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Heerun GhurburrunSenior Expert ARCA Consortium
Doing Business no. 1 in AfricaHow Mauritius did it?
Tuesday 29 May 2012
Royal Swazi, Swaziland
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Mauritius, some key facts
A small sub-tropical island in the Indian Ocean at around 2100 km to
the east coast of Africa and some 870 km to the east of Madagascar
Former French colony (1710 1810) and British colony (1810 1968);Gained full independence in 1968 and became a republic in 1992
Total surface area of 1865 sq. km, with no natural or mineral
resources
Population of 1.2 million inhabitants
GDP at market price of 10.7 billion USD
Import markets (2010)
Asia: 53% (India 22% & China 13%); Europe: 25% (France: 8%);Africa: 12% (South Africa: 8%)
Export Markets (2010)
Europe: 63% (UK 22% & France 17%); Africa: 18%; USA: 11%Improving the Business Climate in Swaziland - Session 1: How Mauritius did it? -29/05/2012 2
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Mauritius, a success story
Mauritius, 1st
in Doing Business in Africa, over the last 6years according to World Banks Doing Business rankings
How Mauritius achieved this performance?
What are the reasons explaining this success?
Is there a secret recipe for success in business climatereforms?
What are the ingredients of this recipe?
Can the Mauritius doing business model be replicated onthe continent?
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Mauritius Doing Business
Mauritius initiated a bold and ambitious business climatereforms programme in 2005
Phase 1 of the reform programme was implementedbetween 2005 and 2008
In 2007 Mauritius was ranked 32nd
out of 175 countries byWorld Bank Doing Business report and 1st in Africa
Since then, Mauritius has kept this top 1st position in Africa
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Indicator 2005 2011
Economic Growth 2.5 % 4.1 %
GDP per capita 4600 USD 8770 USD
Economic sectors contributing to GDP 5 11Unemployment Rate 9.6 % 7.9 %
Job creation 3000 / year 8700 / year
FDI 94 M USD 325 M USD
Company incorporation / year Less than 8000 Over 40000
Individual businesses registered Less than 20000 Over 100 000
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EconomicFDI
GDP Growth
BusinessGrowth
Diversification
Resilience
Social
Job creation
Wagesincrease
Standard ofLiving
Povertyalleviation
International
Enhanced image Credibility & Trust
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+Economic ImpactDiversified Economic Landscape
AGRICULTURAL
INDUSTRIAL
SERVICES
KNOWLEDGE &
INNOVATIONUSD 20,000by Yr 2020
Sugar
Textile
Sugar
Tourism
Textile
Sugar
Tourism
Financial Services
ICTFreeport
Textile industry
Cane industryHospitality Industry
ICT/BPO
Financial Services
Seafood processing
Logistics services
Real Estate Development
Healthcare & Life Sciences
Knowledge industry
Renewable Energy
* GDP per capita
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+
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+
Source: OECD
GDP Growth (%) 2006 2007 2008 2009 2010 2011
World 4.1 4.0 1.7 -2.1 3.9 3.1
Mauritius 5.6 5.7 5.5 3.1 4.2 4.1
Developed Countries(Japan, US, EU-27)
2.8 2.6 0.3 -3.6 2.5 1.8
Latin America 5.5 5.6 4.0 -2.2 5.9 4.7
Africa 6.0 5.9 5.4 1.8 4.4 3.5
Asia 8.7 9.1 5.8 4.2 8.3 7.2
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+
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ICT Industry 2004 2011
GDP contribution Less than 0.5% Over 6 %
No of companies Less than 50 Over 400
No of jobs created Less than 2000 Over 15000
Broadband connectivity Less than 1 Gbps Over 10 Gbps
Development of the flagship Ebene CyberCity infrastructure & services
High growth industry with high export potential
Spill over effects:
Education & Training Building & Construction
New and diversified job opportunities
New supporting business opportunities & services
Modernisation of the economy
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+
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+
36.3
9.1
40.4
227
29.330.6
61.4 56.1
87.7
93.6
240.7
380.6 383.8
293.1
464.9
0
50
100
150
200
250
300
350
400
450
500
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
USD
millions
According to the World Bank report InvestingAcross Borders published in July 2010,
Mauritius is one of the worlds most open
economies to foreign ownership and one of
the highest recipients of FDI per head ofpopulation.
