Ravin Dajee, Managing Director, Absa Bank Mauritius: “Modern wealth management requires sophisticated structures”
In the elegant setting of Absa House, Managing Director Ravin Dajee presents a compelling outlook on Mauritius’s economic prospects, spotlighting growth opportunities in tourism, construction, and financial services. He also addresses pressing challenges, including inflation and public debt, while underscoring the importance of fostering sustainable and balanced growth. Ravin Dajee positions Mauritius as a strategic gateway for investment into Africa, highlighting Absa’s steadfast focus on customer experience, digital transformation, sustainability, and talent development as cornerstones for creating lasting value for both clients and communities. In addition, he sheds light on the successful transition of HSBC clients to Absa Bank Mauritius following the acquisition of HSBC’s local business, reflecting the bank’s commitment to seamless service and integration. Looking ahead, Ravin Dajee shares his vision for the future of banking, exploring how digital innovation and shifting global dynamics will redefine the industry landscape.
MAURITIUS
“Our goal is to stay aligned with Mauritius’s economic trajectory”
How would you assess the current economic trends in Mauritius, and what is their direct impact on the banking sector? How is Absa adapting to these changes?
Mauritius has consistently exemplified economic resilience, adeptly navigating challenges to find solutions and emerging stronger. In 2024, economic growth is expected to hover at a commendable level between 5.5% and 6%, largely driven by the recovery in the Tourism sector, construction and financial services. Going forward, GDP growth is likely to moderate to 3.5% to 4% over the medium term.
That said, we must remain vigilant to challenges that could pose risks to our long-term economic and social progress. While inflation currently sits within the target range set by policymakers and is anticipated to decrease further, the rising prices of essential goods is squeezing disposable incomes. Public debt is also projected to continue its downward trend, but currently hovers around 80% of GDP, which warrants cautious oversight. The same applies to the balance of payments deficit, particularly the commercial deficit, as these factors directly affect the value of the Mauritian rupee.
A weaker rupee may enhance our attractiveness to tourists and boost export competitiveness, it can, however, also have a negative bearing on living costs, inflation, and vital foreign direct investment. According to a recent report published by Axys, while nominal GDP in MUR terms grew at a CAGR of 5.9% over the past decade, real GDP in USD terms has contracted at a CAGR of -0.3% since 2014, when adjusted for currency depreciation. Axys also estimates that the MUR has depreciated by 33% against the greenback over the same period.
In the banking sector, adapting to evolving economic and market dynamics presents significant challenges. The strong average returns on assets and equity underscore the solid performance of Mauritian banks. However, potential declines in interest rates, coupled with a global economic slowdown could dampen credit demand and investment flows, impacting banks' earnings. Moreover, non-bank competitors are increasingly entering the financial space, without necessarily facing the same regulatory constraints as traditional banks. This intensifying competition is driving up funding costs and compressing net interest margins as banks vie for deposits by offering higher interest rates. Furthermore, adapting to new regulatory changes requires substantial compliance investments which are further pressuring these margins.
Mauritius is set to enhance its role in cross-border investments, particularly as a gateway to Africa, supported by its strategic location and robust financial infrastructure. Additionally, the country is well-positioned to serve high-net-worth individuals. However, to unlock Mauritius' full growth potential, it is essential to address current skills gaps and labour market rigidities, and to further streamline regulations to improve the business environment.
Absa Mauritius is committed to supporting the realisation of Mauritius's vision of becoming a leading International Financial Center. We are exceptionally well-placed to advise and partner with international corporations. Our broad presence on the continent and deep expertise, allow us to guide clients through a variety of strategic transactions, helping them to navigate complex financial and regulatory landscapes to capitalise on emerging opportunities across Africa.
Over the past few years, we have significantly upgraded our service model and digital platforms to provide clients with seamless, 24/7 access, and an enhanced client experience across all our channels. We have also strengthened our value proposition for global clients, with the launch of our custody and wealth management services.
