This chapter reviews the trends in domestic and foreign investment in Mauritius and the impact of foreign investment in terms of various FDI Qualities indicators of inclusive and sustainable development.
OECD Investment Policy Reviews: Mauritius 2024
OECD Investment Policy Reviews
Abstract
Mauritius’ successful global business company regimes have made it one of the largest foreign direct investment (FDI) recipients and source countries worldwide. Its inward FDI stock amounted to USD 375 billion in 2022, 29 times the country’s GDP, and the outward investment stock to USD 335 billion. Global business companies account for 98.3% of the inward FDI stock and for 99.7% of the outward FDI stock (2022). Investors use these companies to channel investment through Mauritius to third destinations, with very little actually invested in Mauritius’ real economy. Most of this chapter examines trends in and the impact of traditional FDI on Mauritius’ economy, excluding global business companies.
Traditional FDI flows into Mauritius increased rapidly between 2006 and 2012 but have become more volatile in recent years and are moderate in international comparison. The growth in FDI inflows in the 2000s can be attributed to the gradual opening of the real estate market to foreign citizens through the introduction of several residency by property acquisition programmes starting in 2001-02 and the implementation of a set of ambitious structural and regulatory reforms starting in 2005, which liberalised the economy and significantly improved the regulatory environment for investment. Following a peak in 2012, FDI inflows in Mauritius have been more volatile because of the phasing out of preferential trade agreements and, more recently, the Covid-19 pandemic. They dropped significantly during the pandemic but exceeded pre-pandemic levels in 2022. Overall FDI flows into Mauritius amounted to 2.1% of GDP between 2020 and 2022 but to only 0.9% of GDP when excluding FDI in real estate. This compares to FDI inflows of 3.5% of GDP on average in the SADC region.1
The bulk of traditional FDI flows into real estate and export-oriented sectors, allowing investors to benefit from economies of scale by expanding their markets beyond Mauritius. FDI in the real estate sector amounted to over half of total FDI inflows between 2018 and 2022, mostly related to the sale of high-end luxury real estate to foreigners. Apart from real estate, given its small domestic market size, Mauritius has been successful in attracting FDI in export-oriented sectors such as light manufacturing and tourism services and in sectors with potential to become regional hubs such as financial services, the information and communications technology (ICT) and business process outsourcing (BPO) sector. These sectors allow investors to expand their markets beyond Mauritius.
FDI has been an important driver of the development of thriving modern services industries in Mauritius and could help to expand other non-traditional sectors. Financial and insurance activities are one of the main pillars and largest sectors of the economy and the second largest FDI recipient, as Mauritius is an important regional financial centre. Likewise, Mauritius has become a leader in Africa in BPO and ICT services with more than 700 firms operating in its ICT sector. Since 2006, FDI in ICT services has increased fivefold. In light of Mauritius’ quality infrastructure and health and education systems, new opportunities have arisen, particularly in expanding services exports to other African countries. Education and health have both attracted increasing FDI over the last decade but their contribution to total FDI remains low. Opportunities for expanding investment in these sectors exist in health tourism and in education, attracting additional offshore campuses of foreign universities to Mauritius and better promoting and improving the enabling environment for existing campuses. The sustainable ocean economy is another emerging sector, which offers investment opportunities in marine research and products, transport and port services, energy and education.
The share of FDI in Mauritius originating from Africa has increased, while the share of FDI from Europe has fallen. This shift has been supported by the government’s pro-Africa policies, seeking to position Mauritius as a gateway for investment in and trade with Africa. Whereas almost three quarters of FDI in Mauritius originated from Europe in 2006, FDI inflows from Europe accounted for only one third of total FDI in 2022, with a rising share originating from Africa and Asia and Oceania. The two largest countries of origin of FDI in Mauritius in 2018-22 were France, reflecting historical ties, and South Africa, which is the largest market for Mauritian products in proximity. While French couples account for a large share of investment in real estate, French investors are also present in many other economic sectors, including modern services, manufacturing and energy. Greenfield investment and merger and acquisition (M&A) deals from South Africa target to a large extent Mauritius’ modern services industries.
Besides providing a source of financing, FDI in Mauritius contributes to productivity, innovation and skills development. Based on data from the World Bank Enterprise Survey, foreign firms in Mauritius in sectors other than real estate are larger and more likely to export than domestic firms. Their labour productivity is 43% higher than in domestic firms overall, and they experience faster productivity growth than domestic firms2 (see more details on Mauritius’ productivity performance in Chapter 3). While 27.2% of foreign firms in Mauritius report spending on R&D, only 9.3% of domestic firms do so. Similarly, foreign firms are more likely to engage in product and process innovation than domestic firms. Furthermore, 62% of foreign firms offer their workers training compared to only 19% of domestic firms. While foreign firms are more likely to have a female top manager than domestic firms, the latter perform better on other gender dimensions. These results indicate that foreign firms in Mauritius outperform domestic firms on a number of dimensions, and that, with the right policy mix in place, Mauritius could benefit from knowledge, technology and skills transfers from foreign to domestic companies.3
FDI in Mauritius also supports the green transition and the uptake of clean technologies, as foreign firms outperform domestic peers in terms of environmental practices. For example, more than half of foreign companies report complying with environmental certifications or standards and taking measures for water management and for waste minimisation, recycling or management compared to less than 30% of domestic companies. Similarly, more than 40% of foreign firms report monitoring energy consumption, water usage or CO2 emissions, having adopted greener materials for production and having taken measures for energy management compared to only 22-27% of domestic firms. With the right policy mix, foreign firms’ strong performance in deploying clean technologies and environmental protection measures could help to improve Mauritius’ environmental performance and a wider deployment of clean technologies.
Most FDI in Mauritius flows into sectors which stimulate the development of other economic sectors but generate few technology spillovers from foreign investors to domestic companies. Investment in the real estate sector, which receives more than half of FDI, supports the development of tourism infrastructure and ancillary services such as wealth management and other financial services and providers of smart home applications. But the sector itself has very limited potential for knowledge and technology spillovers from foreign investors to domestic companies. Likewise, real estate contributes indirectly to creating jobs in other sectors, most importantly, the construction sector, but the sector itself generates very few jobs: it accounts for only 0.3% of employment in Mauritius. The financial sector, which attracts the second-largest share of FDI in Mauritius (12%), displays a high level of labour productivity and is technology and skills-intensive, but accounts for only 2.8% of employment in Mauritius.
Private investment declined in Mauritius in the 2010s but has been picking up since 2021, both in absolute terms and as a share of GDP. Gross fixed capital formation stagnated in absolute terms and declined from a peak of 25.5% of GDP in 2009 to a low of 16.8% of GDP in 2016 (Figure 2.1, Panel A). Likewise, private investment declined from a peak of 19.8% of GDP in 2008 to a low of 12.3% of GDP in 2015. This evolution can be attributed to a decline in private investment in manufacturing, accommodation and food services and agriculture as a result of a loss of competitiveness in labour-intensive manufacturing and sugar production and to a decline in capital productivity (World Bank Group, 2015[1]; Ranzani, Bergmann and Tandrayen-Ragoobur, 2019[2]). An increase in investment in real estate over the same period was not able to fully compensate for this decline. Following a further drop in 2020 because of the Covid-19 pandemic, private investment has been picking up again since 2021 in most sectors, but particularly in real estate (Statistics Mauritius, 2023[3]). In 2022, GFCF reached 19.7% of GDP and is predicted to reach 21.7% of GDP in 2023. Nevertheless, GFCF in Mauritius (% of GDP) remains moderate compared to countries in the region and elsewhere and lower than in the SADC region and in the OECD (Figure 2.1, Panel B).
Notes: The difference in GFCF as a share of GDP between panels A and B can be attributed to the different data sources (Statistics Mauritius vs. World Development Indicators). Panel A. 2023 is a forecast. Panel B: GFCF: OECD and SADC 2021 instead of 2022; GFCF, private sector: Croatia, Dominican Republic 2021 instead of 2022, no data for Botswana, Portugal, Uruguay, Costa Rica, Greece and OECD.
Source: A. Statistics Mauritius; B. World Development Indicators.
Private investment is concentrated and expanding in real estate, as approximately half of private investment is directed towards real estate (47% as of 2022), compared to only around 30% in 2007 (Figure 2.2, Panel A). This increase can be attributed to various Residency by Property Acquisition schemes (Box 2.2). Other sectors attracting significant amounts of investment are wholesale and retail trade (9% in 2022), accommodation and food services (6.5%), manufacturing (5.8%), information and communication services (5.3%) and construction (5.2%). Beyond investment in real estate, investment has also been expanding in sectors with higher technology sophistication and productivity such as information and communication or health (Figure 2.2, Panel B), but these sectors’ overall contribution to private investment remains small. On the other hand, the share of accommodation and food services, manufacturing and agriculture in total investment has declined significantly since 2007.
Source: Statistics Mauritius
Mauritius’ successful global business company regime has made it one of the largest FDI recipients and source countries worldwide. Two types of international company licences exist: Global Business Companies (GBCs) and Authorised Companies (ACs). Both conduct business largely outside of Mauritius (see section on investment in global business companies). Thanks to these companies, Mauritius’ inward and outward FDI stocks are amongst the largest in the world: Mauritius had the 23rd largest inward investment stock and the 24th largest outward investment stock in the world in 2022 in absolute value. Its inward FDI stock amounted to USD 375 billion in 2022, 29 times the country’s GDP (Figure 2.3, Panel A), and the outward investment stock to USD 335 billion, 26 times its GDP (Figure 2.3, Panel A). This compares to inward and outward FDI stocks of less than 100% of GDP in most countries in the region and elsewhere (Figure 2.4, Panels A and B). Mauritius also has also a large portfolio outward investment stock amounting to USD 178 billion, almost 14 times its GDP (IMF, 2023[4]).
