Mauritius is currently going through a phase of transformation —from a middle-income to a high-income country. How do you think this should be managed in order to sustain growth?
It is very important for us to manage this moment properly because we are on the most difficult part of a long going process; it is relatively easy to go from a low to a middle income, but to take a leap into a high income is the real challenge.
After our independence, the GDP per capita was less than USD 200 and up to date we have a GDP per capita of USD 9000. We believe we will achieve this high income status but it means getting more competitive and having the right priorities in terms of investment to develop the new niche areas we want to focus on, such as the financial services and the ICT sectors, for example. On the other hand we also have the Ocean Economy; we have a huge exclusive economic zone of 2.3 million km2 and a lot of resources in the sea; pharmaceutical products, mineral resources, fish, and in our particular case the water is very pure and it can be used for energy purposes as well.
Globalization has turned the world into a dynamic scenario, in which it is necessary to have competitive advantages and know how to play on an effective way. Which is in your opinion, Mauritius´ main asset that makes it a potential player on the global economy?
When investors arrive to a country they look for some common conditions that we can provide. Investors look for stability; we are a stable democracy with transparent elections on a regular basis. They look for independent institutions, which is something we have. Also our ultimate court of appeal is still in the UK, the British Council, and this warranties people that procedures are well regulated. They want a safe country; we are one of the safest countries in Africa.
Property rights are respected, we have no exchange controls, tax and dividends, and no in heritage taxation. We reduced both, personal and corporate tax to 15%, this makes us one of the lowest jurisdictions. All these are factors that attract Foreign Direct Investment. We are a multicultural society, multilingual with flexible and well-prepared work force, because we have free education for a long time. Finally, we have the needed infrastructure to be able to develop businesses.
Mauritius aims to become a business hub in the Indian Ocean Region; taking advantage of the role the country plays as a bridge to enter the African continent. What are the main challenges to face in order to achieve this objective?
We have come a long way already. A lot of countries are investing now in Mauritius to use it as a platform to get into Africa for the reasons I previously mentioned. Besides, we are members of international organizations such as SADC or COMESA, which give us a potential market of 600 million people, preferential access to these markets and duty free. Up to date we also have 42 double taxation avoidance agreements and these are all facilities people can have through us.
Recently, by my initiative, we started setting up a center for international arbitration. We are bilingual, our legal system is hybrid, French and English, and we need to take advantage of these assets. We are being looked as an example for other countries in Africa; they are benchmarking with us and learning from our experience.
Mauritius Government’s main concern is to develop the economic sectors and eliminate poverty, however, this can only be done through foreign direct investment, and exploding the country´s main advantages. As Prime Minister of Mauritius, how do you ensure to increase Mauritius visibility and present Mauritius as an ideal destination for investment and business development?
Before the start of stimulus packages in Europe and America, we were not affected by the subprime rate, but at some point we were going to be affected by the recession that followed it.
Ahead of time, we started giving stimulus packages and opening up the economy at the same time. As a foreigner you can get a work permit, a residence permit and you can buy property and you can have double nationalities. We try to attract people with the talent that we don’t have in the country. We have a lot of talented people here and we don’t want to face rates of unemployment but we are lacking expertise in some areas and so we allow the people to come. This is all addressed to a business facilitation act, which we started on my previous mandate.
Today if you want to start a business you can do it online and if in 3 days you haven’t received your permit you can assume you already got it. We also have the Board of Investment with very capable people to facilitate procedures.
We had to face some external challenges even before the recession, specially in terms of energy and food prices, the economy was going through a critical moment. When we came in every economic indicator was in red, we had a public debt with a deficit of nearly 70% and we reduced it.
With the Sugar Protocol we were getting preferential access to the European market but it came to an end. The Multi Fiber Agreement also came to an end just after we came in and this forced us to compete with other countries like Bangladesh or Pakistan, where labor is cheaper and this represented a big challenge. However, we managed to maintain sustained growth. International agreements like AGOA have also been very helpful and we want to renovate it.
In order to achieve efficient development it is essential to have a good communication between the public and the private sector. How do you promote a good interaction between these two actors?
We have a very good team of ministers that on each of their sectors act as regulators. We are accessible, whenever there’s a problem and we try to see what we can do.
In 2008 you brought to the table the initiative Maurice Île Durable. How did you come up with this idea and what are the actions that are being taken in order to achieve this project?
This was the idea of another Mauritian, professor Rodney, who is now living in France. He came to see me during my first mandate with the idea of making Mauritius less dependent of fossil fuel. I got very interested by this suggestion and so we started it but it was already the end of my mandate and then I lost the elections, so the project went on standby. It was in 2005 when I came back as Prime Minister that I restarted it, and its going very well, we are already seeing results.
