The Urgency for a Mauritian Sovereign Wealth Fund (SWF)
A SWF is a state-owned vehicle that holds and independently manages portfolios of assets and endowments on behalf of a country indefinitely into the future. Setting up a SWF for Mauritius is long overdue, as highlighted by this author in “Do Not Waste a Windfall: Learnings from Sovereign Wealth Funds Around the World” (Le Mauricien – Forum, 9th September 2025). This need has grown more acute with the convergence of the Chagos settlement and the ongoing challenges faced by the Mauritius Investment Corporation (MIC).
The MIC was established as a subsidiary of the Bank of Mauritius (BOM) during the COVID-19 crisis, with the specific aim of supporting companies deemed vital to the economy. Importantly, the MIC was not financed from the BOM’s existing reserves but through monetary expansion, with the central bank printing MUR 81 billion — a textbook cause of inflation. Allegations of political interference, preferential deals, opaque governance and inflated valuations soon followed, providing an unending stream of sordid headlines.
Two Challenges and Two Foundations for Success
Mauritius faces a twofold challenge. First, the BOM’s balance sheet is distorted by that monetary expansion, while the full value of these investments is difficult to recover, leaving the central bank with impaired assets — hence current talk of writing off the MUR 81 billion. Second, strategic state assets remain scattered across multiple entities, lacking coordination and scale, their management used as political rewards with little attention to national value creation. Is it therefore time to move towards a structured and coherent approach to managing public assets, instead of the historical practice of fragmented portfolios managed for political interests?
On the other hand, whilst the case for a Mauritian SWF is clear, successful SWFs have two fundamental conditions: scale and robust governance. Without a sufficiently large asset base, the fund will struggle to attract high quality international partners and fund management firms. Conversely, in the absence of strong governance the fund could lapse into yet another vehicle whose management is driven by political rather than value considerations.
To address these interrelated challenges, the design of a Mauritian SWF must be comprehensive. It should aim to resolve legacy issues associated with the MIC while also consolidating the nation’s assets within a professionally managed and independent framework, with the right critical mass.
Endowing the Vehicle: Resolving MIC Challenges and Achieving Coherent Scale
The SWF’s foundation should rest on three core pillars, each contributing to its immediate strength and long-term viability.
- The MIC Portfolio
The first pillar involves transferring the MIC portfolio into the SWF. In return, the BOM would receive a secure repayment claim on the fund, structured as a “senior debt instrument”. This legally binding IOU would rank first in the order of repayment, ensuring the central bank a safe mechanism to recover value over time. The SWF would be prohibited from making any distributions to the government until the BOM had recouped the full value of its claim. This would streamline the BOM’s balance sheet and allow it to refocus on its core mission, critical aspects for the credit rating agencies and for alleviating downward pressure on our Mauritian rupee.
- Strategic State-Owned Assets
Transferring the MIC portfolio alone will not resolve the impairment issue. To ensure that the BOM recovers its claim, the fund needs additional assets of scale. A larger, more diverse portfolio would improve chances of value recovery and remove the need for an immediate write-off.
Consequently, the second pillar is to transfer strategic state-owned assets into the SWF, drawing inspiration from Singapore’s highly effective Temasek model. This would include:
State-controlled infrastructure entities, i.e. port, the CEB, and the CWA;
Strategic minority stakes held by the government, notably in Mauritius Telecom and SBM;
The various portfolios operating in silos with fragmented strategies, questionable governance, and missed opportunities for scale, such as SIC, SICOM, STC, DBM, the National Property Fund, Landscope, and the Mauritius Africa Fund, as well as the listed bond portfolio held by the BOM.
- Chagos-Related Inflows
The third pillar is the inclusion of all current and future Chagos-related inflows within the SWF. Ring-fencing these proceeds prevents them from being absorbed and lost into the annual budget cycle. Consolidating these inflows within the SWF allows it to grow and compound over time, helping Mauritius to establish a credible and internationally respected entity.
Creating Long Term Trust: Getting Governance Right
SWFs that combine the strongest governance with scale become economic powerhouses. By contrast, weak governance jeopardises the SWF from the outset – Angola’s experience serves as a cautionary tale close to home. The SWF and its governance structure would be enshrined through an Act of Parliament. This is not privatisation: the state remains the owner, but ownership and management are clearly and permanently separated.
