Mauritius must take advantage of the opportunities in sub-Saharan Africa

November 12, 2021

He took the helm of Bank One at a time when Mauritius was in lockdown and the outlook for the Mauritian economy was bleak. Mark Watkinson, an international banker who has worked across the globe, looks back on a challenging period when it was necessary to reassure staff and customers and put in place a coherent strategy to get through the crisis. In the interview that follows, he draws a parallel between the current crisis and the one in 2008, while emphasising the need for the financial services industry to embrace the tremendous growth opportunities in sub-Saharan Africa.

1. Mr. Watkinson you had a long career with HSBC during which you lived and worked in ten different countries in Asia, the Middle East, Europe and North America. What brought you to Mauritius and Bank One?

Yes, I was very fortunate to spend over 30 very good years with HSBC. I joined at a time when HSBC was expanding from a regional Asian bank with 25,000 employees to a global bank with over 300,000 colleagues. It was a very exciting time and I was privileged to work in some amazing countries.

When I retired from HSBC, I was not ready to stop. Far from it. I was very keen for another adventure. I had passed through Mauritius some 15 years earlier and it left a very positive impression on me. The financial services sector and the island seemed to have great ambition. My positive impression of Mauritius coupled with what I was hearing about the enormous change underway in sub-Saharan Africa, meant that, when I was approached to join Bank One, I jumped at the opportunity. With a firm base in Mauritius and two strong shareholders, CIEL and I&M, who have a significant presence in sub-Saharan Africa, Bank One seemed ideally positioned to take advantage of one of the most extraordinary transformations underway anywhere in the world. Sub-Saharan Africa currently has a population of just over a billion people. This figure is forecast to double over the next 30 years to 2 billion people and further increase to 3 billion by the end of the century. The story for Bank One and for Mauritius is how do we play our part in the huge change that is taking part in our neighbourhood.

2. You arrived in February last year and took over as CEO in April. The country was then in its first lockdown, markets were tumbling and the future was not promising. What were your thoughts at the time and what were your priorities?

Yes, I would describe it as an interesting time to start!

In such circumstances, my first thoughts were are about the team and our customers. How are we going to protect our staff and how can we best continue to serve our customers? It was a very challenging time indeed for all banks. I have to say, however, that the Bank of Mauritius and the Mauritius Bankers Association were exceptional. The level of co-operation and communication is not something that I have seen in other countries and it certainly played a huge part in helping the banks in Mauritius successfully navigate the crisis.

As soon as the crisis hit we triggered the Bank One Crisis Management Team and used this as a base for all our decisions and actions. We established communication channels with our staff, customers and regulators, introduced health protocols and looked at innovative ways to serve our customers. The pandemic has fired a very significant change to the way we serve our customers and how they access our services. Digital processes and propositions are now a driving force in the financial services industry and will change the face of banking over the coming years.

As an example, Bank One recently launched its new mobile payment application “POP” off the back of the Bank of Mauritius’ Instant Payment System. POP will allow customers, no matter which bank in Mauritius they use, to make instant payments across the domestic banking sector. This is the beginning of a payments revolution in the country.

3. What parallels would you draw between the 2008 economic crisis and the 2020/21 global pandemic? Are there similarities?

While I don’t pretend to be an economist, the fascinating thing about the two crises is that while they would appear to have started at different ends of a spectrum, one triggered by structural problems in the US and the other by a global pandemic, there have been strong similarities in the ultimate outcome with revenues collapsing, confidence falling sharply and unemployment spiking. Again, both crises forced governments around the world to undertake extraordinary actions and very significant interventions.

Where, however, the two crises diverge is with respect to the impact on banks. While both crises have tested the metal of a huge number of financial institutions across the world, the fact remains that as a result of regulatory intervention over the years following the 2008 financial crisis, banks are now in a much better position, particularly with respect to rules around capital and liquidity, to weather the storm.

4. Mauritius exited the FATF grey list recently. Will this have an immediate impact on cross border investments channelled through the Mauritian financial sector?

Being on the FATF grey list has been a tough experience for Mauritius. However the Bank of Mauritius and the business community have done an excellent job to identify the gaps and address short comings. I think that I am right in saying that Mauritius’ exit from the grey list is one of the fastest ever recorded and this is a tribute to the hard work undertaken.

The actual impact of being on the grey list is more difficult to measure. To a large extent, overseas foreign currency clearers have been supportive of the jurisdiction and so the number of rejected international payments for compliance reasons would appear to have been limited. What is more difficult to measure, however, is the loss of investment opportunities. The input from management companies across the island suggest that existing customers have remained on the island but customers with new structures have chosen other jurisdictions. It is very much hoped that with Mauritius’ strong showing in coming off the grey list quickly customers will return.

It remains extremely important for Mauritius and in particular for the jurisdiction’s long-term brand as an International Financial Centre to keep its guard up and to ensure that it remains off the FATF grey list.

