54 years of Independence- a reassessment !

The official version :

“Over more than half of a century after the dire prognosis about its future, Mauritius has steered itself from an impending ‘Malthusian crisis’ to an exemplary developmental poster-child. Supported by a conducive environment of political stability, rule of law, strong domestic institutions and policy continuity, Mauritius has successfully transformed itself from a low-income, mono-sector economy to a middle-income and temporarily High-income one with a diversified flourishing economy by carving out special niches in sugar, textile, tourism, financial services and ICT. In terms of purchasing power parity, its per capita income was more than three times and five times higher than the average of South Asia and Sub-Saharan Africa respectively.

Mauritius' economic performance has been invariably labelled as the “Mauritian miracle" and it has often been cited as the “African cub-Tiger”. It ranked, on the basis of the 2020 Human Development Index for 189 countries, 66th globally, 44th among developing countries and first in Africa and was classified in the High Human Development quartile globally. Mauritius was also ranked among the top African performers in terms of international competitiveness and 13th out of 190 countries according to the discredited World Bank Ease of Doing Business Report 2020. Life expectancy at birth, adult literacy and income distribution improved significantly to surpass average levels for upper middle-income countries.

Over the period 1970 to 2000, the impressive average real growth of 5.6 percent compared to 3.8 percent for Sub-Saharan Africa was outperformed by only a few countries namely the formerly known East Asian tigers and Bostwana. But its economic trajectory has, however, not been smooth over the years. It has been shaped by various growth cycles. From a take off in the 1960s, the economy gathered momentum in the period 1970-77 but slowed down in 1977-84 and picked up again as from 1984 to 1989. It subsequently stabilized to annual average of 5 percent up to the beginning of the millennium and thereafter dipped to an average of only 4.5 percent.” ……..

From thereon, follow our version which is more in tune with more recent facts and figures

A reassessment:

Mauritius at crossroads: But at the cusp of the millennium, after more than three decades of remarkable progress with sustained economic growth and significant improvement in the standard of living, Mauritius found itself at crossroads. It was in the midst of a challenging environment- a new era where the protected environment in which it was evolving so far was withering away. It started facing daunting challenges with the entry into the world economy of vast new sources of hard-working and highly motivated cheap labour from economic powerhouses such as China and India; the unbundling of the production chain across frontiers is accelerating across frontiers in manufacturing and extending more deeply in services; the reliance on trade is rising almost everywhere; the gradual phasing of external trade preferences for its textile and sugar and the volatility of prices; prices of labour-intensive manufacture and tradable services were falling while the prices of commodities, notably energy was rising. Mauritius has been increasingly affected by these developments.

The lost decades: Growth dwindled to an average rate of only 4.0% over the past two decades, nearly a two percentage points below the heady historical trend.

Why lost decades ? The improvements to the macroeconomic, business and investment climate and the adoption of a more simplified and growth-friendly tax and hiring system were short term and piece-meal reforms that were not accompanied by the more broad-based and inclusive reforms to tackle fundamental bottlenecks and generate sustainable growth. The low level of capital investment and the absence of sector reforms to generate productivity improvements in agriculture, industry, public utilities, health, education, public sector etc, did not prepare the economy enough for greater resilience and sustainable growth thus undermining the medium to long-term growth prospects.

We avoided making hard choices. The reform agenda remained unfinished and critical constraints to economic development became increasingly evident.

These economic constraints were more sectoral than macroeconomic, and in the absence of sector reforms to generate and enhance productivity improvements, the long run growth potential was insufficient to absorb the unemployed and growth was not broad-based enough to achieve the desired above-average growth rates.

On the social side, over the past twenty years, the proportion of households in relative poverty showed a general increase - the poverty rate decreased from 8.7% in 1996/97 to 7.7% in 2001/02, and then continuously increased in the next 15 years i.e. 7.9% in 2006/07, 9.4% in 2012 and 9.6% in 2017. In 2017, the estimated number of households in poverty was around 36,500, around 3,000 more households as compared to 2012. Similarly, the proportion of persons in relative poverty increased from 8.2% in 1996/97 to 10.4% in 2017, but with a drop to 7.8% in 2001/02. In 2017, the estimated number of persons in relative poverty reached 131,300, up from 122,700 in 2012. From 1996/97 to 2017, poverty depth, as measured by the income gap ratio, increased from 21.0% to 23.8%. At the same time, poverty intensity went up from 1.7% in 1996/97 to 2.5% in 2017

