A flourishing economy
The foreign observer may only see Mauritius as a small earthly paradise: sugar cane, food crops, a few fishermen and hotels that bring in foreign currency and create jobs. The economic reality of the country is quite different and Mauritius, cited as an example by economists from all over the world, is in fact considered as the dragon of the Indian Ocean. However, at the time of independence in 1968, the situation was that of an underdeveloped country. Unemployment was over 20% and the population was at a catastrophic rate of 3.5%. The standard of living was 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 represented 90% of exports at the time. More than 50 years later, apart from the pandemic whose effects have not yet been quantified, Mauritius is in great economic shape. Per capita income has increased 15-fold, unemployment is relatively low (around 7%, but this is a very relative rate that does not take into account people who prefer to live 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 small demographic crisis) and the country's economic growth rate has averaged 3 to 8% per year for the past twenty years. At the same time, sugar sales have continued to rise in a recovering world market, although they now account for only 3.5 percent of gross domestic product (gdp). While the economic figures appear to be mostly in the green, they are heavily dependent on trade relations with Europe and Asia or 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 is booming. Mauritius has everything to please, starting with its idyllic landscapes, its tropical climate tempered by the trade winds and the warmth of its inhabitants. 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 approximately 1,400,000 in 2019 and more than one million in 2022. It is safe to say that Mauritius will soon have more visitors than inhabitants every year! This tourist market is vital for the island's economy, as it represents more than 10% of GDP and nearly 100,000 direct and indirect jobs. Although it suffered a drastic and dramatic drop during the pandemic, the figures for 2022 and 2023 are very encouraging and show a constant increase. France, including visitors from Reunion Island, remains the leading market for Mauritius, far ahead of the United Kingdom, Germany, South Africa, India and China.
In order to welcome holidaymakers in the best conditions, the island has continued to develop its hotel facilities through the construction of new establishments and the regular renovation of many hotels. This development is done with a constant concern for excellence as evidenced 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 several destinations in the world has increased significantly in recent years. This has been the case in France since 1998, thanks to an alliance between Air France and Air Mauritius and the introduction in 2007 of a new airline, Corsair. In winter, there are up to 20 flights per week, with a capacity of more than 7,000 seats in both directions. Faced with other emerging destinations and a tourism industry that is more demanding in terms of quality of service and environmental, social and ethical commitment, Mauritian tourism stakeholders, led by the government, must take up the challenge of environmental protection (and move towards ecotourism), cleanliness (with better waste management) and the renewal of the workforce (poorly trained in new technologies), in order to highlight the natural assets of an island that is made for tourism.
Workcamps
For years, Mauritius has been redesigning its landscapes through vast construction sites. 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 in 2019 linked Port Louis to Rose Hill, was extended to Curepipe in 2022 via the central plateau metropolises.
This pharaonic construction project, carried out by an Indian company, has caused a lot of controversy and has put a recurring problem in Mauritius back on the agenda, with the rupture of a pipe and a sewer: the water network. Some pipes date back to the colonial period and let precious water escape, others are made of plastic and are laid on the ground. Some neighborhoods are poorly supplied and the quality of 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 the Victoria Urban Terminal, new hotel complexes and many others (Smart City, Business park...) which, if they participate for some in the economic development of the island, deteriorate for others the environment and the living environment of a small island already very built.
Issues
Mauritius has thus succeeded in establishing itself as the dragon of the Indian Ocean. Like 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, some clouds are gathering on the horizon and confronting Mauritius more and more with the problems of the "developed" countries. First of all, the numerous development aids that the country has benefited from under bilateral agreements (with France and India in particular) and under international agreements (European Development Fund, World Bank and International Monetary Fund loans) are being withdrawn one after the other, because Mauritius no longer meets the criteria. Some sectors, such as the sugar industry, have already suffered and are experiencing a year-on-year decline in production and especially in yields. In addition, in general, the increase in salaries is causing a steady decline in the productivity of certain companies (especially manufacturing companies) while increasing the cost of living and the expectations of Mauritians. In addition, the problems of drugs and corruption have increased and tend to discredit law enforcement, some of the administrative body and members of the government. The riots that occurred 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 to the country's future is social. Indeed, despite the establishment by the state of a significant social security system, not all Mauritians have benefited equally from the growth. Inequalities, accentuated by the coronavirus crisis, are growing between the different strata of the population and the different ethnic communities. To see this, one only has to compare the business district in Port-Louis, where young Indo-Mauritian and Franco-Mauritian executives swarm, to the Creole villages in the south of the island, which still live in great poverty. Invisible to the tourist (welcomed and served like a king), racism is a social reality that affects a certain part of the population and occasionally generates intolerance within the same company. That said, it is nothing to do with the more serious discord affecting other countries in the world. While unrest may cause a wait-and-see attitude in the local financial community, the Mauritian economy remains in good shape. It is therefore likely that Mauritians, who are used to facing the worst difficulties, starting with cyclones, and whose future is more than ever in their hands, will remain united to meet the challenges of the 21st century!