Beyond banking services, Absa is dedicated to fostering inclusive growth through a strong Environmental, Social, and Governance (ESG) agenda that contributes positively to social and economic progress in Mauritius.
Absa Bank Mauritius has recently made significant strides in its growth and transformation strategies. Could you provide the latest financial highlights and explain how these results align with the bank’s broader objectives?
Our medium-term growth strategy is anchored on four main pillars:
- Customer Experience: Ensuring each interaction with Absa is seamless.
- Digital Innovation: Leveraging digital transformation to position ourselves as a leading market innovator, offering innovative products like Digi Account, Digi Business Account, and Digi Loans.
- ESG and Sustainability: Integrating sustainability into our operations as a core commitment.
- Engaged and Talented Employees: Achieving these goals through a dedicated, skilled, and motivated workforce.
The focused and diligent execution of our strategy has yielded excellent financial results for the bank. In 2023, we maintained a strong growth trajectory with revenue up by 27% and profits surging by nearly 80%. On the balance sheet side, Loans to customers grew by a healthy 21%, while customer deposits increased by 12%. Our efficiency ratio improved from 51% in 2022 to 46% in 2023. We also maintained a strong Capital Adequacy Ratio of 18.5% and a Liquidity Coverage Ratio of 273%. These solid fundamentals provide a sustainable base for our growth, and as a regulated entity, maintaining this strength through rigorous control environments is essential.
As for 2024, we are building on this momentum. For the first 9 months of the year, we achieved a strong performance with revenue closing at nearly Rs 7 billion, representing a year-on-year growth of 33%. Our headline earnings—a critical profitability measure—are 23% higher than the same period in 2023. Loans to customers registered a growth of 26% while deposits from customers saw a year-on-year increase of 29%. Additionally, our cost-to-income ratio has dropped to 40%, reflecting greater efficiency and our Capital Adequacy Ratio stood at 19.6%, well-above regulatory requirements.
Our ambition is to outperform the market while delivering sustainable returns to our shareholders. We are expanding and diversifying across business lines, including international corridors within the global business sector and Wealth Management, both domestically and internationally.
How does the acquisition of HSBC's local business units align with Absa’s broader growth strategy in Mauritius and the region?
While we are amongst the four largest banks in the domestic market, our growth has been largely driven by the global business sector. However, over the past few years, we have significantly expanded our domestic business, both in the retail and corporate sectors.
The acquisition of HSBC’s domestic Wealth, Personal Banking and Business Banking portfolios is a strategic move that closely aligns with our ambition to strengthen and accelerate growth in the domestic market, and to create a more balanced revenue split between our global and domestic business operations.
This landmark acquisition will further bolster the momentum we have seen in recent years and ensure that our domestic business becomes a more substantial contributor to both our top-line revenue and profitability.
Is Absa aiming to catch up with the two banks that traditionally have dominated the local market?
The relatively small domestic banking market size limits growth opportunities, amid fierce competition among banks. As a result, many banking institutions are focusing on the global business sector for expansion.
Our primary goal is not to compete more directly with banks in the domestic market. Instead, we aim to create a more diversified business model by expanding our presence and relevance in the domestic market, leveraging HSBC's established customer base.
Our domestic banking market is relatively small, with over 10 banks operating, yet it is still largely dominated by two banks with a combined market share above 75%. A banking sector with multiple strong players can enhance the overall stability of the financial system. It can also lead to increased competition, which will drive innovation and improve the quality of services offered to customers.
The acquisition of HSBC's local business units underscores our commitment to grow as a key player in the domestic banking sector, and it is vital for us that clients perceive Absa as a purpose-led organisation that sets a new high standard, a bank that strives to listen and relate to customers to deliver the most appropriate solution and banking experience to each one.
How has the onboarding experience been for the new retail customers and enterprises?
Overall, the transition has been positive. We welcomed approximately 38,000 retail customers and 400 Small and Medium Enterprises, as well as 67 new colleagues to the Absa family.
