As the world transforms into a global village, strategic outposts have gradually emerged: New York City, Dubai, Shanghai, Cairo, Paris, London are but a few examples. Despite its short yet independent 41 years, Singapore has undoubtedly succeeded in positioning itself as the trade doorway to Asia, dominating the region in manufacturing, overseas, and tourism.

As we witness Singapore in all of its glory and tenacity, our attention turns to the gateway to the world’s emerging continent, Africa. Located 600 miles east of Madagascar, Mauritius, the Star and Key of the Indian Ocean, is poised to become of the brightest futures of any African nation. The thriving successes of Singapore and Hong Kong as focal points in their respective parts of Asia should only inspire Mauritius in its quest for economic prosperity. The belief is definitely there, but what are the real odds? And is the present path the correct one?

History

Discovered and abandoned by the Portuguese in the sixteenth century, Mauritius obtained its name a century later when the Dutch re-occupied the island and named it after Prince Mauritz of Nassau. Rats and Maroon slaves ultimately punished the colonizers who were supposedly responsible for the disappearance of the legendary Dodo. The French were the first to reap the benefits of their occupation; until, that is, 1810 when the British came back to take revenge on the French. Both the French and the English brought in indentured laborers, artists and slaves. The British realized the strategic positioning of the island even then, with India and Asia open for trade to the East, and with Europe just over and above.  Mauritius would be a crucial military base for control of the southern area of the Indian Ocean. 1968 saw a peaceful handover of power from the British Government to new independent Mauritius.

Diversification of the economy from a monocrop (sugar cane) slowly changed the business front, as the government of Sir Seewoosagur Ramgoolam, who is considered the father of nation, offered gracious packages which strengthened the textile industry and the tourism sector. Sir Aneerood Jugnauth led a growth rate averaging 10-15% in the 1980s while Paul Berenger and his counterparts were still trying to strengthen the financial and fiscal sectors. Since growth has slowed from 5-6% to 4%, the government is taking radical measures to attract more foreign direct investment and increase revenue from the banking sector. If Mauritius stands any chance of standing by one of its emblems, Star and Key of the Indian Ocean, its GDP has to at least double by 2020, in order to make funds available for the country’s infrastructural development, such as in its transport system and in technology.

Because Mauritius cannot depend on surrounding nations for water, as Singapore does, it has always tried to preserve its wildlife and maintain a clean, delicate ecological balance, one of the many reasons tourist pour onto the island each year. However, Mauritius has a great deal to learn from Singapore. An athlete may have the potential to run and win, but he must train not only hard but smart as well.

Building Exports

While Mauritius is seeking to catalyze growth in the economies of its African brothers and sisters, it will be difficult to solve Africa’s myriad of problems. For instance, sugar cane yield per hectare in Mauritius is one of the highest in the world and Mauritius ranks among the ten leading world sugar producers.  Such a reputation has encouraged the government of Mozambique to literally give away land to the Mauritian Government for exploitation. Mozambique and other neighboring countries can only benefit from the local production of sugar, as it provides jobs for the locals as well as the end product itself. Sugar companies directing operations abroad from Mauritius are concrete examples of how the future could look if Mauritius becomes the region’s financial tower.

Even though agriculture has always been one of Mauritius’s main sectors, the EU’s recent cut in quota prices has hit the economy with an estimated loss of 4 billion Euros, perhaps prompting a more rapid centralization of the Mauritian sugar industry.  With regard to manufacturing high class textile, Africa also seems to be the solution.  Labor in China and India is much cheaper than in Mauritius, so the island has set its objective on countries like Madagascar and Mozambique, where labor prices can still be competitive. Proximity is vital for diplomatic negotiations, as far as tax cuts are concerned.

In addition, the US Senate’s Africa Growth and Opportunity Act (AGOA) will only favor Mauritian investors.  The AGOA provides duty- and quota- free exportation of textiles and other products from African countries to the US.  At least, the Republic should invest much more in now-stable Madagascar or other potential SADC countries.  The South African Development Community is a group of 15 countries via which Mauritius is planning to channel most of its diplomatic efforts, in order to increase regional trade.  These countries which can produce their own cloth and therefore encounter no issues with second or third party non-AGOA countries, as the AGOA stipulates that raw materials should be produced locally or regionally.

