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Financial Sector Overview

Economic Landscape

Mauritius is a small Southern African country located in the Indian Ocean. It has a surface area of about 2000 km2 with a population estimated at 1.3 million in 2019. In the 1960s, its economy relied heavily on agriculture. The progress achieved, driven mainly by the dynamism of the real estate, manufacturing and service sectors, in particular the financial sector, tourism and communication and information technologies, placed the Mauritian economy in the upper middle-income category. In 2018, the national Gross Domestic Product (GDP) was USD 13.3 billion, with a growth rate of around 3.9% between 2016 and 2018. Despite the gradual strengthening of the country's export potential through the development of the textile sector and a rather efficient industrial sector, the marketing of sugar cane continues to account for a quarter of export earnings. The country's fiscal attractiveness makes it an important and promising financial hub for pan-African and international banking groups. Human development indicators are also well above the African average: the literacy rate is close to 100%, the labour force is skilled, and the unemployment rate has fallen steadily, to 6.6% in 2019, after peaking at 15% in the 1970s. In 2018, Mauritius ranked first among African countries in the Human Development Index, followed by Algeria and Tunisia. Mauritius  also distinguished itself over the last  decades by  its remarkable ability to reform the business environment. According to the World Bank’s 2019 Doing Business report, the country moved up five spots compared to 2018, ranking 20th in the world and first in Africa.

Overview of the Financial Sector

Mauritius' financial sector is rather large compared to the size of the economy: the sector's total assets were more than four times the GDP in 2018. As in the vast majority of African countries, the sector is dominated by banks, which hold 83% of these assets.  In recent years, Mauritius has been considered a leading international financial centre on the African continent and has attracted financial actors from emerging countries. The dynamism of the offshore economic activity of the multinational companies based in the country boosts the banking sector's liquidity. Deposits from multinational firms account for nearly 40% of total domestic bank deposits. The country also has a more developed capital market compared to Sub-Saharan Africa. In existence for some 30 years, the Stock Exchange of Mauritius (SEM) has been contending since the arrival of a second stock exchange, Afrinex, a subsidiary of the Bombay Stock Exchange, in March 2019. The country also hosts more than 450 private-equity funds that are active on the African continent. In 2016, over USD 59 billion was invested in Africa from Mauritius.

The banking sector is regulated and supervised by the central bank, Bank of Mauritius, while the Financial Services Commission (FSC) is responsible for licensing, regulating and supervising the non-bank financial sector, including insurance companies, private pension funds and the stock market.

Banking sector

Banking Market Structure - At end-June 2018, the Mauritian banking market consisted of 20 commercial banks, including 9 locally owned, 8 foreign bank subsidiaries and 3 foreign bank branches. Total cumulative banking assets accounted for  277% of GDP in 2018, or USD 36.9 billion. The sector is concentrated: the country's 2 largest banks hold a 40% share of the banking market in terms of deposits and cumulative assets, while the 4 largest banks hold 61% of total assets.

Structure of Credits and Deposits - Bank loans to the private sector increased by 9% between 2017 and 2018, from MUR 290 billion (Mauritius rupee), or USD 8.05 billion, to MUR 316 billion (USD 9.6 billion). Bank credit expanded primarily due to financing for financial services and businesses, and accounted for 41% of the nominal increase in credit. The construction and tourism sectors accounted for  33% and 12% respectively. Financial depth also increased significantly, from 64.8% in 2017 to 67.1% in 2018. Regarding bank deposits, they increased slightly under the combined effect of domestic and offshore economic activity, from MUR 952 billion (USD 26.4 billion) in 2017 to MUR 1.005 trillion (USD 30.4 billion) in 2018. Deposits are the main source of financing for banks, accounting for 75% of their cumulative liabilities in 2018.

Financial Strength of the Banking Sector - The banking sector is fairly healthy. Following the gradual implementation of the Basel II and III prudential standards by the Central Bank, Mauritian banks have been required to maintain a minimum risk-weighted capital ratio of 11.25%, since January 2018. This ratio stood at 17.5% in June 2016, 18% in 2017 and it fell to 17% in 2018, while remaining well above the regulatory threshold. Non-performing loans, as a proportion of total outstanding loans, also fell from 7.1% to 6.4% between June 2017 and June 2018. The Banks' net (tax) profitability remained high between 2016 and 2018, rising from MUR 11.3 billion (USD 326.5 million) to MUR 17.3 billion (USD 523.7 million).

Financial Inclusion

According to Global Findex 2017 data, Mauritius has the highest financial inclusion rate on the African continent: 89.8%, more than double the average for sub-Saharan Africa (42.6%) and well above the average for high-income countries (73.1%). The financial inclusion rates were 80.1% and 82.2% respectively in 2011 and 2017. Gender disparities regarding  access to financial services are minimal: 87.1% of women have access to the domestic financial system. In 2017, a Mauritian had an average of at least two bank accounts. Just under one in two (42%) bank accounts registered in the country benefited from a line of credit in the same year. In addition, more than two-thirds (68.5%) of the adult population made electronic payments in 2017, a level well above the sub-Saharan African average (34.4%) and slightly above the average for high-income countries (62.3%). The quality of the technological and financial infrastructure has also facilitated the rapid development of mobile money in the country: over 90% of the adult population has a mobile money account, while only 50% had one in 2013.

The Bank of Mauritius has undertaken significant structural reforms which  have led to better financial inclusion. These include enhancing financial-sector transparency by disclosing interest rates and service fees, and implementing financial projects geared towards efficiency and cost reduction. Under the impetus of the central bank and in support of the government's strategy, a financial literacy promotion programme was also implemented in 2018 to raise awareness of the importance of saving, investing in financial markets and fiscal management, while  enabling them  to identify fraudulent financial services, including pyramid schemes. This programme reached more than 25,000 families.