Traditional FDI accounts only for a small share of foreign investment in Mauritius. Global business companies account for 98.3% of Mauritius’ inward FDI stock and for 99.7% of the outward investment stock (2022). Investors use these companies to channel investment through Mauritius to third destinations with very little of this capital actually invested in the real economy. The traditional inward investment stock excluding global business companies amounts to only 44.8% of GDP or USD 4 315 per capita (2022) (UNCTAD, 2023[5]). Most of this chapter will examine trends in, and the impact of, traditional FDI in Mauritius, excluding global business companies. More details on investment in global business companies are provided in a short sub-section, which is part of section 1.2.
Source: IMF International Investment Position database
Source: IMF International Investment Position database
Traditional inward FDI in Mauritius increased impressively between 2006 and 2012. Except for a short peak in 2000 as a result of the acquisition of a 40% stake in Mauritius Telecom by France Telecom for USD 261 million (Refintiv, 2023[6]), FDI inflows in Mauritius were low prior to 2006, below USD 60 million or 1.5% of GDP (Figure 2.5). FDI inflows began to increase sharply in 2006 following the gradual opening of the real estate market to foreigners starting in 2002 and the implementation of a set of ambitious structural and regulatory reforms starting in 2005, which liberalised the economy and significantly improved the regulatory environment for investment (Box 2.1) (UNCTAD, 2017[7]; World Bank Group, 2015[1]). Following this increase, FDI inflows decreased moderately in 2009 in the context of the global financial and economic crisis but started recovering in 2010, peaking at USD 589 million or 5.0% of GDP in 2012.
Since 2012, FDI inflows in Mauritius have been more volatile. This can be attributed to the end of the Multi-Fibre Arrangement in 2004 and the phasing out of other preferential trade agreements which had attracted efficiency-seeking investors looking for access to the European and US markets, especially in the textile and sugar sectors (UNCTAD, 2017[7]). In the context of the Covid-19 pandemic, in 2020, FDI inflows in Mauritius declined significantly, by almost one third in absolute value from USD 444 million in 2019 to USD 225 million in 2020 but started recovering in 2021 and exceeded pre-pandemic levels in 2022.
Note: A. The Bank of Mauritius conducts an annual Foreign Assets and Liabilities Survey which collects data on equity and intra-company loans, which cannot be collected from banking records and other sources. It also provides data on reinvested earnings. The Survey undertaken in 2023 led to a substantial upward revision of the estimate for net FDI inflows in 2022. Several sectors saw increased gross inflows in 2022 as a result of the adjustment, notably in manufacturing and in tourism-related sectors. By country of origin, FDI inflows from France doubled, making it responsible for one third of total FDI in 2022.
Source: Panel A. 2010-2022: FDI: Bank of Mauritius; GDP: World Bank, 1990-2009: UNCTAD bilateral FDI database; Panel B: UNCTAD bilateral FDI database.
Despite the growth in FDI in the 2000s, inflows per capita and as a share of GDP continue to be moderate relative to other countries. The FDI stock and inflows are above or in line with other countries in the region such as Botswana, South Africa and Namibia and with the SADC average when measured in USD per capita but lower than in other international comparators (Figure 2.9). Mauritius performs worse when FDI is measured as a share of GDP: Mauritius’ FDI stock as a share of GDP is lower than the SADC average but remains higher than in South Africa and Botswana. These differences can be attributed to having a higher GDP per capita than in most other countries in Africa, particularly in SADC.
Mauritius significantly improved the regulatory environment for investment through a set of liberalising reforms in the mid-2000s, starting in 2005. In the context of these reforms, the favourable tax and regulatory environment, which was previously provided exclusively in the so-called export processing zone (EPZ), was expanded to the entire economy, thereby opening the economy to further competition, eliminating distortions and significantly reducing customs tariffs and trade barriers. Labour and business regulations and the tax system were simplified, notably through the introduction of a single corporate income tax rate of 15%. The Business Facilitation Act – adopted in 2006 – was at the core of these reforms. It amended 26 laws with the aim of simplifying business procedures by removing the scope for discretion and focusing on a rules-based approach.
The government also improved macroeconomic stability by dealing with high public deficits and rising public debt, implemented successful labour market reforms and simplified the process for starting a business. Labour market reforms succeeded in easing labour market regulations and reducing the high cost of job termination through the Employment Rights Act and the Employment Relations Act of 2008/2009. In 2008, Mauritius made starting a business faster by implementing a centralised database linking the company registry with tax, social security, and local authorities, thereby reducing the cost of starting a business by two thirds and the number of days required to start a business from 46 to 6 days.
Notes: See figure 2.5. for the UNCTAD’s definition of FDI.
Source: UNCTAD bilateral FDI database
FDI in Mauritius originates largely from Europe (51%), Africa (18%) and Asia and Oceania (18%) (2018-22), reflecting the country’s strategic position between Africa and Asia (Figure 2.7, Panel A). The main countries of origin of FDI in Mauritius in 2018-22 were France (26.6%), reflecting historical ties, and South Africa (14.3%), which is the largest market for Mauritian products in proximity (Figure 2.7, Panel B). Other important home countries include the United Kingdom (6.4%), the United Arab Emirates (6.3%) and China (5.6%). France accounts for a large share of investment in real estate in Mauritius, owing to retired French buying a secondary residence in Mauritius. South Africa and the United Arab Emirates are also present in the Mauritian real estate market although to a lesser extent (Roxana Popescu, 2021[8]).
FDI from Africa has increased faster than from Europe. FDI inflows from Africa increased more than twenty times and FDI inflows from Asia and Oceania tripled between 2006 and 2012 whereas FDI from Europe only doubled over the same period (Figure 2.8). While the bulk of investment originated from Europe in 2006 (74%), FDI inflows from Europe accounted for only 35% of Mauritius’ total FDI inflows in 2022, with 13.7% originating from Africa and 13.4% from Asia and Oceania. Since 2012, FDI from Europe, Africa and Asia has remained at similar levels, albeit with some fluctuations. The increase in investment from Africa can be attributed to the government’s pro-African policies, seeking to position Mauritius as a gateway for investment to, and trade with, Africa (Capital Economics/EDB, 2021[9]; EDB, 2023[10]).
Note: Panels A and B are based on FDI statistics from the Bank of Mauritius excluding direct investment in global business companies.
Source: Bank of Mauritius
FDI inflows into Mauritius by geographical origin, million USD
Source: Bank of Mauritius
The bulk of traditional FDI flows into real estate and export-oriented sectors, which allow investors to benefit from economies of scale by expanding their markets beyond Mauritius. This also includes sectors which have already developed into, or have the potential to become, regional hubs such as financial services and the ICT/BPO sector (World Bank Group, 2015[1]). Real estate accounted for 56.5% of FDI between 2018 and 2022, followed by finance and insurance (12.2%), accommodation and food services (6.8%), manufacturing (5%), education (4.6%), wholesale and retail trade (3.3%) and ICT (2.9%) (Figure 2.9, Panel A). FDI in real estate has increased ninefold since 2006, when it amounted to only 23.5% of total FDI inflows (Figure 2.9, Panel B). Some non-traditional sectors such as ICT, education and health have also attracted increasing FDI inflows over the last decade but their overall contribution to total FDI remains low. On the other hand, FDI in finance and insurance services, accommodation and food services and manufacturing has been on a declining trend.
Note: Panels A and B are based on FDI statistics from the Bank of Mauritius excluding direct investment in global business companies.
Source: Bank of Mauritius
The composition of Mauritius’ FDI inflows broadly resembles the composition of private GFCF with a strong concentration of investment in real estate. FDI is overrepresented in the real estate sector, which accounted for 57% of FDI inflows and 47% of private GFCF between 2018 and 2022. FDI is also overrepresented in the financial services sector, which attracted 12.2% of FDI but only 1.8% of private GFCF between 2018 and 2022. This mirrors the importance of Mauritius as an international financial centre. The wholesale and retail sector in turn receives predominantly domestic investment: accounting for 8.6% of private GFCF but only 3.3% of FDI. This can be attributed to the prevalence of many MSMEs in this sector, which are mainly domestic firms. FDI is also underrepresented in information and communication but overrepresented in the education sector relative to total private GFCF. Accommodation and food services and manufacturing attract similar proportions of FDI as of private GFCF.
Except for financial services, the bulk of FDI is directed towards sectors with relatively low value-added growth. Modern services industries recorded the fastest growth rates between 2012 and 2022 (Figure 2.10), including ICT services (6% real growth), financial and insurance services (5.1%), health and social work (4%) and professional services (3.3%). Amongst those sectors, only financial and insurance services received a significant share of FDI inflows –12.5% between 2013 and 2022, while other services industries did not account for more than 3% of total FDI. The real estate sector in turn grew at only 3.1% on average between 2017 and 2022 (in constant prices) and accounts for only 5.5% of total value added (2022). Accommodation and food services, which received the third largest share of FDI inflows between 2013 and 2022, and the manufacturing sector, which received 5.5% of FDI inflows, grew at slower rates as well.
Average value added growth rate (%, constant prices) and FDI inflows (% of total)
Source: FDI: Bank of Mauritius, Value added: Statistics Mauritius
FDI in real estate is mostly related to the sale of high-end luxury property to foreigners, which is largely occupied by foreign residents (World Bank, 2022[11]). This type of foreign investment has been promoted and facilitated through several so-called residency by property acquisition programmes, the first of which was launched in 2001 (Box 2.2). In parallel, Mauritius also developed several so-called residency for investment programmes, which target investment in economic sectors other than real estate. Seven Residency by Property Acquisition schemes account for 53.5% of Mauritius’ FDI stock (MUR 136 billion, or approximately USD 3 billion in 2023 by 4 566 investors).4 FDI in real estate has also been boosted by the tourism sector, one of the principal pillars of its economy supported by government policies targeting the high-end of the tourism industry (OECD, 2014[12]).
