Competitiveness in Mauritius
Basic Facts about Mauritius
Government
Parliamentary
democracy
Population
1.3 Million
Basic Information:
GDP (2010)
US $ 9,711
Economic Growth(2010)
4.4%
Per Capita Income(2010)
Per Capita Income 2011
(Estimate)
US $ 7,672
US $ 8,876
Unemployment Rate (2010)
7.8%
Inflation rate (2010)
2.9%
FDI (2010)
USD 465 Million
Literacy Rate
85%
Tertiary Enrollment Rate
43%
Objective: 70%
by 2015
Double Taxable Avoidance
(DTA) Treaties
36 countries
International Benchmarks
Index of Economic Freedom 2010
12th out of 179 countries – 1st in Africa
World Bank Doing Business Survey 2011
20th out of 183 countries – 1st in Africa
Ibrahim Index of African Governance 2010 1st out of 48 African countries
Democracy index 2010
24th out of 167 countries – 1st in Africa
Global Enabling Trade Report 2010
33rd out of 125 countries – 1st in Africa
Human Development Index 2010
72nd out of 182 countries – 1st in Africa
Global Competitiveness Index 2010-2011
55th out of 133 countries
Worldwide Digital Access Index 2010
62nd out of 178 countries
Global Information Technology Report
2010-2011
47th internationally – 1st in Africa
Foreign Relations
• shares strong and friendly relations with the West as well as with
India and the countries of southern and eastern Africa.
• It is a member of the:
– African Union (AU)
– World Trade Organization (WTO),
– Commonwealth
– La Francophonie
– Southern African Development Community (SADC)
– Common Market for Eastern and Southern Africa (COMESA)
– Indian Ocean Commission
– Indian Ocean Rim Association.
MAURITIUS – Constraints and
Challenges
CONSTRAINTS
CHALLENGES
• Small Economy
• Economy highly dependent on
few sectors that are sensitive to
global crisis
• Weak
technology/innovation
base
• Insufficient R&D
• Product
and
market
concentration
• Financial and infrastructural
constraints
• Elimination of trade preferences
• Exchange rate fluctuations
• Increased competition from lowcost manufacturers
• Slow pace of restructuring and
diversification
• Rising costs of air and sea freight
• Increase in costs of inputs
• Low penetration of new markets
MAURITIUS
Strengths and Opportunities
STRENGHTS
OPPORTUNITIES
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Political stability
Open Economy
Government’s commitment to reforms
Strong Business Climate
Bilingual and Educated workforce
Favourable trade agreements
Broad range of well funded support
institutions
Entrepreneurial Culture
Shared visions between public and private
sector
World class tourism industry
Strategic location – bridging Asia and
Africa
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Investment in product and design
innovation
Unexploited regional trade advantages
Investment in Technology/skills upgrade
Product/Market diversification
Attract potential investors from the
Mauritian diaspora
Adoption of cleaner production
techniques.
Optimise on the provision of the EPA
which provide for less stringent rules of
origin for textile and canned tuna and
improved market access in the EU.
The Mauritian Economy- A diversified economy
2010
1990
Sugar
1970
Sugar
2000
Agro Industry
Sugar
Textile &
Fashion
Textile
Tourism
1980
Textile
Sugar
Tourism
Financial
services
Textile
Financial
services
Seafood
Tourism
Freeport
ICT/BPO
IRS
Hospitality
Financial
services
ICT/BPO
Real Estate &
Property Dev
Knowledge
Industry
Medical
Tourism
Renewable
Energy
Aspirations of Mauritius
Mauritius aspires to become:
the channel for trade and investment between Africa and Asia in the
coming years.
a thriving, competitive and modern society, where the population enjoys a
high standard of living.
the region’s leading centre for international financial services, including
banking, insurance and other consultancy services.
a liberal and well-regulated Cyber Island with state-of-art Information
Technology infrastructure and a supporting physical and social
infrastructure.
a centre of excellence in education and health.
an ecologically well-balanced economy ensuring that higher growth is
environmentally sustainable.
What we inherited at the time of
independence in 1968?
•Ethnic/Cultural diversity
•Power concentrated in a small elite
•Very small domestic market
•High population growth and large labour surplus
•High unemployment
•Economic crisis throughout 1970s
•Commodity dependent
•Low level of human development
BASED ON THESE APPARENTLY ADVERSE INHERITANCE, JAMES
MEADE MADE DIRE PREDICTIONS ABOUT THE FUTURE
PROSPECTS OF MAURITIUS
What we did?
