Report on the Mauritius Mission
December 28, 2012 (revised)
GRIPS Development ForumThe policy research team of the GRIPS Development Forum (GDF), consisting of Prof.
Kenichi Ohno, Prof. Izumi Ohno and Ms. Sayoko Uesu, visited Mauritius from 1 to 4 October,2012. The mission objective was to collect information on (i) industrial policies, tools andpolicy formulation mechanisms of Mauritius in the past and present, and (ii) its current
economic policy direction. We have conducted similar missions in a number of other Asianand African countries in search of best and diverse policy practices. Information from thesecountries, including Mauritius, will be used in our policy dialogue with other developing
countries as well as for informing the Japanese authorities involved in development
cooperation, including those preparing for the Fifth Tokyo International Conference on
African Development (TICAD V) scheduled in June 2013. We would like to express our
sincere appreciation to all organizations and individuals who kindly received us and sharedvaluable information and insights with us1.
1. History
Mauritius is a small island located in the Indian Ocean with a population of 1.3 million. The
island was inhabited until the Dutch came to colonize the island, unsuccessfully, in the 17th
century. After being abandoned by the Dutch in 1710, the French took possession of theisland in 1715 and ruled for the next hundred years bringing Malgash and other African
people from the continent. As a result of France-Britain battles, Mauritius was colonized by
Britain in 1810 and a large number of Indians were brought to the island as labor at sugar
and tea plantations. With a constant influx of Chinese workers beginning in the early 20th
century, Mauritius became a multi-ethnic society where the majority was Hindu followed by
Créole, Muslim, and Chinese. Ethnic and cultural diversity has become a fundamental
feature and asset of Mauritius to this date, where every citizen speaks both English andFrench as well as their native language. Mauritius became independent in 1968 and has
enjoyed relative political stability since then.
At the time of independence, the economy was dominated by sugar plantation which
exported raw sugar to Europe. In the 1980s, Mauritius initiated economic development withsteady progress in structural transformation. With its per capita GNI reaching US$8,240 in2011 (World Bank), by now the country is regarded as one of the most successful
economies in Africa and extensively studied as model cases. Mauritius is also ranked high interms of investment climate, competitiveness, climate and governance. For consecutive
1

Our deepest gratitude goes to Mr. Seewraj Nundlall, Director of Goods Producing Sector of the Board of
Investment, who kindly coordinated all meetings with the public sector. The mission members would also
like to thank Dr. Jean-Claude Maswana of the JICA Research Institute for his intellectual and pragmatic
help in conducting the field research.

1

years, the country has been ranked top in Africa in the World Bank’s Ease of Doing
Business Report2. The World Economic Forum’s Global Competitiveness Index ranked
Mauritius at 54 out of 133 countries in 2011-12, behind only South Africa in the Africa Region.
The country scored the highest in the 2011 Ibrahim Index of African Governance.
However, success was neither naturally arising nor easily foreseeable at the outset whenthe economist and Nobel Prize winner James Meade, around the time of independence,
gave a pessimistic view on the future of the island nation due to the lack of natural resources
and remoteness to any industrial areas, which were seen as major obstacles forindustrialization 3 . However, monoculture and isolation did not prevent Mauritius fromachieving an economic miracle. In retrospect, the Mauritian government has beenreasonably wise and strategic, making right choices at every difficult point in the nation’s
short history. Proactive and foresighted policies included establishment of Export
Processing Zones (EPZs) and development of the textile sector in the 1970s, as well as amore recent and successful restructuring of the sugar sector, as explained below. Mauritius
has diversified its industrial base and moved up to high-end products and services, as
described by the Joint Economic Council (JEC) in Figure 1 below, a movement that still
continues today.
Figure 1. Economic Trajectory of Mauritius

Economic Trajectory2000
TEXTILESUGAR
TOURISMFINANCIALSERVICESFREEPORT1990
TEXTILESUGAR
TOURISM

1980

1970

TEXTILESUGAR
TOURISMFINANCIAL SERV.
ICT / BPOREAL ESTATESEAFOOD/AQUACULTURE
KNOWLEDGEHEALTH
ENERGY

SUGAR
Monocrop
EconomyManufacturing& Services
EconomyManufacturing& Tourism

Business
Platform

Source: Joint Economic Council (2012).
2

Mauritius was ranked 19th out of the 185 countries in the 2013 Doing Business Report, improving fiveranks from the previous year. The country’s ranking of Ease of Doing Business is always the focus ofattention of the government and private sector. For example, when Mauritius lost three ranks in the 2012
Report, both the government and private sector took this issue seriously (even though it has remained top
rank in Africa). The JEC memorandum on 2013 budget suggests that Mauritius improve its “Ease of Doing
Business" environment and aim at the top 15 countries in the next three years.
3 James Meade, British recipient of the Nobel Prize in economics, prophesied in the early 1960s that
Mauritius’s development prospects were poor—that the country was a strong candidate for failure, with its
heavy economic dependence on one crop (sugar), vulnerability to terms of trade shocks, rapid population
growth, and potential for ethnic tensions.

