With the news that Nigeria is officially Africa’s largest economy, South Africans are taking a renewed interest in their neighbours to the north. For a long time, South Africans had a sense of superiority – we thought we were doing a better job than our African peers, and that there was nothing to learn from them. But now, as growth throughout the continent outpaces SA’s, we are more willing to consider that our African neighbours can teach us a thing or too. In this interview, for example, Magnus Heystek talks about the island state of Mauritius and its pro-business, pro-growth regulatory environment. Mauritius has focused on things like reducing red tape and encouraging foreign investment, and this strategy has paid off – Mauritius has grown at an average of about 4.3% a year since 2007, a period that includes the great recession. South Africa – which grew by an average of 2.8% a year in the same period – could certainly benefit from some of Mauritius’s pro-business magic. – FD
ALEC HOGG: Making an investment in Africa could be considered to be difficult with factors like political instability and economic uncertainty but not so, it seems, in Mauritius. Joining us now to tell us more, is Magnus Heystek from Brenthurst Wealth. Magnus, let’s go back a little bit. You were the man who discovered Dainfern. You made many people a lot of money. In fact, I thought they were going to make you Mayor for life in Dainfern. I know you’ve looked at Mauritius recently. As an investment destination, does it get back to the opportunities of that early Dainfern?
MAGNUS HEYSTEK: Well yes, good afternoon, Alec. It may be the same story. I’ve been going to Mauritius for 20 years; firstly, on a couple of honeymoons secondly, I started buying property. I’ve observed how Mauritius has grown from a single-commodity country, which was sugar, into tourism, financial services, and property development. It is now a hub for international trade and it’s quite remarkable. South Africa can learn many lessons from Mauritius.
GUGULETHU MFUPHI: Such as…
MAGNUS HEYSTEK: For example, in terms of making it easy for businessmen to set up business structures. In Mauritius, they actually apologise to you after three days if you want to register a company. They actually phone you up and say ‘we apologise, so within three to five days, you can be set up and running whatever you want to do.
ALEC HOGG: Similar to Singapore, in a way.
MAGNUS HEYSTEK: It’s very much like Singapore. I don’t know Singapore that well, but I’ve been there.
ALEC HOGG: It’s business focused.
MAGNUS HEYSTEK: Its very business focused. They welcome entrepreneurs. They welcome capitalists to set up structures. That’s why it’s grown rapidly over the last ten years. It’s also done very well on the corporate governance front. It’s the most – in terms of the Mo Ibrahim index – the most corruption-free… There is corruption, but as far as Africa is concerned – number one on anti-corruption, number one on ease of doing business, and something that I read yesterday, it’s the safest country in Africa, safer in many respects, than the United Kingdom, Spain etcetera. The crime rate is extremely low. No one has guns. They don’t hijack cars in Mauritius, because where do you go with a car?
ALEC HOGG: That’s true.
MAGNUS HEYSTEK: They therefore welcome many businessmen, including people from South Africa.
ALEC HOGG: But from your perspective, have you made investments there?
MAGNUS HEYSTEK: I have indeed. I bought property and I’m extremely happy. It’s developed by South Africans – it’s a place called West Island. They come from South Africa. You actually go there…I joke that you’re standing around a braai on a Saturday afternoon waiting for the rugby game to come on board, you’re speaking Afrikaans to your neighbours, and you’re in Mauritius. Half of the place is owned by South Africans: South African farmers, businessmen, people who just want to have a foothold in another country, which is close by. They speak English and drive on the left-hand side of the road, so it’s really gaining a lot of traction, not only for South Africans, but also for many people in Africa.
ALEC HOGG: We had a guest earlier in the week, Barry Harwood from HKLM, who was also telling us about the welcoming approach to South African businessmen – because he is one – from Nigeria. I just want to get a sense from you… Mauritius, as you say, has open arms to South Africa. Nigeria – Barry was saying a similar thing. Often, in South Africa, businessmen feel a little bit threatened, a little bit under the cosh.
MAGNUS HEYSTEK: Well, we’ve read many reports from South Africa, top businessmen coming from abroad who want to join a big company, Home Affairs makes it extremely difficult for him to get a work permit, and it takes months. There’s a totally different kind of feeling in Mauritius. They actually welcome you. They want you there, they bend over backwards, and we really have to learn lessons from them. It’s a small country – 1.2 million people – it’s not bigger than Boksburg to Krugersdorp, but boy, they’re doing the right things.
