“Mauritius requires an investment of $6.5 billion by 2030 to achieve its climate action goals”

Dr. Rama Krishna Sithanen, Governor of the Bank of Mauritius.

“The country’s climate action commitments under the Paris Agreement require an estimated investment of $6.5 billion by 2030. The scale of the required investments far exceeds what governments alone can provide. The private sector, financial institutions, multilateral development banks, and international development partners must also contribute,” the Governor of the Bank of Mauritius stated at the “Cap sur la Finance Durable” conference organized, this week, by the Agence Française de Développement (AFD), the European Union, and Business Mauritius.

The second edition of the “Cap sur la Finance Durable” conference, organized by the Agence Française de Développement (AFD), the European Union, and Business Mauritius, took place on the 5^th and 6^th of February. In his keynote address, Dr. Rama Krishna Sithanen, Governor of the Bank of Mauritius, emphasized the necessity of integrating environmental considerations into economic policies and financial frameworks. He described the transition to sustainable finance as a strategic priority for the Bank of Mauritius, acknowledging the important role of international partnerships in achieving this goal.

“The environment and the economy go hand in hand. At the World Economic Forum in Davos, this relationship has even been quantified: more than 50% of global GDP depends on nature. We can only imagine the consequences for our economy, and by extension, our survival, if extreme climate events become more frequent and more intense,” Dr. Sithanen remarked.

Dr. Sithanen pointed out that climate change is not just an environmental concern, but also a severe economic challenge, particularly for Africa and Small Island Developing States (SIDS). “Although all countries suffer from climate change, it is the African continent and small island states that pay the highest price,” he warned.

Referring to a 2023 report from the United Nations Economic Commission for Africa, Dr. Sithanen mentioned that 17 out of the 20 countries most affected by climate change are in Africa, and that climate-related issues have an economic impact of 2% to 9% on national budgets across the continent. In North Africa, for example, water shortages could impact 71% of GDP and 61% of the population, threatening food security for 300 million people.

Dr. Sithanen underscored the Mauritian government’s commitment to sustainable development, highlighting upcoming legislative reforms. “In its Programme for the 2025-2029 period, the government has pledged to introduce a historic constitutional amendment to enshrine the rights of nature in the country’s legal framework. Additionally, a new law on ecologically sensitive areas will be introduced to protect both our population and our biodiversity,” he said.

Beyond legal reforms, Mauritius is mobilizing significant financial resources for climate action. The country’s Nationally Determined Contributions (NDCs), its climate action commitments under the Paris Agreement, require an estimated investment of $6.5 billion by 2030. Of this amount, $2.3 billion will come from the government and the private sector, while the remaining $4.2 billion must be mobilized from international financing agencies and other external sources.

“Imagine the consequences for our economy, and our survival, if extreme climate events become more frequent and intense”

“This translates into substantial annual financing needs of approximately $1 billion until 2030. The scale of the required investments far exceeds what governments alone can provide. The private sector, financial institutions, multilateral development banks, and international development partners must also contribute. We are all in the same boat, and our survival depends on our ability to adapt and facilitate inclusive and sustainable development,” Dr. Sithanen emphasized.

The Mauritian banking sector is already experiencing a positive shift toward sustainable finance. The total exposure of banks to sustainable projects has grown from MUR 4.2 billion in June 2022 to MUR 10.2 billion in June 2024, representing an annual growth rate of 56.1%. Meanwhile, loan applications for green projects have surged by 80% annually. The Governor credited this progress to financing facilities from the AFD and Proparco, which have played a key role in promoting green investments.

“Mauritius has undergone a transformation in its financial sector, with a focus on governance, transparency, and sustainability,” Dr. Sithanen stated.

The Bank of Mauritius (BoM) has indeed taken a proactive approach to integrating sustainability into the financial system. In October 2021, the Climate Change Centre (CCC) was launched as a dedicated hub to assess the macroeconomic and financial implications of climate risks. The BoM also became a member of the Network for Greening the Financial System (NGFS) in 2020, joining a global network of central banks working toward sustainable finance.

In 2019, the BoM partnered with Standard Chartered Bank to develop a sustainable finance framework, and the Stock Exchange of Mauritius (SEM) has introduced a sustainability index to encourage businesses to adopt ESG-compliant practices.

Additionally, the BoM is finalizing a national green taxonomy, which will provide a standardized framework for defining and classifying green investments. The Financial Reporting Council Mauritius (FRC Mauritius) is also working on a roadmap for the adoption of IFRS S1 and IFRS S2 sustainability standards.

Mauritius has also strengthened its collaboration with France and the European Union, particularly through AFD financing programs. Key initiatives include:

• A €200 million loan (with a €2 million grant) to enhance water access and sanitation.

• The AdaptAction Phase 2 program, addressing climate adaptation challenges and flood risks.

• SUNREF Mauritius, a €185 million green financing initiative, which has already funded 400 projects across construction, tourism, and agriculture.

“Thanks to SUNREF, we have prevented the equivalent of 250,000 tons of CO₂ emissions annually, and generated 15 megawatts of renewable energy capacity,” the Governor noted.

Mauritius has also partnered with Expertise France and the Bank of France to enhance climate finance expertise within the BoM.

Looking ahead, Dr. Sithanen outlined the strategic vision for sustainable finance in Mauritius:

• Signing a MoU with the African Development Bank to establish sustainable investment guidelines.

• Developing a FinTech Master Plan to attract green finance start-ups.

• Offering incentives for renewable energy projects, particularly solar and wind power.

“The world is evolving rapidly, and sustainable development is more crucial than ever for our survival. Mauritius’ commitment to the green transition will strengthen our long-term competitiveness and solidify our reputation as a premier financial hub in the region. The advances Mauritius has made in sustainable finance are the result of collective efforts and a shared vision. We will continue to collaborate closely with our international partners, especially France and AFD, to build a more sustainable, inclusive, and prosperous future for our nation,” Dr. Sithanen affirmed.