2

By the 1990s the national economy had three pillars of sugar, textile and tourism. The textile
industry was particularly remarkable, as it created more jobs, boosted export, andcontributed significantly to the industrialization of the island.
Whenever possible, the mission asked public and private sector leaders of Mauritius for thereason of success. Common answers included the smallness of the country where all key
players in businesses and government personally know each other and work together
intensively; and historical existence of entrepreneurs and strong business culture which caninteract with and lead government effectively. With a capable public sector and a dynamic
private sector, balance between state and market has also been well managed historicallywithout going to either extremes.
2. New policy direction
However, success up to recent past was mainly due to ample supply of unskilled labor andtrade privileges such as sugar quotas and price guarantees in the European market as wellas the Multi-Fiber Agreement (MFA) and the US African Growth and Opportunity Act(AGOA) for Mauritian garments. In recent years, harsh competition from China and other
Asian countries emerged. Moreover, as the country gradually lost generous tradepreferences in sugar and textiles mentioned above, especially with the dismantlement of
MFA at the end of 2004, many investors relocated their factories to other countries and the
manufacturing sector of Mauritius began to shrink. This compelled the government to shift
its policy focus from privileged market access to a more open economy in pursuit of global
competitiveness based on human resource and technology.
The government has often sourced developmental ideas from East Asian economies suchas Taiwan and Singapore. In particular, the experiences of Singapore, an island nation with
spectacular performance, have been closely studied, influencing the economic andadministrative management of Mauritius as reference points and benchmarks. In 2005,
when the administration of Navin Ramgoolam came to power, the new government initiateda series of bold economic reforms, which were also inspired by Singapore’s experiences.
One of the boldest measures was extreme simplification of tax rates. All taxes, including
corporate tax, VAT and personal income tax, are now uniformly set at 15%. No special
treatment or exemption is offered unlike the previous incentive system built on generous tax
holidays.
The government currently promotes both traditional sectors and new growth areas.
Traditional sectors—sugar and textile in particular—are supported for consolidation andmore value creation. Mauritius still wants to develop manufacturing as it has greater3

spillover effects than other sectors4. At the same time, ICT, medical devices and services,precision engineering, pharmaceuticals, seafood, “land-based oceanic” (deep sea water
development), and so on, are added as newly targeted sectors. The government ispreparing skills upgrading programs to meet human resource needs of these industries.
Another policy initiative is opening up to more aggressively absorb financial and humanresources from abroad to stimulate the economy. While Mauritius has always tried to attract
professional expatriates such as accountants and lawyers, the government has extended
the policy even to unskilled labor despite some social concerns. In fact, because of theshortage of non-professional labor in the country, the manufacturing sector now has torecruit unskilled workers from China, Bangladesh, Madagascar, and so on.
Deepening regional integration and becoming an international bridge is another importantpillar. Being a member of the Common Market for Eastern and Southern Africa (COMESA)
and the Southern African Development Community (SADC), Mauritius now sees countries in
Eastern and Southern Africa as promising markets. The government is also trying to take fulladvantage of its geographical location to become a bridge between growing Asia and Africa
for business and finance. In this connection, the government is negotiating a new Air AccessPolicy to increase flights to these regions. Certainly, Mauritius is well connected to Europe
by air; but there are no direct flights to targeted African countries except South Africa. Tworecent instances of successful policy adjustments in key industrial sectors of textile andsugar also deserve special mention.
First, in order to cope with the announced disappearance in January 2005 of the MFA, fromwhich Mauritian garment producers had benefited greatly, the government established a
High-Powered Committee led by the Ministry of Industry. The committee reviewed thesector and decided to put much greater emphasis on productivity and competitivenessinstead of guaranteed access to large markets. A Textile Emergency Support Team (TEST)5
was set up in July 2003 as a joint private-public initiative to assist any enterprise whichshowed serious intention to become more competitive. TEST conducted work in two stages:(i) diagnosis of individual enterprises, followed by (ii) financial assistance to restructure themwith the help of external consultants. Free diagnoses were carried out by the National
Productivity and Competitiveness Council (NPCC, see below). Out of 260 eligible textile andgarment firms, only 43 took advantage of free diagnosis, and none of them actually availed
itself of subsidized restructuring. A balanced mix of private effort and partial official support
succeeded in downsizing the sector. Weak producers exited while remaining enterprises arecontinuing to improve productivity and becoming lean6.
4