Residency by Property Acquisition Schemes
Luxury residential real estate investment schemes allow foreigners and their dependents to acquire a residence permit if they invest at least USD 375 000 in real estate. Advantages for investors include becoming tax resident in Mauritius and being exempted from occupation and work permits. The investment threshold was reduced from USD 500 000 to USD 375 000 in 2020 in light of the COVID‑19 pandemic. The following residency for investment schemes exist:
The Integrated Resort Scheme encompasses investments luxury real estate in designated IRS projects of at least 10 ha. It was launched in 2001 as the first Residency by Property Acquisition Scheme in Mauritius but has been discontinued since 2015.
Launched in 2007, the Real Estate Scheme comprises investments in luxury real estate within smaller residential developments than the IRS (up to 10ha). It was discontinued in 2015.
The Property Development Scheme was launched in 2015 to replace the IRS and the RES. It encompasses investments in luxury residential properties combined with open spaces, leisure and recreational facilities as well as day-to-day management services.
The Invest Hotel Scheme allows for acquiring hotel rooms or units. The unit owner may use the unit or room(s) for a total of 180 days in any period of 12 months.
The Smart City Scheme was launched in 2015 and allows foreigners to acquire real estate within designated smart cities – large-scale developments consisting in residential buildings, offices, commercial spaces, educational institutions and medical and leisure facilities.1
The Ground +2 Apartment Scheme consists in the acquisition of residential property by foreigners in buildings of at least two levels above the ground floor.
In addition to these schemes, the Senior Living Residence Scheme allows non-citizen retirees aged above 50 years to acquire residential units or life rights in retirement homes that cater to adults aged 50 and older.
Residency by Investment Programme
In the context of Mauritius’ Residency by Investment Scheme, foreigners and their dependents become eligible for a 10-year residence permit if they invest a minimum amount of capital subject to different conditionalities (or a 20-year residence permit in the case of a minimum investment of USD 375 000). The renewal of this residence permit is generally subject to the achievement of a minimum gross annual income. Eligible investments include:
Foreigners investing a minimum of USD 50 000 in any business activity.
Foreigners owning or inheriting a business, which is already operational in Mauritius.
Foreigners investing a total of at least USD 50 000, out of which a minimum of USD 25 000 in high-tech machines and equipment in qualifying activities.
Foreigners investing in innovative projects subject to the EDB’s approval or registration with an accredited incubator.
Self-employed entrepreneurs investing USD 35 000 in professional services.
Foreigners investing at least USD 375 000 USD in qualifying business activities.
1. The Smart City Scheme aims to (a) to promote the creation of smart cities across Mauritius which shall be of mixed use comprising office, business, residential and entertainment components, all integrated in a coherent Master Plan focussing on innovation, sustainability, efficiency and quality of life and, where appropriate, involving the creation of technopoles or the construction of public transport stations or terminals; (b) to provide, in relation to the development of a smart city project, for – (i) the creation of an environment-friendly working, living and leisure space aiming at generating its own resources in terms of energy and other utilities and providing for state-of-the-art connectivity, smart modern transport and reducing traffic congestion; (ii) the promotion and co-ordination of the orderly and economic use and development of land; (iii) the proper management, development and conservation of natural and man-made resources for the purpose of promoting the social and economic welfare of the community and a better environment; (iv) ecologically sustainable development – and (c) to promote targeted economic activities and increase FDI and extend export promotion strategically to rapidly growing economies, while at the same time strengthening the industrial and service base and an economic diversification path.
The real estate sector has supported the development of ancillary services industries. These include first and foremost the construction sector but also financial and insurance services such as financial completion guarantees, wealth management and private equity funds, 3-D designers, companies in the media sector for advertising purposes and business and legal services such as the management of hotel units through management companies, marketing, accounting and notary services. The real estate sector is also contributing to the development of tourism infrastructure, including both, hotels and vacation houses and apartments.
FDI inflows in financial and insurance activities reflect the importance of Mauritius as a regional financial centre. Financial and insurance activities are one of the main pillars and largest sectors of the economy, accounting for 11.8% of GDP and 13.5% of gross value added (2022) (Statistics Mauritius, 2023[3]). The development of a regional financial hub was facilitated by the establishment of an institutional and legislative framework for offshore business activities since 1992 and an array of double taxation avoidance agreements (DTAAs) and international investment agreements (see Chapter 4) (Box 2.3). Mauritius’ international financial centre specialises in facilitating cross-border investments, supported by so-called global business companies. The cluster of financial and professional services firms includes banking, corporate services, funds, insurance, legal services and accounting (Capital Economics/EDB, 2021[9]).
The development of Mauritius’ financial sector was facilitated by the establishment of an institutional and regulatory framework for offshore business activities. In 1992, Mauritius enacted the Mauritius Offshore Business Activities Act and established the Mauritian Offshore Business Activities Authority, which was subsequently replaced by the Financial Services Commission (FSC) under the Financial Services Development Act in 2001. The 2001 Financial Services Development Act and the 2001 Companies Act also introduced so-called Global Business Companies (GBC). GBCs are designed specifically for international trade and investment, carrying out their main business operations from within Mauritius predominantly outside of Mauritius (see section on investment by global business companies) (OECD, 2014[12]; UNCTAD, 2017[7]; Capital Economics/EDB, 2021[9]). In 2006, the amendment of the Banking Act to eliminate the distinction between offshore and onshore banking further supported the development of financial services targeted at non-residents in Mauritius, which now represents more than half of banks’ deposits and loans in Mauritius (World Bank Group, 2015[1]).
A wide network of DTAAs and IIAs also played an important role in the country’s transformation into a regional financial hub. Mauritius’ 46 DTAAs (MRA, 2023[18]) combined with corporate tax simplification have increased its attractiveness as a low-tax gateway for channelling investments to third destinations. In particular, the DTAA with India, signed in 1983, which limited the capital gains tax on the sales of assets in India registered in Mauritius, facilitated investments in India from Mauritius from both Indian companies and international investors. However, following the renegotiation of the DTAA with India, since 2017, capital gains from the sale of shares in an Indian company in India are liable to tax in India. Mauritius’ many investment agreements have also contributed to its attractiveness as a regional financial hub (see Chapter 4) (UNCTAD, 2017[7]; Capital Economics/EDB, 2021[9]).
The international arbitration centre and stock exchange have further increased its attractiveness as an international financial centre for cross-border investments. In 2011, Mauritius established its International Arbitration Centre, which operated as a joint venture with the London Court of International Arbitration between 2011 and 2018. Further, Mauritius has a well-capitalised stock exchange, the Stock Exchange of Mauritius, founded in 1989. Foreign investors account for 40% of daily trading (World Bank Group, 2015[1]; Capital Economics/EDB, 2021[9]).
Investment in finance and insurance has been on a declining trend in recent years, decreasing by 80% between 2006, when the sector accounted for 50% of total FDI inflows, and 2020. This trend reflects the renegotiation of the DTAA with India, which was amended in 2016, to impose more stringent conditions on investors and prevent companies from using the Mauritian jurisdiction merely for tax purposes. In addition, the adoption of more stringent anti-tax avoidance rules in 20175 has put the financial sector under pressure (UNCTAD, 2017[7]; World Bank Group, 2015[1]). The diversification of investment in finance and insurance from predominantly Indian investors to more investors from African countries has been able to partially compensate for these factors.
Mauritius started developing export-oriented light manufacturing from the 1970s through the 1980s and 1990s. Textiles and clothing and, to a lesser extent, food products, mainly sugar and fish processing, made up the bulk of production. The development of manufacturing was supported by preferential trade agreements with the United Kingdom, the European Union and the United States, most importantly, the MFA but also the African Growth and Opportunity Act (AGOA). The MFA limited the ability of other countries such as India and China to compete with Mauritian textile production and exports to Europe and attracted FDI in the textile sector, especially from Hong Kong, China. Beyond preferential trade agreements, the EPZ, established following adoption of the 1970 Export Processing Zone Act, facilitated the development of the manufacturing sector (OECD, 2014[12]; World Bank Group, 2015[1]).
FDI in manufacturing accounts for only a small share of both FDI and private GFCF and has not increased substantially since 2006. Private GFCF in manufacturing has even declined from MUR 8.5 billion in 2007 to MUR 5.2 billion in 2022 (Statistics Mauritius, 2023[3]).This can be attributed to the textile sector’s loss of competitiveness following the phase-out of the MFA in 2004 and as a result of competition from low-cost textile production in China, India and Bangladesh while wages have been increasing in Mauritius (OECD, 2014[12]; Rossignoli, 2021[19]; ADB, 2020[20]). Likewise, the end of the sugar protocol in 2009 and the end of EU sugar-import quotas from African, Caribbean and Pacific states in 2017 reduced the international prices for Mauritian sugar. Lower international sugar prices in turn combined with a rising cost of sugar production and a decline in productivity in the sugar sector eroded the sector’s competitiveness (ADB, 2020[20]). As a result, the manufacturing sector has declined in relative terms from 15.8% of GDP in 2008 to 12% of GDP in 2022 (Statistics Mauritius, 2023[3]). This decline is also reflected in trends in FDI in manufacturing.
Opportunities exist in moving up the value chain to produce more sophisticated manufacturing products. Mauritius is already expanding manufacturing of higher value added and relatively sophisticated products such as medical devices, parts of watches, diamond polishing and processing, jewellery, electronics and pharmaceuticals (ADB, 2020[20]). Foreign investment in these manufacturing sub-sectors could support this expansion.
FDI in the tourism sector remains significant but is decreasing. Tourism represented 6.5% of GDP and accommodation and food services accounted for 7.5% of employment in 2022 (Statistics Mauritius, 2023[3]). Prior to the Covid-19 pandemic, in 2019, tourist arrivals amounted to 1.4 million travellers, which compares to a total resident population of 1.3 million (Statistics Mauritius, 2022[21]). FDI inflows in accommodation and food services have decreased by almost one third from USD 55.6 million between 2006 and 2010 to USD 37.1 million on average between 2018 and 2022 (Figure 2.9, Panel B).
