Country Brief

Key facts                                                                             Country Brief last updated September 2008

Mauritius Data 2006* Population, total (millions) 1.3 Population growth (annual %) 0.80% % Below half median household income (2001-02) 13.10% Life expectancy at birth, total (years) 73 GDP (current US$) (billion) 6.3 GDP growth (annual %) 5.6% GNI per capita, Atlas method (current US$) 5,450 Inflation, consumer prices (annual %) 8.90% Foreign direct investment, net inflows (% of GDP) 3.10% Unemployment, total (% of total labor force) 9.10% Time required to start a business (days) 7 Internet users (per 1,000 people) (2004 figure) 6.7 Source:  Central Statistic Office (CSO) *Most recent data available 2001-2006

Mauritius gained independence in 1968, after centuries of colonization by the Dutch (1598), the French (1710), and the British (1810). It has a highly diverse population. Descendants of indentured workers from India, who were brought to work in the sugarcane fields after the abolition of slavery in 1835, make up about 70 percent of the population. The rest of the population includes Africans, Creoles, Chinese, and Europeans.

Mauritius is a development success story. It achieved remarkable economic and social success, based on good governance and an exceptional use of trade preferences for sugar and clothing exports. At independence in 1968, the country was poor, with per capita income of about US$260. Today it is an upper middle income country, with a 2006 per capita income of US$6431 or $11,643 in purchasing power parity (PPP) terms, the second highest in Africa after Seychelles. The country’s ability to profit from the trade opportunities testifies to its institutional strengths – a stable democracy and rule of law; ethnic tolerance; macroeconomic stability; equitable social progress; and reliance on private incentives.

Mauritius is a multiparty parliamentary democracy. A general election in July 2005 resulted in a victory of the Alliance Sociale. Sir Anerood Jugnauth is President of the Republic; Mr. Navinchandra Ramgoolam, leader of the Labor Party, is Prime Minister.

Economy

Economic Performance

Faced with a severe “triple trade shock” of sugar and textile trade preference erosion and rising oil prices, the Government of Mauritius has embarked on a bold, multi-year program of structural reforms aimed at restoring macroeconomic balance and diversifying the economy into new growth sectors such as BPO, seafood, knowledge hub and specialty tourism. The 2006/07 budget introduced the program and the 2007/08 budget a year later put forward a second installment. The objective is to engineer a far reaching transformation of the economy capable of sustaining the Mauritian miracle for another generation. It may be too soon to celebrate, but early signs of success are encouraging. Real growth of 5.6 percent in 2007 was the highest since 2000, the public debt burden is falling, and inflation and unemployment are trending down.

Challenges ahead and Government priorities

Despite the steps which have been taken, many challenges remain. Education must be further expanded to bring human capital up to the best practice standards of Singapore or Korea. Stronger university-business ties are needed along with a more entrepreneurial, innovative culture. In light of limited R&D capacity, substantially more FDI must be attracted to gain access to cutting edge technology and marketing skills. And finally, greater public sector efficiency is needed if the ambitious public investment program is not to undermine current efforts to keep fiscal deficits and debt to sustainable levels. The mid 1990s long term perspective study, Vision 2020, set a goal of sustaining growth in the range of 5.5-7.5%. Provided such challenges can be overcome, this goal can become a reality.

World Bank group program

Program to date

The World Bank's role in Mauritius is evolving, reflecting the country's past success in gaining access to capital markets. Because of its relatively high income, Mauritius is one of only a few African countries eligible for IBRD loans (most African countries borrow from the International Development Association, the World Bank's soft-lending arm for the poorest countries). The World Bank Group is working closely with the recently restructured Ministry of Finance and Economic Development (MOFED), various sector Ministries, other development partners active in Mauritius within the framework of the CPS.

The Bank and the Government of Mauritius recently completed preparation of a Country Partnership Strategy (CPS), which establishes a framework for World Bank engagement in Mauritius for the next 5 years – until 2013. The CPS, which was also prepared in close coordination with the European Union, is based on three guiding principles: (i) alignment with the Government’s program; (ii) flexibility; and (iii) harmonization with other development partners. The CPS envisions preparation of annual business plans for the Bank’s work that would be developed in parallel with the Government’s planning and budget processes.

Reflecting Mauritius’ past success and improved access to capital markets, official donor assistance had been declining in volume and becoming more selective.  However, in response to the current Government’s requests for increased support and not least sugar sector adjustment assistance from the European Union, there has been recently been a significant increase.  At the Government’s request, the main external partners (WB, IMF, EU, AFDB, UNDP) have coordinated their support. The main platform for coordination has been a Development Policy Loan which has been jointly prepared and cofinanced by the Bank, the European Commission, African Development Bank, and Agence Française de Développement.  The World Bank Group has opened on February 12, 2008 an office in Mauritius to underscore its commitment to its partnership with the country and to enhance efficient and effective engagement.

The Second Development Policy Loan (DPL2) in an amount of $30 million is currently the only current World Bank operation in Mauritius. The operation supports Mauritius’ transition from dependence on trade preferences to open competition in the global economy. In addition two project preparation facilities have been put in place for road traffic congestion and public enterprise reform. The World Bank has recently completed a $12.4 million project supporting investments in sewerage and sanitation.

The World Bank also supports the Government of Mauritius through analytical and advisory assistance including knowledge transfer services. It recently carried out an Investment Climate Assessment, an update of the Financial Sector Assessment Program, a Country Economic Memorandum, Country Procurement Assessment Review, a Public Expenditure Review, and a Transport Action Plan. Earlier, the World Bank prepared a report on modernization of the pension system, a labor market study and provided advice to the government on a Medium Term Economic Framework. Currently the World Bank is supporting the work of five sector Ministries in preparing their action plans for the program based approach to budgeting.

The International Finance Corporation (IFC) has made no new investments since 1996, and the portfolio has steadily decreased as investments have been repaid and/or exited. IFC has an equity investment in a collective Investment Vehicle of $9 million. In March 2006, the IFC organized a multi-sector promotion mission, and is positioning itself to play a more active role in supporting South–South investment opportunities as well as private sector involvement in the following sectors: tourism, textile, agri-business, and information and communications technology. IFC is also considering a request from the Joint Economic Council to assist in the establishment of a Credit Bureau to facilitate access to finance for SMEs and from the Government to help promote private sector participation in the ports sector.

Multilateral Investment Guarantee Agency (MIGA) has been actively supporting Mauritian investors venturing abroad, particularly into sub-Saharan Africa. The agency is working to further strengthen relations with the local business community, creating synergies that will continue to support development into the SADC region and other regions of Africa. For the second year running, the Board of Investment (BOI) office has supported and facilitated MIGA’s missions to Mauritius. These missions have firmly put MIGA as a value adding institution to cross-border investors to and from Mauritius. The BOI office has helped to identify more than 30 investors with the potential of using MIGA services. MIGA does not have any exposure in Mauritius, but does support Mauritian investors venturing abroad. At present, the agency’s gross outstanding exposure resulting from Mauritian sponsored investments is US$54.3 million, in support of investments in the agribusiness, infrastructure, and tourism sectors in Burundi, Madagascar, and Mozambique.

Contacts

World Bank Office in Pretoria, South Africa

World Bank Office in Port Louis, Mauritus

World Bank Office in Washington, DC, USA

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