Throughout the process, we sought to ensure clear and consistent communication to inform customers about changes and any actions they needed to take. We ensured that there was no disruption in banking services during the transition period and had dedicated support teams set up to assist customers. We successfully completed the migration from HSBC’s systems to Absa's maintaining account information, transaction history, and other essential data. Our product suite and digital platforms align well with our new clients’ needs.
Our thorough preparation ensured a fairly smooth process. Nevertheless, given the complexity of this migration, we did encounter issues that have been addressed by our teams, and have also learnt valuable lessons along the way.
While the migration has been a significant milestone, the job is not done yet. We are focused on refining our services to provide a seamless banking experience to our new, as well as existing customers.
Absa has been at the forefront of digital banking innovations. Can you discuss any upcoming technologies or platforms that Absa is developing to transform banking services in Mauritius and beyond?
Over the past five years, Absa Mauritius has invested heavily in its digital transformation which has earned us numerous accolades from prestigious institutions such as The Digital Banker and Pan-Finance.
We were the first bank to introduce a fully digital product, allowing clients to open an account from the comfort of their home, without the need to visit a branch. Our app has been significantly upgraded with advanced features, including account linking, instant transfers, QR cash withdrawals, and contactless payments. We introduced Absa Pay, Mauritius' first "Tap and Pay" solution, allowing customers to make secure, instant payments by simply tapping their smartphones at payment terminals.
Moreover, we have also extended our digital suite of products to include the Digi Business Account, and Digi Loans, designed to cater to the needs of both individuals and businesses. Recently, we launched Spark Business, offering a low-cost, real-time payment solution via smartphones for merchants, which allows them to track incoming funds, identify top-performing stores, and issue digital receipts.
We plan over the coming years to expand and elevate our digital product suite and leverage on open banking to cater more fully to the diverse needs of our customer base and tap into new customer segments. Our ongoing digital investments reflect our commitment to making banking faster, more intuitive, and accessible for all customers.
With the rise of fintech and alternative finance platforms, how do you envision the future of traditional banking in the next decade? What steps is Absa taking to stay ahead in this changing landscape?
Banks are set to significantly increase their investment in digital technologies to improve and personalise customer experience, streamline operations, and reduce costs. This includes leveraging AI, machine learning, and cloud computing. Financial services will be increasingly integrated into non-financial platforms, making banking services accessible within everyday activities like shopping or social media use. As digital transactions grow, there will also be a heightened focus on cybersecurity to protect customer data and prevent fraud.
Traditionally, banks have partnered with major tech players but today, the demand for more personalised, faster and cost-effective solutions has made fintech partnerships a valuable way to increase agility and innovation. We can expect to see increased synergy between banks and fintech companies, with each leveraging the other's strengths. Banks will gain from the speed and agility of Fintechs to innovate, while Fintechs will benefit from banks' established customer bases and regulatory knowledge. At Absa Mauritius, we are investing both in developing solutions in-house and through strategic partnerships, and collaborating with fintech companies is central to this approach.
Globally, there is also a shift toward open banking, with Central Banks increasingly emphasising that client data belongs to the client and not the institution. The adoption of open banking frameworks will speed up, allowing third-party providers secure access to bank data. This shift will create further opportunities for us to expand our market reach, offering tailored services to clients who may not yet bank with us.
Above all, we are focused on delivering secure, innovative, and customer-first solutions that meet each client’s unique needs.
How is Absa Bank Mauritius utilizing AI in decision-making processes, particularly in areas like credit scoring and fraud detection?
A few years ago, Absa Mauritius launched Abby, an AI-powered humanoid robot designed to act as a digital personal assistant in our branches. Abby uses facial and voice recognition to provide personalized assistance and streamline customer service. Additionally, we have deployed AI systems that analyse transaction patterns and customer behaviour to detect suspicious activities and flag potential frauds in real time. As part of our Digi suite products, we leverage character recognition technology to simplify and accelerate customer onboarding.
Going forward, our focus is on using AI not just to optimise internal processes, but also to deliver value to our customers by offering highly personalised services through analysis of customer data and behaviour. This will allow us to tailor products and services to individual needs, providing recommendations that are relevant and timely. We are also looking at developing AI-powered chatbots and virtual assistants that provide 24/7 customer support, handling routine inquiries and transactions efficiently.
