Against the average rate of growth of 3.7% the last five years, our economy grew by 3.1% in 2015, down from 3.4% in 2014 and 3.2% in 2013.
When things of this sort happen, people are quick to blame politicians for not having done what was necessary. To a point, this may be true, e.g., when they take the wrong policy decisions. But the thing to do when you find the economic rate of growth taking a downtrend is to look for explanations, identify solutions and apply them to redress course. Criticising someone or other doesn’t usually do the trick of reversing a trend which is going against what you wish for.
Yes, we’ve identified certain factors which are not working up to expectations. We keep saying that the pace of domestic – especially private sector – investment has kept coming down and that this doesn’t help. But the private sector is not investing to the extent we wish it would because it is not having the right opportunity to do so. It will invest and produce goods and services if what it produces will be sold up.
Consider the example of our exports. Let’s pick up domestic exports, which is the residual from total exports after deducting from it goods that were re-exported. They amounted to Rs13.7 billion for the first quarter of 2016, lower by 12.3% compared with the last quarter of 2015 and also lower by 5.6% compared with the last year’s first quarter’s domestic exports. In parallel, manufactured goods exports also declined between 15 and 20% during the first quarter of 2016.
Missing the edge
This shows a slowdown of our exports in general. Markets we export to are not buying them up or competitors are doing better than us in our traditional export markets, so we have a lower volume of orders, or, more broadly, the slow pace of international economic growth is impacting negatively and we are not offsetting this factor. In other words, we are missing the edge we should be having. Naturally, private sector investors cannot invest if they are not even employing to the full the capacity they already have, for one reason or other.
In circumstances like this, if the country had a major strategic think-tank, it would have sat down with entrepreneurs, identified the true cause of the slowdown and come up with applied result-oriented solutions. In the absence of such systematic approach to our economic problem, the easy (and not necessarily relevant) solution has been to ask for tax reliefs, currency depreciation, low interest rates, et al, all of which would not be relevant to sort out matters. Instead of that, we look up to politicians as solution providers each time a major issue comes up in the public.
This way, a series of social and economic problems and issues are raised in public, mostly on an ad hoc basis. Without the solutions that should have come with them in a concrete manner. It is surely not the best way to go to the heart of the matter. A large panoply of issues may be involved, dealing with which would have warranted the setting up and operationalization of a permanent beyond-politics body that would look into emerging structural problems even before they surface up.
We are geographically a small country, bereft of natural resources and a large domestic market. We therefore have to go out to the world with the best we can offer with whatever limited resources we can manage to lay our hands upon. And we know that if we keep delivering low growth in succession or force it up artificially temporarily by excessive fiscal or monetary expansion, there’s a heavy price to pay at some stage or other. Prudent well-managed countries do not take rash courses of action which, instead of building up the economy from the weak position it is finding itself in, first destroy it.
One of the first things we need to do is to get out of this chaotic mentality. The public administration must, on the contrary, inspire everybody to contribute in the best of spirits, despite differences in individual faculties. One of Mauritius’ priorities should therefore be to restore orderliness, something that has been absent from the public platform for too long. The continuing one-upmanship in public life has all but hurt us very deeply at the core as a well-functioning society. All should agree to set aside petty differences they rake up for scoring points. Without it, there’s not much progress we can make either socially or economically.
It’s only on a sound platform that we can address the serious issues facing us as a small economy. This platform consists of essential ingredients beyond personal interests. If we want to find economic scope by tying up more closely with, say, Africa, we need to become privileged interlocutors of international investors wanting to go and do business over there.
Not every Tom, Dick and Harry can assume this role. We have to have an edge over others who would wish to accompany international investments over there. We need to have detailed knowledge not only of where exactly we ourselves stand but also of the distinct locations we want to fan out for business. It would be a grave mistake to assume, for example, that Africa is one homogeneous place for doing business and that a single approach will do.
New business inroads
Given the economic situation we find ourselves in and given the ease with which trade and finance flows in the modern technologically driven globalised world, we have to have a handful at least of the best talents any other country can supply if we want to make new business inroads.
Consider an example. At an early stage of our recent development, we had an ample supply of qualified accountants, auditors, barristers and financiers. Many of them would have remained unemployed had Mauritius not ventured out into the provision of international finance through global business. On this, we built up layers upon layers of other professionals who earned a good name for the country internationally. Why did we not pursue this very healthy objective to keep improving the quality of our services in all sectors and, alongside, the panoply of our skills in other domains which we could also have supplied to? As it is, it is becoming difficult to even have a good plumber or electrician.
Instead of going on building on this substance, the local power game disrupted it. Newer waves of politicians coming alternately to power swept aside skilled public officials to make way for newer incompetents. As a result, the country’s level has kept coming down. Decision-makers who remained in service were cowed down and worked below their potential at the risk of facing the wrath of the newer incompetents. We failed to cash up on the skills of those who “knew”, while pursuing the political quest to make place for others from “our” fold. In so doing, Mauritius has indulged in a luxury it can ill afford for its small size and available pool of talents.
The current economic challenge is to reverse the catastrophic effect all this has had on the country’s potential to make social and economic progress. It is a momentous task and one government mandate will possibly not see it happen. There’s too much of catching-up to do in diverse sectors, with our limited resources made even more limited by an aggressive internationally competitive external environment.
Do what we want, we have no alternative than to ride above this wave. Otherwise, it will not only be difficult for Mauritius to embark, say, on another type of higher yielding agri-business making optimum use of our land resources. Potential investors will avoid us unless we prove worthy of trust. Investors will shun us if we are seen to be able to ride roughshod over established principles whenever it suits the fancy of our decision-makers.
In a first instance, Mauritius will need to re-establish its credentials. We have good enough infrastructure on which we might improve further productively. Not many years back, we had an established reputation, in the region at least, for sticking to the rule of law and for sticking to good decisions in the governance framework. We need to establish ourselves once again as credible and reliable. Never, for breaking our word. We have open to us a high technology platform and free trade with which to do our duties towards the country more effectively. We need to address this task, urgently.
* Published in print edition on 17 June 2016