S E C T I O N S

The economic history of Mauritius reflects distinct phases of evolution. All throughout its economic development, the island has witnessed a relentless struggle against the inherent constraints of small island economies resulting in the need to adopt an outward-looking strategy

Before settlers even came to Mauritius, the island was a stop over for traders on the route to and from India and the Far East. In the middle of the 18 th century, when Mauritius was a French colony, the cultivation of sugarcane and timber was initiated, and ever since then the island became a busy port by way of entrepot trade.Mauritius remained a monocrop economy based on sugar until after independence, when in the early I 970s the export-oriented industrialisation process started off. The establishment of the Export Processing Zone scheme was designed to encourage the setting up of labour intensive export oriented manufacturing enterprises, aimed at helping to dampen the growing problem of unemployment which Mauritius was then facing, as well as to open up further the economy and benefit from the preferential access to the European markets under the Lomé Convention. Launched with the start-u p capital of the sugar sector, the EPZ sector has concentraded mostly on textile and textile-related products. For the last two decades foreign investment in the EPZ sector (mainly from Hong Kong, France, UK & Germany) has played a pivotal role in the rapid structural transformation of the Mauritian economy. Foreign Direct Investment (FDI) has been an important engine of export growth, domestic capital formation, technology transfer and employment creation. The package of investment incentives for the manufacturing and support services sectors has been enhanced and extended to promote technology-driven and higher value-added activities. 

While the manufacturing sector established a sound and solid base for sustainable economic development in Mauritius, in 1 970s-1 980s, the tourism sector simultaneously projected itself as a serious economic pillar by contributing increasingly to foreign exchange earnings of the country, and by being an important generator of employment. A range of investment incentives were provided to boost the development of the tourism sector in terms of fiscal incentives and financial support for hotel development and management services. The labour-intensive,export-oriented growth strategy was therefore powered by three main economic sectors, namely sugar, textile products and tourism. 

By the late 1 980s and early 1 990s the economy had significantly reduced its dependence on agriculture and its base became more diversified. Thus the diversification strategy in the 1 990s focused on consolidating and modernising traditional economic sectors while creating new areas of growth which would allow the economy to embark on higher levels of development. The services sector, more particularly financial services, has been earmarked as the area for further economic development. There was a need to provide an outward orientation to the financial services sector which has predominantly been focussed on banking and insurance. New laws were therefore enacted to provide a new thrust to the development of financial services in Mauritius.

To start off the Banking Act was amended in 1 988 to enable offshore banking to be carried out. Then, followed the establishment of a stock exchange in 1989, through the enactment of the Stock Exchange Act 1 988 which provided for the set up of a supervisory body and a private operating and management company.

Measures for Iiberalising the domestic financial sector were initiated in 1991 and culminated in 1 994 with the abolition of the exchange control. Such measures aimed to reorient macroeconomic policy towards sustainable growth while creating a financially sound and efficient domestic financial system.

Comprehensive legislation relating to non-banking offshore business activities was enacted in 1 992 through the Mauritius Offshore Business Activities (MOBA) Act and the Offshore Trusts Act. Besides the legislative framework in place, various fiscal incentives were introduced to attract international investors to set up offshore vehicles in Mauritius.

 The establishment of a Freeport in 1 992 followed the economic development strategy of Mauritius in positioning the island as a financial, business and trading hub in the Indian Ocean region. The enactment of the Freeport Act provided a comprehensive framework for the development of trade-related activities that would boost the traditional trading base of Mauritius since its Dutch colonisation in the 17th Century.

As can be seen the economic development strategy of Mauritius has paved the way for sustainable development in the various economic sectors while establishing a sound and coherent economic environment for the development of the services sector, especially financial services. With the setting up of the offshore business sector and services like the Freeport and Stock Exchange. Mauritius has ensured that an integrated operating framework for the services sector be allowed to develop in order to exploit fully the business opportunities availing in the Indian Ocean region. The emphasis of the current Government on IT and E-Business developments will no doubt consolidate this framework.