This decline in FDI in the tourism sector can be attributed to a loss of competitiveness and deceleration in the sector’s growth. Accommodation and transport costs are relatively high and at the same time, air transport connectivity is limited. This has resulted in a decrease in tourist arrivals from Mauritius’ traditional markets, mainly Europe and the United States, following the 2008 financial crisis, which was further exacerbated by the Covid-19 pandemic. This loss in tourist arrivals from traditional markets has been offset only partially by arrivals from new markets such as China, India and South Africa (World Bank Group, 2015[1]). Opportunities for investment in the tourism sector and further raising tourism value added exist in the still under-developed marine leisure activities and in the growing medical tourism sector, which benefits from Mauritius’ highly developed and affordable healthcare sector (World Bank Group, 2015[1]).
FDI inflows in new, non-traditional sectors such as the ICT and BPO sectors have increased significantly over the last decade but remain low overall. FDI in ICT services has increased fivefold since 2006 but remains less important than domestic investment: the ICT sector accounted for 5.6% of private investment but only 2.9% of FDI between 2018 and 2022. Thanks to investments from companies such as Oracle, Microsoft, Accenture, Huawei, Orange Business Services, HP, IBM, Infosys, France Telecom, the TNT Group, CISCO and others, Mauritius has become a leader in Africa in BPO and ICT services (ADB, 2020[20]; World Bank Group, 2015[1]). As of 2019, over 700 ICT companies operated in Mauritius in a wide range of activities such as software development, call centre operations, BPO, IT-enabled services, web-enabled services, training, hardware assembly and sales, networking, consultancy, multimedia development or disaster recovery (ADB, 2020[20]). In 2022, the ICT sector accounted for 5.2% of GDP (Statistics Mauritius, 2023[3]). The development of the ICT/BPO sector has been facilitated by its financial services industry, which requires specialised legal and accounting services.
Government policies and language skills have supported the development of the ICT and BPO sectors. Mauritius’ ability to serve both French- and English-speaking export markets has contributed to the development of its BPO sector. In addition, government policies provide a solid regulatory framework that promotes infrastructure development and foreign investment in these sectors, including liberalising access to the landing stations of the three international submarine cables connected to Mauritius. This facilitates competition in the telecommunications market and reduced prices. As Mauritius is transitioning from BPO to information processing outsourcing, to continue supporting the ICT and BPO sectors’ growth, it will be crucial to develop more advanced ICT skills in Mauritius (World Bank Group, 2015[1]).
The sustainable ocean economy, particularly tourism, port services and seafood, presents another opportunity to attract FDI. The sustainable ocean comprises the exploitation of living and non-living resources in Mauritian waters, on the seabed and in the subsoil (World Bank Group, 2015[1]). As a Small Island Developing State, Mauritius is endowed with rich and diverse marine resources. The three most important sustainable ocean economy sectors in Mauritius are coastal tourism (see above), seaport-related activities and the seafood sector (World Bank Group, 2015[1]). Foreign companies have made an important contribution to the seafood industry, which accounts for 1.3% of GDP (2022) (Statistics Mauritius, 2023[3]) and employs approximately 12 000 people directly and indirectly (UNCTAD, 2017[7]). Opportunities exist in expanding the aquaculture sub-sector. Seaport-related activities in turn could be expanded in areas such as ship repair and maintenance, petroleum products and bunkering services as well as container transhipment, port and other cargo and logistics services. Mauritius could even leverage its strategic position between Africa and Asia to become a regional hub for those activities, thereby generating economies of scale and increasing market size (World Bank Group, 2015[1]).
Other investment opportunities in the sustainable ocean economy include research, non-edible ocean products, renewable energies, marine ICT, hydrocarbon exploration and marine finance. Pearl culture, ocean-based biopharmaceuticals, anti-cancer research and tidal energy are concrete opportunities. Moreover, Mauritius could potentially develop a regional sustainable ocean economy education and research hub, leveraging the University of Mauritius’ recently set up Department of Biosciences and Ocean Studies and the Mauritius Oceanography Institute, established in 2000 (World Bank Group, 2015[1]).
FDI in the health sector has been on an upward trend and could be further expanded. It has been encouraged by government policies, positioning Mauritius as an international and regional medical hub and knowledge centre (ADB, 2020[20]). Foreign investment in health has increased by an average annual rate of 18.8% since 2007 from a low initial level. Opportunities for further investment in the sector exist in health tourism and in linking the health sector to the sustainable ocean economy, allowing for innovative medical research and the production of biopharmaceuticals. Health tourism could expand the health sector’s market beyond Mauritius, thus allowing for economies of scale. Increasing private participation in the health sector, which is largely funded by the government, could facilitate the modernisation of medical facilities and equipment and the expansion of the health tourism sector (AHB, 2021[22]).
Similarly, FDI in the education sector has been increasing recently and could be scaled up even more. Mauritius’ education sector experienced a spike in FDI inflows amounting to USD 103 million in 2022 as a result of investments by the African Leadership University. As a result, FDI is overrepresented in the education sector, which attracted 4.6% of FDI but only 1.1% of private GFCF between 2018 and 2022. FDI in education could be expanded by attracting additional offshore campuses6 of universities abroad, opening branches in Mauritius. These campuses cater largely to foreign students, thereby increasing the target market beyond Mauritius and generating economies of scale. The natural beauty of Mauritius and the lifestyle outside the educational context combined with only a few hours’ time difference with European countries offer advantages for developing this sector. Several foreign educational institutions have already opened campuses and branches in Mauritius, including the British Middlesex University and the Australian Curtin University (Middlesex University Mauritius, 2023[23]; Curtin Mauritius, 2023[24]). In addition to attracting new offshore campuses, it would also be important to improve the enabling environment for these institutions as well as promotion and image building of Mauritius as an attractive destination for higher education. This includes, for example, easier access to residence and work permits for foreign students in Mauritius following their graduation.
Mauritius Freeport is playing an important role in attracting foreign investment and in establishing Mauritius as a regional trading and logistics hub. Established in 1992, Mauritius Freeport is a commercial free zone which offers services and benefits such as world-class logistics and warehousing facilities. This includes logistics services for dry warehousing, cold rooms, processing activities and office space (OECD, 2014[12]). It also organises events and offers tax incentives such as VAT and customs exemptions, 100% foreign ownership and free repatriation of profits (Myles, 2023[25]). Mauritius Freeport further offers different support schemes for SMEs, including preferential treatment of female-led SMEs in public procurement. During the Covid-19 pandemic, it offered SMEs interest-free loans and freight rebates (Myles, 2023[26]). Mauritius’ Freeport was nominated the best free zone in Africa by FDI Intelligence’s Global Free Zones of the Year 2023 Awards in the categories large tenants and SMEs (Myles, 2023[25]; Myles, 2023[26]).
Investment in the Freeport is concentrated in logistics and distribution services, but FDI also flows into processing, manufacturing and trading activities. Large companies, which recently invested in the freeport include pharmaceutical companies, a company processing PET plastic bottles, beverages and food manufacturers, a sport equipment distributor and a solar equipment producer. These companies originate from countries such as France, South Africa, the UAE or Japan (Myles, 2023[25]). SMEs, which have recently invested in Mauritius Freeport include a stationery supplier from India, a South African spices and flavouring firm, a British company processing precious and semi-precious stones, and a ceiling specialist from Chinese Taipei (Myles, 2023[26]).
Unlike with traditional FDI, Mauritius has successfully attracted significant investment in global business companies. Mauritius offers two types of international company licences: GBCs are corporations conducting business primarily outside of Mauritius, which are resident for tax purposes and can benefit from the country’s wide network of double taxation treaties. Authorised Companies (ACs) conduct business principally outside of Mauritius, have their central management and control outside of Mauritius and are non-resident for tax purposes and therefore not subject to corporate income tax (FSC Mauritius, 2023[27]; Business Consult, 2022[28]; Capital Economics/EDB, 2021[9]).7 As of January 2023, there were 12 714 active GBCs in Mauritius and 6 219 active ACs (FSC Mauritius, 2023[29]). In 2022, the global business sector accounted for 7.4% of GDP, a similar contribution as the tourism sector (6.5% of GDP in 2022) (Statistics Mauritius, 2023[3]). GBCs’ inward direct investment stock in Mauritius amounts to USD 358 billion, more than 30 times the country’s GDP (2021) (Figure 2.11, Panel A) (FSC Mauritius, 2023[30]). Most of these funds do not stay in Mauritius but are channeled to third destinations. This is reflected in GBCs’ high outward investment stock: USD 293 billion in direct investment and USD 168 billion in portfolio investment as of December 2021,8 representing together more than 40 times Mauritius’ GDP (Figure 2.11, Panel B) (FSC Mauritius, 2023[30]).
Source: Financial Services Commission Mauritius
Approximately half of GBC outward direct investment stock is in India reflecting advantages linked to the DTAA with India as well as proximity and cultural links (48.2% of total) (Figure 2.12, Panel B). Cultural ties with India date back to the 19th and 20th centuries when the island was under British rule and developed strong trade relations with India. This resulted in a significant influx of Indian migrants into Mauritius. To this day, a large share of the population is of Indian descent (approximately two-thirds) (Capital Economics/EDB, 2021[9]). The DTAA with India in turn has encouraged Indian companies and individuals seeking to invest domestically to channel their investments through global business companies in Mauritius (so-called “round-tripping”)9 by limiting the capital gains tax on the sale of assets in India registered in Mauritius (UNCTAD, 2017[7]). Estimates indicate that approximately 20% of GBC outward investment in India could be linked to round-tripping (Capital Economics/EDB, 2021[9]).