The WB report, “Mauritius - Through the Eye of a Perfect Storm” highlights that “Over the medium term, the growth process itself tends to lead to income inequality as the demand for skilled workers relative to supply widens the wage distribution and creates the evident risk that those with less education will be left behind. While the economy has been generating a healthy supply of low-skilled jobs, these have often been filled by migrant workers while many low-skilled Mauritians have stayed out of the labor force or unsuccessfully sought higher paying jobs for which they may not be qualified. Improving social protection therefore needs to be accompanied by renewed efforts to integrate more Mauritians at the bottom end of the income pyramid into the labor market. This includes targeted measures to address the specific disadvantages faced by women and youth. Additional reforms of the education system, focusing in particular on the crucial early years and the provision of second chance education to early dropouts, is key to a more inclusive labor market. “

Lost decades also in the sense that by the early years of the new millennium, when we peeled off some of the layers of the success story it uncovered a fragile underlying fabric which, for quite some time now, was being gnawed by a typical Mauritian virus - the dodo virus. Yes the historical dodo virus had caught up with the African cub-tiger. Like the dodo, the cub-tiger was cosily enjoying the spoils of its success that it has lost its competitive and enterprising drive. Indeed, the tiger needed immediate treatment. It was still a well-cocooned economy, where the economic agents haven't learnt all the tricks of competitive trade and business practices. “Markets and free competition are limited by the actions of the oligarchic families who dominate major plantations, financial institutions, real estate, trade and telecommunications.” And an education system that is no longer responsive to the needs of the economy and we had too much excess luggage on board- an over-burdened bloated public sector and unsustainable social maintenance programmes among others.

Some of our academicians, economists and thinkers were starting to question the very basis of our development model -a failed economic system that was not delivering for large parts of the population. “It is a model that cannot extricate us from our current inegalitarian low-growth economy because it encourages private sector connivance with the public sector resulting in rent-seeking activities, restrictive markets and crony capitalism.”

"Why do we have to continue with the smart cities and real estate schemes with the result that a large part of the population is being crammed into smaller and smaller and relatively poorer areas? Why do we continue to graft on our economy imported concepts of economic development like the tax-centric Global Business Sector and unproductive FDI inflows that have not delivered in terms of competitiveness, technology, management know-how and jobs ? But is this what the population really want or is it a development model imposed on us by a detached ruling elite out of touch with ordinary people’s lives, realities and hopes? -A model of an unhealthy coalition between the family-dominated political elite and the island’s few families-dominated economic elite whose policies have remained too eurocentric, and have thus been hampering our diversification strategies in markets and products.

The tourism sector, our Africa and IT strategies are paying the price today. Digital technology, for example, is moving at a fast rate often driven by the private sector, leading to doing things in new ways: more bottom-up, more plugged into outside networks and with a greater willingness to accept the risk of failure. But here our private sector is slow to move things up a gear. Where are the new emerging local and global services industries? Is our family-dominated private sector too conservative, too claustrophobic to open up to top IT firms from India, Korea, China and other Asian economies?

How can we talk about self-sufficiency in food when our strategic land assets are being sold to foreigners when they should have been put to productive use? There is also no coherence in our policies for a more optimal utilization and sustainable use of land and other natural resources, the development of our coastal regions and protection of marine life, agro-industrial production for food security and a thriving fishing industry….."

It is not the discourse that we are hearing today ; much of the talks and discussions limit themselves to the necessary constitutional reforms that would enhance gender inclusivity, abolish communal representation, and introduce elements of proportional representation. (Cast a look at the different editorials in the mainstream media, the interview of the ex-president, the "message" of the leader of the opposition and many others...). Not a word about the need for an alternative economic system...There are still many doubters about an alternative economic model for our economy to meet its future challenges.

Fighting for a change of the political system is not enough , it will be limiting our demand for social justice in very narrow terms, satisfying ourselves with the few crumbs left by the economic elite for a subservient political elite, without re-examining the use of our resources in relation to the country’s needs, including social and community needs, the natural environment and the impact of property development on our environment. Indeed, our quest “du vrai changement” should be, above all, a call for new economic paradigm that will dramatically change the socio-economic fibre of Mauritius, and especially one that will attend to the interest of "the many, not the few"..

The true discourse is the needed changes and reforms to our present economic model of development and the accompanying political system.

Let us hope that the next time we are given the opportunity of time-travelling the present unfolding development framework it would be an arduous but smooth climb all the way with fewer bumps and troughs to a firm economic foundation that has tamed the challenges to its advantage and met our expectations for a rising economic tide that could lift all boats instead of polarising the country between few haves and many have-nots.

7Prakash Neerohoo, Akhil Mishra and 5 others