(Published in MTimes 11 October 2019)
The Real Estate Schemes (RES) that was started by the MSM-MMM government and accelerated during the Mansoor-Sithanen years have led to much construction activity, and increasingly high levels of foreign direct investments.
The successive regimes did their utmost to advance the private sector’s interests by liberalising land to unlock massive potential for profits in real estate development for large land owners, granting more advantageous Independent Power Producer (IPP) cast-iron contracts in the energy sector, and promoting hotel development for the business oligarchs with public infrastructural investments whilst also allocating huge promotion budgets to the tourism sector.
Successive governments have kept on promoting the RES or variants of it with increased determination, an abomination decried by independent economists as a speculative and unproductive use of the country’s strategic land assets which were being sold off to rich foreigners. Land prices have increased so rapidly and is today out of reach of most Mauritian households. While the sugar barons have in the process been extracting huge profits on their large property holdings though contributing marginally to taxation with corporate taxation slashed, middle class households have been struggling to pay higher property taxes. These real estate schemes fitted like a glove to the hand of the private sector in maximizing their land values as well as in its employment of foreigners, notably South Africans fleeing from black business empowerment, and providing them with owned or rented residences.
Most of FDI inflows go to construction and real estate activities. These are one-off investments; they do not in any way boost our export potential or enhance our productivity and flexibility. There is no transfer of technology or know-how nor any multiplier effects on the economy especially given that the real estate projects are not integrated to our tourism industry. Real estate activities competing with Government spending on badly-needed infrastructure projects have destabilized our economy, squeezed export-oriented industries ranging from manufacturing to tourism. Mauritius can be said to have suffered from the "Dutch disease", a term that broadly refers to the harmful consequences of large inflows of foreign currency.
Thus, for quite some years, the strong currency driven by the capital inflows in real estate projects and the Global Business sector have inevitably contributed to the hollowing out of other parts of the economy, meaning a weakening of the competitiveness of the country's exports and the shrinkage of the export sector. Such an overvalued currency cannot be sustained in the long run given that productivity gains had not proved to be sufficiently large to contribute significantly to enhancing export price competitiveness. Thus, it is not wrong to state that low value-added and price sensitive export items have been adversely affected. These products, already facing intense competitive pressures, are likely to be further impacted as world trade and output growth continue to slow down. Thus, unless sector reforms are undertaken to generate productivity improvements in agriculture, industry, public utilities, health, education, etc, the country will continue to rely on rupee depreciation to enhance tourism and its exports. But a competitive real wage is no longer sufficient to attract foreign investments and create jobs in the new global environment; it’s only a short-term palliative to maintain existing production and jobs.
The Real Estate Model
One regime after the other has continued selling real estates despite periods of boom or gloom in the general economic environment; but we are giving away our prized possessions for a few pennies. “Nou ti deza locater lepok colonial, sa pé retourner,” it would seem. Instead of new pillars that would have reinforced our economic resilience and security, we are building our future on quicksand and sowing the seeds for future recriminations by our progenies for putting in place policies that are promoting economic apartheid – a pervasive threat to our social and national cohesion.
The threat are these Real Estate Schemes or refashioned Smart Cities that are sprouting everywhere -- at Le Goulet, Bel Ombre, Albion, Rivière Noire, Anahita, Roche Noires… This is not what we had bargained for when we supported successive governments in their so-called empowerment policies, inclusiveness or the democratisation of the economy. We were told that there was unfinished business with our democracy and that it had to be further democratized; that the whole production chain had to be unbundled and more opportunities would thus be opened to/for other stakeholders, especially the small players.
These promises have gone haywire; the local landed plutocrats have joined hands with foreign capital; we are being pauperized; the dollar and the euro have been appreciating, and the plutocrats are enriching themselves at our expense. We remain bystanders, with some of our own having been bought in by the crumbs left at the table and our workers reduced to being maids and gardeners. We have become strangers in our own land. That’s the new twisted version of our new vision document.
There have not been any fundamental policy changes that are promoting long-term growth. A policy paradigm shift to enhance long-term productivity is key to ensuring our country’s future. Mauritius has so far avoided making hard choices. One of these hard choices is a politics of rupture with the RES model. Our patrimony is being disposed of for sums that spin the heads of politicians but that carry with them heavy doses of nothingness: they mean almost nothing to the investors who offer them but they mean everything to us, who are being deprived of our means of survival, our sustainability. It is time to put a stop to this model of development and re-examine the use of our land in relation to the country’s needs, including social and community needs, the natural environment and the impact of property development on our environment.
Voters need to demand a campaign pledge from the different political parties that the RES model of development be discontinued and that such a pledge be included in their political manifestos. The fundamental electoral issue is not about the representation of ethnic components of the population, but about plutocratic private interests versus enlightened national interest. Enlightened national interest demands a politics of rupture with the RES model of development. Whether it’s a beautiful lakeside or oceanfront estate, or a modest suburban land or villa, we have to ensure that it is used for the benefit of all Mauritians. We have to stop this foolishness of selling our prized assets to foreigners.