Most other countries of origin and destinations of significant amounts of GBC direct investment benefit from DTAAs and IIAs with Mauritius or are international financial centres. This includes the United States, the Cayman Islands, the United Kingdom and Singapore (Figure 2.12, Panels A and B). Significant inward and outward GBC direct investment to and from Singapore, the United Kingdom and South Africa can further be attributed to DTAAs and IIAs with these countries (UNCTAD, 2023[31]; MRA, 2023[18]) as well as proximity in the case of South Africa, which is the largest economy in the region. In addition, exchange controls in South Africa can make it difficult to conduct international business activities abroad, making Mauritius an attractive destination for South African companies looking to expand their activities into other countries. It is important to note that the geographical distribution of GBC direct investment does not always reflect the ultimate source and destination of capital flows but rather transit countries, through which capital flows are mediated as a result of the advantages which they offer, such as the Cayman Islands or Bermuda (Capital Economics/EDB, 2021[9]).
Source: Financial Services Commission Mauritius.
Financial services, business services, software & IT, communications and the energy sector account for most greenfield FDI projects and M&A deals (Figure 2.13). The data do not cover the sale of residential real estate to private individuals. Both greenfield FDI projects and M&A deals in financial services and insurance are concentrated in investment management, reflecting Mauritius’ financial centre and the large number of GBCs operating in international trade and investment. M&A deals in industrial services consist mainly of business support services, civil engineering and employment services. Greenfield FDI projects in business services, on the other hand, cover a variety of activities such as employment services, legal services, business support services, advertising, civil engineering and education services. Greenfield FDI in software and IT relates mainly to computer programming services and software publishing whereas M&A deals cover software, data processing and information retrieval and computer facilities management.
Over the past 20 years, greenfield investment projects have grown in software & IT and in renewable energies but have decreased in tourism. The increase in investment in renewable energies can be attributed to several investment projects in large solar power plants since 2014 by companies from France, the US and other African countries. The decrease in greenfield investment in hotels and tourism could be explained by the sector’s loss in competitiveness. It relates to both a decrease in the construction of new hotels by large international groups and investments by international travel service providers. An increase in M&A deals in the minerals sectors can be attributed to several deals in metals mining and construction materials.
Note: This figure displays the number of greenfield FDI and M&A projects rather than the amount of capital invested since data on the amount of capital invested was only available for 40% of M&A deals in Mauritius.
Source: Panel A. FDI Markets; Panel B. Refinitiv
India, South Africa, France, the UK and the US account for the majority of greenfield investment and M&A deals in Mauritius (Figure 2.14). Greenfield investment and M&A deals from India, South Africa the UK and the US target largely modern services industries, including financial, business, software and IT services. This reflects the UK and US position as international financial centres and the significant financial, business and software and IT industries in these countries. In addition, investment from South Africa also flows into the retail sector. M&A deals from UK investors in turn also target metals and mining. Greenfield FDI and M&A deals from France are dispersed across many different sectors, including solar energy, modern services industries and manufacturing, reflecting the broad historical ties.
The openness of Mauritius’ trading system has supported FDI inflows in export-oriented manufacturing and services industries and the development of regional finance and ICT hubs. Mauritius joined the WTO in 1995 and is a member of eight regional trade agreements and beneficiary of 12 bilateral preferential trade agreements. It has a very liberal trading regime and is one of the most open economies in the world, ranking fourth of 176 countries in 2023 in terms of trade openness on the Heritage Foundation’s Economic Freedom Index in the category trade freedom (The Heritage Foundation, 2023[32]). Approximately 98% of tariff lines are duty-free (World Bank Group, 2015[1]) and Mauritius is amongst the ten countries worldwide with the lowest average tariff rate (1.18% in 2020, and 0.92 when weighted by products’ share in total imports) (World Bank, 2023[33]). It has also significantly reduced non-tariff barriers (World Bank Group, 2015[1]). In 2022, exports of goods and services amounted to USD 7.2 billion or 56% of GDP. Overall, trade amounted to 119% of GDP in 2022 compared to 92% on average in SADC members (2022) and 56% on average in OECD members (2021) (World Bank, 2023[33]).
Note: This figure displays the number of greenfield FDI and M&A projects rather than the amount of capital invested since data on the amount of capital invested was only available for 40% of M&A deals in Mauritius.
Source: Panel A. FDI Markets; Panel B. Refinitiv
Mauritian exports are well-diversified and their composition reflects FDI inflows. Prior to the Covid-19 pandemic, travel and tourism (33.8% of total exports between 2017 and 2019), agriculture (17.7%), ICT services (15.7%) and textiles (14.9%) accounted for the largest shares of exports (Figure 2.15, Panel A). The main agricultural export products are processed fish, reflecting Mauritius’ location as a small island in the tropics, and sugar, a remnant of preferential access to European and US markets in the past. Similarly, the significant textile exports relate to preferential access to the European market in the past and continued preferential access to the US market through AGOA. The significant financial service and ICT exports can be attributed to the large financial services, ICT and BPO industries. Exports of transport services (7.4% of total exports between 2017 and 2019) reflect the country’s increasing role in providing logistics services to the region (ADB, 2020[20]).
However, Mauritian exports remain concentrated in relatively unsophisticated products, including light manufacturing, food-processing and tourism. Mauritius has developed some more sophisticated export industries such as insurance and financial services and ICT and more technology-intensive manufacturing goods such as chemicals and optical and medical devices, watch parts or diamonds and jewelry. But exports of these goods and services remain much smaller than those of traditional export sectors such as textiles, food products and tourism (World Bank, 2021[34]; Rossignoli, 2021[19]). Overall, the export composition is like that of countries with lower incomes per capita (World Bank, 2021[34]).
Note: Panel A shows the composition of Mauritius’ exports between 2017 and 2019 prior to the Covid-19 pandemic since the pandemic significantly altered the country’s export composition through its strong impact on travel and tourism and transport, which declined significantly.
Source: Harvard Atlas of Economic Complexity
Mauritian exports expanded impressively in the 2000s but have stagnated over the past decade and declined significantly during the Covid-19 pandemic, mirroring trends in FDI inflows (Figure 2.15, Panel B). The strong growth in exports until 2012 was driven by expanding services exports, especially tourism and ICT services, from USD 0.8 billion in 1995 (34% of total exports) to USD 3.4 billion in 2012 (60% of total exports) (Ranzani, Bergmann and Tandrayen-Ragoobur, 2019[2]). Meanwhile, textile and agricultural exports have been on a declining trend over the last decade because of the loss of competitiveness in these sectors following the loss of preferential access to export markets. Even though exports in some more sophisticated manufacturing activities increased simultaneously, this was not sufficient to offset the loss of market share in these traditional export sectors (World Bank, 2021[34]). As a result, Mauritian exports as a share of GDP declined from 59% in 2005 to 44% in 2019 and then to 39% in 2020 in the context of the Covid-19 pandemic (World Bank, 2023[33]). Services exports were hit particularly hard by the Covid-19 pandemic: they more than halved, largely from the collapse of tourism, from USD 3 billion in 2019 (56% of exports) to USD 1.2 billion in 2021 (37% of exports).
Mauritian export destinations are diversified among many countries, led by France (12.2% of exports), the US (12.1%) and South Africa (9.5%) (Figure 2.16). These countries are also amongst the top countries of origin of FDI inflows. The largest share of exports goes to Europe (38%), followed by Africa (34.7%), Asia (14.5%) and the Americas (12.8%). While exports to European countries have declined by 44% since 2013, exports to Africa and Asia have expanded steadily over the last decade, reflecting enhanced regional integration with African countries, supported by intra-regional trade agreements and Mauritius’ pro-Africa policies, as well as new trade agreements with Asian countries. This includes the Common Market for Eastern and Southern Africa (COMESA) (1994) and SADC (1995) and more recently the Tripartite Free Trade Area (EAC-COMESA-SADC) (2019), the Africa Continental Free Trade Agreement (2019), the Mauritius-China Free Trade Agreement (FTA) (2019) and the Mauritius-India Comprehensive Economic Cooperation and Partnership Agreement (CECPA) (2021) (ADB, 2020[20]; ITA, 2023[35]; Capital Economics/EDB, 2021[9]). In December 2023, Mauritius concluded a Comprehensive Economic Partnership Agreement with the United Arab Emirates. Supported by these trade agreements, in particular the Africa Continental Free Trade Agreement, trade between Mauritius and the African continent is expected to grow further.
Mauritius’ goods exports by partners (% of total)
Source: A. UN Comtrade; B. Harvard Atlas of Economic Complexity
Besides providing a source of financing, FDI may support sustainable development. It can help to diversify the economy, provide technology and knowledge, develop the host country’s skills base, boost productivity, and establish linkages with local firms, which help them to access new markets and integrate in global value chains. Aside from the pure economic benefits, FDI can also support social and environmental goals, for instance by promoting responsible business conduct and the use of cleaner technology. This section explores how FDI contributes to selected aspects of Mauritius’ sustainable development using the OECD’s FDI Qualities Indicators (Box 2.4). Most of the FDI Qualities Indicators examined in this section are based on data from the 2020 World Bank Enterprise Survey (WBES) for Mauritius (Box 2.5). It is, however, important to bear in mind that this analysis has to be taken with caution since the sample of foreign firms is very small and may not be fully representative, leaving out sectors such as real estate, which is not covered by the WBES but which accounts for the bulk of FDI in Mauritius. Further, the quality of the data does not allow for examining sector-specific differences between foreign and domestic firms.
