Since independence in 1968, Mauritius has been dedicated to creating an open, diverse and global economy. While there is still work to be done, the country has largely succeeded in these endeavors, and is consistently ranked as a top place to do business globally. The “Mauritius Miracle” makes the small island country a prime place for investment, and also sets an example for other countries seeking a similar outcome.
By Keseena Chengadu, Associate Attorney at Centurion’s Malabo office
In the minds of investors, Africa has transformed into a place of opportunity and prosperity, but of particular interest is the booming economy of Mauritius. Small, isolated and with clear infrastructural deficiencies, Mauritius was completely dependent on sugarcane before its independence in 1968. In the years since, however, it has built an impressive and diverse economy, spanning the fields of information technology, textiles, infrastructure, tourism and finance.
Mauritius has increasingly focused efforts on creating a globalized economy, with double taxation agreements signed with India, France and the United Kingdom in the early 1980s opening doors to international investors. Modern legislation has opened Mauritius to cross border activity, and an increasing number of international businesses are entering the country. The latest predictions from the Mauritius Board of Investment forecast FDI in 2016 to reach around $395 million, an increase of 46 percent over 2015.
Strategically located at the crossroads of international investment flow between Asia and Africa, Mauritius is drawing on long-established links with both continents to position itself as an East Africa trade and investment hub. The country is already a member of the Common Market for Eastern and Southern Africa (COMESA) and the Southern African Development Community (SADC). In addition to close ties with Africa, Mauritius enjoys duty-free market access to the European Union and the United States through the Eastern and Southern Africa Economic Partnership Agreement.
There is no doubt, the island has much more to offer than just its sandy beaches. But getting to this stage of economic diversity and autonomy was not easy.
The “Mauritius miracle,” as some have described it, took decades of regulatory work and consistent investment. The island nation has focused on developing a professional workforce through such methods as providing free university education, and it has a robust and attractive regulatory framework, providing tax-free repatriation of funds, no capital gains tax and corporate tax of only 3 percent.
As an offshore financial center, Mauritius has established itself as a global player. The financial sector stands as a pillar of strength for the overall economy, and was robust enough to withstand the global financial crisis of 2008-2009 with few setbacks. Mauritius is ranked 32nd globally in the World Bank’s Ease of Doing Business survey, and ranked 29th in the world for ease of trade in the World Economic Forum’s 2014 Global Enabling Trade Report.
Certainly, the level of risk is a key aspect considered by investors when deciding to conduct business in Africa. Many of these risks can be mitigated by using Mauritius as a launch pad.
Advantages include an impressive network of double taxation avoidance agreements and investment promotion and protection agreements with Mauritius’ African counterparts. To date, Mauritius has double taxation agreements signed and ratified with 14 African nations: Botswana, Lesotho, Madagascar, Mozambique, Namibia, Rwanda, Senegal, Seychelles, South Africa, Swaziland, Tunisia, Uganda, Zambia and Zimbabwe. The African Corporate Governance Network, created in October 2013 by the Mauritius Institute of Directors and the Institute of Directors South Africa, promotes effective governance in Mauritius and 18 additional member countries.
Economic growth and social stability is achievable for small states, and Mauritius has provided an example of this. The island nation is now poised to become the main gateway to Africa, not as a competitor, but as a partner. As investors search for safe, competitive and reputable jurisdictions to hold their pan-African investments, Mauritius is a clear choice.