GUGULETHU MFUPHI: Are South African corporates missing the boat, or is the time right for us to take opportunities there?
MAGNUS HEYSTEK: There are a number of South African companies. If you go to their waterfront for instance, in Port Louis, and their new buildings, you go into the foyer downstairs and look at the names of South African companies, and you’ll recognise them all. Prominent names: Sanlam, Woolworths, Allan Gray, property development companies, growth points, Shoprite, and Pick & Pay. All those companies are there. They’re extremely active in Mauritius. Firstly, to invest in Mauritius…the largest shopping centre in Mauritius is Bagatelle, developed by the Atterbury people – Attacq. You have the Pick & Pay up the road. You have Shoprite up the road. You have Pam Golding on every second corner. It actually feels like a little province of South Africa.
ALEC HOGG: Is there any antagonism yet, given the fact that there are so many South African business going in there?
MAGNUS HEYSTEK: There might be. There might be a little bit of a chafing that we’re coming into their space and coming with new ideas, but people don’t complain about it. The Mauritians are very much a peace loving country, and not aggressive like other countries. You spoke about Australia just now…they’re not at all like that. There’s a great feeling of ‘please come. We need your capital. We need your money. Come and set up in this country’. The double taxation agreement, which they’ve signed with many countries in Africa, make it extremely easy and very attractive to use Mauritius as a trading base to trade into Africa and trade into India. Again, that’s something we can learn from them. There’s no exchange control. There’s none of this petty paperwork if you want to send $10,000.00 from one account to another account. They just don’t ask those questions. It’s not an issue for them. I’m doing extremely well and it’s a very peaceful country.
GUGULETHU MFUPHI: Is this maybe another wakeup call for South Africa after we lost our number one position on the continent?
MAGNUS HEYSTEK: Well, normally when you lose your ranking, you say the rankings don’t count, but of course, they count. We got a big wakeup call. We’re not the number one dog on the continent anymore and we have to really pull our socks up to make South Africa a very attractive destination. One gets the impression from several pieces of legislation going through Parliament, that the foreigners don’t like it. They don’t like the uncertainty about mineral rights, the uncertainty relating to the oil and gas rights, the obstacles put in the place such as the scrapping of the bilateral agreements with many countries in Europe. Off-camera/off the record, the businessmen say ‘we don’t like it’. When you chat to someone for example, from Colgate or Palmolive, he comes and says ‘we don’t like what we see. We’ll rather go to another country’. We had BMW saying ‘we’re not going to expand our production’, Nissan saying ‘we’re rather going to cars in (I think) Ghana instead of South Africa’. Those are the dangerous things. We don’t know what we’re losing out on, it’s not front-page news, they don’t put out a press statement…they just disappear.
ALEC HOGG: The way it’s being spun amongst the politicians – you might have seen Gwede Mantashe was talking yesterday – ‘well, South Africa has one-third the population of Nigeria’. We did some numbers. In 1994, South Africa’s economy was five times the size of Nigeria’s and now Nigeria is bigger. If you want to talk population-wise, the United States has one-third the population and five times the economy of India, so you shouldn’t be looking at those kinds of… I guess, as you say, ‘well, rankings don’t matter’. Of course, they matter. I heard on CNBC the day before yesterday, someone saying ‘who’s now going to represent Africa on the G20’ – Nigeria.
MAGNUS HEYSTEK: It’s a good question.
ALEC HOGG: More people and a bigger economy. Why should South Africa have that spot? There are many of these issues coming up, but Mauritius is as you say quietly making its progress, as well.
MAGNUS HEYSTEK: Indeed. What about the BRICS? We became part of BRICS because we were the biggest economy. Are we going to fall out of that loose grouping of countries?
ALEC HOGG: Well fortunately, it’s BRICS and BRICN. Hopefully, for the moment, we’ll keep that one.
MAGNUS HEYSTEK: Or, as they say, there is BRICS and South Africa.
GUGULETHU MFUPHI: Exactly. Magnus, thank you so much for your time today.
