The Evolution Of The Mauritian Economy Information Technology Essay

In the past two decades, the world scenario has considerably changed with one of the pioneering factors leading such changes as globalisation being information technology (IT). The pervasiveness of information and communications technologies (ICTs), may it be at home, within offices, or at schools cannot be denied today. The phenomenal growth of ICTs worldwide has had economic, social, political, and legal implications. For instance, businesses operate in more competitive environments today while others have closed down due to unforeseen pressures.

ICTs have also been the foundation blocks for globalisation. Global network systems are today considered as being the new basis for power. The core elements propelling developing and developed economies to surface have been free trade, unrestricted investment, deregulation, balanced budgets, low inflation, privatisation of state owned institutions and infrastructure among others (APC, 2003).

Few multinationals are dominating a large part of the market share in the majority of countries. ICTs have been contributing largely to such encroachment in the social and economic conditions of states. With the advent of ICTs instantaneous, global and electronic information is widely available to all.

Today, a world without ICT cannot be fathomed. Increased dependence on the new forms of information has marked the whole world: financial markets, competition, research and development, educations and innovation are all sustained by the recent developments in ICT. According to Castells (2000) ICTs are the equivalent to the importance of electricity in the Industrial Era. Various other authors have appraised ICTs as being the tool to “leapfrog” economic growth through modernisation of production systems and increase competitiveness.

Economies ignoring the developments in technology will only remain poor, marginalised and cast aside while those taking advantage of it will simply gain further by going beyond the traditional restrictions of space and time (ITU, 2004).

The Mauritian Economy has not been left unscathed by phenomenal changes brought about by globalisation. Reduction in trade barriers and the erosion of trade preferences enforced by the World Trade Organisation (WTO) has exposed the economy to diverse hazards on the world market. Fiscal measures are currently being tightened with a view to sustain the economy in the long-term; increased dependence on local quality products is being encouraged. Consultancy services are being sought from knowledgeable persons with a view to identifying means as to how the economy can survive the impact of globalisation.

Among the long-term strategies put forward, lies the development and progress of the Mauritian ICT sector as a means of reducing reliance on other pillars. The ability of ICTs to counter the effect of globalisation has been proven by countries such as Singapore as a reliable path towards sustaining competitiveness in the world market. Indeed, several years have elapsed since Mauritius has engaged itself in a new vision of transforming the country into a cyber-island. As such, numerous changes and developments have been achieved taking from infrastructure to the legislative framework for ICTs.

Contribution of established pillars to economic progress

Agriculture

Manufacturing

Tourism

Financial and Services

The ICT Sector

Contribution to the economy

Given the lack of figures for GDP contribution, the main emphasis has been on the level of employment generated in the ICT sector to describe its growth. However, in 1997, the ICT sector has been reported to have generated 3.3% of total sales to the economy and by 2002 this figure had grown to a total of Rs.4.1 Billion (2.9% of the Gross National Income). The Mauritius IT Industry Association (MITIA) estimated the ICT sector’s turnover to be around $70 Million for the 2001/2002 period. The telecommunications sector has been accredited with bringing in the major contribution from the ICT sector to Foreign Direct Investment (FDI).

This result is due to approximately 300 companies operating in the ICT sector, involved in a wide range of activities including software development, call centre, Business Process Outsourcing, IT Enabled Services (ITES), training, hardware assembly and sales, networking and other support services. World leaders such as IBM, Microsoft, Oracle, HP, Infosys, Accenture, Hinduja Group have started operations on the island. ITES-BPO so far is the strongest segment of the local ICT industry, experiencing a robust growth recently. These ITES-BPO companies have already invested some MUR 727 M and were employing around 5513 people at the end of September 2006. This figure includes an increase of 27.2% from January 2006 to September of the same year. Call centres contributes most to ICT sector employment in Mauritius with 42% of the workforce pooled into their activities (2338 persons). A remarkable increase of 158% should also be noted with regard to software development where employment increased from 277 to 716 lately, indicative of a rise in demand for software developers as well (BOI, 2008).

Furthermore, with respect to encouraging small local entrepreneurs to invest in ICT, some 18 start-ups have benefited from the National Computer Board (NCB) Incubator Centre. These start-ups have in turn contributed towards the creation of 86 jobs and an investment of MUR 12.75 M.

