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Mauritius: Mauritius Finance Profile




Mauritius is widely recognized as one of the strongest economies in the region featuring a business friendly market place. The country raked 19 globally on the 2013 World Bank Doing business statement - making it the top-ranked African country. It has completed remarkable economic and social success, based on good governance and a well-developed legal, financial and commercial infrastructure.

Mauritius's strong economy is fueled by a vibrant financial services industry, tourism and exports of sugar and textiles. Economy increase averaged 4.5 % a year between 2007 and 2011. Real GDP increase rate remains strong although it is estimated to slow down to 3.4 % in 2012 and 3.7 % in 2013 as the euro area, the country's major export destination, keeps struggling.

Mauritius has a well-developed economy. Basic financial sector infrastructures, such as payment, securities trading and settlement systems, are modern and efficient, and access to financial services is high, with additional than one bank account per capita.

The country's highly developed and efficient banking system consists of 20 commercial banks with almost 200 branches across the country and over 240 ATMs. All banks remain comfortably liquid, well-capitalized and profitable, with non-performing loans representing 2.8 % of total loans as of 2011. Banks appear to be in a strong position despite the crisis and currently hold very few toxic assets (with operations funded mainly through domestic deposits rather than inter-bank foreign borrowing), maintain almost a third of total deposits in liquid or near liquid assets, have limited exposure to equities, and hold long FX positions offering some protection from exchange rate depreciations. The introduction in 2011 of Islamic banking offering Sharia-compliant products and services contributed to diversifying the country's financial products.

Mauritian households have almost universal access to savings accounts and reasonable access to basic personal credit, but term and higher-risk financing is additional limited. Based on a 2011 data, there were 2209 deposit account per 1000 adults in Mauritius, the highest density of accounts in Africa. Moreover, innovative business models are well developed: the National Bank of Mauritius, Orange and Emtel have recently established a partnership to offer national-of-the-art mobile banking services to their customers.

In order to improve access to finance for small and medium sized enterprises (SMEs), the government has contributed about USD 12 million to set up an SME Fund. The fund will allow SMEs to obtain loans from commercial banks with no additional than 10 % equity.

Mauritius has relatively active capital markets: the Stock Exchange of Mauritius (SEM) has 41 listed companies, in addition to listing mutual funds and treasury bills. The institutional and technical infrastructure of the SEM is highly developed, but the market is characterized by low volume and poor liquidity as is typical of small economies. As of year 2010, market capitalization was 55 % of GDP, and the turnover ratio stood at 8.6 %.

The fixed gain market is relatively well developed. The Bank of Mauritius (BOM) regularly issues a diversity of government securities and, as of March 2013, the country received a sovereign deficit rating of Baa2 by Moody's. Corporate entities have, in the completed, issued various non-government securities traded on both the SEM and the Over-The-Counter (OTC) board of Mauritius, but new issuance has been limited following a revision in tax policy on interest payments and, as of December 2009, no outstanding corporate bonds were featured on the market. The secondary market is as well fairly active.

Access to deficit markets is fairly unrestricted; retail investors can purchase government securities via auctions, the stock exchange, primary dealers or over-the-counter trade due at the BOM, while the public can access the market through primary dealers, banks and licensed stockbrokers. The derivatives market in Mauritius is rather developed, but trade volume remains small and consists mostly of interest rate and currency derivatives. Foreign exchange forwards with a maximum tenor of 12 months are traded and moderately liquid. Market activity is however expected to expand next the World Board of Trade Ltd. (GBOT) opened a multi-investment derivatives exchange in late 2010, on which a variety of African commodity and currency derivatives are offered.

Competition in the insurance sector has intensified in recent years, reflecting the fight for market share in the absence of large losses from cyclones. Premiums have fallen and some segments, such as motor insurance, presently enjoy significantly lower operating ratios. However, the sector remains highly concentrated, with the three major insurance groups accounting for around two-thirds of total industry assets. The current regulatory framework limits investment in overseas assets to 25 % of total assets for all insurance companies, with the exception of foreign life insurance and general insurance business firms which cannot engage in overseas investments.

Mauritius features a well developed multi-pillar pension system. Several public pensions' schemes operate in the country and are major participants in the government bond market. The majority notable of these, The National Pension Fund (NPF) had, according to new figures, assets equivalent to approximately 21 % of GDP. Over a thousand funded occupational pension schemes are as well present, and play an increasingly significant role in the fixed gain market.