Mauritius is a multicultural developing island situated in the Indian Ocean. Over the last four decennaries, Mauritius has made a important attempt in its enterprise to go portion of the planetary fiscal market. Indeed, the economic system has witnessed unbelievable advancement and is now considered as a middle-income, good diversifiedA state. Harmonizing to the IMF study 2008, Mauritius has a ‘relatively big and well-developed fiscal system ‘ . The Mauritanian economic system grew by 4.1 % in 2011 driven by a vigorous public presentation in the fiscal sector and a rise of the fabric industry. A growing of grew 3.4 % of GDP was noted in 2011 chiefly due to the third sector ( including fiscal services ) . Considerable development has been marked in the context of fiscal stableness. The attractive financial policies, no exchange controls, modern substructure and handiness of qualified work force aid in absorbing foreign investing in Mauritius. Mauritius has positioned as an imperative gateway associating Europe/USA/Asia to Africa and Europe/USA to Asia thereby increasing the scope and kernel of activities conducted in the fiscal services sector. Harmonizing to World Bank ‘s 2012 Doing Business study[ 1 ], Mauritius ranked first among African economic systems and 23rd globally in footings ease to transport out concern and has been appraised by the Financial Action Task Force ( FATF ) . Additionally, Mauritius is ranked 54th ( 3rd in Africa ) in the planetary fight Index and 8th ( 1st in Africa ) in the Index of Economic Freedom 2012.
History of fiscal sector developments in Mauritius.
Since independency in 1968, Mauritius has experienced outstanding transmutations. In early 1970s, Mauritius supported a monocrop economic system, preponderantly dependent on sugar and has bit by bit evolved to a multi-sector economic system with impressive rise in per capita income ( see Table 1 ) . At independency, the state inherited a alone set of sound legal, a loanblend system based on both on the Gallic Civil Code and English jurisprudence. A strategic alteration took topographic point in the 1970 ‘s as Mauritius switched from agricultural sector to the industrial sector. Mauritius has successfully diversified into different economic sectors such as fabrics, touristry and fiscal services. Despite the effort of the authorities to cut down imports with the execution of an import permutation scheme, no economic growing was noted. However, the acceptance of an outward looking scheme during 1980 ‘s finally led to a roar in the economic system after the debut of the EPZ and the start of exportation.
In the yesteryear, the Mauritian fiscal system comprised chiefly of the banking sector with the first Commercial Bank being established in 1838. The banking sector entirely has contributed over 6 % on norm to GDP in the last few old ages. A transmutation took topographic point in the fiscal construction in the early 1980s and a demand for NBFI ‘s was felt. Having revisited the policies, the mid 1980 ‘s marked the fastest growing rate with an outward looking scheme. In early 1990 ‘s, Mauritius faced new challenges in footings of higher rewards and increased rising prices rate and the economic system ‘s international fight was earnestly threatened. The economic system about hit full employment and investing in new merchandise lines was compulsory to recover the competitory border. Ultimately, the state decided to put up an International Financial Centre which would be to the services sector what the EPZ ‘s were for the fabrication sector, hence the outgrowth of the offshore banking and fiscal services. Ever since, the fiscal sector has flourished and today the sector comprise an increasing figure of taking international Bankss insurance companies, offshore companies, and NBFIs. Investing vehicles runing from investing retentions to major corporate strategies have been set up and administered in the state.
3.2. A. Legal Framework
The Financial services industry is supervised and regulated under a legal model by the Ministry of Finance. Numerous alterations have been undertaken to overhaul and better the statute law. The Stock Exchange Act and Banking Act in twelvemonth were passed in 1988. Further attempts by the Mauritanian authorities to set up the appropriate legal model in the fiscal sector resulted into the Trusts Act 2001, Financial Intelligence and the Anti-Money Laundering Act 2002, Banking Act ( 2004 ) , Securities Act 2005, Guidelines for Islamic Banking 2007, Financial Services Act 2007, Amended Law Practitioners Act 2008 and until late the Foundation Act 2012 among others. The fiscal sector development has added to the economic system ‘s overall resiliency by pulling more and better resources and upgrading the legislative and regulative model. This has had positive spillover effects on virtually all sectors of the economic system.
With globalization, Mauritius has demonstrated strong will and commitment to run intoing international criterions such as the Basel II rules adopted by the Bank of Mauritius in 2009, International Association of Insurance Supervisors ( IAIS ) . The FSC guarantee business-friendly Torahs and ordinance which are in line with the criterions of International Organisation of Securities CommissionA ( IOSCO ) and theA Financial Action Task Force ( FATF ) A recommendations. The FSC besides focusesA on Anti-Money Laundering and battling the Financing of Terrorism demands, corporate administration rules and international norms and criterions for investors ‘ protection such as beef uping Know Your Client ( KYC ) policies. Since April 2009, Mauritius is on the OECD ‘s list of the legal powers implementing the internationally in agreement revenue enhancement criterions ( the White List ) to uphold aid in revenue enhancement affairs.