According to a certain study, an output increase of 1 rupee in manufacturing generates additional 51 centsin other sectors whereas a similar increase in the service sector creates only 27 cents additionally.
5 Gilles Joomun, “The Textile and Clothing Industry in Mauritius,“ pp.206-207, in Herbert Jauch and Rudolf
Traub-Merz (eds.) The Future of the Textile and Clothing Industry in Sub-Saharan Africa, Bonn:Friedrich-Ebert-Stiftung, 2006, see http://library.fes.de/pdf-files/iez/03796/14mauritius.pdf.
6
The mission visited the main factory of Esquel (Mauritius) Ltd., a member of Esquel Group of Companies
headquartered in Hong Kong. It employs 3,000 people with additional 2,000 in three other factories on the4Second, when the sugar industry was seriously hit by the removal of price and quota
privileges of the EU market and forced transition to global competition in 2007, the Mauritian
government negotiated with the EU for the provision of funding for an upgrading program, inwhich the sugar industry was assisted in consolidation and upgrading. New activities suchas establishment of refineries, development of specialized sugar, creation of the bio massindustry, and distillery of rum were initiated. Job loss due to the closure of many sugar mills
for consolidation into four large mills was compensated by a general retirement scheme.
The fact that the Mauritian sugar industry could be transformed in this way within only five
years was considered a miracle.
In the current policy debate, another wave of policy adjustments, which may be larger thanthe case of textile or sugar, is discussed. Since around 2005 Mauritius began decisively toshift from the trade privilege regime to the open competition regime. However, before solid
results were obtained, global situations became severely unstable with the Lehman shockand the Euro crisis. Challenges from emerging economies such as China and India are also
constraining the competitiveness of Mauritius. One group, for example the Ministry of
Finance and Economic Development, advocates further external opening and freer markets
for actively inviting foreign enterprises and talents to invigorate the economy. Another idea,
which seems more widely shared among various public and private bodies, wants
government to do a little more, especially in sectoral targeting and incentives, to push theprivate sector because this group feels that leaving economic development to market alone
does not always attain the nation’s full potential. There are also people in the middle who
support new policy initiatives but are hesitant to endorse selective promotion. This is afundamental question in industrial policy and it is interesting to see how the debate goes in
the context of Mauritius.
3. Key support institutions and their evolution
Since the late 1960s, institutions have been created to promote economic development,
initially to support the sugar industry and EPZs for the textile industry and subsequently topromote other industries. Figure 2 shows their evolution over the last four decades.

island. All materials come from China and this factory manufactures high-end cotton shirts (retail prices of$60-80) for the US market. It was the most advanced garment factory that the mission had known in terms
of processes, skills and quality control. Although workers’ wages are high and rising ($300-650 per month),they are easily offset by continuous productivity increase. Orders are rising despite global economic crises
and the company has to expand capacity every year.

5Figure 2. Evolution of Major Institutions since 1970

EPZs and export promotion
The history of Mauritius Miracle is closely associated with the development of Export
Processing Zones (EPZs) initiated in the late 1960s. With limited impact of the previous
import substitution program, the government under the leadership of Prime Minister
Seewoosagur Ramgoolam and Minister Duval explored alternatives including theestablishment of EPZs, although foreign (European) experts advised the Prime Minister that
EPZs would not work in Mauritius because of remoteness and resource constraints.
The driving force behind the introduction of EPZs was Professor Edouard Lim Fat, aSino-Mauritian professor and engineer, now respected as the “Father of Mauritius EPZ.”
Intrigued by the success of EPZs abroad, he traveled to Hong Kong, Puerto Rico, Singapore,
and Taiwan to study their experiences. Having been assured of its applicability in Mauritius,
he submitted a report to the government for its adoption and convinced the Prime Minister to
opt for this approach. Prof. Lim Fat’s background, originating in East Asia, also helped tobring initial investors from Hong Kong and other Asian countries. Hong Kong manufacturers
were first to come in Mauritius EPZs as they feared that the expected return of the Britishcolony to China in 1997 would destroy their business environment and looked for anotherproduction base. Together with Prof. Lim Fat, Ministers of Industry, Foreign Affairs, etc.
traveled extensively to promote Mauritian EPZs, which showed firm commitment of the6government to this policy and had a considerable impact on attracting foreign investors7.
The state worked hard to forge a difficult political consensus toward establishment of EPZs.
In December 1970, the Mauritian parliament passed the Export Processing Zones Act andthe government created the necessary framework for EPZs. As strengthening the capacityof the Ministry of Commerce and Industry was imperative, the government called for various
technical cooperation programs of international partners to increase its staff size andexpertise, and created the Industrial Coordination Unit that covered project evaluation andmonitoring, investment promotion, export marketing, project funding, and provision of
insurance to protect exporters against defaults by importers. While foreign consulting firms
were initially mobilized, they were replaced as soon as Mauritian authorities gained
expertise. This unit, initially created for simplifying investment procedure in EPZs, later
expanded to become the Mauritius Development and Investment Authority (MEDIA) in 1983
and further renamed to the Mauritius Industrial Development Agency (MIDA) in 1993.
MEDIA and subsequent MIDA had the following objectives:8• Promotion of goods and service export• Development and operation of industrial sites and estates• Plan, implement and review action programs for developing export-oriented
manufacturing• Advice to the Minister on all matters relating to export promotion
More specifically, it provided market information to entrepreneurs, organized and assisted
participation in trade fairs, promoted SME development, conducted market surveys, anddeveloped industrial estates which offered. Though MEDIA/MIDA was not meant to beserving only the textile and garment sector, it was in reality one of the main support
agencies for this sector which became the dominant industrial engine of EPZs.
Another important institution was the Export Processing Zones Development Agency(EPZDA) set up in 1992 to ensure smooth transition from a labor-abundant to askills-intensive economy. This agency focused its assistance on the textile and garment
sector with its main objectives as follows9:・ Diversification of product range
・ Maintenance of growth of core textile products
・ Moving up the market to attain higher value added exports
・ Fostering textile clusters
・ Promotion of technology transfer and acting as a technology watch
・ Provision of support services in the field of regional cooperation
・ Reinforcing knowledge transfer through research and information dissemination
7

