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Mauritius - Economy (Notes)

ECONOMY Mauritius has one of the most successful and competitive economies in Africa; 2006 GDP at market prices was estimated at $6.5 billion and per capita income at $5,214, one of the highest in Africa. The economy is based on tourism, textiles, sugar, and financial services. In recent years, information and communication technology (ICT) and seafood have emerged as important sectors of the economy, growing by an average of 40% last year. Over the past two decades, real output growth averaged just below 6% per year, leading to a more than doubling of per capita income and a marked improvement in social indicators. However, since 2002, the economy started to face some serious challenges as a result of globalization, involving the erosion of trade preferences for both textiles and sugar, two pillars of the economy. Economic growth declined to 3-4% while unemployment, government budget deficit, and public debt increased steadily. The government that took office in July 2005 embarked on a bold economic reform program aimed at moving Mauritius from reliance on trade preferences to global competitiveness. The reform strategy, outlined in the FY 2006-2007 government budget, was designed not only to remedy fiscal weaknesses but also to open up the economy, facilitate business, improve the investment climate, and mobilize foreign direct investment and expertise. The reforms and the opening up of the economy have already started to positively impact the economy. GDP growth increased to 5% in 2006, and the same rate is expected in 2007. In addition to encouraging the restructuring and modernization of the textile and sugar sectors, the government is putting much emphasis on the development of the ICT sector and the promotion of Mauritius as a seafood hub in the region, using existing logistics and distribution facilities at the Freeport (free trade zone at the port and airport). To further diversify the economic base and generate sustainable growth, the government is actively encouraging the following economic activities: (i) the land-based oceanic industry, (ii) hospitality and property development, (iii) healthcare and biomedical industry, (iv) agro-processing and biotechnology, and (v) the knowledge industry. The business climate is friendly yet extremely competitive. The World Bank 2007 Doing Business Survey ranks Mauritius 32nd in the world and second in Africa for ease of doing business. Mauritius has a long tradition of private entrepreneurship, which has led to a strong and dynamic private sector. Firms entering the market will find a well-developed legal and commercial infrastructure. With regard to telecommunications, Mauritius has a well-developed digital infrastructure and offers state-of-the-art telecommunications facilities including international leased lines and high speed Internet access. Telecommunications services were liberalized in January 2003. The government policy is to act as a facilitator to business, leaving production to the private sector. However, it still controls key utility services directly or through parastatals, including electricity, water, waste water, postal services, and broadcasting. The State Trading Corporation controls imports of rice, flour, petroleum products, and cement.