Country FilesSouthCountry Profile 2012: MAURITIUS


Posted on Thursday, 23 February 2012 12:39

Country Profile 2012: MAURITIUS

By The Africa Report

This country profile was published in November 2011 in our annual 'Africa in 2012' issue. The next edition, 'Africa in 2013' will be on sale in November 2012. 







The search for a perfect partner

An ill-fated attempt to revive a grand coalition between Mauritius' two largest political parties lasted little more than a year before collapsing in recriminations in mid-2011, creating a sense of crisis that seemed to coincide with the country's declining economic indicators towards the end of the year.

Deputy premier Pravind Jugnauth and six ministers from his Militant Socialist Movement (MSM) walked out of the government in July after corruption accusations were made against one of their number.

This mass departure left Navin Ramgoolam's Labour Party anticipating a more than usually turbulent year in office in 2012, in line for challenges within and outside parliament – where the party has a solo majority of a mere three seats – and for much of the blame for the loss of economic momentum.

This will only increase the pressure on Labour to secure a new coalition partner, the most likely candidate being Paul Bérenger's Mauritian Militant Movement (MMM). 

Having been been jilted in the negotiations around the time of the May 2010 elections, Bérenger could now be open to reviving an alliance with Labour and the former finance minister Rama Sithanen, who had been ousted when the MSMcame in and Jugnauth took charge of the finance ministry himself. 

This will depend on how Bérenger – still the official opposition leader in 2011 – calculates the best use of his influence. Ramgoolam's preferred solutions will be first and foremost economic.

In October he recalled the last economic crisis of 2008 and added: "The current crisis will be more serious and could last much longer. We must come up with measures to protect ourselves."

At the same time he made an impassioned appeal for an end to a wave of political agitation. In September, thousands of demonstrators had taken to the streets to protest against corruption and falling living standards. Wikileaks published US cables from 2008 alleging that corruption in Mauritius was "a pervasive and ingrained problem". 

The government is likely to look at encouraging new investment as it searches for ways to survive a difficult economic period ahead.

Growth is respectable by some standards but disappointing against the high levels reached in the 1990s and early 2000s. The projection for 2012 is 4.1 per cent against the 4.2 per cent of 2010 and 2011. Mauritius needs to relaunch a far-reaching reform strategy to increase its growth potential.

It will consider labour market reforms to reduce unemployment rates, and education initiatives to enhance human capital, with structural reforms to increase total factor productivity.

Without the MSM in the coalition, the government will find it easier to argue for an increased role for the private sector in managing state-owned enterprises. 

Tourism generates around 10 per cent of GDP and the industry has remained in good health, with revenues up nearly 10 per cent in the 12 months to the end of August 2011 and with the annual total number of visitors very nearly reaching 1m.

The number of Chinese visitors has surged since the launch of direct flights. The textiles industry has stayed steady, but the sugar industry is not doing so well and the island has even had to import sugar from Brazil.

Mauritian sugar companies are, however, still expanding their operations throughout the African mainland. Longer-term, the key to Mauritius' economic success will be its willingness to innovate.

At present, the island still acts as an a droit vehicle for the purpose of investment in India because it has no domestic taxon capital gains, and indirectly this encourages Indian companies to useMauritius as a base for investing back in India.

In the future, the country seems certain to develop as a global finance and technology hub that can exploit opportunities across several different continents, with a privileged connection with African markets, and with its stock exchange acting as a key driver of change.


More on Mauritius:

Country Profile 2011: MAURITIUS

Africa slow progress in human development

2011 Country Profile: Mauritius

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Top Mauritian Companies

Taken from the Top 500 Companies

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Top Mauritian Banks

Taken from the Top 200 Banks

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Last Updated on Tuesday, 25 February 2014 12:12

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