The 2023 AMCHAM Mauritius Business Climate Index (ABCI) score for Mauritius is 47.87 on a 100-point scale, reflecting the perspectives of the business community, including AmCham members and other enterprises. This score offers insights into the prevailing business conditions in Mauritius.
The ABCI is a composite score derived from the weighted average of key indicators: Overall Business Climate (25%), Business Climate Factors (25%), Government Policy (20%), Economic Performance (5%), Business Activity (15%), Financial Environment (3%), and Human Resources (3%).
The 2023 AmCham Business Climate Index for Mauritius indicates a moderate business environment for the year. While the score falls slightly below the midpoint, it’s not a wholly negative outcome. Instead, it underscores areas in the business landscape that require attention and improvement. These concerns encompass government policy, tax structures, corruption levels, law enforcement, business performance, and the overall state of the Mauritian economy. This score acts as a crucial indicator for both the government and businesses, offering insights into existing challenges and opportunities, and guiding the development of strategies to enhance the business environment in Mauritius, as highlighted in the report.
The Mauritian economy boasts several strengths, including a well-established infrastructure and a reliable power supply, contributing to operational efficiency and quality of life. Furthermore, the country benefits from a stable order and safety situation, which is conducive to local businesses. Following the challenges posed by Covid-19, local demand for goods and services in the domestic market has rebounded. Additionally, collaboration between the private and public sectors fosters a business environment conducive to comprehensive economic development.
However, the Mauritian economy faces several weaknesses, notably a decline in the textile industrial sector due to reduced global demand. The absence of necessary economic reforms to address current and future global challenges weakens the country’s economic resilience. Businesses also encounter obstacles, such as difficulties in accessing finance and a shortage of foreign currency, which can potentially impede investment and economic growth. Moreover, the scarcity of qualified labor hampers productivity and competitiveness, posing a critical constraint to the overall progress and development of the economy.
Regarding the Business Climate, the report highlights that within the Overall Business Climate Indicator, which carries a weight of one quarter in the ABCI, 44% of respondents view the business environment in Mauritius as either “extremely unfavorable” or “unfavorable.” This suggests a significant portion of the business community faces challenges or is dissatisfied with the current conditions, potentially indicating issues with government policy, regulation, taxation, or broader economic conditions. However, 35% of respondents perceive the business climate as “favorable” and “extremely favorable,” indicating that a substantial number of businesses find the conditions conducive for operation and growth. These businesses might be benefiting from advancements in specific sectors, targeted governmental policies, or their inherent resilience and adaptability to the present conditions.
During the last 12 months, how would you describe the business climate in Mauritius?
Specific sectors, such as professional, scientific, technical activities, and administrative and support services, exhibit robust resilience to economic influences like inflation, regulation, and taxation, with high mean scores of 60.7 and 60.0, respectively. In contrast, sectors like manufacturing, accommodation, food service activities, education, wholesale and retail trade, construction, and especially real estate (scoring the lowest at 25.0) face a more challenging business environment.
A Resurgence in Demand: Approximately two-thirds of enterprises with favorable ratings attribute this positivity to a resurgence in demand, following the substantial decline caused by the Covid-19 pandemic. An additional 15% attribute their optimistic rating to an upswing in tourist arrivals, while 15% of respondents highlight the enhanced resilience of their enterprises or product ranges, contributing to their favorable outlook. Only 9% of the enterprises cite improved organizational efficiency as a significant factor in their positive assessment.
This feedback illustrates the diverse pathways through which enterprises navigate the post-pandemic landscape, leveraging resilience, innovation, and emerging opportunities to foster growth and sustainability. The report emphasizes that a significant increase in enterprise investment in research, development, and innovation is imperative to further enhance the Mauritian economy’s robustness, positioning Mauritius as a front-runner in sustainable and innovative global solutions, reinforcing its economic standing and fostering long-term prosperity.
Concerns Leading to Unfavorable Ratings: Companies assigning unfavorable ratings to the business climate in Mauritius point to a variety of areas, including high operational costs (47%), unfavorable economic conditions (40%), and a high inflation rate (38%). These concerns encompass expenses related to energy, transportation, raw materials, labor, and freight, directly impacting profitability and competitiveness. The report recommends addressing these concerns through strategic policy reforms and targeted initiatives to significantly improve the business climate, ensuring Mauritius remains an attractive destination for both local and foreign businesses.
Economic Performance: The business community perceives significant room for improvement in the overall performance of the Mauritian economy. Notably, Access to Finance and Availability of Local Qualified Labor receive the lowest ratings among all the indicators in the AmCham Business Climate Index. Some respondents voice concerns that attempts to recruit foreign workers are met with considerable obstacles, exacerbating the challenge of securing qualified labor.
Only 10% of respondents express satisfaction with the Mauritian economy’s performance over the past 12 months. Human health and social activities are the only sector to rate this indicator above 50, as they have been less adversely affected by the economic environment, having received significant funding amid the Covid-19 crisis. Small to medium enterprise (SME) operators bear the brunt of economic performance in Mauritius, with many expressing concerns about rising costs related to raw materials, labor, and social charges.
Availability of Qualified Labor: A significant majority of two-thirds of the study’s respondents flag the scarcity of qualified labor in Mauritius as a significant concern. Respondents also express frustration over bureaucratic obstacles and stringent requirements associated with recruiting foreign workers. Every sector in Mauritius echoes this issue, with no sector rating this key performance indicator (KPI) higher than 46, suggesting a pervasive talent deficit in the job market. Interestingly, Small and Medium Enterprises (SMEs) find this hurdle somewhat less daunting due to their lesser recruitment demands compared to larger counterparts. Nonetheless, the concern remains pertinent across the entire business spectrum.