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The World Bank names Mauritius as Africa’s top business destination

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An annual report from the World Bank has picked out Mauritius as the best place to conduct business in Africa, so just how has the island nation achieved this?

Mauritius has been named as Africa’s most business friendly country by the annual “Doing Business” report from the World Bank. The report seeks to help potential investors (and governments) identify how easy it is to create startups and investment opportunities across the globe. While Africa as a continent does not fare particularly well, Mauritius came in at number 32 on the global list, which made it the comfortable winner in Africa.

The top 5 African nations showed a diverse geographic spread, with Rwanda, Botswana, South Africa and Tunisia following, in that order, on the heels of Mauritius. A quick glance at Africa’s worst performing nations would provide no surprises, as Eritrea propped up a bottom 5 of the DRC, Central African Republic, South Sudan and Libya.

Any nation struggling with armed conflicts and political unrest is not going to provide the ideal base for creating new business opportunities, so while the bottom of the table comes as no surprise, what is it about Mauritius that has seen it take the top position?

Stability, simplicity and low taxes

Mauritius is first and foremost a fairly safe country. Not only does it not suffer from the unrest of many African nations, but it has low crime rates, and a small population which is governed by what the Economist Intelligence Unit called Africa’s only “full democracy” back in 2011. While this may no longer be fair to other nations, it is clear that Mauritius is a society with low levels of corruption and good personal safety.

Prime Minister's Office in Mauritius

Prime Minister’s Office in Mauritius

In addition to this, the Mauritian government has gone out of its way to reduce the amount of red tape involved in starting up a business. This ongoing strive to create a business-conducive atmosphere is highlighted by the 2014/15 changes to building permit rules, in which the process was streamlined to allow new ventures to start running as quickly as possible.

It now only takes 14 days to register a property, and 3-6 days to start up a new business. To help ensure the wheels on each sector of the economy run smoothly, the government has also invested heavily in education. The net result of this focus is that Mauritius has the highest rate of literacy in Africa, at 86%.

South Africa’s high commissioner to Mauritius, Nomvuyo Nokwe, told South African media that not only had Mauritius made it simple to register new businesses but that its development of education was also key. Nokwe stated, “It has highly skilled professional people…it’s made doing business easy, because you have [educated] people to work for you.”

Perhaps one of the most significant aspects to Mauritius’ burgeoning business growth, and yet one with some controversy, is its low taxation. The Africa 2016 Wealth Report referred to the huge growth in millionaires in Mauritius, but this included many from other nations who had moved there. The report found that “Mauritius was the top performing African country for millionaires during this period, with growth of 160 per cent…company and personal income tax rates are only 15 per cent, with no inheritance or capital gains tax.”The controversy around this is that some feel the nation is just a tax haven for the wealthy, and moreover that much of the money coming into the country is simply passing through. There are concerns around the rich, from nations like Kenya, using Mauritius for tax purposes, as its income tax rate is an attractive 15%.

Does the economy match the reputation?

Dipolelo Moime, chief executive of business risk consultancy Legato Services, believes it is more innovation that has attracted outsiders, saying, “Mauritius is continually reinventing and reforming itself massively to ensure the country is as business-friendly as possible, in order to attract multi-national corporations.”

Despite this, the issues around money just passing through cannot be ignored. There is an entire business strategy known as “The Mauritius Route”, which describes how investors in India use the island nation as a conduit to connect them to Indian markets. In fact, 39.6% of foreign direct investment to India, between 2001 and 2011, made its way via Mauritius.

However, this money does not pass through Mauritius in a vacuum, and the banking and legal processes it utilizes are legitimate businesses which create revenue streams for the host nation.

As things stand, Mauritius is not one of Africa’s largest economies, but the World Bank report did not base its findings on GDP, it based them on how easy it was to set up a new business in a nation, how well developed infrastructure was, and how attractive a destination was for new investment. In these measures, Mauritius must warrant its ranking.

As of 2016, Mauritius can boast the highest per capita GDP in Africa, with a 2016/17 predicted GDP growth of 5.7%. In addition, the nation’s stock exchange is widely regarded as one of the best in Africa and is worth over $7 billion. These figures are for a nation of only 1.2 million inhabitants.

Most significantly, the government is not resting on its laurels. The Mauritian government has drawn up a blueprint to diversify the economy, and invest in new industries, while continuing to develop existing ones. “Green growth” is at the forefront of plans to maximize the nation’s coastlines, with a goal of 8-9% economic growth per annum, which will ultimately lead to Mauritius being a high income status nation by 2025. The plans have worked thus far, so investors from far and near will be watching with interest.