AI is also reshaping credit scoring, making it more accurate, inclusive, and objective through advanced algorithms, improving reliability in assessing credit risk. However, we need to acknowledge that there are valid concerns around AI, such as data protection and the risk of biases in its systems. While AI can help identify and reduce human biases, it may also unintentionally amplify them, making it critical to address bias, especially in sensitive areas like credit scoring. Additionally, while fears about AI replacing people are prevalent, I don’t believe that this will be the case. Instead, AI will make us more resilient and efficient, enabling people to focus on higher-value tasks rather than routine activities that machines can handle.
We are also working closely with regulators to ensure a robust framework that addresses data privacy and the ethical implications around the use of AI.
With increasing concerns about data privacy and security, what measures has Absa Bank Mauritius taken to protect customer information?
I think this is a crucial point. Banks and financial institutions operate on a foundation of trust, which is key in maintaining lasting relationships with customers. Clients need to feel confident that their data is secure with us, and as a leading regional bank, protecting confidential and personal data and preventing any misuse, is a top priority for us.
In 2022, Absa Mauritius became the first certified bank in Mauritius for full compliance with the Mauritius Data Protection Act. We strictly adhere to local and international data protection laws, as well as our internal security standards. The bank leverages multiple layers of security, including firewalls, biometrics, and advanced authentication and verification methods. Reliable information protection mechanisms are also implemented at each stage of the data lifecycle, including data collection, processing, sharing, retention, and destruction. Our Security Operations Center monitors Absa’s systems 24/7 for irregularities and cyber-attacks.
Our teams continuously test and refine our systems to safeguard against fraud and ensure top-tier data protection, and we also focus on educating our employees and customers to mitigate the risks of cyberattacks.
Given the complexity of modern financial products, how is Absa Bank Mauritius contributing to financial literacy among its customers?
Compared to other African countries, Mauritius is relatively advanced in terms of financial inclusion with more than 90% of our population having a bank account. However, while access is not the primary issue, financial literacy remains essential to empower people to make informed choices. Too often, banks simply sell products, but our goal is to offer clients solutions that cater to their specific needs and aspirations.
For this to happen, we invest in training our employees to have a solid understanding of each product, so they can guide clients effectively, helping them understand all the implications of opening an account, taking a loan, applying for a credit card, or any other banking product.
Additionally, we are focusing on helping SMEs learn more not just about the banking products available to them, but also key financial principles and solutions to maintain a healthy cash flow, manage debt effectively, plan for long-term growth, and avoid financial pitfalls. By investing in building up the financial literacy of SMEs, banks not only support the growth and sustainability of these businesses but also contribute to the overall economic health of their communities.
Absa Mauritius has also partnered with the Global Rainbow Foundation to develop a comprehensive Financial Literacy Programme. This initiative focuses on improving the financial knowledge of individuals, particularly those with disabilities, to help them manage their finances independently.
HNWI
“Our reach and expertise enable us to support clients with complex, international wealth management needs”
The newly launched Wealth Centre at The Precinct represents a significant investment. What differentiates this center from other wealth management services?
The Wealth business is a pivotal growth engine for our bank. Within this segment, there are two key sub-segments: Domestic Wealth, which represents a smaller yet significant market, and International Wealth, a segment experiencing rapid expansion. Mauritius holds a unique position as a gateway to East and Southern Africa, which offers immense opportunities for growth in the Wealth Management space.
We are committed to building a wealth business that reflects our ambition. When Wealth clients walk into our offices, the experience, look, and feel they encounter should reflect that vision. I encourage you to visit our Wealth Centre, which is a testament to this ambition. With world-class facilities and a client-centric approach, it has been designed to meet global standards while maintaining a distinctly local focus. The Centre offers an elegant setting where clients can receive high-end service in an environment tailored for privacy and comfort. It is our way of ensuring that Mauritius competes on par with leading international wealth hubs.
