1. Delicious Mauritius
by Stephen A. Bornstein
August21, 2013
Once dependent almost entirely on sugar cane and tourism, this tiny island nation is fast
becoming the entrepôtof choice for private equity and hedgefunds pursuing investment
opportunities in the emerging markets of East Africa and India.
Ideally situated off the coast of Madagascar in the southwestern Indian Ocean, Mauritius is a
politically stable, economically vibrant and racially harmonious potpourri of 1.3 million Hindu,
Muslim, Christian and Chinese citizens. It was discovered by Arab mariners in the 9th
century
but not settleduntil 1598 by the Dutch East India Company which introduced sugar cane to the
island. The Dutch colony lasted only 20 years and was succeeded first by the French (in 1715)
and then by the British (in 1810) who brought East African and Indian slaves to work the cane
fields and run the sugar mills. Slavery was abolished in 1835 and Mauritius achieved political
independence in 1968. To this day, the French remain the island’s industrial elite and the
British its senior government officials.The island’s reliable legal system is an amalgam of English
common law (for property and contract rights) and the Code Napoléon (for the penal system).
Mauritians generally speak both English and French (along with Hindi, Creole and other Indian
and African mother tongues).
Since 2000, Mauritius has dedicated itself to becoming the Singapore of the Southern
hemisphere, with a specialization in financial services. It has passed legislation prohibiting
discrimination between local and foreign investment (Investment Promotion Act) and has
entered into Investment Promotion and Protection Agreements with India and 19 (soon-to-be
25)sub-Saharan African nations guaranteeing against nationalization and permitting the free
repatriationof capital and profits.
By far the most magnetic element in the island’s attraction of over 800 private investment
funds to date, however, are the Double Taxation (Avoidance) Agreements
(http://mra.gov.mu/index.php/taxation/double-taxation-agreements) it has negotiated with India
and now more than 36 other countries, including 19 in sub-Saharan Africa. These treaties
enable foreign fund operators to avoid income taxation altogether in the investee economies
and, in Mauritius, to limit the taxation of their interest and dividend income to a maximum of
3% and to completely eliminate taxation of their capital gains.
Thanks to its favorable regulatory climate, Mauritius currently accounts for over 40% of foreign
direct investment in India and an increasing proportion of the FDI flowing into Africa(which
totalled $50 billion last year).Descendants of the Indian and African slaves who initially
populated the island now constitute a financially sophisticated talent pool of lawyers,
accountants and fund administrators determined to mold Mauritius into the financial hub of
the Southern hemisphere. Its GDP per capita (almost $15,600 in 2012) is one of the highest in
Africa and its literacy rate is almost 90%.

2. Surrounded by pristine waters and blessed with gorgeous beaches and the second cleanest air
in the world (behind Estonia), Mauritius has for years been renowned as a top tourist
destination, boasting a long list of ultra-luxurious resort hotels and celebrity vacationers. Any
private fund manager with an investment interest in India or sub-Saharan Africa would thus be
well-served by combining a little Mauritian R&R with a littlefinancial R&D.