(A shorter version published in Le Mauricien, 20 April 2018)
For quite some years now Mauritius has been languishing within the middle-income range, caught in a low growth trap of below 4 % due to declining investment ratios, slow manufacturing growth, limited industrial and export diversification, poor labour market conditions and an absence of structural reforms.
Our successful evolution through different phases of growth during the past five decades has resulted in a highly polarized economy around a large corporate sector and conglomerates. In the context of limited economic space in a small island state the second generation entrepreneurs born of this economic elite have successfully pursued backward and forward integration and today have exploited the market niches. The most striking feature of business today is not the overturning of the established order. It is the entrenchment of the oligarchy-dominated private sector corporates or big companies at the heart of the local economy. The hold of the conglomerates on economic power and wealth has been consolidated over the past fifty years- a legacy of successive regimes. A handful of top companies are generating wealth for a small number of people and have thwarted the level playing field by exercising greater control over new opportunities in the economy. Such that today we have a lopsided dual economy with two different visions of the economy. Indeed, the consolidation of the inherent historic advantages of this economic elite has created a lopsided dual economy ‘à deux vitesses’.
On one side you have the economic dominance of
a rejuvenated version of the old propertied oligarchy which has imposed its
model of development. A model of development that advances the private sector’s
interests by liberalizing land to unlock massive potential for profits in real
estate development for large land owners, by the granting of more advantageous terms to IPPs in energy, by encouraging the employment of foreigners and promoting hotel
development for the business oligarchs with public infrastructural investments.
With the result that today, the new larger corporations, offshoots of the old
sugar barons’ holdings companies, managed by the same families, have become
more entrenched. “Markets and free competition are limited by the actions of the
oligarchic families who dominate major plantations, financial institutions,
real estate, trade and telecommunications.” BTI 2010 — Mauritius Country
Report. Gütersloh: Bertelsmann Stiftung. It is a model of development that
reinforces plutocratic private interests as opposed to enlightened national
interest- a model of development that seeks still freer hands to push forward
a particular economic agenda without conceding much of the entrenched interests
and leaving crumbs for others.
But
what is intrinsically wrong with this model of the oligarchy-dominated private
sector of conglomerates ? They are squashing competition, and they are using
the tricks and arts of management to stay ahead. They are gaining control of
entire markets and finding new ways to entrench themselves. Many of the large
firms have acquired or setting up their own start-ups diminishing the
opportunities in the long term for other SMEs in promising sectors. Many of
these top companies fail to bear their fair burden of taxes, as they are
renovating or on account of their opaque accounting practices that shield the
true extent of their profitability. And
their profits no longer translate into jobs as once they did. Most of the
conglomerates also reflect their excellence at less productive activities. The
policies that rely on the speculative and unproductive use of our country’s
strategic land assets by selling them to foreigners (which has accounted so far
for around more than 60% of the FDI inflows during the past five years) will
surely generate wealth and some periods of reasonable growth but it will
neither be sustainable nor inclusive in the long run. Should we be surprised
then that the private sector is not forthcoming with investment in new
sectors/pillars ? Why ? Because this model of growth is providing them with a more
than reasonable rate of return on the low hanging fruits.
On the
other side we have the rest of the economy- the small struggling entrepreneurs,
the small planters, the informal sector, the public sector and the rapidly
impoverishing middle and lower classes- which is trying to cling to whatever
opportunities that are still left for them or to whatever the public sector is
trying to provide via yearly budgets and government programmes as enunciated in
its long term vision of the economy. A long term vision that reinforces the
present model with some apparent modernising touches like development of new
growth poles - the ocean economy- and some superficial and broadly populist
policies to address widening income and wealth disparities. There are just
empty promises-like the minimum wage or the NIT that do not empower workers or
boost productivity but encourage consumption- because the State is a mere
appendage in this model of development, servicing the dominant private
sector. Despite all the accoutrements of a modern state, it has a leadership
that is just managing the present - the status quo. Shackled by the imposition
of a liberal vision of low taxes and huge concessions to the conglomerates and
hampered by its own murky governance, cronyism and patronage that have resulted
in abundant state capture, it has neither the resources nor the right policies
or the will to implement a new vision of the economy - especially a model that
is more inclusive on the production side of the economy.
.
