60 second interview

Face to face | 23 February 2017

The State Bank of Mauritius is looking to its African neighbours for new trade finance business. Kee Chong Li Kwong Wing talks to TFR in Port Louis about progress so far

Sugar, tourism and financial services have been going well for Mauritius. How successful do you think it has been diversifying from sugar and textiles?

Diversification of the economic base has been quite successful. Today, sugar and textiles account for only 1% and 5.6% of GDP respectively as compared to around 25% some 30 years back. Tourism, financial services, BPO, professional services and ICT are driving growth and their share of GDP is continuously increasing, reaching around 28% in 2015. Our economy is moving from an agricultural, then industrialising to a services economy. 

Can you explain how trade preferences forced a change of direction and how SBM’s trade finance business adapted?

The loss of traditional markets due to erosion of relative trade preferences has forced Mauritius to explore markets other than in Europe and the US, towards Africa and Asia. Services, especially financial services, are playing a greater role and Mauritius is using its expertise and position to facilitate fund flows into Africa. 

SBM has a clear Africa focus and has a long-standing presence in India, which is why we are looking at flows between Africa and Asia. To this end, a specialised trade and investment team has been set up to focus on Africa flows. We are also working with African banks to participate at both primary and secondary levels in trade deals within the continent.

What other exports do you finance regularly?

Our exports financing would be focused on locally manufactured textiles and processed tuna. Regarding exports in agriculture, SBM is accompanying the Mauritian Sugar conglomerates and other agro-industrial enterprises in their regional expansion strategy with our balance sheet items products such as structured trade facilities and collateral management structures as well as off balance sheet items such as letters of credit (LCs) and forfaiting.

You commented that Mauritius is saturated for trade finance lending and is turning to sub-Saharan Africa for new business. How is this progressing?

I can say that we are going in the right direction and this can only gather momentum given our planned acquisition of a Kenyan bank. We are focusing on flows which target the main sectors in Africa, such as soft commodities, oil, gas, and property development.

The Bramer and BAI scandal resulted in impairments in 2015, how has your bank recovered from this and rebuilt liquidity?

Despite the large impairment due to the BAI scandal, but also other impairments in India, the group was resilient and still profitable in 2015. In 2016, the charges for impairment declined substantially, supporting our profitability. 

Throughout the period, SBM has remained strongly capitalised and highly liquid, so there was no issue in this respect. 

At the Afreximbank 2016 structured trade finance event you talked about SMEs being the engine of African economies. How do you support SME exports and manage the risk efficiently? 

Most of the local SMEs would have to export their products regionally in order to survive and grow. With this imperative in mind, we assist them with soft term loans, equipment leasing and trade finance.

In addition, we provide appropriate financial, management and marketing advice to help them. Our close working partnerships with other banks in the region, for example in terms of discounting of LCs, credit insurance and risk management provide further support.

Are you happy with your repayment statistics? In other words, does your trade mainly get repaid? 

Up to now, we haven’t got issues in getting our trade financing repaid by clients, though it can happen that there are delays as our exporters depend on their overseas clients to pay them. We also mitigate the risk by working with trade insurance.

What is your perspective on the future of the Blue Economy and Mauritius’ part in this? And how this dovetailed with Sustainable Development Goals (SDGs)?

The Blue Economy is rightly regarded as the next growth frontier. Given the large Exclusive Economic Zone of Mauritius of 2.3 million km2, as well as its focus on innovation and sustainability, it is obvious that the country can play a major role in the development of this sector. 

One of the focus areas of the Blue Economy is indeed around harnessing renewable resources, including energy, and protecting marine life. 

So, as you say, it should contribute to the SDGs of our region. In this connection, SBM is taking the initiative to launch a Blue Fund to promote the development of ocean resources, seafood production, aquaculture, ship yards, construction of fishing vessels, bio-pharmaceuticals and other ocean based production and services. 

Kee Chong Li Kwong Wing is chairman 
of SBM Holdings, Republic of Mauritius

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