What fuels Mauritius’ rise to top magnet for millionaires in Africa

Mauritius has emerged as an attractive hot spot for millionaires in Africa in the past decade, with Kenya at fifth position, the Africa 2016 Wealth Report has revealed.

The report, which reviewed the fastest growing African countries for millionaires between 2007 and 2015, says the rise of millionaires in Mauritius has been driven by strong economic growth, secure ownership rights and a large number of wealthy individuals having moved into the country over the past decade.

“We estimate that 240 millionaires have moved to Mauritius from South Africa alone since 2007. It has become a major retirement destination because of low taxes which encourage business and appeal to retirees,” the report states.

“Mauritius was the top performing African country for millionaires during this period, with growth of 160 per cent. Ethiopia also performed well, with growth of 130 per cent,” says the report which tracked millionaire growth.

According to the report released on Friday, an investor friendly environment also makes Mauritius an attractive hot spot for millionaires. 

“Company and personal income tax rates are only 15 per cent, with no inheritance or capital gains tax,” adds the report.

“Mauritius exerts low level of government regulation in the business sector when compared with nearby countries such as South Africa, which has exchange controls and high taxes,” says the report.

It adds: “A thriving and growing financial services sector particularly in offshore banking and low crime rate have also been cited as factors fuelling Mauritius’ rise as a magnet for millionaires.”

Experts say Mauritius’ attraction as a hub for millionaires has a lot to do with its conducive investment policies.

“A combination of conducive investment policies, a sophisticated banking sector and low taxes have made Mauritius the destination of choice,” says Rich Management chief executive officer Aly Khan Satchu.

TAX HAVEN

Mauritius has, however, often sought to shed the tag of a tax haven where the rich — including those from Kenya — are said to hide their vast wealth.

Tax campaigners have increasingly expressed concern about how Mauritius is used by big businesses with interests in Africa.

A tax haven is a state or territory where taxes are levied at a low or non-existent rate.

Benefiting from secretive financial regimens, companies and wealthy individuals can use these nations to store money and move it across borders without paying any tax.

In Mauritius, for instance, investors earn automatic citizenship if they buy a Sh50 million plus ($500,000) home, says the report.

Experts say the rising fortunes of Ethiopia have not come as a surprise.

Ethiopia, located at the heart and centre of eastern African region, has in recent weeks been enjoying rapid economic expansion from liberal economic policies that embrace foreign investment in virtually all areas.

“Millionaires” or “high net worth individuals” refer to individuals with net assets of Sh100 million ($1 million) or more. Cote d’Ivoire, in the report, reported the fourth largest number of growth of millionaires at 70 per cent, while Kenya was fifth at 60 per cent.

Meanwhile, Gabon at 50 per cent, Namibia at 35 per cent, and Botswana at 35 per cent came in at positions 6, 7 and 8, respectively.

Nigeria at 10 per cent tied with South Africa at position 9 while Egypt and Morocco follow at position 10.

According to the 2016 Knight Frank Wealth Report, the number of dollar millionaires in Kenya rose from 8,760 in 2014 to 8,962 in 2015.

The Africa 2016 Wealth Report detailed the performance of millionaires in selected African countries between the end of 2007 (the peak before the financial crisis) and the end of 2015.