The ultimate control of the fund would be in the hands of its Board of Directors, which would be truly independent and act in the best long-term interests of the country. This Board would set the long-term strategy of the fund, its performance targets, risk appetite, and asset allocation rules. It would appoint the fund’s executive management team, and review their performance, and make changes as it deems appropriate.
The Board would consist of a Chairperson, appointed by the government, members appointed by economic and political stakeholders (the Leader of the Opposition, the BOM, Business Mauritius, the Mauritius Bankers Association, trade unions), and several independent international experts from finance and academia. Board members’ terms should extend beyond the electoral cycle with removal only for misconduct to further entrench their independence.
The Investment Committee would include the Board, CEO, and CIO and would approve major investment and divestment decisions and the choice of external asset managers. The CEO, and CIO would be selected through a global search based on relevant expertise and experience.
The fund would publish an annual integrated report audited internationally, following Santiago Principles for SWFs in English and French, plus an abridged Citizens’ Report in Creole to build broad legitimacy with the population at large.
The extent to which the SWF’s assets and returns could be diverted to the government budget would be limited to less than the fund’s investment returns. In the event of a large exogenous shock, withdrawals could be increased to a higher limit for a set period, based on certain pre-defined objective criteria. The rest of the returns would be reinvested according to the overall mandate, which could include an allocation for investment into strategic new sectors of the economy, as determined by the Board.
Importantly, to anchor its legitimacy in justice, a portion of the fund’s capital and returns would be ring-fenced specifically for the long-term benefit of the Chagossian community, a symbol of solidarity and gratitude for the terrible cost they bore for the benefits that now flow to Mauritius.
The governance, strategic and reporting provisions must be set out in the founding legislation and protected against our electoral system’s propensity to generate large governmental majorities, with material changes possible only by referendum – only the people would have the keys to this national vault.
Benefits that Flow
Financial Returns: The three pillars set out above would create an initial endowment comfortably over MUR 200 billion (over USD 4 billion). A Mauritius SWF could prudently generate 5–7% annual returns in USD terms – roughly USD 250 million (MUR 11.5 billion) a year. Left to compound, this would grow to c. USD 13 billion (MUR 600 billion) within 20 years – a sum equivalent to some 40% of today’s GDP.
Blue Economy and Climate Champion: With stewardship of 2.3 million square kilometres of ocean, Mauritius can put the Blue Economy and the Climate Transition at the heart of its SWF. Investments in sustainable fisheries, marine conservation, offshore renewables and port infrastructure would make us a global pioneer – the first sovereign fund of the ocean.
Co-investment Magnet: A trusted, independent SWF would attract world-class partners, unlocking billions more in co-investment for our infrastructure, climate transition, Blue Economy and future industries.
Innovation, Private Sector and Diaspora: A well-governed SWF would be a catalyst for innovation across the economy. By smartly partnering with entrepreneurs and the private sector, the fund could de-risk private investment into new industries — from renewables and ocean technologies to biotech, AI and creative sectors — and pioneer innovative financial products. Our diaspora, with its global networks and expertise, could be engaged in bringing cutting-edge ideas and opportunities back to Mauritius.
Centre of Excellence: The SWF would set new standards for transparency and meritocracy. It would train a new generation of investment professionals, keep talent at home, and put Mauritius on the map as a serious, values-driven investor in Africa and the Indian Ocean.
Intergenerational Fairness: Above all, the SWF would be a covenant between generations. It would turn today’s windfall into tomorrow’s endowment for education, healthcare, pensions, security and opportunity.
Status Quo or a Legacy
Beyond the opportunity costs of missed potential gains, there are real risks of maintaining the status quo: Retaining the MIC on BOM’s books, leaves the latter tarnished and distracted from its core mission, under the continuing scrutiny of the ratings agencies. The Chagos settlement would be swamped into the government budget to plug gaping fiscal gaps. Fragmented national assets would continue to underperform beyond public scrutiny until the next nepotistic scandal hits the headlines.
In 20 years, our economy will look very different. Climate change and an evolving international landscape present major uncertainty for our tourism, while the financial services mostly provided by Mauritius will be transformed by AI. With this insecurity, a well-governed and managed SWF would provide stability, optionality and opportunity.
Our children will look back on the Chagos settlement moment and the costly MIC mishap as the time we solved enduring problems and endowed a vehicle for their future — or as a historic opportunity lost.