Our approach to wealth management is highly personalised, rather than a one-size-fits-all solution. We assess each client’s individual needs and their position on the wealth curve, tailoring solutions that are precisely adapted to their goals and requirements. Our offering includes a diverse range of multi-currency cash, credit, and global investment solutions, as well as exclusive benefits like the Visa Infinite smart metal credit card. This ensures that our clients have access to the tools and support they need to achieve their financial objectives.
Integrating art into the Wealth Centre is a unique touch. Could you elaborate on the role that cultural experiences like art play in fostering relationships with wealthy clients?
Our goal was to create a personalised and inviting space for our clients. To achieve this, we have collaborated with South African artists to craft a sophisticated, yet welcoming environment. Art plays a crucial role in cultivating a sense of luxury and connection, making clients feel valued and appreciated. It is about creating an atmosphere that speaks to them personally and enhances emotional engagement.
The presence of African art also demonstrates Absa’s commitment to creating a distinctive and memorable client experience, while reinforcing our brand identity as a pan-African bank. This artistic choice aligns with our cultural heritage and the aspirations of our clients, transforming our spaces into experiences that respect their tastes and cultural values. It is more than just a financial services space; it is an environment that resonates with the high-net-worth clients and celebrates a shared African identity.
What trends are you noticing among high-net-worth individuals (HNWIs) in Mauritius regarding wealth creation and preservation, and how is Absa positioning itself to meet their evolving needs?
The wealth management landscape is evolving rapidly, with several notable trends adding layers of complexity. High-net-worth individuals (HNWIs) increasingly demand sophisticated, multi-jurisdictional solutions involving collaborations with management companies, accountants, and legal advisors. Cross-border expertise is also critical, as many clients have business interests across Africa and elsewhere and require guidance for managing complex international portfolios. Additionally, there is a strong preference for tailored and trustworthy advisory services designed to address the specific requirements and objectives of each client.
As a pan-African regional bank, Absa is well-equipped to meet these needs. Our blend of local expertise and global reach enables us to offer tailored solutions to safeguard our clients' wealth and support their aspirations. In fact, Absa Wealth applies an open-architecture investment model, allowing it to recommend optimal solutions for clients based on their specific needs, even from competitors.
Where are these high-net-worth individuals coming from?
High-net-worth individuals from diverse jurisdictions are increasingly selecting Mauritius as a preferred destination for wealth management. While the largest segment of clients currently originates from South Africa, we are also witnessing significant growth in demand from the UAE. What sets us apart is our unique offering—a cost-effective platform, coupled with personalised service, creating a distinct value proposition.
In many European financial centers, high minimum balance requirements often exclude mid-tier high-net-worth individuals—those with assets ranging from USD 500,000 to USD 3 million—from accessing tailored solutions. Mauritius fills this gap, catering to these clients with a level of service that is difficult to find elsewhere. This niche focus is a key element of our strategy.
AFRICA
“Absa understands the unique risks and opportunities within Africa”
How is Absa Bank Mauritius positioned within the broader Absa Group's strategy for expansion and investment across Africa? What specific roles or initiatives is Mauritius playing in this continental strategy?
The Absa Group is a truly Pan-African Group, operating in 12 countries across the continent with a focus on being a positive force for good in Africa. Absa Mauritius’s growth strategy is built on three key pillars: Growth, Experience, and Sustainability.
We are focused on being a leading player in Mauritius, while aligning closely with Absa Group’s overarching African vision of creating a more diversified business across geography, segment and product, and capitalising on attractive growth prospects across the continent.
Absa Bank Mauritius plays a pivotal role in the broader Group's strategy for expansion and investment across Africa. As part of the Absa Group, Absa Mauritius leverages its strategic location, extensive network, and deep understanding of African markets to offer comprehensive solutions tailored to the continent’s unique dynamics and act as a hub for intra-Africa transactions. With a talented team drawn primarily from the continent and leadership by local teams, we are able to foster strong connections, navigate diverse risks, and capitalise on opportunities specific to African markets.