When it comes to IT Export, companies like Blanche Birger, DCDM Consulting, State Informatics Limited and Mauritius Telecom have extended their operations to the regional market (NCB, 2006).

Investment

The Mauritian government has realised the huge potential of ICT, in boosting the economy. It wants ICT to offer “efficient, effective and citizen-focused public services 24 hours a day, 7 days a week” (ITU, 2004). Mauritius is presently ranked 32nd worldwide as an easy and attractive location for business (BOI, 2008). Foreign investment being constantly sought; the government offers a range of facilities and incentives aimed at creating a favourable climate for FDI; for both the Individual and Corporate Investor. At the international level the government maximises on “its political, economic and diplomatic endeavour to secure market access and investment guarantees” (NCB, 2006).

Mauritius has been a leader in Africa in making tax concessions and giving other investment incentives, dating from 1970. All of these benefits have now been extended to the ICT sector. It is now emphasising a targeted promotion project instead of an incentive driven approach.

The government has, in that respect, given many facilities regarding FDI. The package of incentives as listed in the ICT Incentive Regime is as follows:

low corporate tax of 15% instead of 25%

VAT at 15%, refundable

No capital gain tax

100% foreign ownership

Free repatriation of profits, dividends and capital

No minimum foreign capital required

50% annual allowance on declining balance for the purchase of electronic and computer equipment

Streaming of all administrative procedures

exemption of customs and excise duties on the import of materials and equipment

exemption from tax on dividends

FDI is governed by the Non-Citizen (property restriction) Act of 1975. This investment regulation is in line with WTO’s agreement on TRIMS. A World Bank study conducted in collaboration with the Board of Investment (BOI) indicated that delays in the issue of business licenses and operating permits severely and negatively affect investment. Consequently, recent developments have led to the creation of business within three days.

Most activities in the ICT sector are undertaken by a few big groups and governmental entities. The latter fare fairly well, as compared to other regional countries. Most of our investment in 2005 has been obtained from Indian companies with the objective of using the island as a channel to the African market. For example Mahanagar Telephone Mauritius Limited (MTML) has started operation in July 2005 with international long distance telephone services. As from this year, it has launched fixed phone services and will soon be offering cellular phone services. It was estimated in 2005 that MTML would have invested $25 million in its network. Many European companies are also reported to have entered into joint ventures with Mauritian organisations in the ICT sector. The potential for BPO, call centre services and offshoring is increasing. Many foreign-owned call centres have invested in Mauritius, such as V-Lines from France, and Infinity; joint venture between French and Mauritian organisations.

As such, the potential for BPO, call centre services and offshoring in particular are increasing. In fact, BPO is the most thriving activity at the moment. Investment in BPO activities has increased by 38.3% (to the number of 148) over seven months (January 2006 to September 2006). Following Mauritius, France brings the most funds in the sector (forecasts indicate a figure of MUR 529 million). India is the next big investor in BPO, with a forecasted investment of MUR 440 million (BOI, 2006).

The ITES-BPO sector is actually intended to bring investment of MUR 1.94 billion in the island. So far, MUR 1.01 billion has already been pooled in the economy. By September 2006, ITES-BPO activities were distributed as follows:

Figure 1: ITES/BPO Activity in Mauritius (In Numbers)

Many foreign-owned call centres have invested in Mauritius such as V-Lines from France, and Infinity; joint venture between French Mauritian organisations. Software Development companies are coming in larger numbers, with a 43% growth rate, followed by BPO (40%) and Multimedia Companies (33%). By end September 2006, the BOI has approved of 29 ITES/BPO investment projects. 24% of these come from call centres and 21% from Software Developers. The main target markets of investing companies are France, United Kingdom (UK), United States (US), and India.

Legislations

Given the increasing growth of the ICT sector, there has been a shift in the paradigm of regulation during the last decade. The development of the ICT sector is not solely dependent on the technological advancements but also on a strong and supportive regulatory and legislative environment.

