars comprising the business environment, the financial services development, the infrastructure, the human capital, and reputation are listed as to why Mauritius stands out with a Unique Selling Point to plug the financing gap faced by the African continent.
The Standard Chartered bank, a global bank being bullish on African prospects and strongly advocating for the Mauritius IFC to close the Finance Gap on the continent and with operations globally, including Tokyo, Japan could certainly support the Japan-Mauritius-Africa triangular platform.
Dr V. Bissonauth, Research Coordinator at the Mauritius Research and Innovation Council (MRIC) shared the mandate of the MRIC which is promoting collaborative and inclusive innovation and explained how Mauritius can be used by Japanese companies to set up operations and design new and innovative concepts, products and services to meet the demand and aspirations of the African continent.
Dr V. Bissonauth explained that one of the initiatives of MRIC is to look into new and emerging technologies, with the latest initiative being the launching and deployment of the first nanosatellite in space in collaboration with United Nations Office for Outer Space Affairs (UNOOSA) and the Japan Aerospace Exploration Agency (JAXA). Start-ups in Space Technology are invited to set up in Mauritius
Alexis Merle, Registrar, Mediation and Arbitration Center, Mauritius (MARC) explained that MARC is an autonomous non-governmental Alternative Dispute Resolution Centre established in 1996 as an initiative of the Mauritius Chamber of Commerce and Industry to provide businesses with efficient and flexible means of resolving disputes through mediation or arbitration as alternatives to litigations before State courts. In 2017, MARC was restructured and now comprise of a MARC Court, a MARC Advisory Board and a permanent secretariat. The MARC Court guarantees the institution’s independence. Since 2020, MARC became an independent entity registered under the name Mediation and Arbitration Center (MARC) Mauritius.
The reason to why investors should choose Mauritius as a seat for arbitration is that along with its reputable and efficient IFC, Mauritius has made a head start in Africa with the implementation of its International Arbitration Act and with the emergence of arbitral institutions such as MARC.
Mauritius thus has a state-of-the-art legal framework for arbitration. Its’ legislation is based on the United Nations model law and additionally, Mauritius is a member of the New York Convention for the enforcement of Arbitral Awards. Given that some 160 States have signed the New York Convention, meaning prompt and regular enforcement of Arbitral Awards across other jurisdictions.
MARC is cost efficient and provides a neutral and efficient means of resolving disputes in both English and French.
Hans Herchenroder, Chief Commercial Officer of the Mauritius Freeport Development (MFD) Group, explained how the Mauritius Freeport could be an ideal vector for value addition linking Japan to Africa.
Lack of political stability, lack of infrastructure, difficulty in obtaining educated labour and the perceived dangers of investing in infrastructure without being able of ensuring of getting money back are some of the key issues that have plagued mainland Africa.
This is where Mauritius has a strong value position, especially in the Freeport. There are three main advantages that the Freeport can offer to Japanese companies, namely:
- logistics – processing of raw materials and storage, warehousing and distribution in Africa
- benefitting from COMESA and SADC Trade agreements for value addition of goods - electronics, pharmaceuticals, medical equipment, spare parts;
- low taxation
As an example, in the seafood business, under the Freeport regime, Mauritius can be used as a fishing base for Japanese fleet to fish in the Southern Ocean. In terms of shipping, there is a strong business case for bunkering and vessel repairs for Mauritius with around 33,000 ships sailing past Mauritius every year.
Another opportunity is the fact that Japan has invested massively in extractive industries. The infrastructure for the value addition of minerals exists in the Freeport, including vault services.
It was also opportune to highlight that the Mauritius has been ranked by the FDi intelligence report of Financial times in 2021, as the second best Freezone in the world after the DMCC of Dubai and first in Africa, especially commended on its ability to re-engineer its growth after the initial Covid impact.
Lilowtee Rajmun-Joosery, Director, Mauritius Export Association (MEXA) briefed on the initiatives taken by Mauritius for connectivity improvement. Regarding sea connectivity, MEXA has sensitized the Government of Mauritius for the need to invest in a regional feeder vessel which will service the Indian Ocean ports, including Eastern African ports and may ultimately connect to Durban, Djibouti, Dubai, and India from Mauritius. The Mauritian Government is very receptive to this project. Positive developments on the implementation of this project are expected in 2022 and this will certainly propel Mauritius as a warehousing, industrial and connectivity hub linking Asia to Africa.
Similarly, for air connectivity, MEXA has raised the attention of Government to set up an Air Cargo Hub in Mauritius connecting Asia to Africa by leveraging on the national airline and its alliances. The infrastructure for the Air Cargo Hub in terms of warehousing is already available around the airport and a Freeport next to the Airport is currently under development.
Japanese investors interested in the regional feeder vessel and setting up the Air Cargo Hub are called upon to contact the Economic Development Board.
Mr Hemraj Ramnial, CSK, Chairman of EDB, emphasised that economic transformation must be inclusive, resilient and sustainable. Stronger African regional cooperation through an effective implementation of the African Continental Free Trade Area and Triangular Cooperation is key to unlock new opportunities for diversification and trade. Mr Ramnial cited that for connecting Mauritian women entrepreneurs to global value chains, EDB and the International Trade Centre (ITC) signed a letter of intent to pave the way for the launch of the upcoming SheTrades Hub in Mauritius early next year, empowering and connecting Mauritian women to the African and Global Markets.
The Chairman of EDB invited Japanese investors to explore avenues of mutual cooperation with Mauritian companies already established in mainland Africa for developing synergies for their African projects. Mr Ramnial announced that there are already 60 local companies having 145 business units across 24 countries in Africa operating in various economic sectors such as Financial services, hospitality, ICT, manufacturing, agro-industry and professional services.