Microfinance & SME Financing

Financial services similar to Microfinance are mainly provided by savings and credit cooperatives. Institutions such as the Development Bank of Mauritius and MCB Microfinance, a non-bank financial institution, also offer microfinance programmes to low- and modest-income populations. As at 31 December 2017, 178 savings and credit cooperatives were serving the domestic market. These institutions worked primarily to strengthen the access of SMEs to financial services. Deposits mobilized by these cooperatives reached MUR 2 billion (USD 55.5 million) in 2017.

Under the SME financing programme set up by the central bank, more than MUR 2.1 billion (USD 63.6 million) in loans were granted by commercial banks. According to the IMF’s 2018 Financial Access Survey, SMEs hold 6% of active bank accounts, 5.8% of bank loans and 4.6% of deposits collected in the country. At end-2018, four non-banking financial institutions were also providing leasing services.

Insurance Sector

The national insurance sector is relatively developed compared to the rest of sub-Saharan Africa which, in 2018 averaged 2.8% with a penetration rate of 4.2%. As at 31 December 2017, 15 insurance companies shared the domestic market of non-life insurance services, known as IARD (fire, accidents and other risks), while  8 firms specialized in long-term insurance services. Total accumulated assets of the IARD sector came to MUR 18.6 billion (USD 563.1 million), steadily rising over the previous years and 50% up from 2012  Life insurance dropped in terms of total assets between 2012 and 2018, from MUR 92.6 billion (USD 2.9 billion) to MUR 74.1 billion (USD 2.2 billion).  However, total life-insurance company assets rose by 4.9% between 2017 and 2018. The sector is regulated and supervised by the Financial Services Commission (FSC)pursuant to  the 2005 law on the insurance sector. Regulations authorise local insurance companies to provide loan services to their clients. This specific service accounts for  about 4% of total loans granted in 2018 (including 80% of mortgages).

The distribution of market shares in life and non-life insurance is more or less  atypical compared to the rest of the region where the activity is essentially dominated by non-life insurance. Indeed, in 2016, 54.8% of the domestic insurance market was dominated by life-insurance activities.

In 2018, these life-insurance companies invested 30% (USD 645 million) of their total portfolio in public debt securities, 22% in non-financial companies and 16% in firms specializing in finance. The assets of companies offering general insurance services reached MUR 17.6 billion (USD 488.4 million) in 2017.

Capital Markets

The Stock Exchange of Mauritius (SEM) was established in 1989 and comprises two components: the official market, and the Development & Enterprise Market (DEM) established in 2006 and designed for SMEs and companies with a high-growth potential. In June 2018, the market capitalisation stood at MUR 395.5 billion (USD 12 billion), the equivalent of 85% of GDP.  It declined by 12% compared to  2017, despite the fact that the number of shares traded on the SEM rose between July 2017 and June 2018 to MUR 20.6 billion (USD 623.6 million) (+35.5 % year on year). The official benchmark index is the SEMDEX and the DEM uses the DEMEX. The two indices rose respectively by 24.1% and 17.8% between December 2016 and December 2018. As at 30 June, over 1,024 investment funds had been accredited by the FSC and were active on the domestic financial market.

The central bank is a major player whose 91-day treasury bills and 4-year notes make it possible to absorb the banking sector’s structural liquidity. The securities issued are consistently over-subscribed and raised MUR 77.5 billion (USD 2.35 billion) over fiscal  2017-2018. Other central bank interventions on the money market have helped stabilize the exchange rate of the local currency against major global  currencies. Government issuances also boosted the domestic financial market by MUR 37.9 billion (1.15 billion USD) over the same period.

The entry of Afrinex (a second operator from India) onto the Mauritian stock market in 2019 will help to further boost transactions on the domestic financial market.

Social Security System

Mauritius’ pension system  operates according to a multi-pillar institutional model. The first pension system consists of two schemes: a basic non-contributory public scheme based on a retirement allowance paid to any person aged 60 and over; and a second public pension scheme based on the contribution of civil servants whose eligibility is predicated on 400 months of professional activity and an allowance corresponding to two-thirds (2/3) of the last salary.

The second pension system has two pillars: the  "mandatory professional" pillar is managed by the National Pension Fund (NPF) and is open to any private-sector worker or individual entrepreneur. The second pillar, managed by the National Savings Fund (NSF), is mandatory for all public- and private-sector workers and also offers lending services to members.

The third and last pension system is a "voluntary professional” scheme. It is run exclusively by private pension funds (PPFs) under the jurisdiction of the Financial Services Commission (FSC), in accordance with the Private Pension Scheme Act of 2012 (PPSA). 

In 2017, despite a 21% annual increase in pension benefits, the combined assets of the 21 PPFs with defined benefits reached MUR 38 billion (USD 1.05 billion) with a sector income that rose by  61% compared to 2016 and equivalent to MUR 6.5 billion (USD 196.7 million).










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At a Glance

At a Glance Source
Population in thousands (2019): 1,265.71
GDP per capita (current US$) 2019 - World Average 10,721.61: 11203.54
Account (%) age 15+) - (2014 vs 2017): 82% |90%
Agriculture Orientation Index - Credit ( Agriculture, Forestry and Fisheries share of GDP) (2015 vs 2016): n/a
Financial Inclusion Strategies: SADC Financial Inclusion Strategy 2016-2021
Domestic credit provided by financial sector (% of GDP) 2017: 125.61
Made or received digital payments in the past year (% age 15+) (2014 vs 2017): 48% | 69%
Remittances % of GDP for 2017: 0.017
Mortgage Interest Rate / Mortgage Term (years): 19% | 25

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