Sources: Bank of Mauritius / UNCTAD / World Bank
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+
Single flat rate of 15% tax on profits for companies Single flat rate of 15% tax on income for individuals
15% value-added tax on goods and services
Low customs duty (over 80% of dutiable goods are zero rated)
No tax on dividends for Mauritian companies
No capital gains tax
No inheritance tax for first line heirs
Low Tax
No exchange control in Mauritius Free repatriation of profits and dividends
The Mauritian Rupee, a convertible currency, linkedto a basket of foreign currencies: USD, euro, poundsterling, rand, yen
CompetitiveFiscal
Policies
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+
Investment ProtectionFramework of bilateral & multilateral
agreements & conventions signed by Mauritius
+ 34 Investment Protection Agreements
+ 35 Double Taxation Agreements+ New York Convention of International Arbitration
Mauritius Member of:
+ United Nations since April 1968, World Trade Organisation sinceJan 1995
+ British Commonwealth, International Organisation of Francophonie
+ World Banks multi-lateral investment gurantee agency (MIGA)
+ OECD Development Centre
+ Africa Regional Economic Comminities (African Union, SADC,COMESA, IOC)
Local legal& judiciaryframework
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Increase in job creation through economic diversification and
with more business opportunities
Increase in wages thereby contributing to uplift the standard of
living of the population
The significant increase in government revenue collectionallowed for an increase in government expenditure in:
Improving overall infrastructure (roads, airport, seaport, utilities, housing)
Providing better access to health and education
Implementing the National Empowerment Programme for povertyalleviation through training, entrepreneurship and access to credit
Increased social contribution of the private sector through their
Corporate Social Responsibility programmes
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International ImpactVisibility, Attractiveness, Competitiveness
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Index Global Rank(Mauritius)
Africa Rank(Mauritius)
World Bank Ease of Doing Business 2012 23 / 183 1st
Environmental Performance Index 2010 6 / 163
Fraser Institute Economic Freedom 2011 9 / 141
2012 Index of Economic Freedom 8 / 179
Forbes Survey of Best Countries for Business 2011 19 / 134
Democracy Index 2011 24/ 165
Global Enabling Trade Index 33 / 125
Knowledge Economy Index 2009 64
Mo Ibrahim Index of African Governance 2011 -
International Property Rights Index 2011 38 / 129 2nd
Global Competitiveness Index 2011-2012 54 / 142
Human Development Index 2011 77 / 189 3rd
The A.T. Kearney Global Services Location Index, 2011 36 / 50 4th
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Mauritius at the end of an economic cycle, which was based primarily ontrade preferences
Impact of globalisation on a small island state with the erosion of tradepreferences and more severe competition
Mauritius facing a series of external shocks
Dismantlement of the multi-fibre agreement no preferential market access andentry for low-cost producing countries
36% reduction in the guaranteed price sugar for ACP countries end of Lomconvention
Rising energy costs, with heavy increases in world oil price
Rising freight rates and increase in imports costs to Mauritius
Economic indicators turning red Lower economic growth rate (2.5% in 2005) Lowest in the last decade
Increasing rate of unemployment (9.6% in 2005) Highest in the last decade
Increasing rate of inflation (5.6% in 2005)
High budget deficit (5.5% as a ratio of GDP)
Decreasing investment (falling to 21% as a ratio of GDP in 2005)
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Rising to the challenges: Setting theVision
Position Mauritius as a competitive, global business andservices-based platform with an open economy Create an open, attractive, competitive & resilient economy
Shift from inward looking to one of global competition byattracting foreign capital and facilitating entry of foreign talents,
innovation, knowledge and skills Rationalize, simplify and bolster taxation and fiscal policies
Setup a conducive business environment for doing business inMauritius, improve the investment climate to world standards andgear up Mauritius to be ranked among the top ten countries in
Doing Business Broaden the circle of opportunities to allow all to participate in
the development of the country and to generate economic wealth
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Double GDP per capita from US$5,000 to US$ 10,000 by 2015
Achieve a sustainable annual growth rate of 6 to 8%
