SBM is the second-largest bank in Mauritius with a market share of about 25% of domestic banking assets, and an increasingly diversified network across Sub-Saharan Africa. Kee Chong Li Kwong Wing, Chairman of SBM Holdings, explains why the group’s is best positioned to handle business moving from Asia into Africa.
How is SBM is addressing contagion risks through its diversified operations and assets?
SBM’s exposure to the offshore sector is relatively limited and is managed adequately through the bank’s solid risk management framework. It is most important to track and monitor the source and uses of funds. The issue arises from the escalation in compliance costs diluting the profitability of the products and services around offshore banking. Hence, our group is bent on diversifying products and markets to consolidate its revenue base in the face of headwinds coming from the offshore sector.
How is innovation observable in the country’s implementation of emerging financial service technology?
Most innovations revolve around customers and profitability, and technology plays a major role in financial services. As regards customers, it is a combination of services and cost efficiency. Customer reach has now changed from a brick and mortar distribution model to a digital model. SBM is geared for this advancement through a robust technology platform that is dynamic to customer needs and has to be ahead of the competition. While keeping customer and business interests at the forefront, it is important to use technology for cost optimisation and higher profitability. More importantly, SBM uses technology for effective management of risks and compliance.
What principles of Mauritius’ banking ecosystem, currency and regulatory framework provide a distinctly competitive conduit for those looking to do business in Africa?
The government is keen to build Mauritius as the financial and investment hub of the Asia-Africa corridor, the two largest continents of the world. Suppliers of liquidity look for transparency and governance and to ensure smooth entry and easy exit. The banking and financial services regulations and their surveillance system has improved significantly from what it was a decade ago and the process for improving is on-going by taking lessons from the best practices of developed markets. Support and guidance from regulators in India and other developed markets have helped Mauritius to stay ahead of most countries in rest of Africa. This position helps Mauritius to attract global investors to set up investment vehicles here for onward investments into Africa.
What opportunities does the African Growth and Opportunity Act enable for those looking to make cross-border investments through Mauritian banks?
The African Growth and Opportunity Act (AGOA) offers Mauritius and other Sub Saharan countries duty-free and quota-free access to the United States for approximately 7,000 products. In addition to benefiting from AGOA, Asian investors wanting to set up bases in other African countries can structure their investments through Mauritius, thereby taking advantage of its strong legal and financial framework and its network of attractive Double Tax Treaties with African states.
How is the development of the banking sector being supported by Mauritius’ “Vision 2030” strategy?
The economic blueprint “Vision 2030” sets the tone for the development of several strategic pillars such as SMEs, ICT, real estate, and the ocean economy. In large economies, SMEs stay as support engines to large companies by adding value to the final output. In an open economy like Mauritius, the role of SMEs is limited as support to the few large conglomerates that dependent on imports and offshore markets. Therefore the need in Mauritius is to build the economy around SMEs for GDP upgrade and employment creation. The immediate agenda is to open up opportunities for SMEs of emerging markets to partner in JV with local entrepreneurs across manufacturing, trading and services. In the long run, dependence on imports for essential consumption has to be covered by exports from SME sector, especially in the regional African market.
What value does a Mauritian bank such as SBM present to Chinese investors looking to do business in Africa?
SBM is positioning itself as gateway for investors looking at emerging opportunities in Africa. SBM does have a suitcase banking presence in large countries of Africa. It is also partnering with Afrexim Bank to tap new opportunities in the continent. While SBM’s capability to support onshore opportunities in Mauritius is obvious due to its strong capital base and large size, we are working to upgrade capabilities in Africa through entry into East Africa by a recent acquisition of a Kenya Bank and further expansion afield. SBM will then be able to offer a safe, secure and attractive one-stop comprehensive service to Chinese business groups going into Africa.