3.3. A. The Board of Investment
The Board of Investment ( BOI ) is the national Investment Promotion Agency of Mauritius. To transform Mauritius as a competitory concern platform, BOI offers a scope of advanced fiscal merchandises and services to foreign investors in a concern friendly environment with a competitory revenue enhancement rate and no exchange control. Additionally, the BOI ‘s provides extended web of Double Taxation Treaties to further develop trade and the investing clime. Mauritius presently has entree to Double Taxation Avoidance Agreements with 37 states which provide investors with financial advantages. The DTAA ‘s and Investment Protection & A ; Promotion Agreements ( IPPAs ) have proved to be influential in actuating foreign investors to take Mauritius as an efficient concern platform. Mauritius has attracted a figure of international concerns puting across the Earth and has since enhanced inward and outward investing.
Mauritius has a stable democracy with one of the highest per capita incomes in Africa. Table 1 below shows the tendencies of existent gross domestic merchandise per caput in Mauritius for the past six old ages.
Table 1: Real GDP per capita ( current international $ )
GDP ( $ )
Beginning: World Bank study 2012
Harmonizing to the statistics provided supra, an overall consistent lifting tendency in the Real GDP per capita is noted. This can be attributed to a well-managed economic government in the state. Real GDP per capita peaked highest in 2007 owing to the development in the ICT concern being an indispensable trait. Mauritius witnessed a little rise of 5.97 % in 2011 in comparing to 2010. Datas are in current international dollars converted at buying power para rates.
The duty to modulate bank and non-bank activities falls on different regulators. By the way, the regulative attack has been merchandise based. Soon, the fiscal construction of Mauritius is regulated and supervised by two different organic structures viz. : Bank of Mauritius ( BOM ) and Financial Services Commission ( FSC ) .
3.3. B. Banking Industry
The banking industry is aboriginal in the fiscal system to heighten economic enlargement. Mauritius has a comparatively sophisticated banking sector which consists of the Bank of Mauritius, offshore Bankss and domestic Bankss. The sector comprises of 20 Bankss licensed by the Bank of Mauritius as at December 2012. Of these, 8 are local Bankss, 7 are subordinates of foreign-owned Bankss and 5 are subdivisions of international Bankss. Most celebrated international Bankss are present in Mauritius and actively transport out cross boundary line minutess and internationalization. A strong domestic regulative model prevails in the Mauritanian banking industry. Banks operate in conformity with the Bank of Mauritius Act ( 2004 ) , the Banking Act ( 2004 ) ND conform to rigorous confidentiality issues refering personal informations of clients. The Bank closely monitors the hazard indexs.
SMEs play an of import function in the economic development of a state through employment creative activity, exports, and poorness relief. With the fast spread outing Mauritanian banking industry, nowadays SMEs face no major restraints refering handiness of recognition installations unlike other developing States. Financial services are easy approachable to the populace because more than one bank history per caput has been noted. The industry present possible chances for investing in banking in and through Mauritius in Fieldss like Global Business Banking, Private Banking and Investment Banking.
Mauritius has well-developed and unafraid payment systems. There are widespread banking subdivisions and electronic banking for the convenience of client service. Information engineering in banking has transformed the system. The Automated Clearing and Settlement System ( MACSS ) have speed up automatic processing of checks. In November 2011, the mean figure of checks cleared daily stood at 22,089 checks, for an mean sum of Rs 1,233 million. The Numberss of ATMs have been increasing well over the old ages from 195 in 1995 to 426 in 2011. Consequently, the figure of minutess has risen from 1524578 in 1995 to 4,525,691 in 2011 amounting to Rs 9 billion with a entire figure of 1,324,610A of cards in circulation.A With the rapid extract of prepaid cards and nomadic banking in the modern banking system, the banking industry puting its focal point on easing its electronic bringing channels for the improvement of the populace.
Bing an International Finance Centre Mauritius supports banking assets from many African and Asiatic states. The entire plus value of Bankss in Mauritius was Rs 924.2 billion as at November 2011 with a entire sum of recognition of Rs 248.8 billion to the private sector.
