By L.E. Pep
The Confédération des travailleurs du secteur privé (CTSP) – Confederation of Private Sector Workers – is tuning itself for the forthcoming elections. It held a peaceful march in the streets of Rose Hill on Saturday 2nd Feb. Reaz Chuttoo and Jane Ragoo announced that the union would be issuing directives to private sector workers about which political bloc to support at the next elections.
The CTSP says it is entering the political arena, not for an investiture, but to influence voters’ choice and how to vote. According to the trade unionists, the CTSP has had a bad experience in the past with the previous regime selling out on their demands and the present one is merely conning them. The CSTP laments the fact that for the past four years the government has been procrastinating: labour laws have remained unchanged; private sector workers are losing their jobs every day because labour laws favour the employers. They are allowed to “hire and fire” according to the situation of their companies but they refrain from hiring new employees when their businesses are doing well.
“The elections are coming up and the employees will vote for a political party that will work for them,” Jane Ragoo warns.
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Diversifying the financial services sector
Most of the financial sector or global business sector operators have the feeling that the financial sector blueprint was more of a long-term vision with Fintech-Blockchain-Crypto assets as the new holy grail of the sector. The regulatory sandbox has already started issuing licences for fintech activities. But the more short-term measures through the expansion of non-banking financial activities, such as asset management and portfolio diversification, treasury management operations, risk management and insurance/reinsurance, investment banking, private banking and wealth management activities offer better scope of boosting the sector by adding more value and substance to global business activities.
Hong Kong investors, for example, have shown interest in the setting up of investment banks, private banking and wealth management activities. Other such niche markets are arbitration and dispute settlement. Mauritius is gearing up to be recognised as a world-class Arbitration Court. The Mauritius Arbitration and Mediation Centre and Mauritius Bar Association are planning arbitration and mediation training in the field of arbitration and dispute resolutions.
The latest data on FDI flows to India from the Department of Industrial Policy and Promotion, Ministry of Commerce and Industry of India, confirms the trend that Mauritius is losing its share to the benefit of Singapore. Thus, in the short term, the financial sector has no choice but to continue diversifying and laying down the foundation for long-term growth through, among others, the above-mentioned measures. But the relative shortage of highly skilled legal and financial expertise represents a potential bottleneck to the growth of higher-value-added global financial services. The growing gap between industry needs and high-quality staff especially in niche areas, like fund and asset management will also need to be addressed if we want to succeed in our diversification efforts.
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The ultra-liberals: Same old story for the economy
For the ultraliberals the main problem with the economy is always the question of too much government, too much of bureaucracy, state capture of resources and institutions… But that is only part of the narrative, like the one that was bandied about during the 2007-2008 years, and which they tried to pass on as the golden period of reform.
The improvements in 2007-08 to the macroeconomic, business and investment climate and the adoption of a more simplified and growth-friendly tax system and flexible hiring-firing labour laws were short-term and piecemeal reforms. They 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 for future challenges and significantly undermined medium- to long-term growth prospects. Not much was undertaken subsequently from 2010 to 2014, as well as by the present government in terms of substantial and broad-based reforms. That is why the reform agenda remains unfinished while critical constraints to economic development are becoming increasingly evident.
Similarly today our ultra-liberals tend to ignore that part of the narrative that pertains to the private sector’s connivance with the public sector in favouring rent-seeking activities, restrictive markets and crony capitalism. One thing is certain: countries where rentiers gain the upper hand gradually fall into decline and get caught up in the middle-income trap.
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Election time: Freebies for our workers
The future, at least the immediate one, bodes well for both civil servants and private sector employees. They have suddenly become the preferred ones, the doted upon children; they constitute the vote-banks, and given that elections are fast approaching, Government cannot afford to frustrate them at any cost.
“A little of rain, my dear children will get wet, so go home early, my dear ones.” If they are having difficulties with education fees for their lazy kids, no problem, government will provide everything free. They do not want to work for so many hours; why come to work at all, Government will send their pay by express delivery accompanied by motorcades. “Why worry, dear ones!”. As for private sector workers in particular, they need not worry, Government is going to impose a protocol on their bosses in case of torrential rains.
Government has more freebies coming their way — the PRB this year itself for public sector workers, an increase in transport allowance so that they can take the metro. The private sector workforce also will not be left in the lurch; there are more freebies to come for them as well in addition to the Minimum wage and the Negative Income Tax. Why not a standard 40-hr week for all!
The hope however is that in their enjoyment of the freebies they would not forget their benefactor, and when the time comes to perform their duty… No, no these are not electoral bribes… No, no, they should not think like that… It is those people in the opposition, the press… they say so because, you know, they did not do anything for workers generally, in particular the civil servants…
There are too many prying eyes and ears here… “Gouvernement dan nu la main, what do u want? Just ask… We will visit you, we’ll then talk…”
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The Combined Cycle Gas turbine: why the dilly-dallying?
Two years have gone by since the Combined-Cycle Gas Turbine (CCGT) project at Fort George was first proposed. The CCGT is a modern technology that significantly impacts positively on the costs and reliability of electricity supply in Mauritius and effectively solves our electricity problems of base and peak loads. The combined-cycle power plant uses both a gas and a steam turbine together to produce up to 50% more electricity from the same fuel than a traditional simple-cycle plant. The waste heat from the gas turbine is routed to a nearby steam turbine, which generates extra power.
Those in the know argue that though the combined-cycle gas turbine comes at a higher cost than coal-powered energy plants, in the long term it will enable us to move to Liquefied Natural Gas (LNG). It will also reduce the CEB’s dependence on the local Independent Power Producers.