•Diversification
•Setting up of the EPZ in 1970 (huge success in Mauritius)
•Surplus labour proved highly beneficial to Mauritius Growth (unemployment dropped to
3% by end of 1980s)
•Took advantage of privileged access with EU and the US (accounted for 90% of exports)
•Multi-fibre Agreement
•Adopted concerted strategy of nation building
•Strong and inclusive institutions
•High Level of Public Investment in human development(free education and health
services)
•Avoided social and political tensions and supported solidarity and equity
•Heterodox liberalisation and diversification
•Duty free access to all imported inputs
•A variety of tax incentives to firms operating in EPZ (effect of subsidizing exports)
•Consistency and stability in approach to economic management
•Diversification of political and economic power ensured productive economic policy
•Ethnic diversity provided economic linkages with the world
Challenges over the last decade
Increased competition with globalisation
Soaring energy prices
Dismantling of Multi-fibre Agreement
Sharp cut in sugar prices
Growth on declining path
Low job creation resulting into rise in
unemployment rate (7.3% in 2009 and 7.8%
in 2010)
Financial Crisis in 2008
Euro Zone Crisis in 2009
Economic Reform Strategy
Fiscal
consolidation
and improving
public sector’s
efficiency
Democratise
economy by
promoting
participation
and social
inclusion
Reform
Policy
Package
Improve
Investment
Climte
Improve trade
competitiveness
Policy Response to the Crisis
Various measures taken to cushion the economy
Six Funds created to realise the “Maurice Ile Durable” vision
Consolidation of fiscal performance and improvement of the
Public Sector Efficiency
Reduction in Repo Rate by 50 basis points from 8.25 to 7.75
Reduction in Cash Reserve Ratio (CRR) from 5% to 4.5%
Improvement in Business climate
Widening of circle of opportunity thru’ participation and
social inclusion
What
we did?
Policy Response
to (cont’d)
the Crisis
Introduction of a Rs 500 M Manufacturing Adjustment
and SME Development Fund
Introduction of a Rs 10.4 billion Additional Stimulus
Package in Dec 2008 to rescue private firms facing financial
difficulties
Injection of an additional Rs 2 Bn in the Saving Jobs and
recovery Fund
Introduction of a transition unemployment benefit for
redundant workers
Embarked on several mega infrastructure projects
Policy
Response
the Crisis
What
wetodid?
Introduction of the Leasing Equipment Modernisation Scheme (LEMS)
for enhanced productivity and competitiveness thru’ modernisation of
equipment
Launching of the Rs 360 M Mauritius Business Growth Scheme in Sept
2010 to support enterprise productivity and competitiveness
Increased old age , non contributory pensions and social aid benefits by
5.1%
Reduction in Ministers’ salary by Rs 10,000 per month from July 2009
to Dec 2010
Payment of compensation of 5.1% for the lowest income band while at
the same time broadening the band
Introduction of an Rs 12 Bn Economic Restructuring and
Competitiveness Package in August 2010 with some 100 policy measures
to foster restructuring and deleveraging of firms
Key Challenges remains
Inequality is rising
Country’s competitive advantage on the international market is
shrinking
Microeconomic developments threaten macroeconomic progress
Climate change
Negotiations on NAMA, which provide for elimination of duties on
industrial products implies that the Mauritian enterprises will have to
compete without any safety net and will have to develop non-price
competitive factors.
After 2015, possibility for AGOA benefits to be extended to LDCs such
as Bangladesh and Vietnam
Mauritius will be reverted to the Generalised System of Preferences
(GSP) Scheme which offers less favourable benefits than the AGOA.
Way Forward
Maurice Ile Durable Vision
Bring down cost of energy as a strategy to remain
competitive
Leverage on the Improved Business Climate (promote
Mauritius as an attractive investment destination)
Identify and invest in new growth poles
Identify the right products in the value chain for
production in Mauritius
Diversify our market base
Restructuring
Way Forward
Identify niche markets where Mauritius has a comparative
advantage that could be turned into competitive advantages
Invest in intangible assets (logistics, original designs,
innovation, packaging, branding, R&D)
Optimise on opportunities emanating from regional and
international markets
Comparative advantage has to be based on qualitative factors
(technology, creativity, knowledge and innovation)
Leverage on its location as a gateway between Africa, Asia and
Europe
Invest in education
Thank you