By Reneska Moodley
The economic landscape of Mauritius has undergone remarkable transformation since 2019. Intesh Seebaluck, Research analyst at AXYS Stockbroking and Navnit Seeburrun, Investment Analyst at AXYS Investment Partners share their perspectives on the key factors shaping the Mauritian market.
The Gross Value Product (GVP) has grown by 38% in nominal terms and 7.6% in USD, marking significant progress. Historically reliant on agriculture, particularly sugar, Mauritius diversified into manufacturing in the 1980s. By 1990, manufacturing, driven by the textile boom, became a key economic driver, contributing to a low unemployment rate of 2.7%. Post-1990, the expansion into tourism and financial services further bolstered the economy, with the financial sector now contributing 41% to the gross value added, primarily due to the growth of the global business sector.
Sectoral contributions and Fiscal concerns, challenges
Tourism, a vital sector, has rebounded post-COVID, contributing 7.1% to the gross value added in 2023, despite a 6% decline in arrivals from 2019. Increased tourist spending, fuelled by the appreciating euro, has offset the decline in arrivals. The real estate sector remains robust, while the manufacturing sector has declined, impacted by competition from low-cost producers like Bangladesh. The financial sector now surpasses manufacturing in economic contribution, with global business activities and assets exceeding $700 billion. Inflation, driven by external factors such as the Ukraine war, has significantly impacted purchasing power and the cost of living, with average household expenditures rising by 46%. Public finances show a budget deficit, though reduced post-COVID. Revenue growth, especially from corporate taxes, has improved, but rising social protection expenditures due to an ageing population threaten fiscal sustainability. High public debt, particularly in foreign currencies, poses risks due to rupee depreciation. Addressing labour shortages and balancing social protection with other expenditures are crucial for economic stability.
Expert panel discussion
During a brainstorming session, a panel of experts, including Jyoti Jeetun from Mont Choisy Group, Anthony Leung Shing from PwCMauritius, Manisha Dookhony from The African Legal Support Facility and MINDEX and Johanne Hague from Prism Chambers, discussed key economic issues and potential strategies for growth. They noted the economy’s rebound to pre-COVID levels, showing a 7.6% increase in USD terms. The panel emphasised developing new sectors and enhancing existing ones, highlighting the shortage of both skilled and unskilled labour as a significant issue. Current sectors such as textiles and tourism require labour, but the local workforce is insufficient.
Manisha Dookhony emphasised deepening the financial services sector and exploring the biopharmaceutical sector’s potential, which has seen significant investment. Accurate data tracking and leveraging the diaspora’s knowledge and networks were suggested to develop new sectors. Anthony Leung Shing discussed growth potential in financial services, particularly fintech and wealth management. He stressed improving air and port connectivity to enhance competitiveness and support economic diversification. The panel addressed retaining qualified professionals and encouraging those abroad to return by creating better local opportunities, reducing barriers for foreign workers, and fostering an inclusive environment. Continuous reskilling and upskilling of graduates were emphasised to ensure job readiness. Establishing an educational hub to attract foreign students who might stay and work in Mauritius post-graduation was suggested.
A long-term vision for economic growth was deemed necessary, focusing on developing new sectors, deepening existing ones, and addressing labour shortages through inclusive policies and continuous education. The panel highlighted the potential of the Mauritian diaspora and foreign talent in contributing to the country’s economic development. Forming partnerships with network firms in various countries was proposed to integrate global experiences into recruitment processes, allowing new recruits to work on international assignments from the start, enhancing their growth and experience. Using digital tools and technology, such as AI and automation, to improve workforce efficiency and address resource gaps was emphasised. Increasing government spending on education and improving the curriculum to include emerging technologies like AI were recommended to ensure graduates are workplace-ready and can contribute effectively to the economy.
On taxation, a proposed increase in corporate tax and a new levy for corporate climate responsibility were discussed. Concerns were raised about the impact on global business companies and potential deterrents to future growth. Fair taxation and the role of advanced technologies in improving tax collection were emphasised. Addressing rupee depreciation through alternative solutions like direct trade in other currencies was proposed to reduce reliance on the dollar. In the tourism sector, focusing on increasing tourist spending rather than just arrivals was suggested. Developing inland attractions and new products to enhance the tourism experience and revenue was recommended. Addressing misconceptions about businesses in the tourism sector hoarding foreign currency, it was explained that businesses must convert it to pay for local expenses. In conclusion, the panel agreed on the necessity of a long-term vision for economic growth, focusing on developing new sectors, deepening existing ones, and addressing labour shortages through inclusive policies and continuous education. The potential of the Mauritian diaspora and foreign talent to contribute to the country’s economic development was highlighted.