The dilly-dallying – the snub from the Independent Review Panel, the humiliating note from the Financial Secretary, the revaluation of the bids and a critical note from the Financial Services Commission on the Rs 1 billion loan advanced by the CEB’s pension fund – has nothing to do with the viability or cost of the project. It has more to do with attempts at wresting the project out of the hands of the CEB into those of the Ministry of Finance and Economic Development (MOFED). It is MOFED which will be taking the lead together with the Economic Development Board in the bilateral negotiations with Mozambique on the supply of liquefied natural gas. Why is MOFED so anxious to have the upper hand in the Rs 8 billion CCGT project?
We leave our readers to their own guesses!!!
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ICAC embarrasses government
The latest investigation by the Independent Commission Against Corruption (ICAC) against the ex-Minister of Financial Services and Corporate governance seems to have backfired and embarrassed the government with the revelations that the PM would have allegedly contacted the then Ministry’s PS to hire the son of the Minister of Industry, the son-in-law of the Mauritian ambassador to Russia, the daughter-in-law of the secretary to cabinet and the niece of the foreign minister. The previous Minister of Financial Services, ex-close collaborator of the Kitchen Cabinet, comments ironically on the own goals of ICAC: “Navin Beekharry has shot Pravind Jugnauth in the foot. With henchmen like Beekharry one does not need enemies.”
But at the same time the other ongoing investigation into the monthly salary raise of Vijaya Sumputh up to Rs 323,000 and the extension of her contract by two years by the board of the Trust Fund For Specialised Medical Care, seems to being carried out with the specific intent of intensifying the growing rift between the MSM and the ML to such an extent that ultimately the junior coalition partner will have no choice but to leave government to make room for a new partner for the forthcoming polls.
Such investigations reinforce the perception of an ICAC that looks pliant, partisan and loyal to the government and ultimately leads to the gradual erosion of faith in our institutions.
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Privatisation of Crown lands at La Cambuse
On the occasion of the commemoration of the abolition of slavery on February 1st, all the mainstream political parties had lined up to bore us with their traditional routine – the usual crowd, the laying of wreaths, the same songs, insipid speeches with some attempts at novelty but vain words and of course hypocrisy. None of these parties mentioned the recolonization of our Crown Lands at Le Cambuse by Omnicane and the official notice served by the company on the citizen group ‘Aret Kokin Nu Laplaz’ (AKNL). “We are no longer in 1721 when a settler could decide to take whole swathes of our island. We are in the 21st century…”, and our politicians did not respond. Resitans ek Alternativ had to cancel their World Wetlands day celebrations following the verbal aggression and intimidation by bouncers and lumpen elements. What is revolting is that it all happened in the presence of the police! It was quite of an ironical situation that reflected the repressive years of colonization coming just after we had witnessed the grandiloquent speeches of one and all, especially that of the authorities, on slavery. The Minister of Housing and Lands had promised “I firmly believe our citizens should be able to enjoy and have access to more public beaches. As soon as I took office…, I have given necessary instructions to officers of my Ministry to identify uncommitted plots of land on Pas Géométriques which are suitable to be proclaimed as public beaches.” The environmental activists lament the fact that authorities have let us, the people, down and they allege that they would be in connivance with Omnicane, the promoter of the Mon Trésor Smart City, where government has financed the road to the airport costing some Rs 600 million. The fight goes on. Our ecologists friends are waging battle so that our lands are restored to us, our coastline protected from rash development and passive and active recreational activities promoted for both locals and visitors. “Let’s transform these crown lands at La Cambuse into a Coastal National Park, a Public Coastal Park, where the children of tomorrow will be able to appreciate this ecological treasure – a rich environmental reserve of scenery and natural features of the island.”
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The IMF Article IV Consultations: Some serious concerns
The IMF’s press release on the present economic situation seemed to be quite diplomatic. In spite of falling business confidence resulting from the worsening global economic outlook as well as domestic factors and a gloomy outlook in the global business sector, dismayed by the falling FDI flows to India, the IMF posted a real GDP growth of 3.9%, in 2019. Nevertheless, it raised some concerns about the vulnerabilities that still persist, namely with regard to a) the rising public debt and high budget deficit, b) the rising current account deficit, c) a rapidly ageing population, d) upside risks to inflation, and e) the need to maintain strong and independent institutions.
Shorn of diplomatic niceties and in plain words, the IMF is saying that it is concerned about the trends in the budgetary and debt situation that risk endangering macroeconomic stability. The consolidated budget deficit, inclusive of the extra budgetary funds, shows a much higher figure of some 4.0% of GDP whereas public debt sector debt is at a high 64.5% of GDP. The IMF is expecting debt to increase further in the short term and recommends the adoption of prudent fiscal policies to set public sector debt on a declining path in the medium term. The current account deficit is also expected to continue to deteriorate further due to rising trade deficit in goods and higher capital imports associated with the large scale public infrastructure projects.In view of the rapidly ageing population, Mauritius has no choice but to create more fiscal space to meet the increasing expenditures ahead on health and social security and to respond to unexpected shocks. Thus the country can ill afford the present largesse of the government.
The IMF also recommends that the authorities stay vigilant against any inflationary pressures as there are upside risks to inflation. This may mean that the nominal interest rates which are at historically too low levels (and real market interest rates are negative which discourages saving and aggravates the external deficit, and again endangering macroeconomic stability) may need to increase, thus the need of a tightening of monetary policy to tackle the emerging inflationary pressures.
On the need to maintain strong and independent institutions, the IMF is traditionally a fervent proponent of a strongly independent central bank. Is the IMF having some doubts that the independence of the Bank of Mauritius, and possibly of the FSC too, is being undermined by Government?
* Published in print edition on 8 February 2019