Sir Edouard Lim Fat, From Vision to Miracle: Memoirs of Sir Edouard Lim Fat and the Story of theMauritius Export Processing Zone (EPZ), Printed by T-Printers Co. Ltd., Mauritius, 2010.
8
Gilles Joomun, “The Textile and Clothing Industry in Mauritius,” pp.205, in Herbert Jauch and Rudolf
Traub-Merz (eds.) The Future of the Textile and Clothing Industry in Sub-Saharan Africa, Bonn:Friedrich-Ebert-Stiftung, 2006. see http://library.fes.de/pdf-files/iez/03796/14mauritius.pdf.
9 Ibid, pp.205-206.

7

・ Skills development
・ Promotion of ICT application in industry
・ Enhancement of enterprise efficiency through Business Process Re-engineering
One of the main achievements of EPZDA was the establishment of the Clothing Technology
Center where training was delivered to employees of the garment sector to enhance theircapacity to use new technologies in their factories.
In 2001, MIDA and EPZDA were merged into a one-stop service, Enterprise Mauritius (EM),which provides assistance to the private sector that produces exportable goods which are“Made in Mauritius.” It assists manufacturing firms with such services as export promotion,
export facilitation, export development, and policy advocacy on international trade. Although
EM is specialized in export promotion, it must cooperate closely with other agencies toachieve results. For exporting SMEs, the Small and Medium Enterprises Development
Authority (SMEDA, discussed below) must first strengthen their design and production
capabilities. Once their products become exportable, EM can take over and assist SMEs.
For exporting FDI, the Board of Investment (BOI, also discussed below) must initially attract
appropriate foreign investors. Once they establish production base in Mauritius, EM steps into help and advise them in marketing their products abroad. While the division of labor
among EM, SMEDA and BOI is theoretically clear, according to some observers,
coordination among these implementing agencies is in reality not perfect.
FDI attraction
With the promulgation of a new investment law in 2001, the Board of Investment (BOI) wasestablished to facilitate and promote investment in Mauritius. BOI is the national Investment
Promotion Agency under the aegis of the Ministry of Finance and Economic Development.
Similar to the Economic Development Board in Singapore, it serves as a one-stop shop toboth domestic and foreign investors. BOI oversees both the production sector(manufacturing) and the service sector, and also coordinates multi-sectoral investment
projects such as the Jin-Fei Economic Zone, a Chinese investment program to create an
integrated city combining industrial, commercial and residential areas. Activities of BOI
include counseling on investment opportunities in Mauritius, provision of sector-specific andtailor-made information for potential investors, organization of customized meetings andvisits, and identification of joint-venture partners. The Board has about 90 staff, which
includes about 60 professionals and 30 support staff. It had three overseas bureaus in
Mumbai, Paris and London but they are now closed.
The majority of FDI come from the UK, India, France and South Africa, accounting for morethan 75% of the total FDI flows in Mauritius in 2010. Real estate, financial services,
healthcare, hotels and restaurants are the major sectors attracting FDI for Mauritius. With
the Euro crisis continuing, Mauritius is moving towards new markets in Asia and Africa. The
country is increasingly positioned itself to be a major business platform in the Indian Ocean,serving as a bridge between Asia and Africa.
8