The ICT Authority (ICTA) has identified seven major market segments where regulation is deemed to be imperative. The market segments are as follows:

1. Fixed telephony

a. Local

b. International

i. Conventional

ii. Internet Telephony

2. Mobile telephony

3. Services related to fixed and mobile telephony

4. Dial-up Internet

5. Broadband Internet

6. Wholesale

7. Sale of Equipment

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Mauritius has been accredited with having a sound and an impartial legal system based on the Napoleonic Codes and the British Common Law. Intellectual Property rights have been strengthened by recent trademark, patent and industrial design laws which comply with the WTO’s TRIPS agreement. Furthermore, Mauritius is also a member of the World Intellectual Property Organisation (WIPO) and party to the Paris and Bern conventions for the protection of industrial property and the Universal Copyright Convention (Bank of Mauritius, 2006).

Over the past decade, the Government of Mauritius (GOM) has taken a proactive role in the regulation of the ICT Sector and has passed five laws to deal with issues such as recognition of digital signatures, protection of copyrights and combating cyber-crime. A brief description of each act is provided below:

Table 1: Overview of Main Legislations for the ICT Sector Regulation

Law

Description

Date Passed

The Computer Misuse and Cybercrime Bill

Provides for repression of criminal activities perpetrated through computer systems and protection against computer misuse and new forms of Cybercrime

May 2003

Information and Communication Technologies Act

Provides for the establishment, management, regulation and promotion of ICT sector

December 2001

Electronic Transaction Act (ETA)

Covers electronic records and electronic signatures and the security thereof. (ICT Sector in Mauritius, ICT Authority, 2004)

July 2000

Information Technology (Miscellaneous Provisions) Act

Deals with admissibility of electronics documents as evidence in court cases; data protection and security, computer misuse and patenting of software.

December 1998

Copyright Act

Pertains to the protection of software and electronic databases.

September 1997

Data Protection Act

2010

As per the provisions of the ICT Act, a number of institutions, namely the ICTA, the ICT Appeal Tribunal, the ICT Advisory Council and the Internet Management Committee have already been set up. This regulatory framework has encouraged and allowed international ICT players such as Microsoft, Infosys and so on to successfully conduct their business from Mauritius while allowing the state to meet its social and economic goals. The GOM has also proposed one more bill, entitled the Data Protection Act, which is planned to reassure the ITES companies and their customers on the safety of their data (BOI, 2008). This bill has been in the pipeline for the past 2 years now.

Liberalisation

There has been a marked difference in the ICT sector structure as from 2000 to 2004. The international long distance and Internet Service Providers (ISPs) have changed from having a monopolistic structure to a highly competitive one. The mobile operators have also drifted into full competition, as compared to a previous situation characterised by partial competition (World Bank, 2004).

As per the WTO agreement, in 1997, to liberalise the telecommunications sector, the ICT Act was laid as a foundation for proper legal framework governing and enabling liberalisation to take place (ICTA, 2001). It was agreed that all state monopolies and exclusivity rights in domestic and international services would be terminated by 2004. This date was however advanced to the 1st January 2003 as the legislative environment was then deemed insufficient to meet the development of the ICT Sector as regards to foreign investment. Prior to 2003, Mauritius Telecom (MT) held exclusive rights on most national and international services. However, with liberalisation, the Mauritian population has seen the emergence of several new entrants in the sector to their benefit.

In 2001, the ICTA replaced the MT Authority as per the ICT Act of 2001. It oversaw the full liberalisation of the telecommunications sector and in its first year it granted several licenses.

The liberalisation of the telecommunications services since 1st January 2003 has given a major impetus to the ICT sector (African Economic Outlook, 2006). Exclusive rights of ownership of the SAFE cable have been given to MT however. The mobile market on the other hand, involves two major competing firms: Emtel and Cellplus, and a third likely in the near future: MTML.

Current State of Information Technology in Mauritius

People

Mauritius is a highly erudite economy with 88% literacy rate (BOI, 2006). The island is on the go towards increasing its IT literacy rate. For this purpose, it has started at the ground level i.e. from schools. Another project launched in 2001, was the “School Information Technology” project, where primary and secondary schools will have computers, with at least one computer lab. In 2002, 100% of schools in Mauritius had a computer but only 18.7% of these had access to the internet (ITU, 2005). All the universities have LANs and high speed internet access. In 2004, 48% of the secondary schools and 4% of the primary schools had internet access (BOI, 2006).

With regard to the distribution of the educational level in Mauritius, in the year 2005, there were a total of 11,814 school leavers in S.C. and 5555 school leavers in H.S.C. Only 4444 tertiary students enrolled in Mauritian institutions of which 2,020 enrolled for IT Courses taking from Diploma to Master degrees (BOI, 2006). Adding to the tally of developing IT skilled professionals is the high number of students who are returning to Mauritius each year with degrees from leading universities in Europe, Australia, India, Canada and South Africa.

