Sector Review

Financial Services

The financial services sector, in particular banks, is expected to play an important role in the “relance de l’investissement et de l'économie”. 

However, measures announced are rather aimed at strengthening the regulatory framework than encouraging banks to participate more in the support of the sectors severely impacted by COVID-19. There were also no specific incentives for banks to foster new investments for SMEs and start-ups, as these are considered as being riskier. 

Following the recent proposition to classify Mauritius in the EU blacklist, measures have been announced to accelerate the implementation of the five remaining recommendations by the FATF, but will this be sufficient, and is it achievable in just a couple of months?

To diversify the sector’s offerings, five new financial services products have been introduced; but will these simply be added to the list of pending measures introduced in the past couple of years?

Lastly, we note the creation of the venture capital market on The Stock Exchange of Mauritius to fund the SMEs and start-ups. Given its higher risk profile, it should be accompanied by additional measures, regulatory and/or fiscal, to incentivise potential investors.

Agri-Business & Real-Estate

The measures announced are timid, a 'rehash' of previous measures and ultimately leave the sector players, especially the haemorrhaging sugar industry, hungry for more.

Promoting self-sufficiency is not original and is an initiative previous budgets have espoused without much success. Repurposing abandoned lands is laudable but with no direction on the new cash crops.

Waiving of land transfer taxes and registration duty on new builds will not be as potent in a recessionary environment with an expected increase in redundancies and pay freezes. Similarly,  investing in an expensive cruise terminal at a time when the cruise industry is facing an existential threat may require rethinking.  

Cheap loans at 0.5% interest sound promising but the devil is in the detail, which is lacking. One hopes that the loan will be used for growth or maintaining  jobs - not repaying banks.

One initiative we do applaud is paying contractors faster and reducing the retention period for public contracts. We also commend restricting certain public projects to Mauritian contractors.

Information & Communications Technology (ICT)

At PwC, we welcome the government's commitment to continue the digitisation journey, which will help the public services meet the needs and evolving expectations of citizens and businesses. The measures announced are focussed on the digitisation efforts on four capabilities: services, processes, decisions, and data sharing, which altogether will help accelerate the digital transformation in government.

We are also pleased to see that this budget addresses the need to attract top renowned institutions to set up campuses on the Island, a measure which has been long overdue. It will not only help attract talents but also investors, for the supply of qualified labour will henceforth be available locally.

In order to successfully implement these projects, the government will need to put into place a strong governance structure, closer partnerships with the private sector and better monitoring of implementation progress.