Being a small island country vulnerable to external shocks, Mauritius has been always
mindful of sending a strong pro-investment signal to both local and foreign investors. As
explained before, Mauritius has one of the world's most generous tax regimes, where
personal and corporate tax and VAT are harmonized at 15% and where dividends are tax
free. There is no exchange control, and export-oriented firms enjoy duty-free privilege for
their inputs and equipment. Mauritius has also singed non-double taxation agreements with39 countries so far (of which 13 are African countries) and is signatory to a number of
Investment Promotion and Protection Agreements, namely with 36 countries (BOI website).
For these reasons, BOI was awarded the ‘Investment Promotion Agency of the Year Award’for the second consecutive year at the Africa Investor Investment Business Leader Awards,
held in Tokyo in early October (during the IMF/World Bank Annual Meetings), outperforming
the Rwanda Investment Promotion Agency, the Kenya Investment Authority, the Departmentof Trade and Industry of South Africa, the Investment Promotion Centre of Mozambique, theGhana Investment Promotion Centre, and so on.
SME development
Starting one’s own business as an independent and innovative SME is emphasized in
Mauritius for absorbing highly-educated talents. At high schools and universities, students
are encouraged to “be your own boss” instead of looking for a job at an established firm.
In Mauritius SMEs are defined as enterprises with an annual turnover not exceeding 50
million rupees (about US$1.5 million). The country has about 100,000 registered SMEs inmanufacturing and service sectors10. The creation of EPZs had a positive effect on thedevelopment of local SMEs as most of the textile factories provided materials andsubcontracted CMT (cut-make-trim) works to local firms. It thus created a vertical linkage inthe textile industry, and as local SMEs gradually gained expertise in production and quality
control, they became more independent from large firms and began producing clothing forthe domestic market (including the tourist market).
The government has always supported SMEs since the import-substitution period of the
1960s. In 1976 the Small Scale Industry Unit was established within the Ministry of Industry.
It became the Small Industry Development Organization (SIDO) in 1983 with further
reorganization as the Small and Medium Industry Development Organization in 1993. After
more reorganization in the 2000s, the Small and Medium Enterprises Development
Authority (SMEDA) was set up in 2009. SMEDA works under the auspice of the Ministry ofBusiness, Enterprises and Cooperatives, which was separated from the Ministry of Industry
in 2008. It has about 100 staff (of which 20 are professionals), allocated in the headquarters
and four outstations (three in Mauritius and one in Rodriguez Island). SMEDA provides a10

About 40-50 % of trade establishments are not registered and excluded from the statistics.

9

range of assistance to SMEs covering business counseling, business facilitation, training,and marketing support. The mission visited the SMEDA headquarter complex which
comprised of classroom, library, training center, exhibition hall as well as administrative
office. The exhibition hall of the SMEDA head office (at Coromandel) serves as an important
platform for showcasing locally made products and allows foreign and local visitors including
representatives of hotels to purchase value-added gift items.
In addition, recent initiatives include the support to creative craft incubators, as well as theestablishment of the SME Resource and Technology Center. The former provides
assistance to creative crafts incubators in the seven areas (ceramics and pottery,pyrography, silk painting, coconut craft, wood craft/sculpture, ceramics, and painting onwood ship models), in the form of workspace, specialized training and mentoring services byMaster Craftmen. The SME Resource and Technology Center, launched in April 2012, aims
to provide support to SMEs in search of information on recently developed technologicalinnovations that add value to their business activities. Such support includes personalcoaching and online technical training on new technologies by local and foreign trainers
through proper information channels.
The budget for export marketing is normally allocated to Enterprise Mauritius (EM, seeabove). But for 2012, because of the difficulties that SMEs are facing, SMEDA is additionallyallowed to assist SMEs directly to participate in international trade fairs. SMEs are also
supported by the Mauritius Business Growth Scheme, launched in 2011 with the World Bank
assistance, which provides financial resources for consultancy.
Skills development
Mauritius stresses skills development and has created mechanisms for this purpose, which
are somewhat similar to the ones in Singapore. All firms must contribute 1.5 % of theiremployees’ salary bills to the levy fund for training managed by the National Human
Resource Development Council, an agency established in 2004 under the Ministry of
Education and Human Resource Development. Firms are reimbursed when they send
employees for training at the rate of 60-75% of training cost depending on the sector.
The Mauritius Institute of Technology and Development (MITD), established in 2009 as a
successor of the Industrial Vocational Training Board (IVTB), offers a wide range of skill
development programs totaling 65 full-time courses at its 22 training centers. MITD has agoverning board supported by strong partnership with the private sector. The feedback
mechanism with industries allows MITD to develop appropriate courses in response tobusiness needs. In the future MITD plans to become a regional hub for trainings as there isa large unfilled demand for skill training in Africa, and Mauritius is a short distance awayfrom the continent.
Universities are also a part of the skill development mechanism. Mauritius has two
10universities: the University of Mauritius, established in 1968, and the University ofTechnology Mauritius, established in 2001. The latter and the newer, which the mission
visited, started with some 600 students initially and has now expanded to boast 5,500
students with 90 programs. It has four Schools of Business Management and Finance (to besoon split into Businesses and Finance-Law), Innovative Technology and Engineering,
Sustainable Development and Tourism, and Health Sciences. Many programs aredeveloped in collaboration with the private sector as well as in support of government policy,
with the ICT sector as the most active collaborator with the university showing strong
performance. The university is preparing a new course in aeronautical engineering startingin 2013 in response to the new government policy. Like MITD, it plans to attract foreign
students to become the knowledge hub in the region. The target set by the government is
100,000 foreign students by 2020.
4. Policy making process and public-private dialogue
Mauritius ceased to make medium-term development plans in 2005, and since then theoverall development direction is stipulated in the annual Budget Speech, prepared by the
Ministry of Finance and Economic Development after consultation with line ministries andrelevant private organizations.
Sectoral policies are drafted by line ministries. In the case of industrial policy11, the Ministryof Industry and Commerce leads the process in consultation with private exporters, theMauritius Chamber of Commerce and Industry (MCCI, see below), and other businessassociations. Once approved, the policy is implemented by several public organizations,while the Ministry in charge assumes the monitoring function.
Since about four years ago, all government programs have been monitored throughprogram-based budgeting (PBB) with concrete targets allocated to individual departments
and agencies with evaluation and future budgets depending on performance. Under PBB, allpublic authorities must make three-year rolling plans which are submitted to the Ministry of
Finance and Economic Development for review. While this mechanism compels each office
to seriously pursue given targets at hand, overall consistency of various policy components,
across different sectors for producing ultimate economic performance, is usually harder toobtain.
Inter-ministerial coordination at the policy level is ensured by cabinet meetings held every
Friday, which are chaired by the Prime Minister and attended by ministers. Additionally, forimportant topics, ad hoc mechanisms are used. Recently, the Prime Minister created theHigh-Powered Committee to examine bottlenecks of the economy, which was chaired by the11

