CLA News / Mauritius IFC: Specialised Licences as the Next Frontier for Africa-Focused Funds by Assadullah Durbarry, Barrister-at-Law (Australia and Mauritius)

Why Mauritius Gets It Right for Africa

Fund managers considering Africa-focused vehicles typically evaluate a range of established jurisdictions. Having examined the legal and regulatory frameworks of the principal fund domiciles, my view is that Mauritius presents one of the most effective platforms for structuring and administering investments into Africa.

The reasons are rooted in the way Mauritius has developed its international financial services sector. Over several decades, Mauritius has tailored its legal and regulatory framework to facilitate cross-border investment into emerging and frontier markets, particularly across Africa. Its geographic proximity, longstanding commercial relationships and deep engagement with African economies provide a level of familiarity with the continent’s investment landscape that is difficult to replicate elsewhere.. As a member of the African Union, COMESA, and SADC, and as a State Party to the African Continental Free Trade Area, Mauritius is institutionally embedded within the African economic architecture in a manner that neither Luxembourg nor Dubai can replicate.

This institutional embeddedness has practical consequences. The India-Mauritius Comprehensive Economic Cooperation and Partnership Agreement (CECPA), which entered into force on 1 April 2021, marked India’s first trade agreement with an African nation. Similarly, the China-Mauritius Free Trade Agreement, effective from 1 January 2021, represents China’s first FTA with an African country. These agreements position Mauritius as a unique conduit for Asian capital seeking African opportunities.

The Regulatory Framework That Actually Works

Mauritius’ investment funds regime is principally governed by the Financial Services Act 2007 and the Securities Act 2005, under the supervision of the Financial Services Commission (FSC). The framework supports the full spectrum of fund operations – management, administration, dealing, and advisory – through specialised licences including CIS Manager, Investment Adviser, and fund authorisations for Collective Investment Schemes (CIS) and Closed-End Funds (CEF), and special categorisation of funds such as Professional CIS and Expert Funds.

Critically, market discussions often overlook Mauritius’s regulatory credibility. The jurisdiction maintains full FATF compliance and robust KYC policies that meet institutional investor standards. The FSC approaches applications pragmatically, with clear and achievable substance requirements that do not impose the prohibitive cost structures associated with European domiciles.

The substance requirements introduced in 2019 mandate that global business companies maintain  appropriate decision-making processes,, employ qualified personnel, and incur proportionate expenditure in Mauritius. These requirements, far from being burdensome, have strengthened the jurisdiction’s credibility by ensuring that Mauritius-based structures serve genuine commercial purposes rather than functioning as mere conduits.

Competitive Figures at a Glance

Click on link to download the table of figures

*Note: Cost estimates are indicative and vary significantly based on fund complexity, service provider selection, and whether services are outsourced or in-house.

The Economics Are Compelling

Mauritius provides a 15% corporate income tax rate with an 80% partial exemption on prescribed income categories, effectively creating a competitive tax environment when substance requirements are met. Interest income earned by funds benefits from a 95% partial exemption. The Corporate Climate Responsibility Levy applies at 2% (or 0.4% where income is subject to the 80% partial exemption) for entities with turnover exceeding MUR 50 million.

The treaty network provides the decisive advantage. Mauritius has secured 24 African double tax treaties – more than DIFC (20) or Luxembourg (12) – including critical markets like Nigeria, Kenya, Ghana, and South Africa. These treaties provide tangible withholding tax reductions and capital gains exemptions that flow directly to limited partner returns.

For private equity managers, the absence of capital gains tax in Mauritius is particularly significant. Returns from portfolio company exits – typically the primary source of carried interest and LP distributions – flow through without local taxation, subject to compliance with applicable substance requirements and treaty conditions. This compares favourably with Luxembourg, where funds benefit from participation exemptions but non-fund structures face a 24% corporate rate.

Why I Recommend Mauritius

When colleagues ask me off the record where to domicile an Africa fund, I recommend Mauritius without hesitation. The jurisdiction combines international compliance standards with practical accessibility. It offers experienced service providers, bilingual capabilities in English and French (essential for operating across Anglophone and Francophone Africa), a common law legal system, and a time zone that enables real-time coordination across African, European, and Asian markets.

Mauritius has earned institutional credibility. Over a thousand registered funds managing more than USD 80 billion in assets – including significant participation from development finance institutions and sovereign wealth funds – demonstrate proven acceptance at the highest levels of the investment community.

The dispute resolution infrastructure further reinforces this credibility. Mauritius acceded to the ICSID Convention in 1969, providing access to international arbitration for investor-state disputes. The jurisdiction has also developed a sophisticated arbitration framework through the International Arbitration Act 2008 and the presence of the Mauritius International Arbitration Centre (MIAC), which promotes Mauritius as a neutral and arbitration-friendly venue for the resolution of cross-border commercial disputes. For fund managers concerned about enforcement and investment risk, these mechanisms provide a valuable degree of legal certainty and protection.

Beyond legal certainty and investor protection, Mauritius has also continued to innovate its fund structuring offerings. One of the most significant recent developments has been the introduction of the Variable Capital Company (VCC) regime under the Variable Capital Companies Act.

The VCC structure has gained particular traction among fund managers due to its flexibility. It permits the establishment of multiple sub-funds with segregated liability, ensuring that the assets and liabilities of each sub-fund remain ring-fenced from those of others. This structure will be familiar to international managers accustomed to Luxembourg SICAVs or Singapore’s VCC regime, thereby facilitating the establishment of multi-strategy and multi-investor platforms within a single legal vehicle.

The Bottom Line

DIFC excels for Middle East connectivity. Luxembourg dominates EU distribution. But for Africa-focused investment, Mauritius offers the optimal combination of treaty access, regulatory pragmatism, cost efficiency, and market familiarity – making it the logical foundation for sustainable, compliant fund operations.

As the African Continental Free Trade Area matures and cross-border investment within the continent accelerates, the demand for sophisticated, Africa-proximate fund platforms will only increase. Mauritius, with its established infrastructure, treaty network, and regulatory credibility, is well positioned to meet that demand.

The choice of fund domicile is ultimately a legal and commercial question that must be answered by reference to the fund’s specific investment mandate, target investor base, and operational requirements. For managers whose primary focus is African assets and who require a jurisdiction that understands emerging market realities, Mauritius provides the logical foundation for sustainable, compliant fund operations.

This article is for informational purposes only and does not constitute legal advice. Readers should consult qualified legal and tax advisers regarding their specific circumstances.

Author: Assadullah Durbarry

Barrister-at-Law (Australia and Mauritius)

Principal, Durbarry Chambers, Mauritius