The OECD FDI Qualities Indicators describe how FDI relates to specific aspects of sustainable development in host countries. They currently focus on four clusters: productivity and innovation; employment, job quality and skills; gender equality; and the carbon footprint. These clusters have been selected in consultation with various stakeholders of the FDI Qualities Policy Network, which includes policymakers, the private sector, civil society, international organisations and academia. For each of the four clusters, many different outcomes are identified and used to produce indicators that relate them to FDI or activities of foreign multinationals. Most FDI Qualities Indicators are calculated using data from the World Bank Enterprise Surveys.
Considering the country-specific context, policymakers can use the FDI Qualities Indicators to assess how FDI supports national policy objectives, where challenges lie, and in what areas policy action is needed. Indicators also allow cross-country and cross-sectoral comparisons and benchmarking against regional peers or income groups. This can help to identify good practices and make evidence-based policy decisions.
Source: OECD (2019), FDI Qualities Indictors: Measuring the sustainable development impacts of investment, OECD Publishing, Paris, http://www.oecd.org/investment/fdi-qualities-indicators.htm.
Foreign firms in Mauritius tend to be larger, more productive and more likely to export and to pay higher wages than domestic firms. Foreign firms’ volume of sales and number of employees are both approximately 1.5 times those of domestic firms on average (Table 2.1). Further, foreign firms pay 12% higher wages than domestic firms and the value added per worker in these firms is almost 50% higher than in domestic firms. Foreign firms export either directly or indirectly half of their sales while domestic firms export only 13%, on average, suggesting that foreign firms are better integrated in global value chains. These findings are in line with the theoretical literature, which predicts that foreign firms tend to be larger and more productive than domestic firms since only sufficiently large and productive firms can pay the fixed cost of investing abroad (Helpman, Melitz and Yeaple, 2004[36]).
World Bank Enterprise Surveys (WBES) are nationally representative firm-level surveys, with top managers and owners of businesses interviewed using a globally comparable questionnaire. They cover a broad range of business environment topics such as innovation, training, access to finance and infrastructure as well as firms’ characteristics and performance measures. To date, WBES have been conducted in 155 countries and 319 WBES are publicly available on the WBES website. These surveys have been collected through a consistent methodology and indicators can be benchmarked across countries. However, given that World Bank Enterprise Surveys are not conducted regularly in all countries, data for different countries are not always available for the same year.
The 2020 survey for Mauritius covers 732 firms, although 132 firms are excluded from the analysis since their responses reflect arbitrary and unreliable numbers. The remaining 600 companies consist of 38 foreign (6.3% of firms) and 562 domestic firms (93.7% of firms). They are concentrated in the retail sector (48.8% of firms), followed by different manufacturing industries (20.8% of firms, including food, textiles & garments, wood & furniture, chemicals, rubber & plastics), accommodation (9.7% of firms), transport & storage (8.8% of firms), other services (8.5% of firms) and IT & Telecommunications (3.3% of firms). The survey does not cover real estate companies. Further, given the small size of the sample of foreign firms, it may not be fully representative.
Source: (World Bank, 2023[37]), Mauritius 2020 World Enterprise Survey
(Differences between foreign and domestic firms in Mauritius, comparative statistics, 2020)
Note: Export intensity: % of sales, which are direct or indirect exports.
Source: World Bank Enterprise Survey Mauritius 2020
There is some evidence that foreign firms in Mauritius outperform domestic firms in terms of labour productivity. On the macro-level, labour productivity in Mauritius is significantly higher than in SADC but remains well below the OECD average (see chapter on productivity trends in Mauritius). In foreign firms in Mauritius, annual value added per worker (calculated using firms’ sales as an approximation for value added), a proxy for labour productivity, is 43% higher than in domestic firms
Table 2.1). However, this productivity difference is at the borderline of statistical significance and less pronounced than in comparators such as Greece, the Dominican Republic or Malaysia (Figure 2.17, Panel A). Foreign firms’ higher productivity could be explained by their larger scale of operations, allowing them to harness economies of scale, and better access to technology, financial resources and foreign markets (as evidenced by their significantly higher export intensity), combined with better managerial skills (Javorcik, 2004[38]; Arnold and Javorcik, 2009[39]; Alfaro and Chen, 2012[40]; OECD, 2022[41]).
Except for financial services, FDI in Mauritius is not concentrated in technology-intensive sectors. The bulk of FDI is directed towards two sectors with a high value added per worker: real estate and financial services. While high productivity in financial services can be linked to the sector’s skills- and technology-intensity, the high value added per worker in real estate can be largely explained by the sector’s capital intensity whereas the sector generates few technology and knowledge spillovers. The remainder of FDI in Mauritius is largely directed toward labour-intensive sectors with a relatively low value added per worker, such as accommodation and food services, education, wholesale and retail trade, or light manufacturing (Figure 2.17, Panel B). This is in line with evidence that foreign manufacturers do not always operate in more productive or innovative sectors, but often target labour-intensive industries where the intensity of innovation is expected to be lower than in capital-intensive manufacturing (OECD, 2022[41]).
Productivity growth is stronger in foreign than domestic companies. Overall, labour productivity growth in the economy has been on a declining trend over the last two decades (see Chapter 3). Labour productivity growth in foreign firms averaged 8.6% between 2017 and 2020 compared to only 1.2% in domestic firms. This difference is statistically significant and larger than in most comparators (Figure 2.18, Panel A). With the right policy mix in place, foreign firms could boost economy-wide productivity growth both through spillovers and by attracting more foreign firms with a strong productivity performance.
On average, sectors with above average labour productivity growth do not attract more FDI. The amount of FDI which a sector receives is not correlated with the sector’s labour productivity growth rate (Figure 2.18, Panel B). This relationship is positive only when accommodation and food services, which receive a significant share of FDI inflows and are subject to a strong average decline in labour productivity between 2017 and 2022, are excluded. The decline in value added per worker in accommodation and food services can be attributed to the sharp decrease in tourism arrivals in the context of the Covid-19 pandemic and the resulting decline in hotel and restaurant sales. There is thus some evidence that FDI in other sectors is concentrated in sectors with above average labour productivity growth.
Notes: Panel A: The indicator registers a positive value if foreign firms have higher outcomes than domestic firms, and a negative value if foreign firms have lower outcomes, on average. Confidence intervals are reported at the 95% confidence level. If the confidence interval crosses the zero line, the difference of average outcomes of foreign and domestic firms is not statistically significant. Panel B: Real estate (56.5% of cumulative FDI inflows between 2018 and 2022) is excluded but the line showing the correlation between cumulative FDI inflows and average employment growth takes into account the real estate sector.
Source: Panel A: World Bank Enterprise Survey Mauritius 2020; Panel B: Data on FDI inflows: Bank of Mauritius; data on value added per worker: Statistics Mauritius.
Foreign firms in Mauritius are significantly more likely to engage in innovation than domestic firms. At the macro-level, Mauritius still lags behind upper middle income and OECD countries in terms of R&D and innovation (see chapter 3). At the micro-level, while 27.2% of foreign firms reported spending on R&D in 2020, only 9.3% of domestic firms did so (Figure 2.19). Similarly, 60.2% of foreign firms in Mauritius introduced a product innovation in 2020, compared to only 44.1% of domestic companies, and 36.4% of foreign companies introduced a process innovation in 2020 compared to only 19.7% for domestic firms. These differences are both large and statistically significant. Even though foreign firms in Mauritius still lag behind those in top performers in terms of innovation, including Costa Rica, Namibia or Uruguay, they outperform foreign firms in many other comparators such as Portugal, Greece, Thailand or Croatia.
Foreign firms’ strong performance in innovation could allow for technology spillovers but could also be evidence for limited absorptive capacities in domestic firms. More innovation in foreign companies increases opportunities for knowledge and technology spillovers and transfers to domestic firms. Such spillovers would be particularly important given limited private sector involvement in innovation and R&D in Mauritius (see chapter 3). However, on the other hand, the significant gaps in terms of innovation between foreign and domestic firms could also indicate limited capabilities of domestic firms to acquire, assimilate and use the information, knowledge and technologies, which they receive through interactions with foreign firms (also called absorptive capacities) (OECD, 2022[41]). Evidence suggests that domestic suppliers with better technological capabilities tend to be better able to absorb foreign firms’ knowledge (OECD, 2022[41]; Nicolini and Resmini, 2010[42]; Saliola and Zanfei, 2009[43]).
Notes: Panel A. Labour productivity growth is defined as annual growth in value added per workers based on firms’ total sales. The OECD and SADC averages are based on the latest year, for which data is available, for each country. Angola and Namibia are excluded from the SADC average since they are outliers and as a result of the small number of observations available for Namibia. Panel B: Real estate (56.5% of cumulative FDI inflows between 2018 and 2022) is excluded but the line showing the correlation between cumulative FDI inflows and average employment growth takes into account the real estate sector.
Source: Panel A: World Bank Enterprise Survey Mauritius 2020; Panel B: Data on FDI inflows: Bank of Mauritius; data on value added per worker: Statistics Mauritius.
Spending on R&D (% of firms), having introduced a product innovation (% of firms) and having introduced a process innovation (% of firms)
Note: The OECD and SADC averages are based on the latest year, for which data is available, for each country.
Source: World Bank Enterprise Survey Mauritius 2020
Domestic firms can benefit from knowledge, technology and skills spillovers from foreign firms through business linkages, competition, imitation effects and labour mobility. Business linkages include those between foreign affiliates of multinational enterprises (MNEs) and domestic suppliers or customers; and strategic partnerships, which involve formal collaborations beyond buyer-supplier relationships, for example in the area of R&D or workforce/managerial skills upgrading (OECD, 2022[41]).10 On the other hand, spillovers between firms in the same industry can be the result of competition and imitation effects: the entry of foreign firms heightens the level of competition on domestic companies, putting pressure on them to become more innovative and productive (OECD, 2022[41]; Becker et al., 2020[44]). Finally, labour mobility consists in the movement of MNE workers to domestic firms – either through temporary arrangements such as secondments and long-term arrangements such as open-ended contracts – or through the creation by MNE workers of start-ups (i.e. corporate spin-offs) (OECD, 2022[41]). Spillovers through these channels can include the acquisition of new technology, the development of new skills, improved management practices, the creation of new products, improved quality of existing products, cost reductions and access to new markets for selling or buying inputs, including foreign markets. The extent of spillovers depends on the absorptive capacities of domestic firms (see above).