Mauritius has published the Industrial and SME Strategic Plan (2010-2013), drafted by the Ministry ofIndustry which was later split into the Ministry of Industry and Commerce (focusing on large establishments)
and the Ministry of Business (focusing on SMEs). The mission was unable to meet the Ministry of Industry.
The Strategic Plan is a well-organized document with detailed action plans. Its challenges seem lie mainly
in implementation and monitoring.

11

Cabinet Secretary (the highest civil servant). It invites the heads of EM, BOI, and otherpublic authorities to discuss critical issues such as the progress of the Jin-Fei Economic
Zone. However, high-level mechanisms such as these may not be sufficient to attend to thedetails of concrete issues arising in individual sectors. More than one source admitted thatcoordination among implementing agencies, as well as overall implementation records of
economic policies, had room for improvement.
One of the prominent features of policy making in Mauritius is very strong and highly
productive state-business relationship. It is in fact one of the most productive public-private
dialogue we have seen in any country. The mission confirmed that small wise-men groups,
with members coming from both public and private sectors, has played a central role inpolicy making of Mauritius, enabling the country to engage in substantive policy discussions
and make appropriate choices at difficult moments. Mauritius seems to be full of key
persons who are often long-time friends or alumni of the same university, who can flexiblyinteract, migrate across government, business and academia, and collectively draft policies.
For instance, from around 2000 to 2005, when the country needed to revise economic
policies as trade privileges for Mauritius were being removed, Mr. Sithanen, a prominent
economist who later became the Minister of Finance, drafted a proposal for opening up thenation and steered the government towards that strategy.
In such intensive public-private dialogue, the role played by major business organizations
such as the Joint Economic Council (JEC) and the Mauritius Chamber of Commerce andIndustry (MCCI) are particularly important, as they are the ones that develop proposals thateventually become policies.
MCCI, established in 1850, is the oldest Chamber of Commerce in the Southern
Hemisphere. It has about 400 member firms, which covers 90% of the country’s larger
establishments. While it provides usual business facilitation services to member firms, its
recent focus is advocacy at the policy level. For instance, MCCI sits in all international tradenegotiations together with the Ministry of Industry and other public authorities, a practicewhich is uncommon for traditional chambers of commerce and industry.
JEC, established in 1970 (two year after independence), is a summit organization for
coordinating different views of the private sector and advising the government on policy
matters. The Council has six sectoral associations and three multi-sectoral organizations
under it and its chairman is elected from among leading business leaders12. JEC is an
influential private sector actor, integrating all sectors of the economy. Regular meetings areheld between the government and JEC, on broad economic policies, usually twice a year.

12

The six sectoral associations include: Mauritius Producer Association (MSP), Mauritius Bankers
Association (MBA), Mauritius Exports Association (MEXA), Association Hoteliers Restaurateu de Lile deMaurice (AHRIM), Insurer Council Mauritius (ICM), and Association Mauritian Manufacturer (AMM). The
three multi-sectoral organizations are: Mauritius Chamber of Agriculture (MCA), Mauritius Chamber ofCommerce and Industry (MCCI), and Mauritius Employers Federation (MEF).