A key focus of our strategy is sustainability, which guides our efforts in empowering communities, supporting SMEs and women entrepreneurs, and championing local talent. Our mission includes bringing leading digital solutions to the continent and supporting infrastructure investments, which are critical for Africa’s continued growth and development.
Small and medium enterprises (SMEs) play a crucial role in African economies. How does Absa’s strategy align with supporting SME growth in Africa?
We work with clients across various sectors, including many SMEs. We aim to support their growth, particularly those with the technical expertise, but limited financial resources. Our focus is on empowering these businesses to expand and become impactful players in their sectors. We also focus on supporting underserved segments such as women-led businesses, as part of our Sustainability strategy. We introduced the Women Entrepreneurs Proposition, a tailored offering that provides women business owners with financial services, mentorship, and access to funding to support their business growth.
In partnership with entities across Africa, we are leveraging the African Continental Free Trade Area (AfCFTA) to foster SME growth, facilitating export and import activities, and ensuring SMEs receive the necessary financial support. Absa also places a strong emphasis on equitable access to financial services, ensuring that individuals and businesses can access affordable products tailored to their needs and goals. We have invested in digital platforms like Trade Management Online (TMO), which simplifies the process of doing business for SMEs.
With presence in 16 countries worldwide, our extensive Absa Group network is a significant asset we offer to our clients, enabling them to create connections and access opportunities throughout Africa and beyond.
SUSTAINABILITY
“The Absa Group has a strong ESG agenda”
With sustainability being a key global focus, what is Absa’s strategy for promoting sustainable finance initiatives?
In today's global landscape, there is an increasing expectation for banks to champion sustainable businesses. Shareholders, regulators, and other stakeholders are urging financial institutions to prioritise financing industries and companies that emphasise sustainability.
While it is crucial for us to meet these expectations, we must also consider the unique context of our continent, where the concept of a 'just transition' is vital. A 'just transition' involves ensuring a balanced approach to sustainability by supporting essential industries in their transition to more sustainable practices, thus avoiding abrupt disruptions that could have negative on impact poverty alleviation and job creation.
We have set ambitious medium and long-term goals as part of our sustainability strategy, focused on being a responsible corporate citizen and guiding our clients through their own transitions. However, our role is not only to advise clients on sustainability, but also to fund the foundational changes they need to make in their transition. We also work closely with partners to co-create tailored financial and investment solutions, with sustainability as the end goal.
Our ambitious targets include reducing financed emissions by 50% by 2030 and disbursing Rs 30 billion in sustainable finance by the same year. Our focus areas encompass climate action—such as renewable energy, clean transportation, and green buildings—and financial inclusion, particularly for young entrepreneurs, women, SMEs, digital businesses, and affordable housing. Our commitment to continuous improvement is evident in our achievements; for instance, in 2023, we doubled our sustainable financing asset book compared to the previous year.
Absa Mauritius is fully aligned with Absa Group’s robust ESG agenda, and our initiatives are designed to support the nation’s goals and aspirations, and demonstrate leadership in driving sustainable growth across Africa.
How do you ensure that clients receiving finance or investment services from Absa are meeting their own sustainability commitments?
We support our clients’ sustainability efforts through two main approaches: education and tailored financing solutions. Many of our clients in industries like textiles and hospitality face increasing pressure to meet emission targets and sustainability standards set by their buyers or guests. We ensure that these clients understand global sustainability trends and what steps they can take to align with them. We have in-house specialists who work closely with clients to design actionable plans, and we fund the necessary solutions to help them achieve their goals.
For retail clients, we offer competitive rates on financing to encourage sustainable choices, such as switching to electric or hybrid vehicles. We also provide unsecured loans for green projects, enabling clients to invest in renewable energy installations, like photovoltaic panels and solar water heaters.
Our approach is partnership-driven; by working alongside DFIs, we will be better equipped to track and improve our sustainability outcomes, ensuring that our clients, and our bank meet their sustainability commitments effectively.
