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Mauritius bids to become 'springboard' to India and China

From Maggie Lake, CNN
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Sunil Benimadhu, chief executive of the Mauritius stock exchange
STORY HIGHLIGHTS
  • Mauritius is one of Africa's most prosperous economies
  • The island has been named first in Africa for ease of doing business
  • It aims to be one of the world's top investment and business-friendly locations

CNN's Marketplace Africa offers viewers a unique window into African business on and off the continent. This week the show interviews Sunil Benimadhu, chief executive of the Mauritius stock exchange.

Watch the show on Fridays 1945, Saturdays 0145, 0615, Sundays 0715 (all times GMT).

(CNN) -- Mauritius, a tiny island located off the south-east coast of Africa, is an "ideal platform" for investors looking to tap into Asia's growing economies, according to one of the country's financial experts.

One of Africa's most prosperous and stable economies (the World Bank recently ranked Mauritius first in the continent for ease of doing business) Mauritius' government wants to turn the country into one of the world's top business-friendly locations.

The island's open and flexible regulatory system already benefits international entrepreneurs, according to Sunil Benimadhu, chief executive of the Mauritius stock exchange.

"We tell investors investing into India and China that we've got a big competitive edge in terms of locating their businesses in Mauritius and using Mauritius as a springboard to invest in those countries," he told CNN.

Marketplace Africa spoke to Benimadhu about the country's economic success and the lessons learned from the global financial crisis.

CNN: Tell us about Mauritius' efforts to expand the financial sector. What has particularly changed?

There's been a lot of change on the macro-economic front in Mauritius -- we've really modernized the economic infrastructure.
--Sunil Benimadhu, head of the Mauritius stock exchange

Sunil Benimadhu: First of all there's been a lot of change on the macro-economic front in Mauritius -- we've really modernized the economic infrastructure. We've also come up [with a] major economic reform so as to set Mauritius on the high-growth path.

Within that environment, of course, the financial sector has grown quite substantially. It's a sector that is growing on an annual basis by 11 percent and this growth is driven by the growth of the global business sector.

Mauritius is growingly being used as a platform to service Asia. There is a lot of money being raised in Europe, in the U.S., and invested in India. And because Mauritius has a double-taxation deal with India, therefore it makes Mauritius an ideal platform for people to set up companies to invest in India and in the Asian markets.

CNN: What have been the challenges of managing that?

SB: The main challenge has been to maintain the growth tempo at the macro-economic level at five percent -- year in, year out at five percent. Why? Because Mauritius faced what we call the triple shock in 2004, 2005.

First, with the huge increase in the price of oil. We are a major importer of oil so this had a big impact on our current account balance.

Secondly, Mauritius had relied for a long time on what we call the preferential sugar protocol with Europe and this has ended since 2007, 2006, which means that today we are selling our sugar on the world market and therefore the price that we are getting right now is 30 percent less than what we used to get.

Thirdly, Mauritius' growth has relied for a long time on the manufacturing sector. And today with the emergence of China, Bangladesh and so on, and the huge economies of scale that they can derive, a small country like Mauritius is not competitive relative to those countries. So we've had to reinvent ourselves.

CNN: You seem to be setting yourself up as the bridge, as you said earlier, to India, to China, to the biggest markets. What's the pitch you give to investors?

SB: We tell investors investing into India and China that we've got a big competitive edge in terms of locating their businesses in Mauritius and using Mauritius as a springboard to invest in those countries.

Anybody who is an international investor feels very at ease whenever he is doing something in Mauritius.
--Sunil Benimadhu, head of the Mauritius stock exchange
RELATED TOPICS
  • Mauritius
  • India
  • Africa

We've got double-taxation treaties, which is very beneficial; we've got a very flexible and open economy -- there is no exchange control at all; we've got a regulatory framework that is English-based, so anybody who is an international investor feels very at ease whenever he is doing something in Mauritius because it's easy to understand what the regulatory system in Mauritius is all about.

CNN: What do you think you've learned from the global financial crisis?

SB: We see the global financial crisis as showing a lot of challenges but also a lot of opportunities for us and for Africa.

In terms of the challenges, I think we've had to face the dwindling investments; people have become very worried.

But we also see a lot of opportunities because what is happening right now is that the western world is hardly growing in terms of GDP growth. Everybody expects Europe and the U.S. to grow between zero and one or maybe two percent, which is fantastic.

Whereas the growth is shifting towards Africa and towards the Far East and this is where we're going to get more eyeballs on our exchange and on our country. And therefore we believe that there will be more and more money flowing into this region of the world, which will then help us grow at a fast pace.

Teo Kermeliotis contributed to this report.