12

These meetings are chaired by the Prime Minister and are attended by senior Ministers as
well. Furthermore, JEC has an important say in the annual budget process, and its
suggestions for better industrial policies are frequently taken up by government budgets(Rojid et. al 2010, te Velde 2010).
JEC was initially less active in the policy field, but it gradually became more proactive as
trust had built up between it and government. It is now quite active, for example, in jointly
preparing the Business Facilitation Program in 2006 with BOI, and jointly proposing the
economic reform in 2006 with the Ministry of Finance. At the sector level, representatives of
relevant ministries and private organizations from JEC meet twice a week to discuss policy
issues and make decisions. Mr. Raj Makoond, the incumbent Director of JEC, stressed thatlinkage between policy and practice was crucial in effective implementation; theoretical
inputs from academics are not very useful. In fact, unlike India, Mauritius does not have any
think tanks that drafts policies or conducts studies for the government. All policies are
generated through the interaction between government and businesses. The below
summarizes various interaction channels between the public and private sectors in
Mauritius.

Figure 3. Interaction Channels between the Public and Private Sectors
FormalInformal Governemtn/JEC meetings (chaired

 Regular meetings between Privateby the Prime Minister)

Sector organizations and relevant Tripartite wage negotiations

Ministries on sectoral issues

 Proposals for the National Budget Joint promotional activities

 Representation in a number of Ad hoc Committees

committees
Source: S. Rojid, B. Seetanah & R. Shalini (2010), “Are State Business Relations important to
Economic Growth? Evidence from Mauritius”, IPPG Discussion paper 36.

5. Kaizen in Mauritius
According to Imai (2009), Mauritius is one of the first African countries that adopted kaizen
practice. The National Productivity and Competitiveness Council (NPCC), an NPO
established in 1999 (operational in 2000), is charged with the task of advancing the
productivity movement in Mauritius. The establishment of NPCC followed the “Declaration of
Productivity” by SADC in 1999, whereby the heads of states, including the Republic of
Mauritius, committed themselves to meet socio-economic challenges in their respective
countries through improved productivity. At the same time, it should be noted that even
before this initiative, Mauritius had given serious consideration to the issue on productivity
and quality. The history of quality and productivity movement dates back to the 1980s, when
the textile sector struggled to attain quality standards set by foreign clients. EPZDA
13

mentioned above, which was handling the quality issue at that time, introduced kaizen to thecountry by inviting quality experts dispatched by UNIDO to train local firms and people.
At present NPCC has a relatively small organization with 14 staff (of which 9 areprofessionals). Its supervising ministries changed frequently from the Ministry of Planningand Economic Development to the Ministry of Training, then the Ministry of Education, andthe Ministry of Business. Since this year (2012) it is under the Ministry of Finance andEconomic Development. The most (80%) of financial resource comes from government
budget with the rest financed by training and consultancy fees.
Since its establishment, more than 80 firms have been trained in productivity and quality
tools such as 5S, cell production, kanban, TQM, and TPM. The Council has benefited fromJapanese cooperation from 2006 to 2010 with experts from the Japan Productivity Center
regularly visiting selected firms for quality improvement. An observational study mission to
Japan was also organized for Kaizen Champions of three of the five model companies in
2008, to give the opportunity to the model companies to study Japanese SME development
model and experience practical implementation of Japanese management and productivity
techniques in the workplace. In parallel, the Asian Productivity Organization trained NPCC
staff from 2006 to 2010 in productivity and quality techniques to strengthen their technicaland analytical competencies.
Under the vision “Better Living for the Nation,” NPCC has launched a series of campaigns toraise awareness. For instance, “Make Mauritius Muda Free” was a nation-wide campaign
from 2003 to 2006 which included the younger generation to learn a productivity culture. The
NPCC is presently organizing another national campaign on productivity with overall aim ofdemystifying the concept of productivity. Many related programs were conducted forstudents, communities and women organizations, some of which are still in place. The
Council also has some projects in the pipeline for which it plans to work closely with the
Ministry of Industry and SMEDA. However, recent funding cuts from the government and theabsence of its Director at the moment are causing delay and downsizing in these activities.
At one time kaizen generated great interest in Mauritius. Kaizen appears to be one of theeffective tools to chart the nation towards productivity and innovation. In order to re-ignite
productivity fever, however, NPCC needs stronger support from political leaders as well as
increased budget and staffing.
6. Concluding remark
Mauritius is widely viewed as a development success story. However, its experiences revealthat the success is not brought by luck. Rather, it is the result of conscious efforts by key
leaders of the government and business sectors, over the past four decades, to manage thedevelopment process with strong ownership and forward-looking mindset. As a small island
economy, Mauritius faces inherent vulnerabilities. Sharing a sense of crises and the14country’s future vision, the public and private sectors have established joint policy
formulation mechanisms, both formally and informally. In particular, small wise-men groups
from the public and private sectors have played a central role in policy making of Mauritius,enabling the country to engage in substantive policy discussions and make appropriate
choices at difficult moments. As such, they have developed quite an advanced level of
public-private alliances. Although Mauritius experiences cannot be directly copied to othercountries, we should bear in mind that “an economic miracle” does not just happen, but thatit has been made happen by the efforts by foresighted leaders in both public and private
sectors.

