A flourishing economy
To the foreign observer, Mauritius may seem like a small paradise on earth: sugar cane, food crops, a few fishermen and hotels that earn foreign currency and create jobs. The economic reality of the country is quite different, and Mauritius, cited as an example by economists the world over, is in fact regarded as the dragon of the Indian Ocean. Yet, at the time of independence in 1968, the situation was that of an underdeveloped country. Unemployment was over 20%, and the population growth rate was a catastrophic 3.5%. Living standards were very low, with a gross national product (GNP) per capita of €250, and the country's income was totally dependent on the sugar industry, which then accounted for 90% of exports. More than 55 years later, Mauritius is in insolent economic shape. Per capita income has risen 15-fold, unemployment is relatively low (around 6.5%, but this is a very relative rate that does not take into account people who prefer to make a living from fishing and do not wish to have a permanent job), the birth rate has been brought under control (with only 1.4 children per woman, the island is even experiencing a minor demographic crisis) and the country's economic growth rate has averaged 6-9% a year in recent years. At the same time, sugar sales have continued to rise in an improving world market, although they now account for just 3.5% of gross domestic product (GDP). Although the economic figures seem to be mostly in the green, they are heavily dependent on trade relations with Europe and Asia, and on foreign investors.
Resource diversification
Since the occupation of the island by the Dutch and then the French and English settlers, the sugar industry remains an important pillar of the Mauritian economy. To be convinced of this, there is no need to run around the country in all directions. You just have to stray a little from the coastal road and go inland where sugarcane covers 90% of the cultivated land. But the white gold, despite changes around the production of electricity from bagasse, the fibrous residue of cane, the production of bioethanol and the production of rum, is no longer enough to sustain the country's economy.
In order to diversify its economy, the Mauritian government established a manufacturing free zone in the 1970s to attract foreign investors. The textile industry was the first to be set up and took advantage of its free access to the European market to develop and create many jobs.
Alongside the free zone, another sector is in good economic health: the offshore service sector. Mauritius has all the necessary assets for the exponential development of its financial sector: political stability, low time difference with Europe, a young and highly qualified workforce with a good command of English and French, guaranteed confidentiality, a double taxation agreement, etc. Since 1992, the island has attracted tens of thousands of offshore entities, including several hundred investment funds, for financial flows of several tens of billions of dollars. A very important part of these flows is made between Mauritius and India, a bilateral agreement allowing the companies concerned to be taxed in only one of the two countries. And they obviously choose to be taxed in Mauritius! The other sector of off-shore activity is made up of service companies linked to the port activity. Indeed, Port-Louis, which now has the status of a free port, is experiencing significant development.
Tourism, a key development sector
Since independence, tourism has been booming. Mauritius has everything going for it, starting with its idyllic landscapes, tropical climate tempered by trade winds and the warmth of its people. Under the impetus of the State, the private sector and the Mauritius Tourism Promotion Authority (MTPA), the number of arrivals on the island has risen from 10,000 in 1965 to around 1,400,000 in 2019 and 1,295,000 in 2023. It's fair to say that Mauritius will soon have more visitors than inhabitants every year! This tourist market is vital to the island's economy, accounting for over 10% of GDP and nearly 100,000 direct and indirect jobs. While it suffered a drastic and dramatic drop during the pandemic, the figures for 2022 and 2023 are very encouraging and show a steady rise. France, including visitors from La Réunion, remains the leading market for Mauritius, far ahead of the UK, Germany, South Africa, India and China.
To welcome holidaymakers in the best possible conditions, the island has pursued and continues to pursue the development of its hotel facilities through the construction of new establishments and the regular renovation of numerous hotels. This development is carried out with a constant concern for excellence, as demonstrated by the decision taken by the Mauritian authorities to align their new hotel classification with the internationally recognized criteria of the French classification. At the same time, the number of flights from a number of destinations around the world has risen sharply in recent years. This has been the case in France since 1998, thanks to an alliance sealed between Air France and Air Mauritius, and the introduction in 2007 of a new airline, Corsair. In winter, there are up to twenty flights a week, with a capacity of over 7,000 seats in both directions. Faced with other emerging destinations, and a tourism industry that is more demanding in terms of service quality and environmental, social and ethical commitment, Mauritius's tourism stakeholders, led by the government, must rise to the challenge of protecting the environment (and moving towards ecotourism), ensuring cleanliness (with better waste management) and renewing the workforce (poorly trained in new technologies), to highlight the natural assets of an island made for tourism.
Workcamps
For many years now, Mauritius has been redesigning its landscape through vast construction projects. The latest, and one of the most visible, is undoubtedly the Metro Express, which is not a metro in the European sense of the term, but a "Light Rail System". The first line, which linked Port-Louis to Rose Hill in 2019, was extended to Curepipe in 2022 and continues its journey towards the metropolises of the central plateau.
This pharaonic project, carried out by an Indian company, has given rise to much controversy and, with the rupture of a pipe and a sewer, brought back to the forefront a recurring problem in Mauritius: that of the water network. Some pipes date back to the colonial period and leak precious water, while others are made of plastic and laid on the ground. Some neighborhoods are poorly supplied and the quality of the water is not always excellent, making the issue of water distribution a real challenge for the future.
Numerous urban development projects are also underway, such as Smart Cities, Business Parks, new hotel complexes with apartments and villas, etc. While some of these projects contribute to the island's economic development, others are damaging the environment and living environment of a small island that is already heavily built-up.
Issues
Mauritius has thus succeeded in establishing itself as the dragon of the Indian Ocean. Following the example of Asian industrialized states such as Hong Kong and Singapore, it is now trying to develop a large economic market (the Indian Ocean Rim Association) stretching from South Africa to Australia via India, to counterbalance the North American, Asian and European markets. However, a few clouds are gathering on the horizon, bringing Mauritius increasingly face to face with the problems of "developed" countries. First of all, the numerous development aids from which the country has benefited under bilateral agreements (with France and India in particular) and international agreements (European Development Fund, loans from the World Bank and the International Monetary Fund) are being withdrawn one after the other, as Mauritius no longer meets the criteria. Some sectors, notably the sugar industry, have already suffered as a result, with year-on-year declines in production and, above all, yields. In addition, generally speaking, wage increases are steadily lowering productivity in certain businesses (especially manufacturing), while increasing the cost of living and the expectations of Mauritians. In addition, drug and corruption problems are on the increase, and are tending to discredit the police force, part of the administrative body and members of the government. The riots that took place throughout the country following the death of the singer Kaya (in 1999) are the most revealing evidence of possible popular instability. For one of the major risks hanging over the country's future is social. Indeed, despite the State's extensive social security coverage, not all Mauritians have benefited equally from growth. Inequalities, exacerbated by the coronavirus crisis, are widening between different strata of the population and different ethnic communities. To see this, compare the business district in Port-Louis, teeming with young Indo-Mauritian and Franco-Mauritian executives, with the Creole villages in the south of the island, still living in extreme poverty. Invisible to the tourist (welcomed and served like a king), racism is a social reality that affects a certain segment of the population and occasionally generates intolerance within the same company. That said, it's nothing like the more serious discord affecting other countries around the world. While unrest may occasionally cause local financial circles to adopt a wait-and-see attitude, the Mauritian economy remains in good health. It's a safe bet that Mauritians, accustomed to coping with the worst difficulties, starting with cyclones, will remain united to meet the challenges of the 21st century!
