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  ISSUE No. 63
An Analysis of Foreign Direct Investment in 2013

According to UNCTAD, global FDI flows rose by 11% in 2013 to an estimated USD1.46 trillion, up from a revised USD1.32 trillion in 2012. There has been an increase in FDI flows in all major economic groupings − developed, developing and transition economies. FDI projections for 2014 are estimated at USD 1.6 trillion which signifies a gradual rise as the global economic growth gains momentum, though the risk associated with uneven levels of growth, fragility and unpredictability in a number of economies could dampen the FDI recovery.

Preliminary estimates from the Bank of Mauritius suggest that FDI inflows into Mauritius in 2013 were to the tune of MUR 9.512 billion. FDI is a key driver of economic development and sustained FDI flows are required to help Mauritius graduate to a high-income country. In 2013, FDI as a percentage of GDP stood at 2.6%.

As part of Government’s outward investment strategy to further enlarge the economic space of Mauritian businesses, local investors are on the move to capture new opportunities to further expand their businesses abroad. In 2013, investment outflows exceeded the MUR 4-billion mark.

Foreign Direct Investment by sector (%)
Investment in the tertiary sector accounts for nearly 90% of total FDI. Real Estate activities attracted the major share of investment (MUR 5.9 billion) accounting for 62% of FDI, with the construction sector and financial services activities each attracting 8% of total FDI as shown in Figure 1 below.

Figure 1: Share of FDI by sector of activity
Source: Bank of Mauritius

Foreign Direct Investment in agriculture, forestry and fishing has surged to MUR 678 million representing 7% of total FDI with the major share of investment being in the fishing sector. The manufacturing sector, wholesale and retail trade and accommodation as well as food services activities captured in total 9% of FDI. The ICT sector recorded an investment of MUR 60 million (1%).

Foreign Direct Investment sourced by Geographical Region (%)
Europe remains the main source of FDI contributing 51% of total FDI. The significant increase in FDI influx from Asia (23%) positions this region as the second largest contributor followed by Africa (22%).

Figure 2: Share of FDI by geographic region
Source: Bank of Mauritius

The combined contribution of North America (2%), Oceania (1%) and Latin America and the Caribbean (1%) amounts to MUR 401 million.

Foreign Direct Investment by main country of origin (MUR M)
France is the leading investor in Mauritius (21%) followed by China (17%) and South Africa (16%).

Figure 3: Share of FDI by country of origin
Source: Bank of Mauritius

While in 2012 South Africa topped the league of foreign investors in Mauritius (26%), it has been surpassed by France and China. It is worth noting the gradual increase in investment from China over the past two years, from 2% in 2010 to 13% in 2012 and 17% in 2013.

Direct Investment Abroad by sector (%)
Outward investment in the accommodation and food services (MUR 2.4 billion) and real estate activities (MUR 862 million) spiked to unprecedented levels accounting for 58% and 21% of total FDI, respectively.

Figure 4: Direct Investment Abroad by sector of activity
Source: Bank of Mauritius

Outward investment in the Financial Services Sector (MUR 535 million) accounts for 13% of total outflows after it peaked at MUR 2.4 billion (43% of total outward direct investment) in 2012.

Investment in the manufacturing sector has declined (MUR 124 million) while investment outflows in the wholesale and retail trade have hit a high of MUR 96 million in 2013.

Direct Investment Abroad by Geographical Region (%)
Africa is a continent on the rise, offering myriad opportunities for investment. The Government is spearheading the Africa Strategy to boost trade and investment flows and encourage local investors to tap the investment opportunities unfolding on the continent.

Figure 5: Direct investment abroad by country of origin
Source: Bank of Mauritius

Local investors are showing a keen interest to investing in Africa with investment outflows accounting for MUR 2,993 million representing 72% of total outflows.

Outbound investment to Europe was to the tune of MUR 730 million (18%), France (MUR 212 million) and Switzerland (MUR 107 million) being the main host countries.

Outward investment to the United States has increased significantly to reach MUR 85 million while the United Arab Emirates has attracted MUR 163 million of investment from Mauritius, the highest recipient of outward direct investment in the Asia region.

It is worth noting that figures published by the Bank of Mauritius are preliminary estimates. 2013 data will be revised once the Foreign Assets and Liabilities Survey 2014 (FALS 2014) results are finalized.

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