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Overseas Business Risk: Mauritius
Information on how UK companies can control risks when doing business in Mauritius.
Mauritius is a stable parliamentary democracy. It has been ranked 1st on the Mo Ibrahim Index for Good Governance in Africa every year since its inception in 2007. The island became independent in 1968 and free and fair elections are organised every five years. Transition of power is smooth and peaceful.
Mauritius has a unicameral parliamentary system modelled on the Westminster System. Executive powers lie with the Prime Minister and the Cabinet of Ministers. The President is the Head of State and the role is largely ceremonial. The Judiciary operates independently from the legislative and executive branches.
Pravind Jugnauth has been Prime Minister since January 2017 following the resignation of his father Sir Anerood Jugnauth, who had been Prime Minister since December 2014. He led the Mouvement Socialiste Mauricien to another election victory in December 2019. The next general elections will be held around December 2024.
World Bank upgraded Mauritius from an upper middle income to a high-income economy based on its 2019 GNI per capita figures. As at July 2020, Mauritius GNI per capita was $12,740 with the threshold for the high income group being $12,535. This is the first time that Mauritius featured in the list of high income countries. However, with COVID19, the GNI per capita has contracted and is at its lowest for a decade.
The economy rests mainly on financial services, tourism, sugar, textiles and canned tuna manufacturing.
The Mauritius economy contracted by at least 10.4% (EIU estimate as opposed to Statistics Mauritius estimate of 15.2%) in 2020 and this for the first time in 40 years. The sharp decline in tourism (from 1.4 million tourists in 2019 to 308,980 tourists in 2020), a contraction in domestic economic activity because of COVID19 lockdown and subdued demand, as well as the localised impact of the oil spill along the south east coast of Mauritius in October 2020, have impacted heavily on the economy.
The economy is expected to recover gradually in 2021, with growth averaging 2% on the assumption that domestic demand will be robust, exports of sugar and textiles will continue and hopefully a slow rebound in tourism from mid-2021 onwards.
As at December 2020, the Bank of Mauritius estimated the headline inflation rate to be 2.5%. Preliminary estimate for unemployment rate is 17.5%, a drastic rise from the 6.7% of 2019.
Mauritius pursues a liberal and open economic policy. The country relies heavily on trade and investment with Europe and the US and more recently with markets like India, China and South Africa.
Mauritius welcomes foreign investment in nearly all sectors of the economy and its nationals are not barred from investing elsewhere. Foreign direct investment (FDI) reached MUR 21.3 Billion (£482 m) in 2019, an increase of 22% as compared to 2018. Real estate activities and financial and insurance services attracted the most FDI. The top FDI sources were France, South Africa, UK and India.
Mauritius wishes to position itself as a regional hub for investment into Africa. So far, Mauritius has concluded 46 Double Taxation Avoidance Agreement (DTAA) and 29 Investment Promotion and Protection Agreements (IPPA). As at December 2020, there were over 21,000 live Global Business Companies (GBCs) operating in Mauritius. Total Assets for GBCs was USD 583 bn (estimate 2019).
Mauritius is also establishing itself as a Knowledge Hub for Africa attracting many international universities. There are around 35 UK universities and awarding bodies offering UK qualifications recognised in Mauritius and the UK. Following the success of this project on the local market, international marketing is being carried out to attract foreign students, especially from African countries.
Mauritius is considered one of the most business-friendly countries in sub-Saharan Africa as a result of its political stability, good governance and independent judiciary. With its wide network of Double Taxation Avoidance Agreements and Investment Promotion and Protection Agreements (IPPAs), Mauritius offers a conducive environment for doing business which guarantees predictability, certainty and security. Mauritius signed an agreement with the UK in January 2019 to safeguard trade preferences it currently enjoys under the interim Economic Partnership Agreement (iEPA) with the European Union. The new agreement, known as the UK-ESA EPA, came into force on January 1, 2021.
Mauritius is now in the Top 20 economies as per World Bank Doing Business Report 2020. Mauritius remains the leader in the Ease of Doing Business Rankings in Africa and progressed seven places to 13th out of 190 countries according to the latest World Bank Ease of Doing Business Report 2020.The country is also highly rated against many other related international benchmarks. For example, it ranks first in Africa and 54th most competitive nation in the world out of 140 countries ranked in the 2019 edition of the Global Competitiveness Report published by the World Economic Forum. This acknowledgement by the World Bank confirms that Mauritius remains a competitive and attractive jurisdiction for the international investors’ community.
To further streamline processes and facilitate ease of doing business in Mauritius, the Economic Development Board, in collaboration with the European Union officially launched the National Electronic Licensing System (NELS) on Thursday 28th March 2019. The main objective of implementing a National Electronic Licensing System is to offer a single point of entry for application, payment and determination of business-related licences and permits.
Compared to other African countries the risks of doing business in Mauritius are low. However, challenges have been reported in finding suitably qualified personnel e.g. in the IT, telecommunications, medical and other specialised sectors. Mauritius has a wealth of well-qualified financial and legal personnel, most of them trained in the UK, and it benefits from a bi-lingual French/English workforce. Local labour law can be complex and companies are recommended to hire highly qualified human resource personnel.
