Big lessons for South Africa - as the economy chugs to a halt
Category Live in Mauritius
While South Africa's economy stagnates due to a myriad of economic problems, Mautrius's free market economy has seen it attract large amounts of foreign investment.
Dani van Vuuren, business development consultant at Sovereign Trust, said that Mauritius's growth rate is expected to increase by 75% in the next 10 years, with the nation becoming a hotspot for relocation and startups.
A major growth driver is the tax incentives the East African island nation offers foreign investors. Corporate and personal income taxes are taxed at only 15%, and additional concessions are available.
"Mauritian tax residents are taxed on Mauritius-sourced income only, and there is no capital gains tax or inheritance tax. In addition, there are no foreign exchange controls, which offers the ideal gateway for international business expansion," said Van Vureem.
In addition, Mauritus's Free Market Economy has far less strict labour laws than South Africa.
Speaking to CapeTalk, Honorary Consul of the Republic of Mauritius Mukhtar Joonas said that the Free Market approach in Mauritius has helped to grow the economy.
"In the short term, a few people get hurt, but it is a way of weeding out the ones that are not efficient and really productive. So, in the medium to long term, it's a major benefit," Jones said.
He said that Mauritius currently has an unemployment rate of 3%. South Africa, on the other hand, has an unemployment rate of 32.9%.
Although he acknowledged that Maurtius's policies may not be applicable to a nation with 45 times the population, Jones said that South Africa's labour laws are a major issue.
He said that strikes and hiring red tape are impeding employment in the country, as opposed to Mauritius, where employers have free reign to employ whomever they want.
"You need to update your labour laws if you want to create employment," he said.
He said that divorcing someone is easier than firing someone in South Africa and that investors prefer to invest in property than in companies with workers and managers.
He added that South African workers are overprotected, and their wages are over-inflated, adding that more competitive wages could help with the nation's unemployment woes.
Attracting investment
Mauritius has recently seen an influx of wealthy individuals into the country, with the luxury property market booming.
International agents and local developers said that Brits, Europeans and South Africans see the island as a 'safe haven' for investment.
The Africa Wealth Report 2022 said that Mauritius is home to just under 5,000 high-net-worth individuals (HNWIs), marking a nearly 80% growth from the prior decade. HNWIs like the island for its strategic location, dynamic business landscape and advantageous fiscal regime.
The island is highly coveted by wealthy individuals around the world due to its strategic location, dynamic business landscape and advantageous fiscal regime.
"Overseas investors are attracted to Mauritius because of the lifestyle but also because it is considered one of the safest African nations with a dynamic economy and stable political framework. It makes sense fiscally with property buyers seeing a good capital uplift from their investment, " Robert Green from Sphere Estates said.
He added that more families are moving to the island due to the lavish lifestyle on offer, the ease of doing business, and the high-quality schools.
Christophe Piquet from Heritage Villas Valriche also noted that luxury buyers were changing in demographics.
Author: Pierre