(Bloomberg) -- Botswana’s push to diversify its economy away from mining and into financial services positions it to compete with Mauritius as an African hub for high net-worth individuals and families, a new study has found.
The world’s largest rough diamond producer by value is among the countries leading continental efforts to develop more robust regulations and improve the ease of doing business to attract foreign investment and promote economic growth, investment management firm Ocorian Ltd. said in its latest Africa family office report,
Africa is home to more than 135,000 dollar millionaires, a population that’s poised to increase by 65% over the next decade, according to a separate report by Henley & Partners and New World Wealth.
“With wealth growing across the continent, it’s natural that a number of jurisdictions have spied an opportunity to work with the region’s ultra-high-net-worth individuals and families through favorable tax and regulatory environments, expert service providers and meeting international transparency standards,” Ocorian said in its report, which was published on Tuesday. It warned that Botswana remains constrained by a lack of expertise in the financial services sector.
A collapse in the market for diamonds, which generate the bulk of state revenue in Botswana, has triggered an economic downturn. Voters responded by stripping the party that has held power since independence almost six decades ago of its parliamentary majority in Oct. 30 elections.
Ocorian also named Rwanda, which is seeking to become a technology and innovation hub, as a potential rival for Mauritius. After rebuilding following a civil war in the 1990s, the East African nation “has become impressively safe and secure, encouraging long-term investments in the country,” the fund manager said.
Both Botswana and Rwanda still have some way to go to effectively compete with Mauritius, a wealthy Indian Ocean island nation, which is known for its pristine beaches and luxury resorts, and is a popular low-tax jurisdiction offshore base for investors.
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