There are five main institutions offering courses leading to certificates, diplomas and degrees in IT. These include the University of Mauritius (UOM), Mauritius Chamber of Commerce and Industry, Swami Dayanand Polytechnique, De Chazal Du Mee Business School (DCDM) and University of Technology Mauritius (UTM). Other institutions include Formation, Recruitement et Conseil en Informatique, State Informatics Limited and NIIT Computer Education and Training Centre (NCB, 2006).

However, the Mauritius College of Air (MCA), which is the country’s leading public distance learning institution, has very few Computer Science courses and in the year 2002 only 3.6% were enrolled in the Computer Science field. Nevertheless, there are many other international universities which provide distance learning courses. Distance learning accounted for the largest share of tertiary Computer Science students with a total of 1,962 students in 2002 (ITU, 2004).

The Tertiary Education Commission (TEC) and the Task Force on E-Education and Training projected the number of graduates to join the ICT labour market up to 2005 at around 4000 (NCB, 2006). The following diagram illustrates this distribution by the type of institution:

Figure 2: Enrolment in Tertiary Computer Science Courses by Institutions (2001)

[Adapted from ITU (2004)]

However, the forecasted demand of IT workers and/or IT specialists far exceeds the forecasted supply. It was forecasted, in 2003, that if GOM accelerated training accompanied with a low demand for IT professionals, Mauritius will just meet the demand for IT professionals in 2006. If the contrary was to be true, then Mauritius would face an acute shortage of capable labour which was forecasted to be around 8000 IT professionals.

In the year 2000, there were approximately 1,900 IT Professionals according to a survey carried out by the NCB. Three years later that figure had increased to 3,200 professionals. Furthermore, an annual growth rate of 15% per annum of newly trained IT graduates is estimated by the TEC. However, as stated earlier, it would prove to be grossly inadequate to meet the demand if there is the expected and the desired growth of the ICT sector. The GOM is providing incentives to attract internationally renowned institutions and universities to set off-campus branches in Mauritius (ITU, 2004).

Due to Mauritius’ relatively poor adoption of the internet, the GOM has sharpened its focus on education at all levels. Promotion of an ICT Culture at the national level has been acknowledged through operation of:

An IT Coach Project (Cyber Caravan) to raise ICT awareness around the country

A Computer Proficiency Program – a joint Government Private-Sector initiative by the National Productivity and Competitiveness Council (NPCC) – on basic computer skills is available to the community at large at a subsidised fee of Rs.700.

Also, the GOM has recently launched an ambitious and enormous training programme of 400,000 Mauritians in ICT over the next four years on the 4th September 2006. Commonly known as the IC3 programme, it aims to dispense a series of training sessions under the Universal ICT Education Programme (UIEP) which will eventually lead to the highly recognised Internet and Computing Core Certification (IC3). In that respect, the NCB has been delegated the task of implementing the project which will include people from various background, be it educational, social, or work. The IC3 Certification which was developed by Certiport Incorporation (USA) is the first globally accepted, standards-based, validated certification program for basic computing skills. It consists of three modules, namely: Computing Fundamentals, Key Applications, and living Online. IC3 being a foundation course for ICT studies, the trainees can further evolve in the sector by going as far as the MCSE (Microsoft Computer Software Engineer) qualification.

IT Penetration among the Mauritian Population

Since it has adopted a vision of becoming a cyber-island, the state has been strongly emphasising the need to bring the technology to the reach of one and all. On one hand, the younger generation has been heavily benefiting from the inclusion of ICT in their curriculum. 2004 reports confirm that around half of all secondary school and a number of primary institutions benefit from internet access. A large portion of the educational institutions have been equally fitted with computers for students’ use. On the other hand, the government has also been providing training in IT. As per October 2004, 2500 civil servants had already been trained. The table below illustrates some economic and ICT indicators for 1999-2004:

Table 2: Economic and ICT-related indicator (1999-2004)

Year

Indicators

2003

2004

Estimated Population (Millions)

1.186

1.196

GDP per capita (MUR at Market Price)