We are implementing new technologies on our new developments; for example, in the airport we installed solar panels. We are working on educating people about energy consumption. We are creating wind and solar farms, we are increasing the scale of these projects and now we have German and French firms investing into them.
One of the government’s initiatives, and a personal priority for you, is to develop the ocean’s economy. What actions have already being taken?
We already launched the project. We invited the private sector, including people from abroad because we need foreign direct investment. We are making it known through all the embassies with special representatives at the UN. We are happy to see a very positive reaction and this is because the potential is huge through the economic zone.
We will be exporting the water. This is something similar to what Hawaii does in Japan, but as a volcanic island, our water actually has more minerals and is purer, so we want to take advantage of it.
No matter how wealthy a country can be, if its human resources are not well educated it will hardly get far. What are the actions you have taken in order to develop the education sector in Mauritius?
We’ve had free education since 1977 and it is compulsory up to the age of 16, however our tertiary enrolment was too low. When I came in, it was around 15% and we have managed to upgrade it to 43%. To do that we want to include the top names in the campuses and they are starting to come to Mauritius. We need to have quality education. We recently received some experts from the UK to evaluate our education system in order to take corrective measures. If you don’t have quality standards people just won’t come in, they want to make sure there is a proper environment and we are focusing on creating it in a more affordable rate.
Due to its geographical location and history, Mauritius holds solid commercial relations with countries like India, Japan, the UK and many African countries. Which are the latest agreements that have being signed and what are the benefits you expect from them?
We have very good agreements with India; this is the reason why a lot of investment coming from the United States passes through Mauritius to go to India. We have a strong relationship with this country because a lot of our people come from there.
We are increasing our commercial links with China and each time getting more investment in Mauritius from them to go into Africa. At the beginning China wasn’t interested in Mauritius because they were looking for mineral resources, which are something we don’t have, but after they realized the potential of our country to work as a platform due to our stability, our security and the know-how we have in key sectors.
Mauritius and the United States have a wide history of cooperation. Currently, more than 200 American companies are represented in the country. This is a relationship that contributes to reinforce Mauritius’ image of credibility as a safe place to do business. Where do you see this bilateral relation in the coming years? How do you promote it?
One of the problems we face is the distance between the two countries but we are reducing it each time more and more. Our relationship with the USA is a long story; the first ambassador that was sent to Mauritius from the USA came on the time when Thomas Jefferson was president and we were not even independent. We share the same values such as democracy or rule of law, which is not something present everywhere and this makes us compatibles.
You were elected Prime Minister in 1995 for the first time then you were re-elected in 2005 and in 2010. In these almost 15 years of leadership, which are the main changes you have witnessed during your time as Prime Minister?
Many politicians don’t realize that the new generations are different. We currently have a big debate regarding the electoral reform; we have a system in which you have to indicate whether you belong to the Hindu community, the Asian community or any other community. This was done to make sure minorities would get represented in the parliament. It worked well for a while but we are now so much more integrated. We want to have a second republic. The fact is that the youngest generations agree with what I am trying to do, they understand it is needed, as they think on a more global way.
Before been appointed Prime Minister you also worked in several areas such as General Practitioner or Lawyer. With such a varied background, from all these years of work and success, what makes you feel most proud of?
My father was a Prime Minister so I learnt a lot of things just by being there next to him. I however studied medicine in Ireland and did my internship, and then I came back to Mauritius. I started specializing in cardiology in London and that’s when I changed the direction and became a lawyer. At that time they were converting Mauritius into the first republic but without elections and we were facing political uncertainty, I got involved because I wanted to campaign against this project on my own, against a big majority. I did it on my own, without a party to support me. Eventually I managed to bring enough people on my side of thinking and I defeated the Prime Minister and that’s how I got into politics and then I just couldn’t stop.
To conclude this interview Your Excellency, our readers are more interested on the leaders we interview than on the company or institution itself. In that context, what message would you like to send to our worldwide readers of HARVARD BUSINESS REVIEW?
It is not a coincidence that the World Bank is classifying Mauritius 1st in Africa. That in the MEI index, which rewards countries regarding good governance and management, we’ve come out 1st for the last 7 years. We’ve been appointed as a top country to do business, 29th out of 145 countries. The US Heritage Foundation has a ranking for economic freedom in which we are 1st in Africa and 8th out 178 countries. Moody’s have ungraded us even if we don’t have economic resources. All these are great indicator of Mauritius been a great place to invest, specially if you want to enter Africa because you will have our know-how, stability, expertise and also the climate provided by our welcoming people.