The potential for technology and knowledge spillovers in Mauritius is limited by the concentration of FDI in the real estate sector. Even though this sector, which receives the bulk of FDI inflows contributes to developing tourism infrastructure and ancillary services such as construction, wealth management and providers of smart home appliances, it has a very limited potential for knowledge and technology spillovers. FDI inflows in other sectors more likely to generate technology and knowledge spillovers accounted for only 0.9% of Mauritius’ GDP or USD 80 per capita between 2020 and 2022.11
In sectors other than real estate, there is evidence for technology and knowledge spillovers from foreign to domestic firms. Fully 16.5% of domestic firms in Mauritius use technology licensed from a foreign company (excluding office software), the highest share of domestic firms among comparators in the region and elsewhere (Figure 2.20, Panel A). This can be attributed in part to the large share of domestic companies in the ICT sector (67.2%) and in the textile sector (35.5%), which are using foreign technologies (Figure 2.20, Panel B). The share of firms using foreign technologies is above 20% as well in other manufacturing industries, accommodation, transport and storage. Labour productivity12 is 36.2% higher in domestic firms using foreign technology than in firms which are not. These results have to be taken with caution since the indicator is not limited to foreign-owned companies based in Mauritius and therefore technology licensing could occur through channels other than local spillovers.
Domestic firms serve as foreign firms’ suppliers to a lesser extent in Mauritius than in comparators. Foreign firms source only 24.7% of their inputs domestically, the lowest share among comparators (Figure 2.21). The share of inputs sourced domestically is particularly low in the manufacturing sector (6.6%), indicating that foreign manufacturers rely largely on imported inputs. This reflects the composition of Mauritius’ manufacturing sector, which is concentrated in low-technology products, mainly textiles and food processing. These products generally do not generate significant knowledge spillovers or linkages to other productive sectors (ADB, 2020[20]). On the other hand, the relatively low share of locally sourced inputs could be linked to Mauritius’ very open trading system with very low tariff and non-tariff barriers. This theory is supported by the equally low share of domestically sourced inputs by domestic companies in Mauritius compared to countries in the region and elsewhere (46% compared to 69% on average in SADC and 65% on average in OECD members).
Note: Panel A. The OECD and SADC averages are based on the latest year, for which data is available, for each country.
Source: World Bank Enterprise Survey Mauritius 2020
Foreign firms’ share of domestically sourced inputs (%)
Note: The OECD and SADC averages are based on the latest year, for which data is available, for each country.
Source: World Bank Enterprise Survey Mauritius 2020
Knowledge and technology spillovers in Mauritius could be the result of strategic partnerships, competition and imitation effects and labour mobility. Given the rather low share of foreign firms’ inputs sourced domestically, there could be additional transmission channels for the large amount of technology spillovers from foreign to domestic firms, which is suggested by the large share of domestic firms using foreign technology. An alternative transmission channel for these spillovers could be strategic partnerships, particularly in technology-intensive sectors such as the ICT sector. Another transmission channel could be competition and imitation effects, especially in labour-intensive sectors such as textiles and other light manufacturing industries and accommodation services. International evidence suggests that spillovers as a result of competition and imitation are frequently found in labour-intensive sectors such as light manufacturing (OECD, 2022[41]; Nicolini and Resmini, 2010[42]). Lastly, spillovers could also be attributed to labour-mobility between MNEs and domestic firms (OECD, 2022[41]).
A large proportion of foreign firms in Mauritius provide their employees with training: 62% of foreign firms offer their workers training compared to only 19% of domestic firms, a statistically significant difference (Figure 2.22, Panel A). Further, the share of foreign firms providing training to their workers is higher in Mauritius than in most comparators even though the share of domestic firms offering their workers formal training is lower than in most international comparators. This is in line with international evidence that foreign firms often contribute to skill development in host countries by providing training to their employees or to the employees of domestic partner companies, for instance to ensure the quality and reliability of inputs (OECD, 2022[41]). On the other hand, the big difference in providing training between foreign and domestic firms could also be attributed to more significant skills mismatches and shortages in foreign firms, which may require workers with more rare or different skill sets than domestic firms. Even though Mauritius performs well in education outcomes overall, skills mismatches are a challenge for some businesses (see chapter 3).
Evidence suggests that foreign manufacturing firms employ a moderately higher share of skilled production workers than domestic firms. The share of permanent full-time skilled workers in foreign and domestic manufacturing companies in Mauritius is in line with international comparators even though it remains below top performers such as Portugal, Croatia or Thailand (Figure 2.22, Panel B). On average, 71.5% of foreign firms’ workers are skilled compared with 62.4% in domestic firms. However, these numbers have to be taken with caution since the World Bank Enterprise Survey 2020 for Mauritius includes only 10 manufacturing companies. Given this small sample size, this difference is not statistically significant. When looking at all permanent full-time workers, foreign and domestic firms’ performance in terms of skilled workers is very similar: while 31% of domestic firms’ workers are skilled, 30.6% of foreign firms’ workers are skilled. The moderate performance of foreign manufacturing companies in terms of skilled workers could be attributed to the prevalence of FDI in relatively labour-intensive light manufacturing activities, often employing a significant amount of low-skilled workers (OECD, 2022[41]).
FDI in Mauritius is not concentrated in sectors which generate many jobs. The real estate sector, which attracts the bulk of FDI (56.5% of total between 2018 and 2022) employs only approximately 1 500 workers (2022) and accounts for less than 0.3% of employment, less than any other economic sector (Figure 2.23, Panel A), although it has to be borne in mind that investment in real estate creates jobs indirectly in the construction sector and other ancillary services industries such as financial and insurance, business and legal services. Construction accounts for the third-largest share of employment. Likewise, the sector receiving the second largest share of FDI, the financial services sector, accounts for less than 3% of total employment. Except for accommodation and food services, sectors, which account for a large share of employment, such as wholesale and retail trade, manufacturing, construction and transport, receive relatively little FDI. Overall, except for real estate, financial services, accommodation and education, most sectors’ share in FDI is lower than their share in employment. In terms of employment growth, it is weakly positively correlated with the amount of FDI in a sector when real estate is excluded, driven largely by strong employment growth in financial services, although this relationship disappears once real estate is included, suggesting no strong link overall between FDI and employment growth (Figure 2.23, Panel B).
Notes: The OECD and SADC averages are based on the latest year, for which data is available, for each country. Panel B is based on manufacturing firms only.
Source: World Bank Enterprise Survey Mauritius 2020
Average employment growth vs. FDI by sector in Mauritius
Notes: Panel B: Real estate (56.5% of cumulative FDI inflows between 2018 and 2022) is excluded but the line showing the correlation between cumulative FDI inflows and average employment growth takes into account the real estate sector.
Source: Data on FDI inflows: Bank of Mauritius; data on employment and employment growth: Statistics Mauritius
Evidence for higher wages paid by foreign firms in Mauritius is weak. International evidence suggests that foreign firms tend to pay higher wages because of their access to better technologies, inputs and human capital and higher levels of productivity (OECD, 2022[41]). In Mauritius, annual wages in those foreign firms included in the 2020 World Bank Enterprise Survey averaged USD 4 191 compared to USD 3 746 in those domestic firms covered by the survey.13 This difference is not statistically significant and significantly smaller than in most comparators in the region and elsewhere (Figure 2.24, Panel B). A cross-sectoral analysis shows a weakly positive relationship between a sector’s amount of FDI and the deviation of average wages paid in this sector from the economy-wide mean (Figure 2.24, Panel A). This is largely driven by financial services and real estate, which receive the bulk of FDI and where wages are comparatively high but which account for only very small shares of total employment. Once these two sectors are excluded, the relation becomes weakly negative, indicating that overall FDI is not concentrated in sectors with above-average wages. Sectors with relatively low wages receiving relatively large shares of FDI include accommodation and food services, manufacturing and wholesale and retail trade.
Enhanced gender equality could improve well-being and economic outcomes. Mauritius has achieved gender-parity in education, and female-to-male labour force participation has been increasing, but gender inequities persist in the labour market, driven in part by gender-discriminatory traditions and customs (ADB, 2020[20]). This is evidenced by substantial and persistent gender gaps in labour force participation and in wages and by higher female unemployment rates: In 2021, for women aged 15 to 64, the labour force participation rate stood at 53.3% compared to 80.1% for men. Female unemployment was 8.6% compared to 7.1% for men (World Bank, 2023[33]). Further, Mauritian women were paid on average 30% less than men in the private sector in 2015 conditional on characteristics such as education, age and work experience. This large wage gap further discourages female labour market participation (World Bank Group, 2015[1]; ADB, 2020[20]). The gender gaps in the labour market contribute to worse well-being outcomes for women than for men: in 2017, 11% of female population was living below the poverty line compared to only 9.7% of the male population and 16.1% of female headed households were in relative poverty compared to 7.7% of male headed households (Statistics Mauritius, 2020[45]).
Notes: Panel A: indicator registers a positive value if foreign firms have higher outcomes than domestic firms, and a negative value if foreign firms have lower outcomes, on average. Confidence intervals are reported at the 95% confidence level. If the confidence interval crosses the zero line, the difference of average outcomes of foreign and domestic firms is not statistically significant. The OECD and SADC averages are based on the latest year, for which data is available, for each country. The Panel B: Real estate (56.5% of cumulative FDI inflows between 2018 and 2022) is excluded but the line showing the correlation between cumulative FDI inflows and average employment growth takes into account the real estate sector.
