Should “Mauritius” take a fresh look at its overall strategy?

One appalling thing about our country is the importance we attach to short term issues. The question is whether all the emphasis placed on the short term is at the expense of deeper strategic thinking about where exactly we would like to find ourselves performing on the future stage.

For quite a while, it may be recalled, minds were concentrated on the flash floods in Port Louis which killed so many in March last year. Similarly, minds got occupied a couple of months later with the NTC bus accident in which several passengers perished due apparently to faulty brakes. The swindling away of substantial sums of money through unlicensed Ponzi schemes mounted by a few crafty persons was then much talked about for a while. The exacerbation of domestic and other violence became and still remains a common preoccupation. This has been followed by claims that we would not have properly vetted certain foreign institutions of higher learning which have been dispensing education in the country. In the past two weeks, the running theme of conversations and national vexation has been the capsizing of an alleged political alliance sought to be made between the MMM and Labour against the backdrop of ‘electoral reforms’.

This last issue has been referred to the Tribunal of the People whereas most of the others are resting in law courts and committees to determine who is to blame and be sanctioned. Most of the short term excitement is to be sorted out therefore in proper time by the existing institutional setup of the country. The feeling is that we give so much time and attention to no doubt important momentary issues but at the cost of not giving due attention to placing our country’s future on new, enduring and more solid foundations.

Laying down stronger foundations

While this sort of sporadic concern with day-to-day occurrences happens in other countries as well, in many of those places, a deeper concern for the shape of things to come is simultaneously at work. America and Europe may now be battling their way out of the financial and economic crisis which erupted in 2007-08. However, they are also busy building up the Trans Pacific Partnership, a free trade platform grouping America, Australia and ASEAN countries, a huge trade bloc that others will have to reckon with once it is up and operating on the basis of mutual preferences. They also have in the offing another trade and investment bloc called the Trans-Atlantic Trade and Investment Partnership expected to be finalised this year to favour North America-Europe preferential trade and investment flows. Structures like this will be the dominant players on the world stage and they will dictate access of non-members to the markets being covered by the agreements.

It may be recalled that we thrived on the Lomé Convention which we signed up, along with Britain, in 1974 with the EU (called EEC at the time). Preferential access to the EU market under the Convention, along with local legislative and tax incentivisation, favoured the growth and development of manufacturing activity in Mauritius. Out of nearly nothing before, some 500 textile exporting units were now operating in Mauritius employing at its peak over 90,000 workers. Many economic forces were unleashed locally in its wake, such as the growth and development of our financial sector to the point of bringing up later an “offshore” financial sector here in Mauritius. Aviation and shipping helped meet short delivery and peak demand targets from external markets, grounding themselves better in the economic landscape.

Someone has to be in charge to readjust for the future

By 1993, we knew that the Multi Fibre Agreement (MFA) would come to an end in 10 years’ time so that markets we were exporting to would open up to competition from cheaper global producers and hamper our growth unless we took pre-emptive action. In 2003, when the MFA came down and the American AGOA put a premium on exports to the US which sourced raw materials from either the US or certain low-income African countries, we were caught on the wrong foot, our input sourcing being still concentrated on the Far East.

We had not acted to reinvent our model with changing global conditions.  Textile industries migrated away or closed down. There were serious job losses. We did not succeed to expand the sector’s scope by adopting suitable local policies or finding for it new networks of trade. The strategy which worked so well since 1974 got frittered away and we had not done our homework in anticipation. Had someone been appointed specifically to do the homework, this situation could have been averted. As we stand today, it begs the question whether we will be content to let the textile sector stall where it finds itself or whether we will take calculated initiatives to explore additional avenues of production.

What do we see also? Europe has decided to phase out our sugar export quota by 2017. We do not, for now, see increase in sugar prices compensating for the loss of export quotas. Situations like this call for “repositioning” the activity before it is too late. There would be nothing wrong if strategic thinking was done and implemented at the national level to avert any serious setback from the evolving situation. Coordination is required. Can we go to other markets? Which ones and what for? Should we extend our range of production towards more value-addition? With which partners? How do we get as many stakeholders involved in the new platform as possible instead of giving way to business concentration?

Take another example. We have come to depend heavily on the India-Mauritius Double Tax Avoidance Agreement for our financial sector. The sector gives employment especially to the young and educated. However, the future operation of this treaty is shrouded in uncertainty. Unless we took up the challenge to remove the uncertainty a long time ago and got ourselves to work along new parameters, we risked paying a high price. Did we? The character of the financial market is such that there will always be other players who will immediately fill up any gaps left behind, employing technology and networks. One prepares the new grounds in advance. Have we been at it? Don’t we need to coordinate local market action to drive up a country advantage for this sector?

This brief incursion into the matter shows that every front of our economic activities calls for meticulous “repositioning”, given the dynamic nature of global engagements. If Pope Francis has found it necessary to “reposition” the conservative church he heads in view of an altered global landscape for members of the fold, the question is why countries should not be even more proactive to secure the future of their economies acting before it is too late.

 


* Published in print edition on 1 May 2014

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