Reach an investment rate of more than 30% of GDP
Reform the labour market for more flexibility and competitiveness
Welcome at least 2 million tourists by 2015 Provide a low tax envrionment, with a standard single tax rate of
15%
Make of Mauritius a duty free island by 2015
Double the contribution of SMEs to GDP
Further diversify the economy by creating new investment and
business opportunities
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ECONOMY
&
BUSINESS
BUSINESS
ENTRY
(Simple & Fast)
LOW TAXREGIME
(level playingfield)
FOREIGN
INVESTMENT
(Open policy)
SMEs
(Support &Empowerment)
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Eliminate, Repeal, Abolish
Eliminate incentive-based investment schemes or special regimes (eg. EPZ) Taxand fiscal policies reforms
Eliminate obsolete or useless permits, licences or other clearances
Repeal and abolish outdated or inadapted laws and policies
Relinquish ministerial discretionary powers as far possible: rule-based system
Review, Rationalise, Reengineer and Simplify
Immigration policies Work and Residence permits policies
Property acquisition by non-citizens policies
Building and Development permits policies
Environmental Impact permit policies
Integrate and Innovate Application of the Move data, not people principle Computerisation & Automation
Application of the ex-post control principle Allow to start and then check for compliance
Application of the Self-adherence to Guidelines principle Onus on the business operator tocomply to rules & regulations
Application of the Silent Agreement principle Onus on public officers to deliver on time
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Respond with boldness and embrace radical change through
fundamental reforms Political Will to bring about fundamental reforms
Setting the Stage for Robust Growth (Minister of Finance) Aug 05
Ministerial Committee on Red Tape and Bureaucracy Sept 05
Joint Public/Private Sectors Committee to review investment climate
Sept 05
Rational and objective assessment of the business climate
World Bank Studies
Administrative Barrier Study
Doing Business Report 2006 Oct 05 Investment Climate Assessment Report Jan 06
Consultations and Discussions at various levels (public &
private) Briefs, reports, papers, memorandums
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Setting up the legal framework for the new business
environment
Budget Speech 06-07 (June 06)
Finance Act 2006 (July 06)
Business Facilitation (Miscellaneous Provisions) Act 2006 (July 06)
Transforming the legal framework into an operationalbusiness framework
01 October 2006 : New Business Environment in place and effective
Capacity building & awareness campaigns locally thru media
(tv, radio, press, web), workshops, seminars to communicate andexplain the New Business Environment to all stakeholders
Launching of the Mauritius Opens the World investment
promotion campaign at the international level
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Budget Speech 2006 by Minister of Finance
Outlined the framework for the New Business Environment
Finance Act 2006 01 July 2006
Reforms of the taxation system and new fiscal policies
Business Facilitation (Miscellaneous Provisions) Act 2006 01 Oct 06
Omnibus legislation providing for the legal framework for the reforms ofthe overall business climate in Mauritius
Business Registration Act 2006 01 Oct 2006
Unique business registration number for all companies and businesses to beused by all government services (income tax, customs, VAT, etc)
Amendement of over 30 existing laws
Repeal of at least 4 major laws which have been outdated with thebusiness climate reforms
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Resources, Supporters and Partners: critical success factors to
develop and implement successful reforms
Main driving change agents in the recent reforms in Mauritius:
The Ministry of Finance and Economic Development
Board of Investment (national IPA)
Joint Economic Council (apex body representing the Private Sector)
Partners
All Ministries and para-statal bodies
Private sector institutions and associations
World Bank, FIAS, EU
Supporters
Business Community
Public at large
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Promoting Champions Champions at all level have been identifed, empowered and supported
to push forward the business climate reform agenda
Government
Prime Minister
Minister of Finance & Economic Develompment
Ministries
Permanent Secretaries and high level executives of key ministries
Institutions
Director of Investment Facilitation at the Board of Investment Investment Promotion Agency of Mauritius
Registrar of Companies
Director of the Passport & Immigration Office