128,288

141,826

GDP Growth at basic prices

+3.7

+4.5

Mobile Subscribers/100 inhabitants

38.13

47.58

Fixed Telephone Penetration (%)

91

92

Estimated Internet Users

180 000

230 000

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No. of Internet Subscribers (dial – up)

60 052

77 558

Estimated Household Internet Penetration (%)

International Internet Bandwidth (Mbps)

45

61

Estimated Internet Hosts

3985

4836

Source: Central Statistics Office, Mauritius

A survey conducted by the NCB in 2002 showed that the main reason why people did not have a PC at home was that they already had one at work and the second reason was cost. The government started a “Computer in Every Home” campaign and also provided subsidised loans to civil servants for buying PCs; but CSO figures claim that people did not know about these initiatives.

Furthermore, the Ministry of Health had implemented the National Health Information System, so as to make health care more efficient. By 2002, seven health centres had been computerised.

Mauritius also has the cheapest internet access rates in the African Continent. However, on a global basis, the price of internet connection is relatively high. Indeed, in July 2004, there was a 15% VAT charge on internet services. Such diverging strategies directly hinder the government’s policy of spreading internet use throughout the island.

With prospective competition from MTML, the internet tariffs were expected to fall by the end of 2006. This would have rapidly increased the number of internet users. Nowadays, post offices also provide electronic services, namely for payment of bills and the sale of telephone services. Mauri-Post is further expected to launch online banking services.

Conclusion

The ICT Sector in Mauritius has undeniably emerged as a sector in its own right today. The vision of the Mauritian government to make it the next engine of economic growth is in its making as ICT starts to make important inroads to the contribution of GDP. An analysis of 18 economies on their abilities to effectively implement ICT putting Mauritius in 5th position clearly supports this view.

The Mauritian government has taken several steps to make the island’s outlooks more favourable to investors in the ICT Sector. Additionally, infrastructural developments, especially in the physical terms, are highly conducive to the foreign investment and the GOM is taking pro-active measures to attract further FDI in the ICT Sector.

The legislative framework for the sector clearly demonstrates the country’s willingness to foster competition, openness, and an attractive business environment as well as the provision of universal service with efficient interconnectivity. With the liberalisation of the local telecommunications market, investors can expect lower rates of internet access as well as better services from international brands in the future. The liberalisation is also attracting investment in the telecommunications field.

To complement the above, several unprecedented initiatives, with the IC3 programme being the latest, have been undertaken to create a first-time-ever educated population in respect of information technology. The combination of the discussed issues, projects, and factors in this chapter will irrefutably link Mauritius firmly to the global information highway in the near future.

Yet, development cannot happen in a vacuum, and Mauritius will need to keep pace with the fast changing environment of ICT as it develops the sector further. Pro-activeness, responsiveness, and flexibility represent key requirements for the ICT sector development to prevent the country from losing its position.

Literature Review

This chapter describes the strengths, weaknesses, opportunities, and threats (SWOT) of the Mauritian ICT industry. The following diagram illustrates the main elements of the analysis:

STRENGTHS

WEAKNESSES

Language- Bilingual Workforce

Political Willingness

Infrastructure – Physical & Telecommunications

Attractive Fiscal Incentives

Sound Legal Framework

Geographical Location

Political Stability and Low Risk of Terrorism

Infrastructural Weaknesses

Poor education system

Deteriorating economy

Lack of Research and Development (R&D)

OPPORTUNITIES

THREATS

Membership in major Regional Trade Blocs

Indian Government support

Rapid Development Pace

Brain Drain

Competing ICT economies in the region

Risk of natural disaster/s

Table 3: SWOT for the Mauritian ICT Industry

Strengths

Bilingual Workforce

Mauritians are bilingual being conversant in both French and English and can therefore service both English-speaking and French-speaking markets (Novatech, 2008).

The Industrial Vocational Training Board (IVTB) furthermore organises the training of call centre and BPO operators (which currently constitute a high proportion of the ICT sector) on a regular basis. Additionally, ten public and some thirty private institutions, in collaboration with reputed foreign universities and international training centres provide professional training courses in the IT sector. Key players operating in Mauritius include NCC, NIIT, Aptech, University of Surrey, University of Birmingham, University of Witwatersrand, Université of Poitiers, Dale & Carnegie, BCS, ACCA, CIMA. Additionally, Mauritian employees are commended for their loyalty by Indian, French and British firms. This, according to them, improves the quality of the Mauritian workforce.

