Mauritius, the island nation in the Indian Ocean, has undergone a financial transformation since the early 2000s, promoted by the government in order to catalyze the economy of the country. This has impacted credit access in Mauritius in a big way. Since 2000, the country has experienced losses connected to its truncated access to EU sugar and textile markets and is facing steeper competition from China and other East Asian exports.
Mauritius Economy Compared to Other Countries
This loss of preferential treatment and high budget deficit spells a slight struggle for Mauritius to retain its middle-income standing. Currently, the country ranks 65th in the world on the Human Development Index, and in 2014, it was the second highest country in Africa on the development list. Mauritius’ Gross National Income (GNI) per capita is at $9,770 and the Organization for Economic Cooperation and Development (OECD) reports that the country performs better than the average compared with other sub-Saharan African and middle-income countries as far as information ability, involvement of the trade community, advance rulings, appeal procedures and internal border agency cooperation.
By continuing to focus on the area of governance and impartiality, Mauritius can increase its trade volumes and lower trade costs. A strengthened customs system and transparent ethics policy could be the final stretch to reach the Prime Minister’s dream of a high-income country.
The Prime Minister of Mauritius, Pravind Jugnauth, has predicted a revamping of the economy and expresses hope for Mauritius moving into the future. Key reforms introduced in the 2018/2019 budget helped bring Mauritius its present position. The Minister also touched on the government’s dedication to raising the country to high-income level country, thereby funneling benefits to every citizen. Already this commitment can be seen in the growth of Gross Domestic Product (GDP) and financial services, estimated to continue at 4.1 percent in 2019.
The government introduced changes to the legislative system in order to prevent money laundering and corrupt business. In his speech, the Prime Minister assured that the country is conducting a national risk assessment of terrorism financing.
Credit Access in Mauritius
A report from the Global Findex as of 2017 records 68.5 percent of Mauritians making or receiving digital payments, as well as 48.3 percent using credit or debit cards. The percentage of adults above the age of 15 who borrowed from a financial institution in Mauritius was at 22.9 percent, much higher than the sub-Saharan average of 8.4 percent, in comparison. Outstanding housing loans are increasing in availability as well, and almost 90 percent of adults were able to obtain access to financial institution accounts, banks or otherwise.
Enjoying past growth of upwards of 6 percent in the 1990s and continued economic performance, Mauritius is still dealing with the changes in the EU Sugar Protocol and falling sugar prices. As of 2006, the government incentivized seafood production in order to shift toward exporting fish instead of sugar, as well as a list of Integrated Resort Schemes offering luxury villas to foreigners. Diversifying the market and leveling the competition will surely launch Mauritius ahead in the economic playing field. The GDP by sector reveals the sugar sector operates at a modest 4.3 percent in 2007, led by government services at 15 percent, wholesale at 11, finance and real estate at 14.2 and many other diverse trade sectors.
Unfortunately, drastic adjustments meant one-third of employees for the sugar sector were redundant. The lost sugar income has still not been completely replaced, but the government is focused on diversification and increasing exports in the coming years.
In addition to experiencing an incredible 195 percent wealth growth from 2007 to 2017, credit access in Mauritius continues to increase due to strong ownership rights, a resilient economy, and ease of investment. Hopefully, the country’s example spearheads a movement throughout Asia for easier credit access and stable banks and economy.
– Hannah Peterson