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Mauritius eyes Africa as pressure mounts on offshore business

Comments (0) Africa, Business, Latest Updates from Reuters


EBENE, Mauritius (Reuters) – Mauritius beats Singapore as the world’s top route for foreign investment to India and is a hub for thousands of firms managing half a trillion dollars in assets.

But there are only a sprinkling of office blocks in Ebene Cybercity, the heart of the tiny Indian Ocean island’s financial services industry, and the area only livens up at the weekend when a band plays in a bar of the district’s only luxury hotel.

Such limited activity is evidence that Mauritius is a “tax haven” for companies which generate no real business on the island yet use it to benefit from tax avoidance treaties with Asia and Africa, critics say.

“Mauritius is playing the tax competition game and they are playing it very well,” said Nadia Harrison, tax policy expert at ActionAid. “The result is that they are reducing the amount of tax that can be collected from the poorest countries.”

Concerned about the impact of tax havens, world powers are tightening the noose on multinationals seeking tax advantages and India wants changes to its tax treaty with Mauritius, forcing the island’s new government to re-examine its business model and focus elsewhere.

There is debate in the new government, which took office in December, about whether Mauritius was ever a tax haven but there is general agreement that the economy needs to shift focus to make sure firms invest locally and to prepare for any loss of business from India.

“My message for the offshore sector here is: they have to move from a tax haven to a typical transparent financial sector. This is what is happening now,” Finance Minister Seetanah Lutchmeenaraidoo told Reuters.

He wants the financial services industry to deepen investments in Africa to help lift sluggish growth in Mauritius and make it a high-income state by 2020.

“Singapore is to southeast Asia, what Dubai is to the Middle East, and what Mauritius will be vis-à-vis Africa,” Lutchmeenaraidoo said.



New rules agreed by ministers from the Group of 20 industrialised nations this month to stop companies moving profits to low tax centres and “treaty shopping” for tax benefits combined with changes to India’s tax treaty are increasing the pressure on Mauritius.

“We know it is going to have a decisive impact on the future of offshore financial services worldwide,” said a former minister and now a fund manager, adding that the government was being driven “into a corner” by India.

India has pushed Mauritius into talks to change to its Double Taxation Avoidance Agreement. Signed in 1983, Mauritius took off as an investment route when India opened its economy in the 1990s.

A Global Business Company 1 (GBC1), the title for “offshore” firms, pays zero capital gains tax in Mauritius, instead of as much as 40 percent in India on some short-term investments.

Such benefits made Mauritius the source for 24 percent of the $24.7 billion of foreign direct investment (FDI) in India in fiscal 2014/15, Reserve Bank of India figures show, making it the largest source of FDI.

New Delhi says much of those funds are not really foreign investment but Indians routing money through Mauritius, a practice known as “round-tripping”.

Changes being discussed to the tax treaty would limit the appeal of Mauritius. If a company still chose to be based there, then it would be required, for example, to spend at least 1.5 million Mauritius rupees ($42,700) a year on the island before enjoying treaty benefits.

Mauritius has little choice but to negotiate with India, which could revoke the treaty altogether, like Indonesia a decade ago. This would be damaging for the financial services business which accounts for 10 percent of the island’s $13 billion gross domestic product. Of the more than 10,000 GBC1 firms, about 60 percent focus on India, officials say.

India also plans to implement a domestic law in 2017, known as the General Anti-Avoidance Rule (GAAR), that could supersede the treaty’s tax benefits in some instances.

“It hangs like a sword of Damocles,” said the former minister, adding that Mauritius needed several more years to refocus. “We need breathing space.”



The changes in India are driving the island’s pivot to Africa. Almost 60 percent of GBC1 firms registered in the past three years focus on Africa, benefiting from more than a dozen double taxation avoidance treaties on the continent.

Critics say Mauritius is simply becoming a “tax haven” for Africa instead of India, a charge the government denies.

“We need to be able to reassure our friends in Africa that that is not our aim, to siphon money,” said Deputy Prime Minister and Tourism Minister Charles Gaëtan Xavier-Luc Duval. “Our aim is to contribute towards investment into Africa.”

To do so, the government has held talks with insurance firms, such as Axa and Prudential, on using Mauritius as a regional headquarters. An investment vehicle is being set up with Ghana for technology, poultry, sugar and other projects, with Mauritius firms and money involved.

But African governments should be cautious about tax pacts, ActionAid’s Harrison said.

“In the past there have been these sweeping assumptions that tax treaties will always be good for investment,” she said. “We are just encouraging countries, and particularly developing countries, not to take that for granted.”

(By Edmund Blair, Reuters)

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