The most important sectors of the Mauritian economy are textiles, tourism, financial and business services, information and communication technology, seafood processing, real estate development, energy, and education/training. The government of Mauritius is emphasizing innovation as the basis for long-term growth. Mauritius also aspires for the ocean economy to play a significant role in its economic development. Before Covid-19, authorities planned to stimulate economic growth in five areas: serving as a gateway for investment into Africa; increasing the use of renewable energy; developing smart cities; growing the blue economy; and modernizing infrastructure, especially public transportation, the port, and the airport. Due to the pandemic, however, the government’s focus in 2021 will be to rebuild existing sectors. Economists predicted that tourism and manufactured exports would be the hardest hit sectors.
The Mauritius International Arbitration Centre (MIAC) that operated as a joint venture with the London Court of International Arbitration until 2018, brings a high level of dispute resolution services to the international community. MIAC has operated as an independent arbitration centre since 27 July 2018, drawing on the significant expertise gained during this initial phase of its development. It is worth noting that the Judicial Committee of the Privy Council in London is the final court of appeal for Mauritius.
4.Bribery and corruption
Bribery is illegal. It is an offence for UK nationals and bodies incorporated under UK Law, to bribe anywhere in the world. In addition, a commercial organisation carrying on a business in the UK can be liable for the conduct of a person who is neither a UK national or resident in the UK or a body incorporated or formed in the UK. In this case it does not matter whether the acts or omissions which form part of the offence take place in the UK or elsewhere.
In 2020, Mauritius was ranked 52nd out of 180 countries in Transparency International’s corruption perception index. The country is often cited as Sub-Saharan Africa’s example of good governance and democracy. Mauritius is ranked first for good governance in Africa according to the 2020 Mo Ibrahim Index of African Governance. The 2019 Democracy Index compiled by the Economist Intelligence Unit and measuring the state of democracy in 167 countries, considers Mauritius as a full democracy ranking it 18th worldwide and 1st in Sub-Saharan Africa.
During the past years, Mauritian governments have implemented anti-corruption measures, including the establishment of the Independent Commission Against Corruption (ICAC) in 2002.
There are however, weaknesses at the legislative level particularly about regulations dealing with both private sector corruption and the funding of political parties.
There are ongoing investigations into some alleged fraud and corruption in both the public and private sector. Senior political leaders are also subject to legal proceedings.
Mauritius Human Development Index (2019 report) was 0.8, which put the country in the high human development category, positioning it at 66 out of 188 countries and territories.
Chapter II of The Constitution of Mauritius guarantees the protection of fundamental rights and freedom of the individual. A National Human Rights Commission was created under The Protection of Human Rights Act to deal with complaints of breaches of human rights listed in the Constitution and complaints against the Police.
Commonly reported human rights problems in Mauritius include the mistreatment of suspects and detainees by the Police and domestic violence against women.
The UK has been working with the Mauritius Government, UK retailers, local manufacturers and NGOs on projects to improve migrant workers’ rights in Mauritius. In 2019, the UK funded the publication of a guide aimed at informing migrant workers of their rights and possible remedial actions in case of violations. The booklet called ‘Know Your Rights’ has been published in six languages.
The Equal Opportunity Commission became operational under the Equal Opportunities Act of 2008 and it investigates allegations of discrimination and promotes equality of opportunity in both the private and public sectors. Mauritian law requires organisations employing more than 35 people to set aside at least 3% of their positions for persons with disabilities. Workers exercise their rights of freedom of association and the right to collective bargaining. The law prohibits the employment of children under 16 years of age and prohibits the employment of children between 16 and 18 years old in work that is dangerous, unhealthy, or otherwise unsuitable for young people. The Government introduced a minimum wage in January 2018.
Female participation in the Mauritius labour force is about 45%, with a growing prevalence of dual income households. Women can enjoy an active social life without encountering social or cultural restrictions and mixed race marriages are not uncommon.
Infringement of copyright and intellectual property is not uncommon in Mauritius. It is recommended that trademarks and/or IPs be registered to avoid fraudulent use. For more
information on Intellectual Property and Copyrights, please visit the UK Government website and the Attorney General’s Office for publications/legislation on the subject.
7.Protective Security Advice
Mauritius is generally a safe country.
There is an underlying threat from terrorism.
Petty crime, particularly theft, is common. Most crime is non-violent.
The Mauritius Police Force can arrest and detain an individual on a provisional charge until investigations are completed, which can be a lengthy process. The UK government has previously raised its concerns about the use of the provisional charge and the issue was also raised at the UN International Human Rights Council in 2014. According to the Director of Public Prosecution, the purpose of a provisional charge (information) is to bring the arrest and detention of a person under judicial supervision and control.
Contact the DIT team in Mauritius for more information and advice on opportunities for doing business in Mauritius.