Mauritius Investments in 2015 Targeted Luxury Real Estate, Not Financial Services

Mauritius Investments in 2015 Targeted Luxury Real Estate, Not Financial Services

From AfricanArguments. Story by Seán Carey.

High-level scandals have dominated the headlines in Mauritius recently.

At the end of 2014, a surprise election result saw the 85-year-old veteran politician Anerood Jugnauth return as prime minister to begin his sixth term since 1976.

In Mauritius, 2015 will probably be remembered as the year in which a number of long-running high-level scandals were exposed.

Former Prime Minister Navin Ramgoolam, who lost the 2014 elections, was arrested on five counts of conspiracy, bribery and money-laundering. His mistress took refuge in Italy and is fighting extradition.

Ramgoolam allegedly aided a Ponzi-style scheme set up by Bramer Bank, part of British American Investment (BAI), a conglomerate with significant investments in South Africa, Madagascar, Kenya, Malta and France.

Finance Minister Vishnu Lutchmeenaraidoo withdrew Bramer’s banking licence and a new state-owned institution, the National Commercial Bank which has morphed into the MauBank was established to take over Bramer’s assets and liabilities.

British American Investment owner Dawood Rawat, in exile in Paris, claims his innocence.

Like other emerging economies, Mauritius has been hit recently by the channeling of international capital to what are perceived as safer investments in the developed world. Official statistics show that inward investment to the Indian Ocean island fell by nearly 30 percent to around $200 million in the nine months to September 2015.

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Perhaps more worryingly though, the investment that did come in tended not to target wealth-generating sectors such as manufacturing, outsourcing, ICTs or financial services, but far less productive luxury real estate purchases. The concern among some local commentators is that this pattern of investment will continue and that the promised new economic miracle will fail to materialize.

However, the majority of economists remain broadly optimistic about Mauritius’ prospects, particularly regarding the possibility of developing the so-called blue economy.

This could involve exploiting the capital Port Louis’ harbor facilities to capitalize on the increase in shipping of commodities and manufactured goods between Africa and Asia; the introduction of new deep sea and coastal fishing technologies, including aquaculture; bio-pharmacy; and, despite the global commodities glut, finding game-changing oil and mineral reserves in Mauritius’s territorial waters.

Construction of the first of eight “smart cities,” announced by Jugnauth in June, will also begin shortly.

The idea is to build on the success of Cyber City — also known as Ebene — creating, with private-sector financing, sustainable business, entertainment and residential hubs that will boost both jobs for an ever-growing number of well-educated young people.

Increasingly, this demographic is looking for jobs not on the basis of kinship or political patronage but on merit. Meritocracy is something of a buzzword in Mauritius these days. In addition, there are plans to regenerate existing urban areas such as Curepipe, Goodlands and Quatre Bornes.

Read more at AfricanArguments.