Infrastructure

Telecommunications

The SAT-3/WASC/SAFE submarine optical fibre cable links Europe to the Far East through Mauritius and provides connectivity to worldwide destinations through ADSL, ISDN and high bandwidth international leased lines (IPLCs).

Government has equally accelerated the liberalisation of the telecommunications sector by an early termination of the exclusivity of the incumbent operator, Mauritius Telecom (MT) as mentioned earlier. As such, new operators have entered the local telecommunications industry offering value added services in the field of International Telephony, Internet Service Provider and Voice over IP. The market has become highly competitive and new entrants compete mainly on prices to gain new clients.

A further asset is possessed by Mauritius Telecom, the national operator, with a Point of Presence (PoP) in Telehouse, Paris where major international bandwidth providers and key telecom operators are present for interconnection, thereby providing end-to-end service at very competitive rates (BOI, 2008).

Another underwater cable of East Africa, EASSy (Eastern Africa Submarine Cable System), will soon add to the bandwidth provided by the SAFE cable. The cable of a length of more than 8000 km will link Mauritius to around 20 countries of the Eastern coast of Africa including Kenya and Madagascar. As such, telecommunications and internet costs, which have already been reduced substantially over the past few years, are deemed to further decrease. The Minister of Information Technology and Telecommunications, has signed the protocol for linking Mauritius to the EASSy project on the 20th November 2006. This will give Mauritius a competitive edge in telecommunications costs.

Physical

The Ebene Cybercity is the first IT Park in the African region. It is spread over an area of 172 acres and with consist of various facilities such as video conferencing, conference halls, 24/7 restaurants and banks. The first Ebene Cyber Tower has already been constructed with many international ITES-BPO players are already operating within the most “intelligent building” in Mauritius.

A second cyber tower is also now operational and has already been booked up to 70%. Among the operators are the French company, Phone Sales Experts, which has already started its activities with 50 employees and an American BPO which has booked five floors and is expected to employ around 600 employees.

Political Willingness

The dedication of the Mauritian government to achieve its goal of making Mauritius a cyber-island has also been reflected over the past few years by its e-government initiatives (e-government, 2004). E-government is the use of ICT to deliver public services which provides greater convenience for citizens (G2C) and to businesses (G2B), as well as between different ministries (G2G). Such initiatives include:

The setting up of a Government Online Centre (GOC) as a point of interaction with citizens and businesses.

The setting up of a Government Intranet System (GINS) as a medium for collaboration between civil service departments.

The designation of Chief Information Officers to champion IT developments and for the provision of learning materials.

The approval of international standards to benchmark the internal level of security.

Indeed, the government took the initiative to invest in an e-government scheme gearing towards e-management, e-services and e-democracy. E-management consists of computerising all governmental departments while E-services are a platform for the exchange of information between the population and the state. E-democracy on its part is a concept that allows citizens to participate in government decision-making through the posting of queries. Citizens are also provided with e-services such as Application for Lump Sum, Driver’s License, Scholarships and Passports are offered online (Govt. Mtius, 2010).

The enactment of various legislations for regulating the ICT sector equally reflects such willingness at top level.

Attractive Fiscal Incentives

Fiscal incentives are being used as a means to increase FDI and investment potential in the island. Such differing tax regimes enable the island to get a competitive edge over neighbouring competing countries such as Singapore.

Sound Legal Framework

As mentioned, various legislations previously enacted, have been further enhanced in the move towards making Mauritius a cyber-island with an internationally recognised legal framework. These legislations are as follows:

Computer Misuse and Cybercrime Act (2003) for the protection against criminal activities related to the ICT sector

ICT Act (2001) for the regulation of the ICT sector

ISP Act (2001) for the regulation of ISP operators

Electronic Transaction Act (2000) for e-commerce

Information Technology Act (1998) for data transmission

Copyright Act (1997) intellectual property rights.

Data security and protection bill to be implemented shortly

Geographical Location

Mauritius has long been described as the star and key of the Indian Ocean. The island was considered as a major trade link between Europe and Asia. Today it is still positioned as the bridge but rather between larger numbers of geographic locations, especially between the African and Asian continents. Further enabled with the SAFE fibre optic cable, this key of the Indian Ocean finds itself strategically located- just as its name suggests- for conduction of ICT-related businesses in francophone regions.

