Published in MTimes 21 September 2018
Part of the narrative of the Metro Express is
that this project represents not just a new transport infrastructure but the
dream of a “modern, liveable, vibrant and environmentally-friendly Smart
Mauritius”.
For the more practical policy maker’s perspective, who has the
forthcoming 2019-20 ballot in mind, it is one of the few viable projects with a
high investment or income multiplier. Such big projects are necessary to get
the economy going again. The cumulative effects of this multiplier will enable
the present Government to come nearer to its target of a high income economy
and will be the perfect exhibits in its efforts to sway opinions in its favour -
a government supported by a smug chest-thumping economic elite, that has had
the guts to take a host of game changing initiatives.
But the whole narrative may be having some serious flaws. The first flaw: How high is the Metro Express investment multiplier in the short run? It is not likely to be high because (1) more than 75% of the inputs will sourced from India (with such high leakages we cannot expect a high investment multiplier); (2) most of the investment multipliers for urban infrastructure in Small Island Developing States (SIDS) tend to be low in the short term and lower than multipliers in the export or the manufacturing sector, and (3) especially in the case of SIDS, such investments tend to have temporary multipliers because they act more on the demand rather than the supply side and this leads to important leakages through imports.
But at this crucial juncture in our economic
development, when we are investing so many billions in a decongestion
programme, with its great many unknowns and inherent risks, the country has
other priorities that need to be addressed namely, among others, the need to
boost growth and create productive jobs. Indeed, there are urgent priorities
now which are more short term and should be tackled immediately. For example, what
is happening to our exports sector is very worrying; we need more resources for
diversification, for training, for industry support , for restructuring , for
improving external competitiveness. Equally in the sugar sector, financial
services, ICT and tourism sectors. We also need to start investing Rs 11.5 billion
over ten years in the Ocean Economy and in a massive human capital formation
programme in these sectors while consolidating the policies for inclusive
growth. These policies have the potential of boosting growth substantially and
creating productive jobs.
When Singapore was implementing its rail
transit system, the real GDP growth averaged 8.5% p.a. This enabled
Singaporeans to enjoy further rapid increases in living standards; its exports
sector was flourishing, its companies were prospering and it was attracting
record levels of foreign investments in productive sectors and its foreign
reserves stood at some 30 billion dollars (some 6 times our present level). It
could thus afford to educate and train its labour force while constructing its
infrastructure and building its nation. We can equally do it if we know our priorities
and we drive forward, one step at a time, ensuring that there is audacity and
conviction to take bold decisions and a willingness not to succumb to the prestige projects of the day but to the
initiation of long term reforms and expenditure prioritisation to chart a new
path for Mauritius and a great future for our children.