Attachments:
1. Mission schedule
2. Organizations/persons visited
3. List of information collected15

Attachment 1

Mission Schedule (29 Sept.- 4 Oct. 2012)
1. Mission Members
Kenicni Ohno Professor, National Graduate Institute for Policy Studies (GRIPS), Tokyo, Japan
Izumi Ohno

Professor, National Graduate Institute for Policy Studies (GRIPS), Tokyo, Japan

Sayoko Uesu

Research Associate, National Graduate Institute for Policy Studies (GRIPS), Tokyo, Japan

2. Mission Schedule
DATE
TIME
ACTIVITY
1 Sep 29 Sat PM Arrival (Sayoko Uesu)
2 Sep 30 Sun AM Arrival (Kenichi Ohno & Izumi Ohno)
AM Board of Investment
3 Oct 1 Mon
PM SEZ visit
Ministry of Finance and Economic Development
AM
Mauritius Chamber of Commerce and Industry (MCCI)
4 Oct 2 Tue
Joint Economic Council (JEC)PM Mauritius Export Association (MEXA)Enterprise Mauritius
Small & Medium Enterprise Development Authority (SMEDA)AM
National Productivity and Competitiveness Council (NPCC)
5 Oct 3 Wed
Mauritius Institute for Training and Development (MITD)
PM
University of Technology Mauritius
AM Esquel Group
6 Oct 4 Thu
PM Departure

16

Attachment 2

Organizations/Persons Visited
The Government / Governmental Organization of Mauritius
Organization

Ministry of Finance and Economic Development

Board of Investment

Small & Medium Enterprise Development Authority (SMEDA)

Enterprise Mauritius

Name
Position
Vishnu D. BassantDirector
F. Dilmahamood
AnalystK. Rughoomkh
AnalystP.Kutwoaroo
AnalystP.Hurry
Consultant
Seewraj Nundlall
Director, Goods Producing Sector
Shakeel Jaulim
Investment Advisor
Indranee Seebun
Managing Director
Maurice Chi Kam Chun
Assistant Manager
Mohammad Ehsan Saumtally Assistant Manager
S.BhanjiDirector
Dev Chamroo
Chief Executive Officer
Nitish Gobin
Manager, Market Research

University / Institute
Organization
University of Technology Mauritius
Mauritius Institute for Training and Development (MITD)

Name
Dharamand Fokeer
Pradeep Joosery

Position
Director General
Officer in Charge

Name
Mahmood Cheeroo

Position
Secretary-General
Manager, Economic Analysis andIndustry Division
Director
Productivity Executive
Productivity Consultant
Productivity Specialist
Director
Director
Technical Engineering Dept. Manager

Private Sector
Organization
Mauritius Chamber of Commerce and Industry (MCCI)
Joint Economic Council (JEC)
National Productivity and Competitiveness Council (NPCC)
Mauritius Export Association (MEXA)
Esquel Group

Renganaden Padayachy
Raj Makoond
Dominique Louise
Dev Appalswamy
Hemlata Ramsohok
Daniel Wong
Hemraj Ramnial
Jeebun L.K.

17

Attachment 3

List of Information Collected
SourceBoard of Investment (BOI)
Mauritius Export Association(MEXA)

Title
Pamphlet on Mauritius
MEXA Directory of Export
Annual Report 2010
The Exporter, Issue No.13 Dec. 2011

Ministry of Industry, Commerce andConsumer Protection and Ministry
Mauritius Business Excellence Award 2012of Business, Enterprise andCooperatives
Mauritius Business Growth Scheme(MBGS) Unit, Ministry of Business, Leaflet etc.
Enterprise and Cooperatives
Competitiveness Foresight -What Orientations for Mauritius(A Disucussion Paper, January 2005)
National Productivity and
NPCC News Letter, Vol.9 No.3-4Competitiveness Council (NPCC)
Annual Report 2007/2008, 2008/2009, 2009/2010
LeafletSMEDA

SME Directory 2011

Enterprise Mauritius
Esquel Group

Mauritius, Your Sourcing Destination
Pamphlet18

Authors/Publisher
BOI
MEXA
Ministry of Industry,
Commerce andConsumer Protection
MBGS Unit

NPCC

Ministry of Business,
Enterprise andCooperatives
Enterprise Mauritius
Esquel Group