Bank of Mauritius
The Bank of Mauritius ( BoM ) , founded in September 1967, is the Central Bank of the country.A It supervises and regulates the activities of banking sector. The BoM is responsible for keeping monetary value stableness in the economic system, commanding the foreign exchange militias, explicating and put to deathing pecuniary policy, guaranting information confidentiality and maintaining equal liquidness amongst others. At present ( 2012 ) there are 8 non-bank deposit-taking fiscal establishments, 6 foreign exchange traders and 10 money modifiers. The minimal Cash Reserve Ratio ( CRR ) demand on a bank ‘s sedimentations in 2011 was 6 % which endorse stableness in recognition creative activity of the Bankss.
The recent major inventions in the BoM are the debut of CAMEL evaluations, to bring forth dependable and comparable evaluations in bank revelation ; the execution of the Bulk Clearing system, the Cheque Truncation system and the COMESA Clearing and Settlement System. The Bank ‘s chief informations Centre in Port Louis during has been upgraded utilizing blade waiter and practical machine engineering. The Bank has set up a Wireless Network to complect banking establishments take parting in check glade in Mauritius.
The Central Bank has been working closely with SEM and Commercial Banks to put up a platform to merchandise authorities securities on the Exchange. Commercial Banks which have been licensed as Primary Traders by the Central Bank will move as Market Makers on the SEM platform to guarantee liquidness.
Soon, there are 20 domestic Bankss in Mauritius. Domestic Bankss render several services such as sedimentations taking, allowing loan, card-based payment services, cyberspace banking, fund direction services, stock broking, private investing banking, tutelary direction and others. The Mauritius Commercial Bank LtdA and theA State Bank of Mauritius Ltd history for about 75 % of the banking market portion.
Mauritius has a noteworthy offshore banking sector among other developing states in the Indian Ocean. After the passage of the Mauritian Offshore Business Activities Act in 1992, Mauritius became an ideal legal power for offshore concern activities. Its web of dual revenue enhancement pacts accompanied with good developed telecommunication systems and infrastructural services, offer moneymaking chances in ‘global concern banking ‘ largely with important regional economic systems such as Asia and Africa. The seaward Bankss in Mauritius offer a broad scope of services including foreign exchange dealing, , offshore trust and securities and fund direction. Presently there are 19 seaward Bankss in Mauritius and this sector is sing a sustained growing.
The fiscal sector witnessed a new entrant in March 2011 with the beginning of the first fully fledged Islamic banking operations. Mauritius now offers at introducingA a competitory platform of Shariah compliant banking services and fiscal merchandises. HSBC Bank ( Mauritius ) Limited and Century Banking Corporation Ltd are presently set abouting Islamic banking concern. The Islamic fiscal services sector in Mauritius is set for farther enlargement in the coming old ages.
3.3. C. Financial Services Commission
The Financial Services Commission ( FSC ) , established in 2001, is an incorporate regulator for planetary concern, insurance and pensions, capital markets and other NBFI ‘s. The FSCA licences, regulates, proctors and supervises the behavior of concern activities while advancing equity and transparence of the fiscal establishments. The FSC is committed to the sustained development of the economic system as a sound, stable and competitory International Financial Centre of reputation.
Fiscal intermediation expanded by 5.5 % in 2011 as compared to 4.3 % in 2010, stand foring 10.1 % of the GDP, FSC Annual Report 2011. This is explained by a growing of 4.5 % in the insurance sector, 6.0 % in the banking sector and 6.0 % in ‘Other fiscal intermediation activities ‘ .
In 2011, the FSC licensed 16 NBFI ‘s under the Financial Services Act 2007[ 2 ], 19 under the Securities Act 2005 and 694 under the Insurance Act 2005, numbering to 729 figure of NBFI ‘s, therefore stand foring an addition of 7 % as compared to 2010.
Since its origin in 1992 under the Mauritian Offshore Business Activities Act ( MOBAA ) , the planetary concern ( once known as offshore concern activities ) has experienced sustained growing. The planetary concern sector contributed on mean 5 % of GDP over the last few old ages. The Financial Services Act 2007 defined the planetary concern company ( GBC ) as a resident corporation that proposes to carry on concern outside Mauritius. There are two types of GBCs based on the class of license – GBC1 and GBC2. The top three mark markets for GBCs are Africa, India and Asia.
Harmonizing to table 2, the planetary concern industry experienced a rise of about 13 % in the figure of GBC 2 ‘s in 2011 as compared to 2010 indicating that the legal power ensures certainty and attraction to transport out concern, harmonizing to the FSC Report 2011.
Table 2: Entire figure of Global Business licensed between 2007-2011
GBC 1 ‘s
GBC 2 ‘s
Beginning: FSC Annual Statistical Bulletin – 2011
The figure of GBCs followed an upward tendency bespeaking growingly fiscal investings. In 2011, GBCs were being serviced by 154 Management companies. Management companies are service suppliers which act as mediators between their clients and the FSC. As at October 2010, there were about 140 licensed Management Companies. Despite a changeless rise in the turnover for direction companies in Mauritius for the last four back-to-back old ages, an approximative autumn of 40 % was registered from the twelvemonth 2010 to 2011. The net income before revenue enhancement dropped by about 54 % in 2011 when compared to twelvemonth 2010, as depicted below.
