This year’s (SAVCA PE) conference theme is synergy with collaboration, defined as the interaction of elements that, when combined, produce a total effect greater than the sum of the individual components. I thought of the synergies that exist, and potential new ones, between international finance centres (IFCS) like Jersey and South Africa.
Supporting investment into Africa
African governments are steering away from traditional financing and investment sources and seek out overseas capital securely and efficiently to ensure Africa can achieve the growth trajectory to enable it to achieve its future aspirations/the African Union Agenda 2063: The Africa We Want. In this strategy, there is a clear synergy with the funds industry in Jersey’s IFC.
As a specialist centre for the alternative asset classes that already account for around 81% of its overall funds business (40% of which is represented by PE and VC), valued at approximately US$-645 billion, Jersey is well-placed to facilitate South African fund managers with capital-raising.
Making a difference to South Africa’s energy challenges
South Africa recently received support from The World Bank through a US$1-billion low-interest loan to assist with the energy crisis. However, experts suggest the scale of this issue will require private sector investment.
Jersey, known for its stability, governance standards, and expertise, has emerged as an attractive destination for international investors looking to contribute to South Africa’s green transition.
A gateway to Europe
Jersey is a strategic gateway to Europe, offering fund managers easy access to EU capital through National Private Placement Regimes (NPPRs). This positioning benefits investors seeking a safe and familiar environment with market access compliance under the Alternative Investment Fund Managers Directive (AIFMD).
More than 200 Jersey-registered managers are opting to market almost 400 funds into the EU through the NPPRs, a figure which has almost doubled in the past five years.
A safe harbour for investors
South Africa ranks fifth as the country of origin for the total number of Jersey-domiciled funds and sub-funds . South African fund assets domiciled in Jersey are also on the rise. For example, in 2021, statistics reported a 38% year-on-year increase versus a total growth of 23%, reflecting growing confidence in the jurisdiction.
Estimates suggest that over the next five years, investors plan to increase impact investment allocations to sub-Saharan Africa to address the continent’s most pressing social and environmental issues. In doing so, investors are likely to seek out reputable jurisdictions, like Jersey; an IFC that has been at the forefront of funds services for more than 60 years and that is independently endorsed as a top IFC by the International Monetary Fund (IMF), OECD and the EU, to name a few.
Historic links and mutual benefits
There is a longstanding relationship between Jersey and South Africa, with prominent South African organisations such as Standard Bank, Alexander Forbes, Ashburton Investments and Nedbank, establishing offices in Jersey for more than two decades. This history signifies a symbiotic relationship, showcasing the mutual benefits derived from collaboration.
In fact, in the last five to 10 years, several Jersey-headquartered funds administration firms such as JTC and Altum Group as well as other firms with Jersey-based offices have set up offices and grown their presence in South Africa supporting and servicing business booked through to Jersey.
This expansion into South Africa not only supports the footprint of these firms into Africa but contributes towards reducing unemployment and skills development in financial services in South Africa.
A positive economic impact
While there are opportunities for Jersey to support investors in South Africa, it is worth adding that such opportunities are mutually beneficial. This is borne out by research from the Centre for Economics and Business Research (Cebr) into global value chains, which quantified the full extent of Jersey’s global economic footprint through the metrics of GDP, employment and jobs. The research shows that the capital intermediated through Jersey equates to £6 billion of Africa’s GDP annually, and supports more than 900,000 jobs in Africa.
A bright future
These examples emphasise the relevance of collaboration between Jersey and South African fund managers. From facilitating capital-raising to addressing critical issues such as the energy crisis and fostering a mutually beneficial relationship, there are several strategic opportunities for both regions in the evolving landscape of international finance. I am certain there are other areas too.