5. At the start of our discussion you mentioned that that the opportunity with respect to Sub Saharan Africa had attracted you to Bank One. What opportunities does Sub Saharan Africa present for the country as a whole and for banks in Mauritius?

As I mentioned a little earlier, there is enormous demographic change underway in sub-Saharan Africa. However, in many other countries and regions there will be significant population decline over the coming decades. This will have a material impact on national growth rates. As Mauritius has an aging population, it too will be impacted.

Across the water, however, sub-Saharan African countries are expected to see very large population rises. While it sounds incredible, in the next 75 years, I have seen projections where Nigeria will have a larger population than China and be second only to India. Even if these projections prove to be only 50% accurate, the fact remains that something extraordinary is taking place in our region. This presents Mauritius with a huge opportunity.

The island has a stable democracy, solid financial markets and its legal system has a strong reputation. These are excellent factors on which to build. The question, however, is how do we identify the opportunities and manage the risks carefully. The change ahead can be the basis for long-term growth on the island. Our businesses need to see how they can add value in sub-Saharan Africa and build a reputation for excellence.

The future, however, is not without its challenges and two countries in particular, Rwanda and Kenya, are actively looking to build out their international financial centre propositions.

Bank One is very focused on the sub-Saharan African opportunity. We intend to leverage our Mauritian base and work closely with our shareholders that have banks in Kenya, Rwanda, Uganda, Tanzania and Madagascar. By working together we intend to support our Mauritian customers, expand their operations in sub-Saharan Africa and bring new business home and, at the same time, grow our clients on the Continent itself.

6. What can Mauritius do to leverage the Sub Saharan African opportunity?

As I have mentioned, Mauritius has a number of key factors in its favour. These need to be carefully nurtured and built upon as they provide the island with a clear competitive advantage and differentiation.

There are a number of possible focus areas (drawing on the Dubai and Singapore play books) that will allow Mauritius to maximise its opportunities over the coming years. These include:

• Improving the island’s connectivity to sub-Saharan Africa. This mainly relates to air access. The ability to serve the main commercial centres of sub-Saharan Africa (both East and West) is vital for long-term growth. This is certainly a lesson learned by both Dubai and Singapore. The benefits of improving accessibility is likely to have a huge positive impact on two way commercial flows as well as allowing the Mauritian tourist sector to capture a greater share of the rising mass affluent population in sub-Saharan Africa.

Coupled with air access is the opportunity to become a major regional shipping hub. Again, as shown by Dubai and Singapore, the ambition is to go beyond just a trans-shipment hub and aim to become a cargo breakpoint and value-add centre. The profitability generated, not to mention the jobs created, by adding value to goods passing through Mauritius is a multiple of just moving containers from one ship to another.

• Developing a network of business promotion centres in sub-Saharan Africa. As I often say to my team “you do business with people you know and you like.” There is a huge opportunity to develop connections and to tell Mauritius’ story in sub-Saharan Africa. The work done by the Hong Kong Trade and Develop Council (HKTDC) provides an interesting model. The HKTDC operates 50 overseas offices, including 13 in China. The opportunity exists for the business community to work with government in order to provide the people and expertise and possible shared funding for a proposition similar to HKTDC offices.

• Building a leading regional skills hub. In order to access and to make the most of the new sub-Saharan African markets, there is a need to develop the skills base to do business in Africa. Mauritius is fortunate that it has a very positive reputation in the region and can attract top talent to the island. There is an opportunity to build on this potential so that Mauritius becomes a genuine regional skills hub and a location to which other African countries look for excellence. Attracting and welcoming talent (as well as developing national resources) will be a key ingredient for future success. Singapore has done an excellent job in this respect by attracting top students to the country as well as investors and business leaders. In Mauritius, the African Leadership University is a very interesting initiative and has the potential to greatly increase the island’s influence beyond its shores.

7. What does the future look like for Bank One and your team?

The future certainly looks exciting for Bank One and over the next several years our focus will be on:

• The build-out of our sub-Saharan African regional franchise by leveraging our shareholders network in Africa. The key presence of CIEL and I&M there provides us with a unique competitive advantage as a local bank in Mauritius.

• The continued development of our Mauritian business (new products and services, enhanced digital and data capabilities) to serve better our customers on the island and across sub-Saharan Africa.

• The enhancement of our people proposition to provide development opportunities across our shareholder network in sub-Saharan Africa and to create a genuinely multicultural organisation capable of bringing value across the region.

• Promoting Mauritius as a regional partner and a great place in which to do business.

While Covid has challenged both the island and the broader world over the last two years and we continue to feel the tail end impact of the pandemic, there is a genuine sense with the island opening in October of new possibilities. Mauritius has some incredibly exciting opportunities ahead and Bank One and its shareholders, CIEL and I&M, are focused on playing an important part in the island’s future.