In October, Mauritius' payment system, MauCAS, experienced a significant failure, freezing all mobile payments in the country. The issue, which occurred on October 23, left thousands of people unable to make transactions, causing inconvenience and disruption to daily life. Emtel, a major telecommunications company in Mauritius, attributed the problem to a system issue at the Bank of Mauritius, the country's central bank.
A week after the initial failure, on October 30, interbank payments were slow, taking up to five hours to process, instead of the expected seconds. This delay was not an isolated incident, as similar issues have occurred every month-end, when transaction volumes peak. The recurring nature of these delays suggests a deeper problem that has not been addressed. Many users blamed their banks or payment apps, but the issues ultimately lie with the Bank of Mauritius' payment rails and clearing systems.
The Bank of Mauritius has not issued a statement or apology regarding the incidents, leading to criticism of its silence and lack of transparency. In contrast, Emtel apologized for the disruption caused to its customers. The central bank's failure to communicate has allowed commercial banks to take the blame, raising questions about its competence and ability to manage critical infrastructure.
The issue has also raised concerns about the appointment of Rajeev Hasnah as First Deputy Governor of the Bank of Mauritius in December 2024. According to the Bank of Mauritius Act, the Deputy Governor must have recognized experience in banking or financial matters. However, Hasnah lacks experience in payments, technology, or banking, sparking concerns about his suitability for the role and the selection process that led to his appointment.
The Governor of the Bank of Mauritius, Dr. Priscilla Muthoora Thakoor, has also faced scrutiny for her handling of various issues, including an FX liquidity crisis, excess liquidity, and the Silver Bank receivership. The IMF has projected inflation to reach 6.4% by the end of 2026, above the target range of 2-5%. Critics argue that the central bank has not provided credible signals to the market or addressed its existential problems.
The incidents have significant implications for Mauritius' status as an international financial centre. The country's payment system failures and the central bank's silence have raised concerns among investors and citizens alike. In contrast, central banks and fintechs globally are investing heavily in digital payments and cybersecurity.
To restore trust, two key actions are necessary: an independent inquiry into the October outages and month-end delays, with published findings, and the Governor and First Deputy Governor must account for these failures and the subsequent silence. A central bank's reputation relies on trust, and if its leaders cannot ensure the smooth functioning of the payment system, they must explain why they should remain in their positions.
Key points
- The Bank of Mauritius' payment system failures have raised concerns about its competence and ability to manage critical infrastructure.
- The appointment of Rajeev Hasnah as First Deputy Governor has been questioned due to his lack of experience in banking, payments, or technology.
- An independent inquiry and accountability from the Governor and First Deputy Governor are necessary to restore trust in the central bank.
