One of them is notorious for being Africa’s biggest tax haven, the continent’s Cayman Islands, spitefully regarded by global tax fraud investigators. The other is a landlocked South African country with a rapidly growing GDP; in fact, in 2015, Botswana was Africa’s largest GDP. It is also dealing with a nasty HIV/AIDS crisis, the third highest prevalence in the world, despite its 2.2 million population.
Global Credit Ratings (GCR) the organization that rates countries based on credit coefficients, among other criteria, is well disposed to both these nations. It has rated Mauritius and Botswana Africa’s least risky economies, with a risk score of 9.25 and 9 respectively. GCR conducted a close survey of 28 countries globally. Both countries were praised for “strong institutional scores,” and “strong fiscal positions.”
Other high-performing countries are South Africa with 7.5, while Namibia and Cote d’Ivoire recorded 5.75 and 5 respectively. Kenya and Rwanda maintained positive positions at 4.5 and 4.25 respectively. Ebola and Malaria-torn Democratic Republic of Congo recorded 0.5 score, while cash-strapped Zimbabwe and conflict-ridden South Sudan shared the bottom with 0 risk score.
Interestingly, eight of the best performing countries are in the top ten freest economies in Africa. As of 2017, eight of the best performing countries are in the first eight in Transparency International’s least corrupt nations’ index. Ironically, seven of those best performing African countries are also seven of nine identified by the Corporate Tax Haven Index (CTHI) as notorious African outlets for global tax evasion. According to CTHI, Mauritius, Botswana, South Africa, Ghana, Gambia, Kenya, Tanzania, Liberia, and Seychelles are nations where multinationals go to hide their monies to avoid government taxation in their countries of operation. It is not hard to connect low risks with high foreign investment.
Meanwhile, Mauritius’s decision to tighten requirements for tax residency qualification, the single policy that once made it an attractive tax haven, has left many foreign companies grappling with a new reality. Mauritius’s new rules will not consider any company managed from outside Mauritius as eligible for tax residency, a policy that could force many companies to rejig their operational bases.
The Mauritius economy is expected to grow by 4.1 percent this year. Its economy is heavily reliant on textile, sugar, and financial services. Botswana, on the other hand, is home to the regional headquarters of many international companies, and it relies on the mineral sector for more than forty percent of its revenue. Its Orapa mine is reportedly the largest diamond mine in the world.
By Caleb Ajinomoh
The post Mauritius and Botswana are Africa’s least risky economies appeared first on Ventures Africa.
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