What long-term impact does Absa hope to achieve through its sustainability efforts in Mauritius and across the continent?
By investing in sustainable finance projects, Absa Mauritius seeks to enhance climate resilience and adaptation, particularly in vulnerable sectors like hospitality and agriculture. This includes supporting initiatives that mitigate the effects of climate change, such as flooding and beach erosion. The bank focuses on supporting women entrepreneurs, and SMEs. By providing access to finance and capacity-building resources, Absa Mauritius aims to foster inclusive growth and reduce poverty.
As a bank, we lead by example. We have launched green initiatives such as solar-powered ATMs and a fully green charging station for our customers and employees. Through these efforts, we not only support our clients’ sustainability journeys, but also showcase our commitment to sustainable practices.
As a leading financial institution, Absa Mauritius seeks to drive sustainable progress, create meaningful impact, and contribute to a more resilient and prosperous future for Mauritius and the broader African continent.
OUTLOOK
“Enhancing Mauritius’s appeal as a safe and efficient investment platform”
As we move towards 2025, what are your expectations for the economic recovery in Mauritius, and what sectors do you foresee leading this recovery?
The IMF has revised its growth expectations, projecting a rate of around 6% for 2024, while the World Bank estimates a slightly lower growth of approximately 5.6%. As we approach 2025, the economic recovery in Mauritius is expected to continue, albeit at a slower pace compared to the rapid rebound seen in the past few years. Over the medium term, growth is expected to moderate to around 3.5% to 4%.
Several key sectors will continue to drive this growth: tourism will play a significant role, alongside construction, which will include both government-led infrastructure projects and private, company-led developments in housing and other areas. The financial services sector is poised to grow at a faster pace than the broader economy, largely due to its international focus. The ICT sector is also set for significant growth, fueled by ongoing digitalisation and innovation. This sector will be essential for better economic diversification and generating high-value employment opportunities. Future growth is also likely be driven by the emergence of new export-oriented sectors. Banks will play a pivotal role in driving growth by supporting emergent sectors in achieving their potential.
However, there are some downside risks which include amongst others, geopolitical and trade tensions which could lead to disruptions in supply chains, the rupee depreciation and foreign currency shortages, resulting in persistent inflation. Our vulnerability to climate change as a small island nation, as well as tightening labour market conditions with sharp increases in the minimum wage and labour shortages amidst an aging population, also remain among key concerns.
As I mentioned previously, there are also fundamental areas where we need to proceed with caution to ensure balanced growth. In particular, public debt is an area that requires careful management, along with addressing the commercial deficit in our balance of payments. These are crucial for maintaining economic stability and should be priorities moving forward. Greater economic diversification will also be crucial to enhance Mauritius’s resilience to exogenous shocks and achieve sustainable and inclusive growth for a more equitable society.
What are your expectations concerning inflation?
Globally, inflationary pressures are starting to ease, particularly in developed countries, largely due to aggressive monetary policy measures. In Mauritius, inflation has been on a downward trend. The Bank of Mauritius projects that inflation will be within their target range of 2% to 5% by the end of 2024 and remain relatively contained and stable during the medium term. The IMF forecasts an inflation rate of around 3.5% in 2024 and 2025, with similar projections from Moody’s for 2024, though the latter warns of the risk of a potential rise to 5% in 2025.
Locally, the easing of inflationary pressures is a positive sign, but it's important to remain vigilant about potential risks such as currency depreciation and external economic shocks; as a country that imports most of its goods, Mauritius is highly affected by global market trends and global price volatilities. It is essential to keep inflation in check to maintain economic stability, and monetary policy will play an increasingly important role in this effort. Additionally, addressing the depreciation of the rupee will be key to stabilising inflation in the long term.
Moreover, long-term strategies are also needed to further diversify the economy, improve productivity, and enhance competitiveness to reduce our reliance on imports.
How do you see Mauritius evolving as a financial hub over the next decade, particularly with increasing competition from other African and Asian markets?
