Africa has big potential for Jersey
JERSEY Government and financial firms are looking increasingly at Africa for business links and investment treaties as the continent is set to be the fastest growing economically, and in terms of population, in the world.
Members of Jersey Finance heard from Andrew Nevin, partner and chief economist PWC Nigeria, about the potential in the region which he thinks could become the world’s largest integrated economic bloc by 2060 to 2070. He said: ‘You look at the Chinese example we’ve had 30 years of originally 10% growth, then 8%, now closer to 6%, but very high economic growth. We potentially should have the same level of growth across Africa and I’m optimistic. I think we all have an interest in Africa’s prosperity now.’
Mr Nevin told delegates there is a big potential for Jersey: ‘Africa needs capital to come into the continent in a structured way, in a transparent way, and I think that Jersey is a jurisdiction that can piece together those structures. So as a home for private equity and funds, impact investment funds, for structured funds like tradeable funds, I think Jersey is maybe the top jurisdiction to be able to piece those together.
‘The other direction is that Africans who have some net worth should have some diversification. Everyone’s paying their taxes, but how can the products be structured that are attractive to Africans to give them some global diversification? Jersey is a more natural home for this than Luxembourg or Lichtenstein and some of the other jurisdictions.’
The Government of Jersey is also aware of the potential and actively working to build links. Tom Le Feuvre, head of international agreements, said the potential in Africa is ‘huge’ and, with or without Brexit, it should be a focus.
‘By 2050, there will be more Africans than any other region in the world. It will be the greatest centre of population, inevitably, it is also going to be the greatest centre of wealth creation.
‘If we’re thinking of Jersey, at its core has been about how we do wealth management, then the reality is, in the years ahead, there will be more wealthy people living in Nigeria, Kenya, South Africa, than there are in Switzerland and some of the traditional markets that we’ve been looking at. So we have to plan for that future. And I believe that Africa, from going from being perhaps a niche part of Jersey’s business will become absolutely mainstreamed.’
Around three-quarters of the wealth held in Jersey is already from non-UK domiciled beneficial owners. Mr Le Feuvre said that the EU forecasts 90% of global economic growth in the next 10 to 15 years will be from outside Europe.
‘It means that a very significant part of the global markets team’s work is prioritising Africa,’ he added. ‘African jurisdictions make up more countries than anywhere else within our global market strategy. So you know, there is a very significant weighting towards Africa. That’s based on good analysis. We think that there’s a real opportunity around Jersey’s role as an exporter of capital. So there’s a reason why governments would want to engage with us.
‘We have factors like the strength of Commonwealth membership in Africa, the fact that these are jurisdictions that operate in English and French, that they have legal systems that are often based on English common law. So trusts and other vehicles are well understood. The role of London as a real financial hub for Africa, and the fact that we’re on the same time zone for most of the region. So for us, those are empirical reasons that suggests that a Jersey/Africa partnership should be a very significant part of our business mix.’
The global markets team are currently negotiating double taxation agreements with Kenya and Nigeria and are very interested in negotiating bilateral investment treaties with Ghana and Rwanda – both countries are keen to proceed – and formal permissions are being sought from the UK to progress those talks, although inevitably these can take years to reach a conclusion.