Magazine article African Business

Investing in Mauritius Engine of Growth: With Its Stable Social and Political Environment, Strong Institutions, Robust Financial Services Sector, Sound Macroeconomic Policies and General Openness to Business, Mauritius Looks Set to Remain among the World's Top Destinations for Investment

Magazine article African Business

Investing in Mauritius Engine of Growth: With Its Stable Social and Political Environment, Strong Institutions, Robust Financial Services Sector, Sound Macroeconomic Policies and General Openness to Business, Mauritius Looks Set to Remain among the World's Top Destinations for Investment

Article excerpt

WHEN IN DECEMBER 2014, the Alliance Lepep (Alliance of the People), comprising the Mouvement Socialiste Militant, the Parti Mauricien Social Democrate, and the Muvman Liberater returned to power in the island nation of Mauritius with 49.8% of the vote, it was only seen as further proof of the resilience of the African nation's democratic culture and stability. After independence from Great Britain in 1968, Mauritius got off to a shaky start, its prospects written off by many at the time, given its lack of resources beyond sugar. However, since 1975, it has steadily embarked on reforms that have raised it to the top spot in current many economic, political and social indices on the continent.

In a little over a generation, Mauritius has managed to diversify its economy from a reliance on sugar to one built on five main pillars--financial services, export processing zones (EPZ), tourism, information and communications technology and of course sugar, which now plays a diminished role in the economy. Uniquely, on the continent at least, Mauritius has been able to achieve this without massive amounts of foreign direct investment, relying instead on a sound and robust domestic banking system which has underwritten the investments required for its economic success. Indeed, the country has not required a financial facility from the IMF since the mid-1980s, suggesting a period of relative economic and financial stability.

Post-independence, Mauritius began to diversify away from its mono-crop sugar, building a strong textile industry which quickly flourished. It also developed its tourism sector, capitalising on its island status and the almost complete absence of conflict or tension that has persisted to date. Financial services also became a strong pillar in its services drive and in the 1990s, it took advantage of the nascent interest in new technologies and built up its ICT sector, further boosting its position as a services powerhouse.

The country is firmly committed to free markets and both leading political parties that have wielded power since independence espouse equal opportunities for all market participants, free trade and competition. The World Trade Organisation describes its investment regime as "free and transparent" and in its 2016 report, the World Bank Doing Business Guide places it atop its tables in Africa and 28th globally. This can be credited to, among others, the high quality of its institutions and extensive investment in human resources. The government has also pursued largely sound macroeconomic policies and it is only recently, with changing global economic conditions that its debt profile has caused mild concerns among market watchers.

Given this, it is no surprise that Mauritius has caught the eye of investors and over the last decade particularly, has been very successful in attracting high levels of investment and foreign capital.

Owing to its low taxes and offshore financial services, there is a mistaken assumption among some that it is a tax haven. This is contrary to the findings of the Organisation for Economic Cooperation and Development (OECD), which puts Mauritius firmly among the group of countries with "jurisdictions that have substantially implemented the internationally agreed tax standard." It has a strong regulatory framework and is recognised as having implemented the highest internationally agreed standards. It occupies pride of place as one of the first jurisdictions to be included in the OECD White List. Indeed, banking and financial transactions are remarkably transparent and anyone opening an account has to submit to full disclosure. The country has also declared itself fully ready to exchange tax information with all its international partners.

A haven of opportunity

Investors in Mauritius have several options available to them. A member of several regional economic bodies, including the Southern African Development Community (SADC), the Common Market for Eastern and Southern Africa (COMESA), the Indian Ocean Rim Association for Regional Cooperation (IOR-ARC), and the African Union (AU) and until recently, a beneficiary of the Africa Growth and Opportunity Act (AGOA) trade regime, it offers an ideal staging post for gaining tariff free access to several important markets. …

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