Mauritius has elegantly maintained its reputation as an idyllic Indian Ocean tourist magnet while reinventing itself as an African powerhouse.
MOST VISITORS TO MAURITIUS get no further than the hotel ‘malls’, enjoying the beaches, tropical climate and platinum hospitality – unaware of the burgeoning economy, the governments’ irresistible incentives for investors or the number of companies that have established headquarters in the country.
If the GDP of Mauritius were depicted on a traditional Monopoly board, you would be forgiven for thinking that tourism is the ‘Eloff Street’. In fact, tourism constitutes only 7,2 percent of the GDP while manufacturing adds a healthy 16,5 percent. Close on its heels is the financial sector at 10,3 percent. Surprisingly too, the ubiquitous sugarcane fields only contribute three percent of the GDP, despite the fact that they don’t only produce sugar but electricity from bagasse, ethanol and soon bio-plastics.
In the last few years, aggressive development has turned the tide and on 22 August 2015, Mauritian prime minister Sir Anerood Jugnauth launched the ‘Vision 2030 Blueprint’. He not only announced the ambitious plans for the island, but outlined the growth achieved over the last few years. ‘The aim,’ he said, ‘is to become a truly competitive economic partner in Africa.’
Mauritius has become one of the most attractive countries in which to do business and is ranked sixth globally, ahead of the UK and the US, by the Economic Freedom of the World annual report of the Fraser Institute.
One of the most exciting projects embarked upon recently is the creation of what are known as smart Cities. ‘The four key objectives,’ says sir Jugnauth, ‘are ecological sustainability, economic competitiveness, digital connectivity and an improved quality of life.’ So far eight Smart Cities have been announced by government. Communication and innovation is pivotal behind the creation of a Smart Island and the government has put its money and removal of red tape where its mouth is.
This is all good for the local economy but what’s in it for foreign investors? For starters, the incentives for investing in the Smart City Scheme would have any savvy investor salivating. Tax breaks, subject to conditions, include exemption from income tax for eight years, VAT on capital goods and customs duty on dutiable goods; exemption in certain circumstances from land transfer tax and registration duty, land conversion tax and capital gains tax for subdivision of land; and exemption from registration duty for first-time buyers under the Mauritian Diaspora Scheme.
The government will also pay 50 percent of your employees’ salaries for two years to aid job creation (this is for school certificate holders, higher education and graduates under 30 years old who have been unemployed/seeking employment for more than one month). There is no quota system, however, for employing Mauritians and employing foreigners is a relatively easy process.
This is a compelling reason why Mauritius is fast becoming a preferred centre for regional and global headquarters, as well as regional treasury management. Numerous benefits exist for setting up in the country including a favourable fiscal environment and access to double taxation treaties, the possibility to employ expats, no exchange control, a proven and efficient regulatory system, access to internationally known service providers and easy availability of highly efficient professionals.
So who is taking up the opportunity? The French, South Africans, British, Americans and Chinese are all looking at Mauritius with their eye firmly on return on investment. In fact, multinationals like Aspen Global, Copal Amba, GlaxoSmithKline, Old Mutual, Maersk, Standard Chartered Bank, HSBC, Barclays, Huawei, Middlesex University as well as Prudential Asset Management are already operating in Mauritius, and banking group Lloyds of London are to set up front offices in the near future.
The new airport, built at a cost of $306 million, on the international map in terms of modernity, and further refurbishment is continuing in order to make it a gateway to the rest of Africa and encourage investment. The five-year plan for the development of roads, electricity, waste management, the airport and telecommunications is being accelerated to facilitate the projected growth. Anyone who has sat in the traffic leading into Port Louis will know that congestion on the narrow roads is a huge problem. An investment equivalent to R6 billion over the next five years will address this challenge in order to save the economy millions.
The port, too, is being doubled in size. After all, the island of Mauritius is on the doorstep of the African continent. With the prospect of a modern port and a range of services including freight companies and logistics service providers, investors from Dubai, China and Singapore are already showing serious interest. This will also support the proposed increase of manufacturing for the GDP from 16,5 percent to 25 percent within the next five years to include high-precision engineering, food processing, pharmaceutical products, watch making and fast-moving consumer goods, which – surprisingly enough – include luxury jewellery brands.
The prime minister believes that the country can increase its economic growth rate from the current three percent annually (South Africa is at just over one percent) to a healthy 5,5 percent by 2017.
The focus for the future is Life Sciences with research and development and biotechnology companies, as well as other research companies, setting up in Mauritius, making it a potential hub for healthcare and medical services, in addition to a possible medical education centre of excellence for Africa.
Mauritius also has a major financial services agency, contributing 10,3 percent of the GDP. The plan is to use Mauritius as a hub to invest in India, Europe and America, so positioning itself as a platform to other parts of Africa. It is described as a strategic global business jurisdiction at the crossroads of Asia and Africa.
While the government focuses on Smart Cities, ocean economy, port and infrastructure, consolidating on existing traditional sectors and the focus on innovation and technology, investors around the world are eyeing this small island as one of the most attractive financial ‘destinations’ in the southern hemisphere.