Political Stability and Low Risk of Terrorism

Free elections are carried out every five years with smooth transition of political power following general elections. Mauritius has got hold of a good reputation of social and political stability; a country where expatriates find it easy to work and adapt to the multi-lingual and multi-racial community.

In addition to its insularity, the island benefits from its isolation from major threats like terrorist attacks. The multi-racial society has not experienced consequential upheavals in the past decades. This peaceful coalition between different religious backgrounds reduces the risk of terror.

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Weaknesses

Infrastructure

The virtual work can bring higher earnings than any other task. However, internet connection, the lifeline of many webmasters and service providers, is unfortunately one of the most expensive for developing countries. This is often because government institutions hold a monopoly over network lines. Potential service providers have mushroomed however in Mauritius following a certain degree of liberalisation in the sector, such as “Clickpost” or “Network Plus”. However, these have not contributed much to bringing the connection costs down. The dial-ups are still the cheapest type means of connection, which are nevertheless considerably less performing in terms of speed. A comparative study with India showed that the operating costs in Mauritius are 25% higher than in India (L’express, 2006).

Furthermore, BPML which is entitled to manage the Ebene Cybercity has been running into financial difficulties over the past few years and this weakens the financial situation of the government and reduces the pace of development.

Lack of Research and Development (R&D)

Mauritius possesses neither the skills nor the infrastructure (e.g. sophisticated equipment and labs) to carry out its own research in the field of technological development. Such expertise is only available abroad, especially among the G8 [1] . Importing them would involve engaging considerable amount of funds. It is therefore no wonder that organisations are reluctant to venture into this field because of the high degree of uncertainty involved. The opportunity cost of unsuccessful technological developments is indeed too high and while the benefits of R&D are undoubtedly substantial, they are only visible in the longer run.

Poor education system

Significant weight is provided to the availability of trained manpower, in a country analysis for investment decisions by a potential technology investor. Trained manpower is impossible to create without the participation of the concerned industry (in this case, ICT) as well as complementary sectors such as education (Isaacs Shafika, 2007).

The current education system in Mauritius brings in a rather minimal contribution. The skills that are being imparted to students are often inadequate, thus requiring further induction. In other cases, organisations are unwilling to invest bearing on the additional cost of training.

Concrete steps have only recently been undertaken to fill the skills gap. But the skills (from revised tertiary courses to increased number of tertiary institutions) are not expected to reach the labour market before at least a couple of years.

Deteriorating Economy – soaring inflation rate, high international debts, and serious unemployment issue.

As previously mentioned, Mauritius faces a tough episode in its economic development. Much touted thousands of jobs, for local income earners, in the cyber economy have not yet materialised.

Taxation rates for income earners have been increasing endlessly, as a means of funding the government and regulating expenditure while reforms towards diversification of the economy have been reported to be too slow. While ICT seemed to be the logical answer to the dwindling economy’s diversification, this transition is far from being achieved. The short term is expected to be particularly challenging. The new industry is furthermore knowledge-intensive and Mauritius faces the hurdle of having to educate its labour force. Despite steps taken in that respect, it will be difficult to reduce unemployment rates, since the emerging industries are less labour-intensive.

Opportunities

Mauritius’s Membership in Major Regional Trade Blocs

Mauritius is a member of the Common market for Eastern and Southern Africa (COMESA), the Southern African Development Community (SADC), the Indian Ocean Commission (IOC) and the Indian Ocean Rim-Association for Regional Cooperation (IOC-ARC).

The success of the Mauritian economy has been partly fuelled thanks to its preferential access to USA, Europe, African sub-continent, Australia and others. Positioning Mauritius as a bridge between Asia and Europe while allowing multinationals and foreigners to gain access easily to major untapped African markets can be achieved via the above-mentioned Regional Trade Agreements (RTAs). For instance, the COMESA which launched its Free Trade Area (FTA) on 31st October 2000 eliminates all tariffs on products manufactures in a COMESA member state. 9 countries are already member of this FTA giving Mauritius zero-tariff access to advancing economies like Kenya and Egypt. Thus, Mauritian organisations that receive export permits for cheap ICT products are likely to prosper in the African market. The latter needs the products while Mauritius has the skills and commercial abilities.