We are at the crossroads of some
serious choices - either to continue with the present model of development as a
shameless imitator of neoliberal policies tried elsewhere in given
circumstances or we choose a different destiny, a path of serious discovery and
inventiveness, by directing our energies to more imaginative forms of planning
and policies that produce altogether different outcomes that are more
sustainable and inclusive.-A new development model that will create a level playing field and promote
inclusive growth by tackling the constraints of the dual economy rather than
economic growth per se. This economic
model will have to be built on a strong, vibrant and wider economic base which
has the potential to bring the level of growth for Mauritius to graduate to a
high income status and to sustainably address the issue of equity.
We need a decisive rupture from the
previous economic model and its policies. If we want to realise our potential
for sustainable and inclusive growth, we will have to break past shibboleths
and move away from the short-termism that has focused on some quick short term and populist measures
and picked the low-hanging fruits. We will have to do things differently and
aim to be a game-changer. We need a new vision. There is frustration over the
current status quo and people are restless for change. The combination of a lack of economic opportunity and access to
facilities may become a toxic brew. Problems like unemployment and poverty,
instead of being addressed on a sustainable basis, are being postponed by
short-term palliatives. All these methods and institutions have run their
course and proved to be ineffectual in creating jobs or a competitive economy.
The country does not need a vision
that is developed by the same economic elite and its lackeys- a vision of
bureaucrats not anchored in the realities of the country. It has to carve a new
vision towards an alternative development paradigm anchored in new realities.
Many of our stakeholders, especially the marginalised environmental and leftist
groups, are already demanding that we reassess the developmental model which is
neither sustainable nor desirable or even workable.
A new Vision : Let a thousand thoughts flourish !!!
The new growth model needs to be bold and inclusive. Businesses need to really find new answers; to be a global player and attain sustainable growth via higher value added activities; knowledge excellence and exemplary business practices have to be adopted. Is it not time to dump lower value added activities (cane, sugar, textiles , sea food activities…)while not neglecting other agricultural and agro-industrial production for food security, for now and for future generations? We need an “Optimal Land Utilization Authority, a “ridge to reef” development of our coastal regions, equally we have to decide whether it’s smart cities or sustainable use of land and other natural resources, fish farming or protection of marine life, modernisation of the education system via online learning labs or traditional curriculum development and expansion of educational physical infrastructure.
For others, technological
development, innovation, access to finance hold the key for transition towards
a more inclusive and resource-efficient economy. Still others want, to see how
we are to decrease the environmental footprint of our products across the value
chain; how we develop our cities to have a soul, a living landmark rather than
a theme park; how we are to source most of our raw materials sustainably and
how the corporate houses are to steadily integrate green practices into their
mainstream functioning and open up opportunities for others- a genuine
democratisation of the economy in all sectors and at all levels.
These initiatives will be the building blocks to achieve a national Vision to provide a shared destination. These hopeful signs will be the precursors of a revolution that Mauritius cannot miss.
Addendum: That’s why some regimes have in their manifestos a “democratization programme” for the economy. But they repeatedly take us for a ride . They fool us with the recuperation of some marginal lands from the private sector and present it as a great achievement and little is done to trim down the entrenched privileges of the corporate sector. On the contrary they promote their own version of democratization by grooming up their own conglomerate- (a local version of the Samsung /South Korean cronyism)- the BAI- and in return they and their entourage reap the benefits of such cronyism. And we -LePep- are swayed by the usual ethnic considerations and fail in properly deciphering their gymnastics. And it is very likely that they will continue to fool us again and .....But I dare to say “ not this time...”
These initiatives will be the building blocks to achieve a national Vision to provide a shared destination. These hopeful signs will be the precursors of a revolution that Mauritius cannot miss.
Addendum: That’s why some regimes have in their manifestos a “democratization programme” for the economy. But they repeatedly take us for a ride . They fool us with the recuperation of some marginal lands from the private sector and present it as a great achievement and little is done to trim down the entrenched privileges of the corporate sector. On the contrary they promote their own version of democratization by grooming up their own conglomerate- (a local version of the Samsung /South Korean cronyism)- the BAI- and in return they and their entourage reap the benefits of such cronyism. And we -LePep- are swayed by the usual ethnic considerations and fail in properly deciphering their gymnastics. And it is very likely that they will continue to fool us again and .....But I dare to say “ not this time...”