While Mauritius has long been recognised as a gateway for investment into India, we have in recent years also made significant headways in becoming a pivotal hub for investment flows into Africa. Mauritius boasts a strong legal and regulatory framework, being the only jurisdiction in Africa fully compliant with all 40 Financial Action Task Force (FATF) recommendations and holding an investment-grade rating. Leveraging on these strengths, Mauritius is well-positioned to act as an investment funnel for Asia and the Middle East towards the African continent.
With a proactive approach to sustainable finance and the implementation of an enabling regulatory framework, Mauritius is strategically positioning itself as a leader in sustainable finance and impact investment, aligning with global trends towards responsible investing. This presents opportunities for banks to develop green financing and investment products which cater to the needs of environmentally conscious investors.
Leveraging its skilled workforce and technological infrastructure, Mauritius can also carve a niche in artificial intelligence and data analytics for financial services, establishing itself as the Fintech hub for the region. The introduction of the Virtual Asset and Initial Token Offering Services (VAITOS) Act and the Variable Capital Company (VCC) have paved the way for progress in this area.
There is also a growing interest for Africans to structure their wealth out of Mauritius. Leveraging on its mature banking industry, one of the most sophisticated in Africa, Mauritius can deepen and broaden its already strong value proposition to establish itself as a preferred wealth and private banking destination for affluent Africans.
At Absa Mauritius, we are focused on establishing our bank as a premier destination for high-net-worth individuals, particularly those seeking entry into African markets. While many investors currently look to Dubai, we aim to enhance our appeal not only as an investment location, but also as a vibrant place where talented professionals can live, work, and manage their wealth.
Though the Mauritius IFC is well-positioned to continue its growth, there are some challenges we need to address to solidify our position as a leading financial hub in the region. A primary challenge lies in attracting and retaining skilled professionals, especially in areas like Data Science and Analytics, as well as Anti-Money Laundering (AML) and Countering the Financing of Terrorism (CFT). Creating an attractive environment for fintech firms also involves attracting talent and building platforms to support fintech growth. In parallel, with the increasing volume of financial flows, cybersecurity must be a top priority for all players to maintain customer trust and credibility of the jurisdiction.
In your view, what major global trends—such as digitalization or regulatory changes—will have the greatest impact on the international banking landscape over the next five years?
As we look to the future, several major global trends are set to redefine the international banking landscape and will require banks to be agile, innovative, and resilient in order to thrive.
The rapid pace of digitalisation will continue to transform banking operations, while enhancing customer experience will remain a top priority. Banks that prioritise customer-centric strategies will be able to build stronger relationships and drive customer loyalty. Technologies such as artificial intelligence (AI), blockchain, and cloud computing are not only enhancing efficiency, but also revolutionising customer experiences.
AI, for instance, is enabling banks to offer personalised services through advanced data analytics, while blockchain is improving the security and transparency of transactions. Cloud computing, on the other hand, is providing scalable solutions that reduce costs and increase operational flexibility. The rise of fintech companies will also continue to disrupt traditional banking models, but strategic partnerships with these fintech firms will be crucial for banks to access new cutting-edge technologies and customer segments.
Cryptocurrencies are also emerging as a significant force in the financial sector, challenging traditional banking systems and monetary policies. While cryptocurrency as a payment solution may take time to gain widespread trust and adoption, it is essential to consider its future implications. The main challenge will be how regulators choose to adopt and integrate it. In Mauritius, we might not be at the forefront of cryptocurrency innovation, but we can position ourselves as agile followers, ready to adapt once larger economies have tested, refined, and regulated it.
The regulatory landscape will continue to evolve, with significant implications for the banking sector. Key areas of focus include data privacy, anti-money laundering (AML), and environmental, social, and governance (ESG) standards. Compliance with these regulations is crucial for maintaining customer trust. Regulatory Technology will be key in helping banks manage regulatory compliance more efficiently and cost-effectively.
All these technological advancements and broader trends are also transforming the workforce. As new skills become essential, talent strategy is becoming an increasingly important focus and will require bank leaders to rethink and adapt their workforce planning.