Both the sugar and the textile industries serve as security blocks for the economy and while tourism, which is the government’s main source of income, is booming, it should eventually slow down and ultimately decline. Despite world class hotels, gorgeous white sand beaches and very decent green tourism, the law of diminishing returns will displace tourism from its 40% share of GDP. There is therefore is a call for transforming the island into the business center of the SADC.  The face of tourism has to change no matter what, simply because its present structure is too volatile and dependent on world security (events such as the September 11^th attacks caused a 20% drop in tourism). The reputation of the island around the globe as a safe destination is central to the idea of transformation into a duty-free island. Though the concept was brilliant and is still feasible, its financial structures were not properly constructed to prevent illicit trade and black markets.

Apart from the sugar sector, the Mauritian Government should offer financial incentives for local and foreign private companies to purchase stocks from the SADC region and to represent themselves on the Stock Exchange of Mauritius. At the end of 2003, 280 fund management companies were in operation, with a total NAV of more than US$9billion, up 50% on the previous year. One major attraction is that companies have access to the Double Tax Treaties with 32 countries, including China, India, France and the United Kingdom. Offshore insurance companies are also welcome, but the channel is still to be explored, as only fewer than 30 companies are licensed to operate at present. Even though Mauritius has adopted a safe, vigilant and wary approach to Offshore Banking, with stringent applications for Offshore Banking Units (less then 10 at present), the Government has realized the huge potential for foreign investment in Africa and around the world via its financial network.  Should SADC economic activities grow, Mauritius could stand as the grand winner. Double Tax Treaties with most key countries in the region, such as Botswana, and South Africa, have already been ratified.

Ties to neighbors

In addition, Mauritius’s cultural and historical ties with India ensure that it will always enjoy a major link with Asia. The Indian government is more than ready to help Mauritius: one Indian company has recently planned to establish an electronic network within more than 20 countries in mainland Africa, with the central help of Mauritius. The United Nations Global E-Government Readiness Survey has placed Mauritius as number one in terms of e-government for 2005.  Tremendous effort to diversify the economy has led to the construction of two cyber towers, one of which has been in operation since 2003 and was named the most intelligent building in the world in its construction year. Indian companies such as Infosys are ready to take advantage of the high literacy (over 95 %) and lingual abilities of the Mauritian population. Indeed, Francophone and Anglophone countries are targets for the new cyber era. Africans also do not consider Mauritians to be as foreign as they would consider the Europeans or the Chinese, for example.  This diplomatic card is essential for local acceptance.

Beyond the superficiality of geographical positioning, Mauritians have always helped their African neighbors.  A most recent example is that Mauritian experts have set up financial sectors in 5 countries over the last two years, including Madagascar. The ideology of the ‘Intelligent Island’, proposed by several governments, can only be maintained if investment in the educational and social sector is increased to offset the shortage in trained personnel in the information and communications technology sector. As far as the exploitating of its Exclusive Economic Zones (200 nautical miles radius around the island) is concerned, Mauritius is glad to welcome the use of high resolution satellite images from India’s satellites to track down phyton plankton, the food for tuna and sardines. The idea actually underlines a project to make Mauritius and Madagascar, the seafood hub of the region.  A fishing partnership between the two nations has recently been formed.  Exporting seafood to mainland Africa is definitely an option. However, for this to happen on a very large scale, Mauritius will need to develop bigger port facilities, especially, in comparison with Singapore and its reputed sea port facilities and nine airport runways.

The above description paints bright future of the Republic of Mauritius. Mauritius has recently addressed issues of corruption and public safety, and such problems should always be in the limelight because they are a stable, working government’s most vulnerable shortfall.  With these tools in hand, Mauritius is the place to be for business, at least within the SADC. Africa is a large continent with multiple opportunities for investment. Beyond that, Mauritians should not forget their business ethics: Africans are not only their business partners, but also their brothers. If Mauritius is to take a different position from the ones taken by previous Western countries in African business, its approach should be love, compassion and discipline, as the island should also serve to help a continent in great danger.