𝐂𝐫é𝐚𝐭𝐢𝐨𝐧 𝐝𝐞 𝐫𝐢𝐜𝐡𝐞𝐬𝐬𝐞 !

It’s making the headlines today , why is it not happening?

Why is our “pays en panne sur la question de création de richesse”

We believe it is because our present economic model has reached its limit . Why ?

Because we have a risk-averse, conservative and rent-seeking private sector complacently enjoying the low hanging fruits in an unhealthy coalition with a subservient elite/establishment.

Our conglomerates continue restricting entry, facilitating collusion, and ensuring the prevalence of undue advantages for their players in selected markets.

That’s just an aperçu of the type of business practices of our private sector in the context of our crony capitalism that has enriched cronies and some specific conglomerates through allocations of licenses, land, contracts and special deals.

Every other day, our local press is fraught with “allegations” of the nexus between politicians, business groups and cronies. The MIC scandal and the cast-iron IPP contracts continue to remind us how lately a new breed of “rodeur boutes” businesses and rent-seekers oligarchs have emerged in an environment characterized by governance and ethical deficits.

The dominant position of conglomerates creates a conundrum for innovative independent firms. An analysis of World Bank Enterprise Survey data reveals that, other firm characteristics being equal, 𝗰𝗼𝗺𝗽𝗮𝗻𝗶𝗲𝘀 𝗮𝗳𝗳𝗶𝗹𝗶𝗮𝘁𝗲𝗱 𝘄𝗶𝘁𝗵 𝗼𝗻𝗲 𝗼𝗳 𝘁𝗵𝗲 𝗹𝗮𝗿𝗴𝗲 𝗰𝗼𝗻𝗴𝗹𝗼𝗺𝗲𝗿𝗮𝘁𝗲𝘀 𝗵𝗮𝘃𝗲 𝗲𝗮𝘀𝗶𝗲𝗿 𝗮𝗰𝗰𝗲𝘀𝘀 𝘁𝗼 𝗳𝗶𝗻𝗮𝗻𝗰𝗲, 𝗮𝗿𝗲 𝗺𝗼𝗿𝗲 𝗹𝗶𝗸𝗲𝗹𝘆 𝘁𝗼 𝗯𝗲 𝗮𝗯𝗹𝗲 𝘁𝗼 𝗲𝘅𝗽𝗼𝗿𝘁, 𝗮𝗻𝗱 𝗮𝗿𝗲 𝗺𝗼𝗿𝗲 𝗶𝗻𝘁𝗲𝗴𝗿𝗮𝘁𝗲𝗱 𝘄𝗶𝘁𝗵 𝗱𝗼𝗺𝗲𝘀𝘁𝗶𝗰 𝘃𝗮𝗹𝘂𝗲 𝗰𝗵𝗮𝗶𝗻𝘀. Borrowing a term from a Mauritian micro-entrepreneur, this leaves smaller firms with the conundrum to either ‘ride the dragon’ by collaborating with one of the big players or face the resulting disadvantages in access to finance and key markets. To the extent that collaboration with a conglomerate limits the ability to appropriate profits, this result in 𝗱𝗶𝗺𝗶𝗻𝗶𝘀𝗵𝗲𝗱 𝗿𝗲𝘁𝘂𝗿𝗻𝘀 𝘁𝗼 𝗶𝗻𝗻𝗼𝘃𝗮𝘁𝗶𝗼𝗻 𝗳𝗼𝗿 𝗦𝗠𝗘𝘀 while at the same time 𝒓𝒆𝒅𝒖𝒄𝒊𝒏𝒈 𝒕𝒉𝒆 𝒊𝒏𝒄𝒆𝒏𝒕𝒊𝒗𝒆 𝒇𝒐𝒓 𝒄𝒐𝒏𝒈𝒍𝒐𝒎𝒆𝒓𝒂𝒕𝒆𝒔 𝒕𝒐 𝒓𝒊𝒔𝒌 𝒕𝒉𝒆𝒊𝒓 𝒐𝒘𝒏 𝒓𝒆𝒔𝒐𝒖𝒓𝒄𝒆𝒔 𝒇𝒐𝒓 𝒊𝒏𝒏𝒐𝒗𝒂𝒕𝒊𝒗𝒆 𝒆𝒙𝒑𝒂𝒏𝒔𝒊𝒐𝒏.

An outdated development model

Some of our politicians, academicians, economists and thinkers have been questioning the very basis of our development model -a failed economic system that is 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, the reliance on the unproductive Silver Economy and the 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 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.

Maintaining the status quo is no longer a viable option.

It is this discourse that we have been hearing lately-La rupture, le soi-disan Sanzman; but 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 discussions on the radio channels limiting the debate on Sanzman to its most reduced form). Not a word about the need for an alternative economic system.

Fighting for a change of the political system is not enough , it will be limiting our demand for change in its 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.

There are still many doubters about an alternative economic model for our economy to meet its future challenges. They are still trapped within the box of the old policies and the old ways of thinking !!! There are alternatives to our present model of development which are both desirable and workable. Alternatives which are actually far more resilient, sustainable and inclusive, far more oriented towards achieving quality growth than the race to the bottom and far more targeted towards improving happiness and welfare indices rather than the Doing Business indicators. -an alternative model of development with ample creative ideas on “land democratization”, import substitution, the local economy, food security, the SME sector, culture, education, sports, the fishing industry ,….while integrating environmental constraints.

Truly major reforms await the country, things that were not tried in the past. When economic actors rethink their activities and financing models around more sustainable frameworks, social and environmental objectives are not only complementary, but also more innovative and more resilient across their value chains in the long term boosting trade, exports, investment and growth.