Director General of Mauritius Revenue Authority
Private Sector
Director of the Joint Economic Council
Secretary General of the Mauritius Chamber of Commerce & Industry
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Reforms Prior to October 2006 Post October 2006: Business
Facilitation (Misc Prov.) Act
Business Registration Multiple business
identification numbers
Starting a Business (46 days)
Unique Business Registration
Number
Business Start Up in 3 days
Taxation Corporate Tax rate @ 25 % Single flat tax rate @ 15 %
Investment Incentives Investment Certificates issued
to qualify for Investment
Schemes (20)
Investment schemes abolished &
move from incentive-driven to
rule-driven
Business Licensing Separate Building Permit and
Development Permit (between
120 days & 2 years)
Single Building and Land Use
Permit issued within 2 weeks
SME registered within 3 days
Work & Live in Mauritius Separate Work Permit and
Residence Permit (60 days)
Occupation Permit in 3 days
Acquisition of property for
business purposes
Non-citizen Property Acquisition
Certificate issued by Prime
Ministers Office (> 4 mths)
Authorization issued in less than
1 month by the Board of
Investment
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Several legal and regulatory reforms on-going
Extensive use of Information Technology for all government services
Registration of property: from more than 200 days to only 48 hours with therecent Land Administration & Valuation Information Management System (LAVIMS)
E-governance for local authorities
On line submission of corporate and income tax returns
E-Judiciary project (court case e-filing and management)
Setting up of a new Insolvency Unit at the Registrar of Companies
Setting up of the International Arbitration Centre in Mauritius with apermanent representative from the Hague
New labour legislations
Employment Rights Act
Employment Relations Act
Setting up of a new commercial division at the Supreme Court
Licensing of private credit information bureau
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Lesson 1Business Climate reform is not an
option, but a vital necessity
There is no safety net anymore for anyone
No one owes you a living Your destiny lies in your own hands
Planning business climate reforms is important,
but To walk the talk and and make it happen is the
real acid test
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Lesson 2Reforming: not a one-off event, but a process
Unflinching political will and full commitment at thehighest level of the state to move ahead a boldbusiness climate reform agenda
Rational, objective and dispassionate assessments ofexisting business climate situation
Public-Private Dialogue: Consultations anddiscussions
Definition of priorities and allocation of resources
Setting the business climate reform action plan
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Lesson 3Stakeholders
Engage and mobilise all key stakeholders
Share and communicate the business climate
reform action plan Identify, empower and support Champions to
push forward the business climate reform agenda
Build capacity and train people to understand andadapt to the changes in the new businessenvironment
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Build a rigorous project plan for the implementationof the business climate reforms
Define & set specific, measurable, achievable, andtimely objectives
Set clear deliverables in terms of results, outcomesand outputs
Assign responsibilities to project and task owners,with accountability
Allocate resources (finance, people and technology) Define key milestones and performance indicators to
measure progress all way along
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Lesson 5Monitoring & Evaluation
Build monitoring and evaluation mechanisms tomeasure and follow-up progress
Interministerial committee on business climate
Public-Private Steering Committee to oversee andfollow-up the implementation of the business climatereforms action plan
Intensive use of information and communicationtechnologies to computerise and automate processes
Use of project management tools to have a strict andrigorous control on the implementation process
External audits (World Bank)
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Final LessonThe proof is in eating the apple
Adopt a Yes We Can attitude
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One that would have the
fruit must climb the tree -Thomas Fuller (1608 - 1661) , English clergyman & historian
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Heerun GhurburrunSenior Expert ARCA Consortium
Doing Business no. 1 in AfricaHow Mauritius did it?
mailto:[email protected]:[email protected]