What Next?

Editorial

Municipal elections are behind. The next reckoning is with 2015 when general elections will be held. The outcome of 2015 will be shaped by what is achieved between now and the date of the general elections.

Municipal elections gave victory to the MMM-MSM alliance in three out of the five municipalities (Port Louis, Beau Bassin-Rose Hill and Quatre Bornes); Labour won in Vacoas-Phoenix (11-7) whereas the number of seats were shared equally between the Labour-PMSD and MMM-MSM alliances in Curepipe (seven each), the MMSD of Eric Guimbeau with one of its candidates elected standing as arbiter as to which of the two major blocs will eventually control the municipality.

In 2005, the Labour-led Alliance had secured all the five municipalities in the wake of its victory at the general elections of that same year. The present outcome represents a setback for it at the level of municipalities. On its part, the MMM-MSM alliance has claimed that the results of municipal elections are blazing a trail for it for 2015. Nothing is more uncertain.

The MMM traditionally derives its core strength from urban voters. Despite the discredit many Labour-PMSD municipal councillors had of late cast on municipal administration, the MMM and its late-found political ally, the MSM, failed to garner all the five municipalities. It may be said that the MMM did not succeed in what is believed to be its very bastion of its strength. The division of votes in Curepipe between itself and its former ally, the MMSD, shows further that the MMM does not command unanimity among its traditional voters even in the urban areas despite the problems of incumbency faced by Labour-PMSD.

The strident calls by the opposition for voters to deliver a vote of no-confidence against the government also went unheeded. A number of voters (on average 55% of the total number registered) decided not to vote. Had the opposition carried conviction with urban voters regarding a vote of sanction against the government, urban voters would not have chosen to stay away from the polling stations in such large numbers. The historical trend of the rate of abstention in municipal elections was thus more or less maintained. The majority of voters were indifferent just the same.

The MMM-MSM should therefore not make a big issue out of it as if the tide were already turning against the government. The results do not show such an absolute turnaround of voter sentiment in favour of the opposition. But the vote carries clear signals to the government. Despite being in the advantageous position of holding the reins of power, it could not mobilize voters enough to prevent the opposition from asserting itself in three out of the five municipalities. It knew that it was fighting it up against the bad record left behind by those upon whom it had conferred the duty of running the municipalities. It faced an uphill fight. Nevertheless, the figures of abstention also show that it did not reckon sufficiently with the negative perception of municipal administration left behind by its councillors.

Seen from a wider perspective, the municipal results show that risks have increased for the government side for 2015. Voter indifference is one of the risks. There is also the risk that a good outturn for the opposition in certain municipalities may give voters who like to sit on the fence confidence enough to shift their loyalty to the opposition altogether. In a system in which the margin of difference is fairly small to decide who wins at general elections, the government will only be adding in this perspective to its risks by allowing slippage of marginal voters as well as not giving satisfaction to the bulk of those who also voted it to power in 2010.

In general, there has been neglect of this segment of the electorate. Take one example. We have been seeing small sugarcane planters increasingly abandoning their lands being left to themselves. Some have not hesitated to sell over their henceforth unproductive plots of land, short of being able to put them to profitable use. These plots were acquired after great sacrifice in days past. Faced with growing economic difficulties, small planters have not seen themselves evolve into entrepreneurs of a higher class or being helped to create a productive economic domain for themselves as it was done for the IPPs not too far in the past. They have not been transformed into producers for external markets with the help of new export markets, better technology and research support as it used to be the case when large sugar estates had to be propped up in the past. Planters are still to find out how their promised 35% shareholding in sugar sector by-products will materialize.

It is only concrete results touching specific voter classes that will make a difference in the 2015 elections. Those voters cannot be left behind in the quest of security of tenure to be obtained by political contrivances of all sorts. It is decisions which impact positively on the development of the country without neglecting those who voted for it in 2010 that can give an affirmative direction to the outcome of 2015. This means the government has to set down to work and get implemented projects that have been announced a long time before (e.g., Land Based Oceanic Industry, exploiting maritime resources, innovating and creating new light engineering activities, re-shaping SMEs). This kind of activity should widen the base of the economy. Roads by themselves are extremely useful as infrastructure but they are best when used to transport the outcomes of real productive economic undertakings, not simply for carrying an ever increasing population of passenger cars.

There are two and a half years from now and the general elections to see projects coming into shape. It is not too long a time. The steady figure of the rate of unemployment shows that the private sector has taken up the tax rebates offered to it but it has not delivered an increasing number of productive jobs in return. Price inflation, including those, such as that of land, which are not reflected in the Consumer Price Index, is hitting the government’s voter base the hardest. Someone must stem the tide. It requires the will to push a constructive agenda to benefit those who have no other source of support except what only the government can give. They took a bet on it in 2010. If promises are kept vis-à-vis them by getting down to hard work at last, the 2012 municipal election results might not make a dent.

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Pushing the Bank of Mauritius against the Wall

In reply to a parliamentary question from the opposition this week, the Minister of Finance stated that the Treasury had actually given effect to the Ministry’s earlier decision to buy up US dollars for account of the Ministry from commercial banks. It may be recalled that the Ministry had taken the decision to buy up $100 million from commercial banks under the scheme. The objective behind the foreign exchange transactions directly with the banks was to get the rupee depreciated. In turn, the rupee’s depreciation was being sought by the Ministry to perk up the rate of growth of the economy by one percentage point, according to some “enlightened” view to this effect shared with it by the IMF.

It came out in the answer to the question that the Treasury had purchased $8.5 million so far from commercial banks on account of the National Resilience Fund. Opposition parliamentarians, aware of the opposition of the Bank of Mauritius to this attempt to secure an artificial depreciation of the rupee by manipulation through commercial banks, asked whether it would not have been preferable for the Ministry to buy up the dollars it needed from the central bank directly instead of doing so from commercial banks. The Ministry’s view was that this would amount to the central bank competing against operators and that this would be contrary to the rules of good governance.

As far as we are aware, the central bank has been meeting government foreign exchange requirements for the past four decades of the central bank’s existence out of its own reserves.  Was it competing against operators when so doing? Not at all. It was simply fulfilling its role of being banker to the government as laid down in the law. As such, it cannot be seen to be trespassing any rule, least of all, any rule of good governance by supplying dollars directly to the government for its legitimate needs to defray normal foreign exchange commitments of the government.

The Bank of Mauritius has been resisting an artificial depreciation of the rupee as sought to be engineered by the Ministry in view of the inflationary consequences it would have through higher import prices of basic commodities. By having recourse to banks instead for its projected purchase of dollars, it is the Ministry which appears to be offending the rules of good governance, using the backdoor and making institutions subjected to regulation by the central bank complicit in exchange rate manipulation. We can understand the risk the central bank is taking on itself for choosing to protect consumers against the willed erosion of their purchasing power by the Ministry. The government was surely not voted to power to fulfil such a mandate.

* Published in print edition on 14 December 2012