Source: Panel A: World Bank Enterprise Survey Mauritius 2020; Panel B: Data on FDI inflows: Bank of Mauritius; data on value added per worker: Statistics Mauritius.
FDI is not linked to higher female employment. The share of female workers in both foreign and domestic firms is approximately 40%, in line with or above many comparators (Figure 2.25, Panel C). Excluding real estate, on average, sectors with a relatively large share of female employment such as education, financial services, accommodation and food services receive more FDI. This relationship becomes less clear, when the real estate sector is included, which employs only approximately 40% of women (Figure 2.25, Panel D). This sector also has the largest gender wage gap in Mauritius: women’s wages are only 24% of men’s in this sector. Sectors where women often earn more such as professional activities, electricity and transport and storage receive less FDI (ADB, 2020[20]). However, it has to be borne in mind that, as mentioned previously, overall the real estate sector accounts only for a very small share of employment.
Notes: Panels A, B and C: The OECD and SADC averages are based on the latest year, for which data is available, for each country. Panel D: Real estate (56.5% of cumulative FDI inflows between 2018 and 2022) is excluded but the line showing the correlation between cumulative FDI inflows and average employment growth takes into account the real estate sector.
Source: Panels A, B and C: World Bank Enterprise Survey Mauritius 2020; Panel D: data on FDI inflows: Bank of Mauritius; data on female employment: Statistics Mauritius
Foreign firms could contribute to improved gender outcomes in the labour market through their higher share of female top managers but perform less well in terms of female ownership. One quarter (24.2%) of foreign firms in Mauritius have a female top manager but only 13% of domestic firms and this difference is strongly statistically significant. This is in line with or above most international comparators but remains below top performers in Asia (Figure 2.25, Panel A). However, women are amongst the owners of only 29.2% of foreign companies in Mauritius compared to 50.1% of domestic firms. On average, 20.2% of domestic companies are fully or partially owned by women compared to only 8.2% for foreign firms. Among domestic firms, female ownership is particularly high in the textile sector (34.7%) and above 20% in the ICT sector, accommodation, wood and furniture manufacturing, food manufacturing and the retail sector. Except for the ICT sector, these high shares of female ownership could be attributed to the typically relatively high shares of female employment and female ownership of SMEs in labour-intensive and low-skilled sectors such as textiles, accommodation and retail (OECD, 2022[41]).
The mixed performance of foreign firms in gender outcomes could be linked to gender practices in their countries of origin. The gender-inclusivity of foreign firms is strongly influenced by the values and norms in place in their countries of origin (OECD, 2022[41]). While female ownership is widespread in France, one of the two main countries of origin of FDI in Mauritius, (53% of French firms report female participation in ownership), it is very low in South Africa, the second largest country of origin of FDI in Mauritius (only 10% of South African firms report female participation in ownership). In contrast, few French firms have a female manager (only approximately 20%) and the share of female workers in French companies remains relatively low (36%), whereas a large share of South African firms (39%) report having a female top manager and approximately 40% of their workers are female (World Bank, 2023[46]).
Addressing environmental pressures in Mauritius is essential to preserve the tourism sector’s attractiveness and to fully exploit the island’s sustainable ocean economy. As a small island, Mauritius is highly vulnerable to climate change, including rising sea levels and more frequent and intense natural disasters. Rising sea levels are already contributing to coastal degradation: it is estimated that 18% of beaches in Mauritius are affected by severe erosion (World Bank, 2022[11]). In addition, overfishing and the deterioration of lagoons, reefs and other maritime ecosystems as a result of overfishing, land-based pollution leaking into the ocean and unsustainable tourism installations are issues affecting its sustainable ocean economy (World Bank Group, 2015[1]). Further, sewage and waste management remain challenges and present risks for the environment: Only 28.3% of Mauritians were connected to the public sewage system in 2022 (WMA, 2023[47]) compared to 82.7% in OECD countries on average (as of 2021) (OECD, 2023[48]). At the same time, the land area and infrastructure available for solid waste management are limited and waste production is increasing rapidly, placing water supply sources and the environment at risk from contamination through uncontrolled discharges and illegal dumping (World Bank Group, 2015[1]) (UNDP, 2023[49]). Mauritius also remains strongly dependent on coal and oil for electricity generation, with only 22% of electricity from renewables (2021) (IRENA, 2023[50]).
Foreign firms’ strong performance in deploying clean technologies and environmental protection measures could contribute to improving environmental performance and the wider uptake of clean technologies. Foreign firms in Mauritius outperform their domestic peers on almost all environmental dimensions except for energy efficiency, where domestic firms perform equally well and for renewables, where the difference in foreign and domestic firms’ performance is relatively small and not statistically significant (Figure 2.26). For example, more than 50% of foreign companies report complying with environmental certifications or standards and taking measures for water management and for waste minimisation, recycling or management compared to only 22-30% of domestic companies. Similarly, more than 40% of foreign firms report monitoring energy consumption, water usage or CO2 emissions, having adopted greener materials for production and having taken measures for energy management compared to only 22-27% of domestic firms. These findings align with international evidence that MNEs are key players in the deployment of capital and R&D-intensive clean technologies across borders thanks to their financial and technical advantages. The strong performance of foreign companies in Mauritius in green business practices could also be linked to several initiatives by the Bank of Mauritius and the Financial Services Commission to promote environment- and climate-friendly investment.14 It opens opportunities for technology, knowledge and skills transfers to domestic firms through market interactions and worker mobility (OECD, 2022[41]).
Over the last three years, did this establishment adopt any of the following measures? (% of firms), 2020
Notes: Environmental certifications = Compliance with environmental certifications or standards; Waste management = Waste minimization, recycling or waste management; Energy efficiency = Energy efficient appliances; Environmental monitoring = Monitoring energy consumption, water usage or CO2 emissions; Green materials = Adoption of greener materials; Circularity = Adoption of circularity practices; Environmental technology = Adoption of new machineries or processes with a smaller footprint; Climate-friendly energy = More climate-friendly energy generation on site; Air pollution control = Air pollution control measures; Renewables = Use of renewable energy
Source: World Bank Enterprise Survey Mauritius 2020.
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← 1. These figures come from UNCTAD and World Bank statistics. The Bank of Mauritius conducts an annual Foreign Assets and Liabilities Survey which collects data on equity and intra-company loans, which cannot be collected from banking records and other sources. It also provides data on reinvested earnings. The Survey undertaken in 2023 led to a substantial upward revision of the estimate for net FDI inflows in 2022. Several sectors saw increased gross inflows in 2022 because of the adjustment, notably in manufacturing and in tourism-related sectors. By country of origin, FDI inflows from France doubled, making it responsible for one third of total FDI in 2022. Using the revised Bank of Mauritius data, FDI flows into Mauritius averaged 2.8% of GDP between 2020 and 2022 but only approximately 1.4% of GDP when excluding FDI in real estate.
← 2. Labour productivity is calculated as value added per worker based on firms’ sales.
← 3. These outcomes have to be interpreted with caution since they rely on a small sample of foreign firms and the quality of the data does not allow for analysing sector-specific differences between foreign and domestic firms.
← 4. Information received from partners in Mauritius.
← 5. In July 2017, Mauritius signed the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (MLI). The MLI was ratified and entered into force in February 2020 (UNCTAD, 2017[7]; Capital Economics, 2021[51]).
← 6. Offshore campuses are campuses, centres, schools or faculties of a university in one country operating abroad in another country. They are operated and maintained as part of the parent university abroad and tend to award degrees of the parent university.
← 7. Both GBCs and ACS are governed by the Financial Services Act of 2007, which replaced the Financial Services Development Act of 2001 (UNCTAD, 2017[7]; FSC Mauritius, 2023[27]).
← 8. Official statistics on the GBC inward and outward investment stock cover only direct investment flows to and from GBCs but not ACs (Capital Economics, 2021[51]).
← 9. Round-tripping reflects the flow of domestic funds channelled through offshore centres back to the local economy in the form of direct investment.
← 10. This includes joint ventures, contract manufacturing, marketing agreements, R&D collaborations but also less formal agreements like technical support or training offered as part of supply-chain arrangements.
← 11. These figures come from UNCTAD and World Bank statistics. The Bank of Mauritius conducts an annual Foreign Assets and Liabilities Survey which collects data on equity and intra-company loans, which cannot be collected from banking records and other sources. It also provides data on reinvested earnings. The Survey undertaken in 2023 led to a substantial upward revision of the estimate for net FDI inflows in 2022. Several sectors saw increased gross inflows in 2022 as a result of the adjustment, notably in manufacturing and in tourism-related sectors. By country of origin, FDI inflows from France doubled, making it responsible for one third of total FDI in 2022. Using the revised Bank of Mauritius data, FDI flows into Mauritius averaged 1.4% of GDP or USD 128 per capita between 2020 and 2020 when excluding FDI in real estate.
← 12. Defined as value added per worker based on firms’ sales.
← 13. These average wages are lower than the average annual wage of approximately USD 9150 in 2020 based on data from Statistics Mauritius because the 2020 Mauritius WBES includes a large share of firms from the retail sector (49% of firms), the manufacturing sector (21%) and the accommodation sector (10%), which all pay relatively low wages.
← 14. These initiatives comprise the Environmental Awards 2023, organised jointly by the Bank of Mauritius, the Financial Services Commission and the Ministry of Environment, Solid Waste Management and Climate Change, which aim at rewarding the best environmental initiatives of banking, financial non-banking and professional services companies on sustainability measures and at encouraging their replication for a cleaner, greener and safer Mauritius. They also include, amongst others, the Bank of Mauritius’s Climate Change Centre, which was established in 2021 and the Guide for the Issue of Sustainable Bonds, released by the Bank of Mauritius in 2021, which could facilitate access to finance for green investment (Bank of Mauritius, 2024[52]; FSC, 2023[53]; Bank of Mauritius, 2024[54]).