Mauritius is a subtropical island country in the Indian Ocean, off the south-eastern coast of Africa. It is surrounded by coral reefs and is known for its beautiful beaches and lagoons. The mountainous interior includes Black River Gorges National Park, with rain forests, waterfalls, hiking trails and wildlife that includes flying foxes.
The capital Port Louis includes sites such as the Champs de Mars horse track and eighteenth-century botanical gardens. Its two major rivers, the Grand River South East and the Black River, are the primary sources of hydroelectric power, and Lake Vacoas, one of the main reservoirs, is the primary source of water. Sugarcane is the island’s major export crop.
Mauritius suffered many economic difficulties as a result of the Covid-19 pandemic, including halting the island’s tourist trade, which it relies on extensively.
“Then while we were trying to recover from that there was the aggression by Russia on Ukraine,” says Dev Erriah, managing partner at Erriah Chambers in Port Louis. “That complicated things for us because we are a small island and have to import oil and gas and many other things.”
In its determination to not have all its eggs in one basket, there a major focus on developing new sectors like ICT, and call centres and innovative projects so that Mauritius can progress more economically and diversify its economy, he says.
“We are also developing the blue economy, which in my opinion we have ignored for too long.” This is the exportation of marine resources, including fishing, and seafood.
“Our tuna is being eagerly fished in our seas by the Japanese and we are signing an agreement with the European Union for countries like Portugal, France, Spain and Ireland to come and fish here. They will pay Mauritius a commission based on the tonnage of Tuna that they fish.”
This will be good for Mauritius, because it will help to make up for the losses it has suffered through its tourist industry being so badly affected.
Within the blue economy the country is also pursuing the exploration of oil and gas resources on its seabed. Tenders have been launched for this, and an Australian company has been awarded a contract. “And we are doing a joint exploration with the Seychelles islands.”
He says the Mauritius seabed is three or four times the size of Germany, France and Portugal’s put together.
The island is also trying to diversify its financial services sector, which includes opportunities for fintech and crypto currency. The island has recently introduced virtual assets legislation, VAITOS, which will help to enable Mauritius to be a financial hub in the Indian Ocean.
This law has been introduced as a result of Mauritius being removed from the European Financial Action Task Force (FATF) grey list four months ago.
On 7 May 2020, the EU included Mauritius on its grey list of high-risk countries that have ‘strategic deficiencies in their anti-money laundering and counter terrorist financing frameworks’.
“We had to introduce this law to prove that we have strengthened our financial services regulations,” says Erriah.
He says the biggest opportunities for investing in Mauritius lie in the blue economy, where it is extending fishing rights to countries like Japan, which is very interested in investing in the island’s seafood hub. “Norway and other Nordic countries are also interested in investing in our fishing industry, for example to build factories to produce canned tuna.”
Other investment opportunities include property, whereby Mauritius is giving premium visas to people who want to work there and either rent or buy property at different levels of investment. “And these people will spend money in Mauritius,” says Erriah.
He says €750,000 is a minimum investment in a certain type of property, and at a higher level investments in land and housing would range from €2 million to €3 million or the equivalent in US dollars.
There is also an emphasis on investments in renewable energy like solar and wind power projects, which are attracting investment from Germany and the Nordic countries, among others. Erriah says the island currently relies extensively on oil, coal and gas, although its sources are very diversified and include buying from Russia, among others.
India and China are Mauritius’ biggest trading partners and South Africa is also one of the top countries it trades with. “There is a ministerial delegation from Mauritius in South Africa right now, to strengthen commercial relationships that were disrupted by Covid-19. With the rupee going up in value it is easier to buy in Rands.”
One of Mauritius’ biggest challenges is that it depends on foreign currency – the euro and sterling and US dollars. And its imports are based on US dollars, which, being a volatile currency, affects the price of goods.
But having said that, Mauritius’ tourist industry has improved, tourists are coming back and accommodation is 90% to 95% full, which is bringing in foreign currency, says Erriah.
This has started to compensate for the currency issues and the value of the rupee has started to increase. “It has gone up by 20% to 25% since six months ago when it was nearly 50 rupees to one euro. Now it’s about 41 rupees to one Euro, and we are also catching up on the Pound Sterling, but the USD exchange rate against the rupee is still very volatile.”
Laws and regulations
New laws relating to virtual assets like crypto currency and corporate governance have been recently introduced. Strengthening those laws in line with recommendations from Europe’s financial action task force (FATF) and other advisory organisations will ensure that the country does not end up on the grey list again, says Erriah.
He says there are also laws coming into play relating to the construction industry and the transport industry. “We have a light metro service covering about 35% of the country, mainly in urban areas.”
The metro is above the ground and is very green, in the sense that it doesn’t run on petrol or diesel but on rechargeable batteries, as with electric vehicles. “And as the metro coverage grows it will reduce the need for buses, which run on diesel and pollute the air,” says Erriah.
Despite the Covid-19 challenges and the global turmoil due to Russia’s aggression against Ukraine, Erriah Chambers is doing well and has not been adversely affected, says Erriah. Since the advent of Covid, workflows have been coming from insolvencies and restructuring, Air Mauritius went under administration, and a lot of companies went into liquidation, he says.
“We have had work from that, and the aviation sector where we are involved heavily. We’ve had a lot of litigation work as well, for example companies not being able to meet their obligations and force majeure.”
Erriah says he is confident that the tourism industry will pick up very soon in Mauritius, “especially as we are coming to the end of the year which is a vacation period. We are optimistic that 2023 will be a good year for Mauritius and I think we will do very well in the years to come.