Table 3: Summary of fiscal consequences of Management Companies
( inclusive of Corporate Trustees ) ( 2007 – 2011 )
Employee turnover ( thousand USD )
Net income before revenue enhancement ( thousand USD )
Beginning: FSC Annual Report 2011
Insurance market and pension
The Insurance is an built-in portion of the fiscal sector as it contributes to economic growing by advancing fiscal stableness, mobilising nest eggs, furthering trade every bit good as extenuating hazards. The FSC licenses the insurance/reinsurance companies every bit good as insurance service suppliers under theA Insurance Act 2005, A in alliance with the rules of IAIS.
As illustrated below, the insurance industry grew by 8 % in 2011 with assets amounting to Rs 95.9 billion for 21 insurance companies. Similarly, the entire gross premium expanded by 9 % from Rs 17.5 billion in 2010 to Rs 19.2 billion in 2011 during the twelvemonth under reappraisal. Another public presentation index of the insurance industry is the addition in figure of licences issued. The FSC licensed 18 insurance agents, one insurance agent and 675 insurance sales representatives in 2011.
Table 4: Figures for the insurance sector in 2010 and 2011
Growth ( % )
Long term Insurance
Entire Gross Premiums
Entire Gross Claims
Entire No. Policies
Beginning: FSC Annual Report 2011
The capital market is one of the most dynamic sectors in the economic system. It promotes growing by change overing nest eggs to investings and aids companies in raising financess. A The Securities Act 2005 governs the operations of securities exchanges in Mauritius.
The FSC has twoA dulyA licensedA Securities Exchanges:
Stock Exchange of Mauritius LtdA ( SEM )
Global Board of Trade LtdA ( GBOT ) .
Stock Exchange of Mauritius
Following the passage of the Stock Exchange Act in 1988, the Stock Exchange of Mauritius Ltd ( SEM ) , a private limited company, was incorporated in 1989 to command and oversee the securities market operations. The local stock market which was opened to foreign investors after the abolition of the Exchange Control in 1994, has witnessed net influxs of Rs 6.82 billion from foreign investors from August 1994 to 11 April 2012. In 2008, the SEM became a public company and is today one of the taking exchanges in Africa. By achieving rank to the World Federation of Exchanges since 2005, SEM is being acknowledged internationally.
Over the last decennary, Mauritius Bourse generated encouraging investing influxs on many listed companies foreign investor. Being ranked foremost in the “ Most Advanced African Stock Exchange ” class in 2012, SEM now aims at consolidating its place to farther contribute to economic development of the state. Until late, SEM brought flexible alterations in its Listing Rules to provide for Global Business companies and remain in line with international criterions.
The SEM operates two markets:
The Official Market took off in 1989 and soon has 62 listed companies with a market capitalization around US $ 5.5 billion as at 30A November 2012 and 3 listed Global Business companies in 2013. Harmonizing to the FSC ‘s Annual Report 2011, the official market capitalization was Rs 172 billion which amounted 53 % of GDP.
Development & A ; Enterprise Market ( DEM ) .
The DEM started in 2006 and presently has 52 listed companies in 2012 compared to 50 listed companies in 2011. The DEM market capitalization rose to Rs 59 billion connoting a growing of 9 % in 2011 as compared to 2010, FSC ‘s Annual Report 2011.
Global Board of Trade Ltd
The GBOT, launched in October 2010, is a major measure in development of the Mauritanian economic system. GBOT is promoted by an Indian Group, the Financial Technologies Group, which is licensed and regulated by the FSC. It is an international multi-asset category exchange which offers a basket of currency derivative merchandises and the trade good derived functions for trading. During 2011, the entire turnover for the 294,441 contracts traded on the GBOT hit USD 8.155 billion.
The construction of the fiscal services sector is undergoing dynamic alterations worldwide. With activities going more incorporate, a incorporate fiscal and regulative model was proposed by Dr Manraj[ 3 ]for the Mauritian fiscal system. . In a nutshell, Mauritius is presently in a transitionary theoretical account for reforms are being initiated to supply trust in the sector. Given the increasing figure of issuers, participants and investors in our local market over clip, a meaningful part is brought towards the integrating of the Mauritius fiscal services. The fiscal sector remained resilient and profitable during the twelvemonth 2010-11 despite the unsure economic conditions that persisted on the international forepart.