First published by ISS Today

Mauritius is a country adept at reinventing itself. Not blessed with abundant resources, it has successfully transformed from an agrarian to a manufacturing to a services-based economy through a series of smart decisions and pragmatic policies.

Apart from adapting to evolving economic realities, the island nation has also realigned its strategic priorities and partners at various stages to manage the risk inherent in being a small open island economy.

But with their traditional markets no longer offering the stability and security of years gone by, policymakers have again had to adapt to a changing geo-political landscape. Declining growth prospects in Europe and the changing nature of financial relations with India in particular have amplified the risks of economic shocks.

A strategic pivot towards Africa, which had long been neglected (despite the country’s geographic location), was seen as the logical choice in the face of these headwinds. Indeed, since the turn of the decade when a conscious decision was taken to ramp up engagement with the continent, trade and investment with African nations has steadily been rising.

This strategy has yielded some positive results. Mauritius has signed a number of Double Taxation Agreements and currently has 23 Investment Promotion and Protection Agreements with countries across the continent, which have boosted intra-regional trade and investment.

Mauritius has also emerged as the preferred International Financial Centre in directing private equity funds to the continent. According to data from the Economic Development Board, total inbound investments for 2016 in Africa stood at $59-billion, of which nearly 50% went through Mauritius.

Diplomatically too, Mauritius has played an active role in regional bodies such as the African Union (AU) and Southern African Development Community (SADC). The country has also carved out a space for itself when it comes to hosting AU investment conferences.

Indeed, it has “excelled when it comes to promoting regional economic integration and improved involvement of the private sector,” says Institute for Security Studies senior researcher Liesl Louw-Vaudran, writing on power and influence in SADC. With continued membership and engagement within regional associations, this trend is set to continue as Mauritius attempts to increase its commercial and political relevance in Africa.

“Africa is a continent on the move and with high growth potential and tremendous opportunities for Mauritius,” says Ken Poonoosamy, Economic Development Board of Mauritius deputy CEO. The relative “ease of doing business, talent pool, lack of foreign exchange control and our membership to SADC, [the Common Market for Eastern and Southern Africa], [the Indian Ocean Commission] and now the [Continental Free Trade Area]” makes Mauritius an attractive launchpad for the rest of the continent, he adds.

Yet, despite this progress, the jury is still out on whether Mauritius has been successful in its endeavours to position the island as the “gateway to Africa”. Critics argue that it has been good at “talking the talk without really walking the walk”. At the heart of this criticism is its perceived “identity crisis”. Simply put, there is still huge scepticism around whether Mauritius really wants to be part of Africa.

A key reason behind this supposed indifference lies in the country’s history. Having been discovered initially by the Dutch, then colonised by the French and then the English, European influence in Mauritius has been widespread and deep.

However the more obvious reason behind the limited affinity towards Africa is the significant Asian influence on the island. With about 70% of the population of Indian descent, the linkages to India are plentiful, meaning there is a historical and cultural symmetry deeply engrained in the Mauritian identity. Further, its proximity to India and the sizeable diaspora on the island make unwinding these strong connections difficult.

Europe and India have formed the bedrock of the country’s heritage. This is reflected in trade and investment numbers which indicate that both contribute the lion’s share of economic activity with Mauritius.

So forging a clear African identity has been a challenge. L Amédée Darga, chairman of the Mauritius Africa Business Club, says “Mauritius as a country is well embedded in Africa but a majority of the Mauritian people still do not feel the African identity. This schizophrenic state is partly due to [the] internal ethnic dynamics of the country”.

It is a view echoed by Ocorian Capital CEO Richard Arlove, who says Mauritius is currently grappling with a “Brexit problem” – unsure whether it really wants to be “in or out’ of Africa”. This sense of exceptionalism, as it has been described, means that government’s policy direction struggles to find resonance with the country’s broader population.

But do these ethnic dynamics fully explain Mauritius’ lack of African-ness? Not quite. Some criticisms levelled against the country range from Afrophobia to a lack of cultural awareness and empathy, to naivety when embarking on business activities with the continent.

Recent revelations from #Mauritiusleaks have further dented the country’s image. So too have inquiries by the International Consortium of Investigative Journalists, which painted the country’s financial hub status in a negative light amid allegations of tax avoidance and money laundering. Although the report’s findings were emphatically denied and criticised by the government, the perception that Mauritius is a tax haven persists.

For critics, the recent controversy will reinforce existing suspicions around the country’s allegedly opaque transparency. It may also sour relations between Mauritius and African countries who feel that the island nation is undermining development in Africa and undercutting peer nations financially.

The rapprochement of Mauritius with the rest of Africa mirrors similar trends in North Africa, a region that has also grappled with existential questions around the notion of Africa-ness. Indeed, exceptionalism and ethnic separation from sub-Saharan Africa have been two consistent criticisms levelled at Egypt and Morocco in the past.

In both instances, the rapprochement towards the rest of the continent has been driven primarily by economic incentives and rationale. Mauritius is therefore not alone in its efforts to reinvent itself as a pan-African player, and indeed faces stiff competition from other African countries.

But are these issues surmountable? Yes, according to AfrAsia Bank treasurer Parik Tulsidas. He says the island nation “possesses the ingredients to create this ‘relevance’ and drive success, but it does require a mindset change, and a more focused/coerced/daring action from all the players to create this shift towards Africa”.

“Africa has its own sets of challenges, yes, but we shouldn’t forget that Mauritius is being well and truly part of Africa – we seem to conveniently overlook this fact … to our detriment. This is what needs to change”.

Given historical ties with Asia and huge dependence on Europe, Mauritius’ engagement with African countries takes it into largely uncharted territory. Although its policy intentions towards the continent are positive, an improved level of cultural intelligence will be necessary across diplomatic and business spheres to make this pivot successful. Mauritius has reinvented itself many times before – can it do so again? DM

Ronak Gopaldas is an ISS Consultant, Director at Signal Risk, Fellow at Gordon Institute of Business Science