The U.S. Department of State’s Investment Climate Statements provide information on the business climates of more than 170 economies and are prepared by economic officers stationed in embassies and posts around the world. They analyze a variety of economies that are or could be markets for U.S. businesses. The Investment Climate Statements are also references for working with partner governments to create enabling business environments that are not only economically sound, but address issues of labor, human rights, responsible business conduct, and steps taken to combat corruption. The reports cover topics including Openness to Investment, Legal and Regulatory Systems, Protection of Real and Intellectual Property Rights, Financial Sector, State-Owned Enterprises, Responsible Business Conduct, and Corruption.
To access the ICS, visit the U.S. Department of State Investment Climate Statements website.
Executive Summary
Mauritius is an island nation with a population of 1.3 million people. The Government of Mauritius (GoM) claims an Exclusive Economic Zone (EEZ) of approximately 2.3 million square kilometers, but its undisputed EEZ amounts to approximately 1.3 million square kilometers, in addition to jointly managing about 388,000 square kilometers of continental shelf with Seychelles. Mauritius has maintained a stable and competitive economy. Real GDP grew at an average of 4.7 percent from 1968 to 2017, enabling the country to achieve middle-income status in less than 50 years. In 2020, Mauritius’ GDP was $11 billion and its gross national income per capita amounted to $10,230. In July 2020, the World Bank classified Mauritius as a high-income country based on 2019 data, but Mauritius reverted to upper-middle income status in 2021 due to the effects of the COVID-19 pandemic.
The pandemic severely damaged the economy. Tourism, which contributed around 20 percent to the economy pre-COVID, did not return as expected following the reopening of borders in October 2021. There was a moderate rebound in exports of goods, but exports of services declined further due to the difficult situation in the tourism sector. The GoM estimated that GDP growth would increase 4.8 percent in 2021, with contractions in tourism (18.8 percent) and sugar (9.6 percent), according to Statistics Mauritius. The IMF forecasted that the economy would grow 6.7 percent growth in 2022. Unemployment was estimated at 9.2 percent at the end of 2020, while inflation for 2021 was 4.0 percent.
One of the poorest countries in Africa at independence in 1968, Mauritius has become one of the continent’s wealthiest. It successfully diversified its economy away from sugarcane monoculture to a manufacturing and service-based economy driven by export-oriented manufacturing (mainly textiles), tourism, financial and business services, information and communication technology, seafood processing, real estate, and education/training. Before COVID-19, authorities planned to stimulate economic growth in five areas: serving as a gateway for investment into Africa; increasing the use of renewable energy; developing smart cities; growing the blue economy; and modernizing infrastructure, especially public transportation, the port, and the airport.
In November 2021 at the Conference of Parties 26 (COP 26), the GoM pledged to reduce its greenhouse gas emissions to 40 percent of the business-as-usual scenario 2030 figures. To achieve this target, the government plans to undertake major reforms in its energy, transport, waste, refrigeration and air-conditioning, agriculture, and conservation sectors. The government aims to produce 60 percent of the country’s energy from green sources by 2030, to phase out the total use of coal before 2030, and to increase energy efficiency by 10 percent based on 2019 figures. As part of the national strategy to modernize the public transport system, the light rail network that launched in 2019 is expected to be extended. The government was also working to diversify 70 percent of waste from the landfill by 2030 through the implementation of composting plants, sorting units, biogas plants and waste-to-energy plants.
In 2020 and 2021, however, officials focused on supporting sectors whose revenue disappeared due to the pandemic. In May 2020, the Bank of Mauritius (BoM) set up the Mauritius Investment Corporation (MIC) to mitigate the economic downturn due to the pandemic. The BoM invested $2 billion of foreign exchange reserves in the MIC which were largely directed towards the pharmaceutical and blue economy sectors, in addition to assisting companies that suffered during the pandemic. The BoM also intervened regularly on the domestic foreign exchange market to supply foreign currency.
Government policy in Mauritius is pro-trade and investment. The GoM has signed Double Taxation Avoidance Agreements with 46 countries and maintains a well-regarded legal and regulatory framework. Mauritius has been eager to attract foreign direct investment from China and India, as well as courting more traditional markets like the United Kingdom, France, and the United States. The China-Mauritius free-trade agreement went into effect on January 1, 2021. Mauritius also signed a preferential trade agreement with India, which went into effect in April 2021. The GoM promotes Mauritius as a safe, secure place to do business due to its favorable investment climate and tradition as a stable democracy. Corruption in Mauritius is low by regional standards, but recent political and economic corruption scandals illustrated there was room for improvement in terms of transparency and accountability. For instance, a commercial dispute between a U.S. investor and a parastatal partner that turned into a criminal investigation has raised questions of governmental impartiality.