Political – Government support from India

Mauritius has been benefiting from the Indian support through agreements made by both countries. Organisations of Indian origin are investing heavily in Mauritius. For instance, Indialley, an Indian company, is actually working in cooperation with the NCB so as to organise forums, usually four times a year, which is focused on trends, new technologies and strategic thinking. These forums target mainly the Small and Medium Enterprises (SMEs). Infosys is another organisation which has provided training and employment to Mauritius in the ICT sector.

These agreements have been further renewed following the recent visit of the Indian president. Mauritius signed an agreement with Telecommunications Consultants India Ltd for a Pan-African E-network Project. The public sector organisation will be deploying the network and the investment cost of Rs1.9 billion will be entirely financed by the Indian Government. Recently, the Indian Government has approved a funding of $100 million to Mauritius, $25 million of which constitute a donation while the remaining $75 million is a low interest loan.

The minister of Commerce and Industry of India is further strengthening the sacred bond through a Preferential Trade Agreement (PTA) which would be in effect as from next month. This agreement involves the granting of duty free access on 30 commodities. These PTA can be used as a foundation for widening the scope of the 30 commodities to allow for exchange of ICT knowledge.

Threats

Rapid Development Pace – Lagging Behind

World technology is evolving fast, but Mauritius seems to be lagging behind in implementing the new technologies. Although it has adopted many of the technologies (e.g. 3G mobiles), their use has not spread throughout the whole country. This is mainly because of the high cost of the new technologies and the people’s/organisations’ inability in implementing and using them properly.

While Mauritius is the highest ranked African country in the UN Conference on Trade and Development (UNCTAD) indices in ICT development with a score of 52, it has lost 13 places overall due to the emergence of ICT developments in other countries such as Malaysia, Costa Rica, Trinidad & Tobago, among others as well as the sustained growth of established countries such as Singapore which has maintained its rank among the first three for the past four years. This demonstrates Mauritius’s failure to keep pace with other rising and competing economies (Business Africa, 2005).

Brain Drain

Most of the elite ICT graduates are leaving for better career opportunities in the more developed nations. The government is not investing actively in retaining the skills. Ironically enough, this is a time where Mauritius is in need of ICT expertise. By losing on such skilled resources, Mauritius is at a loss since it is not able to develop its ICT sector using the locally trained labour.

Competing ICT Economies in the region

Other countries in the Indian Ocean are experiencing rapid growth in the ICT sector. The main competitors of Mauritius are Singapore, South Africa, Philippines, Tunisia, and Morocco which offer value for money packages.

In the region, Tunisia and Phillipines have emerged as the major rivals of Mauritius in the BPO and ITES sector. Tunisia has a competitive advantage over Mauritius due to the cheap availability of skilled labour in the French call center market. On the other hand, Phillipines has an advantage of having naturally English speaking residents, thereby reducing the cost of training for call centers for the English market.

Singapore has an excellent regulatory environment, world-class levels of education and training and a government that is committed to enhancing the use of the latest technologies across all sectors of the economy. This reflects the projection that they made, being “to the top of the world competitiveness league”. They have highly developed institutions encouraging culture innovation and transparency in the public sector, which contribute in developing an atmosphere whereby organisations are willing to invest more in latest technology at all levels.

Today, India is undoubtedly the pre-eminent destination for offshore IT services. India, in particular, is witnessing rapid growth due to its cost advantages, skilled labour and government initiatives implemented to improve location attractiveness. A key element in taking the country forward and maintaining its growth momentum is the provision of a highly skilled and competent global workforce.

Recommendations

It can be seen that Mauritius possesses adequate resources which will enable it to achieve its vision of making the ICT sector the fifth pillar of the economy. Yet, as described in section 3 of this thesis indicates, there are certain weaknesses which can hold back development if they are not given due consideration. For instance, education, which customarily remains a scorching subject for debate in Mauritius, is deemed to be a very important factor in the future of the very knowledge-based ICT sector. This is especially true if Mauritius is to achieve its goals of attracting FDI from more value-adding services such as disaster recovery services in this sector.

A fresh vision for the sector is thus required supported by a high level of political willingness and leadership. Therefore the ICT industry vision can be devised for the future Mauritian economy.

Drilled from such vision are pragmatic objectives that eventually require viable strategies for achieving them to ensure future developments in the ICT sector. These are illustrated in the figure shown on next page.

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