If first impressions are important then Mauritius, the new whiz kid in African business, isn’t doing too badly. Picture this, you are a foreign investor flying into Port Louis and the cabin crew hands you your landing card. Now, across Africa, this is usually a flimsy and poorly printed piece of paper that could blow away.
In Mauritius, it is a thick, bonded, full-color paper printed in two languages. You could mistake it for a share certificate or frame it, stick it on the wall, and pass it off for qualifications. Just one of the many ways the small island in the Indian Ocean, desperate to punch above its weight, wants to win over investors before they hit the arrival lounge.
Industrious Mauritius has been busy, since it liberalized its sleepy island economy in 2006, on its way to becoming a little Singapore off the coast of Africa. This year, the World Economic Forum named fast-growing Mauritius the most competitive economy in Africa ranking 45th, above South Africa at 54.
“The only difference between Singapore and Mauritius is that they had oil and we had sugar,” smiles Ashok Kumar Aubeeluck, the head of economic research at the Bank
Those sugar days are almost over. Thirty years ago, 65,000 Mauritians worked in the sugar cane fields and made up nearly a third of the economy – these days, that number has dropped to around 14,000 with sugar making up a mere 1.2% of the economy, according to Aubeeluck.
It was almost 20 years to the day since I set foot in Mauritius and I was surprised by the changes: a spanking new airport; new roads beneath the construction cranes; a cyber-city in Ebene, south of the capital Port Louis, with a cluster of buildings that could have been imported from Silicon Valley; plus, flourishing export processing zones that attract entrepreneurs and earn around half of the country’s income. This is a place, with an independent judiciary, that not only works, but also cleanly.
“I have worked here for 15 years and I have never been asked for a bribe,” says Deyan Ristic, an analyst with Africa Practice in Port Louis.
Many of the world’s largest financial institutions, no doubt encouraged by the island’s 15% flat tax rate to look after its mere 1.3 million people, have moved in. Foreign companies can claim tax credits leaving them with no more than a 3% rate of tax.
Mauritius sees itself as very much part of Africa and more than half of investments from the island are channelled into the continent. The island is very conscious of its image and is moving to protect it.
“Despite all our efforts to be clean, NGOs and biased international media have attacked us. We have employed a reputed public relations agency to create the image of Mauritius as an international destination for investment,” says the foreign minister, Arvin Boolell, at a conference on private equity on the island, organized by the Board of Investment.
Seventy percent of the income of Mauritius comes from services. It benefits from it colonial past in that the island works with both French and English law. A clear advantage when the giants of Asia wish to use Port Louis as a staging post for investments in both Anglophone and Francophone Africa.
Surprisingly, many in business believe Mauritius, the island prepared to meet the world halfway, is not doing enough to entice companies.
“We need economic reform more than electoral reform,” says one of the more cynical business types on the island.
Nevertheless, electoral reform is in the air as Mauritius looks to elections, expected to be announced by the end of the year, in 2015 when the tenure of Prime Minister Navin Ramgoolam comes to an end. Ramgoolam is a skilled coalition builder who rules with his Labour Party, through a tenuous power sharing deal, and the new incumbent is likely to take power with a similar arrangement.
Many critics have called for an end to the island’s long standing ‘best loser’ system, whereby eight politicians – who did not win their seats – are appointed to Parliament. The doubters complain these appointments are made on ethnic grounds.
The opposition and critics also cry out for new blood in government and complain that the right politicians are not being picked for the big jobs. Whatever happens in the elections, the only near certainty is that they will be peaceful – save for a bit of badinage and posturing – another pillar of stable Mauritius.
“I have seen more verbal violence in the Scottish referendum than I have ever seen in Mauritius,” says Moussa Rawat, the Edinburgh University educated non-executive chairman of the Bramer Corporation – a top five company in Mauritius with assets of $1.5 billion.
After the elections, Mauritius will be looking to the future and business. The may have few people, but plenty of business ideas.
Aubeeluck says Mauritius is looking into getting more out of the Indian Ocean.
“At the moment we are getting around one percent of our economy from the sea, largely through seafood , but if we go ahead with plans to harvest more marine and plant life from the sea we could be talking between five and seven percent,” says Aubeeluck.
There is also interest in green energy. Aubeeluck is excited by a German project in the North Sea that puts windmills offshore – where the wind always blows.
“The Germans have managed to power 650,000 households with six offshore windmills, we have only 275,000, so with windmills we could power the whole island and reduce our carbon footprint at the same time.”
Foreign money appears to have the same idea. Fred Sisson and his company, Synnove Energy, is sinking $150 million into generating wind and solar energy
“The infrastructure is good here and it is very stable and there is growing demand for energy,” says Sisson.
Mauritius has plans to increase its energy output from 650MW to 850MW over the next few years.
The island also plans to strengthen its position in the financial services world. Entrepreneur Dhaneshwar Damry has worked for the last two years on a plan to open the first pan-African electronic bourse in the first quarter of 2015. It will deal with companies with a market capital of $50 million and upwards from mining to healthcare. The plan needs the final approval of the Financial Services Commission.
“I think it will work. If you look at it, a Nigerian company will prefer to work with us, rather than a South African company, because there is a history of business rivalry between the two countries,” says Damry in Port Louis.
Another sign in these troubled economic times that if you could bottle optimism and sell it, Mauritius could make a fortune through export.