AfDB-Mauritius Partnership

Train in Port Louis, Mauritius. Through 2018, AfDB will be supporting Mauritius’ goal of transitioning to high-income status and will be focusing support on infrastructure and public-private partnership development. Photo by: Sébastien Amiet /CC BY Since gaining its independence from the United Kingdom in 1968, Mauritius has made remarkable strides in improving its political, economic and social situation. From a low-income country, it has successfully moved up to upper-middle-income status. Economic growth has slowed in recent years, however, mainly because its small and isolated market depended largely on trade with the European Union and India; the weak economic climate in the EU led to reduced imports from the small island nation. The education and skills mismatch has resulted in higher unemployment levels as well. In its quest to transition to a high-income country by 2025, Mauritius has drafted a 10-year Economic and Social Transformation Plan and announced a $10 billion infrastructure program to complement reforms meant to improve productivity and innovation capacity. The government has requested the African Development Bank to support Mauritius’ efforts to stimulate economic growth and move up to high-income status as well. In response, AfDB priorities for Mauritius for 2014-2018 will focus on providing on technical assistance and knowledge advisory services to help the country implement its infrastructure program and reform initiatives. The bank will also support the African country in attracting private sector investments to spur job creation. Funding level Since its first project in Mauritius in 1975, AfDB has committed more than $1.2 billion in support of development projects in the country. Currently, it has an active portfolio of $722 million, which has been given mainly in the form of a budget support loan. Under this country strategy program, AfDB will provide $445.45 million in indicative funding to Mauritius for 2014-2015. The bulk of this amount will be disbursed as loans, while the rest will come in the form of technical assistance and knowledge-based support. The appropriations for the succeeding years will be determined after a midterm assessment in 2016. Funding priorities The overall objective of the country partnership strategy is to boost the country’s competitiveness and resilience to external shock. The strategy hinges on two pillars. The first pillar focuses on infrastructure and public-private partnerships. AfDB aims to tap private sector support to help build vital infrastructure in the energy, transport and water sectors. The bank has sent an infrastructure specialist to the country’s capital city, Port Louis, to provide technical assistance to the government and help improve its capacity to structure PPPs with other development partners. The second pillar, on the other hand, aims to deepen skills and technology development to address the education and skills mismatch. AfDB will support actions and policy reforms toward improving the quality of primary education; the relevance and access to technical, vocational education and training; and research and innovation capacity. AfDB’s twin strategy of green and inclusive growth will also inform both pillars. Shown below are the projects and their sectors of focus for the first two years of this CPS period. In line with objectives of the first pillar, AfDB recently approved the Saint Louis Power Plant Redevelopment Project, which aims to boost the capacity of the Central Electricity Board to produce sufficient and stable electric supply while reducing its environmental impact. The $129.7 million project involves providing four heavy fuel oil-driven generators, two HFO storage tanks, a power station building and one 132-kilovolt substation to connect the power plant to the existing electricity grid. While this is AfDB’s first major energy project, the bank is confident that its previous experience with similar projects in the region has given it the impetus to fund and implement the project alongside CEB. Devex analysis Mauritius’ largest development partners are the AfDB, European Union, World Bank and French Development Agency. The bulk of these agencies’ assistance goes to policy-based lending and technical assistance projects. AfDB has been implementing a customized and flexible approach in managing its aid portfolio in Mauritius since 2012, enabling it to respond efficiently to the country’s needs. When Mauritius reached upper-middle-income status, for instance, bank support was reduced to a more modest amount. But after recognizing that the country needs greater financial assistance to help it move up to high-income status, AfDB significantly increased its allocation for this country strategy period. The bank has identified several risks in implementing its strategies for 2014-2018. Among these are the slow economic recovery in Europe, which is Mauritius’ main export market, a slowdown in reforms due to upcoming elections, weak public sector capacity, and limited private sector investments. To mitigate these risks, the bank will work closely with the government to make sure operations and projects are well-implemented. In addition, AfDB will actively engage with the private sector and ensure that lending facilities are accessible. In line with its 2013-2022 strategy for Africa, AfDB will intensify its technical assistance and advisory services to provide the country with green and inclusive infrastructure investment. Contact Mauritius Liaison office Tel: (11-230) 211-6172/212-7953