We had thought that the parties would be bracing themselves for a total break with the past. No, we might end up with more of the same
By Rattan Khushiram
If the fact that more than 50% of voters are undecided is valid, then the forthcoming polls could deliver a surprise – as many people are predicting. What are the voters looking for? What are their expectations? As the main contending parties have gone through lots of ideological swerves, there is not much that differentiates one from the other. The closer one looks the murkier things seem to be, and voters may ultimately choose to focus on such big picture issues like the management of the economy. How far are the main political parties meeting our expectations to get the economy going once again when on the global front the trade war between the US and China, Brexit and the commotion within the European Union are impacting the Mauritian economy?
The Alliance Morisien: Politics trumps economics
Let’s start with the incumbent government or the Alliance Morisien. Voters are well aware of the state of the economy inherited by the MSM-ML government, but that does not mean it has done any better despite its larger majority; it just did not have the right people, the will and the leadership to set things right. The economic roadmap laid out by the MSM-ML government was a good exercise in PR — a lot of sound and fury but which, at the end of the day, amounted to little. It was bereft of any economic content to unclog and put the economy in a resurging mode after the Sithanen-Mansoor years of policy paralysis. It fell short of what was required to kickstart the engines of growth, both old and new, towards a high-income economy. Its lack of policy coherence and coordinated response in addressing and reacting to the distress in several sectors have led to a larger malaise.
To say that we will soon become a high-income economy does not mean much if it does not raise the quality of life of most people especially those who are barely scraping a living. We cannot expect government’s focus on real estate and construction that included prestige projects like Metro Express, Safe City, Cote d’Or Multisports Complex or MUGAs…to create wealth. (MUGA refers to the Mauritius Telecom Foundation’s “technology-enabled” wellness complex.)
Can we create wealth when we are being burdened by a ballooning debt and the failures at fiscal consolidation, severely damaging our international reputation with investors and credit rating agencies?
Can we create wealth when the independence and credibility of our institutions are being systematically undermined? A clear example is the arm-twisting of the Bank of Mauritius to amend its governing legislation to allow for the transfer of some Rs 18 billion from its reserves. A prime institution like the BOM has become the Government’s piggy bank.
Can we create wealth when the award of the minimum wage is not accompanied by increases in productivity? Can we create wealth when the persistent economic irresponsibility of the regime hangs like the new Sword of Damocles on the economy and business, thereby creating an unhealthy business environment?
As if this were not enough, the recent streak of economically irresponsible electoral promises, which may be interpreted as desperate survival tactics, have created further jitters in the market as the newly announced policies in favour of the fast-ageing population will prove to be a massive burden on public finance and the working age population. This will render the nation less competitive. We have to create wealth first for it to be distributed.
The economy is teetering on the verge of a crisis. Growth has been revised down again this year, private sector investment is losing momentum, youth unemployment remains high, and several key sectors namely sugar, tourism, manufacturing and the financial services are in the doldrums. The devastating state of the manufacturing sector is evident as the sector continues regressing to a mere 12.7% of the gross value added; its growth rate has dropped to less than 1%, and job losses in the “Wearing apparel” sector amounted to 3,870 between June 2018 and June 2019. These figures do make plain the severe distress the economy is going through.
The Alliance Nationale: ‘Politique de rupture’?
The Alliance Nationale’s (AN) economic team is promising that its proposed actions are the initial steps to revive business sentiments, encourage investment, propel demand, rev up growth, boost job creation for the youth and start a new era of development. How far are these proposals or announcements pragmatic and address various pain points in the economy? Will they help to alleviate the situation in the concerned sectors?
The slew of measures is welcome but they are not enough to boost the economy significantly in terms of facilitating the ease of doing business and with regard to the ease of living of the common people. Much more than mere “Consolidation, Diversification and Transformation” and in terms of leadership are required from the economic stalwarts of the Alliance, including Rama Sithanen and Xavier Duval, to fully unlock the country’s economic potential and to outgrow the discomfort of being dubbed “les hommes du secteur privé”.
Most of their announcements have a flavour of “du réchauffé”, a lack of creativity and new ideas. We did not see any indication of “rupture” with the accumulated mass of past distortions, nor any sign of the striving for a new Mauritius Inc – that is the tough path to renewal as policymakers tussle to root out the nexus between politicians, bureaucrats, the economic elite and businessmen. It is more of the same liberal policies that were implemented during the 2007-2008 years, which they qualified as the “golden period of reform” but which consisted in the improvements 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. These were merely short-term and piecemeal reforms, and 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. The AN’s economic team tends to reinforce the impression that the liberal policies that favoured the privileged will continue with the result that we might have to wait for a whole generational change to advance a real “politique de rupture” that will give shape to a new development model and a genuine democratisation of the economy.
The MMM’s agenda: For the many, not the few, pls
The MMM is going all guns blazing its two rivals as it seizes the opportunity to establish itself as a bulwark to fight corruption, nepotism and the looting of public money. Its list of candidates did spring some surprises as many young Turks seem to have trounced some of the old guards to the post. But it will have to beef up its economic team if it wants to show “du vrai changement”. So far, the team has been too timid, too un-enterprising, too bland as reflected in its PQs, interventions and proposals. Alarming times need breakthrough measure; serving old wine with a slightly altered flavour in a new bottle will not do. A lot more will need to be done for it is not going to be painless. The country needs a combination of structured economic reforms and short-term boosts and far-reaching administrative reforms to provide responsive corruption-free governance. We are not convinced that, with the present profile of its economic team, we can expect to see the change that Mauritius needs.
For the MMM to succeed in turning the tables on the two other main protagonists, it will have to show that it has capacity to shed the taint of dynastic politics and its proximity to the corporate sector, namely in the energy and sugar sectors. Its ambiguous stand on the Combined Cycle Gas Turbine — a new technology for power generation, which has reached a sufficiently mature stage of development to take advantage of the worldwide shift towards a more market-driven economic climate and poses as a viable alternative to coal and heavy oil, is rather puzzling. Would it have to do with the defence of the interests of the lobbies of an embattled private sector, intent on rescuing a besieged cane industry? Further, its silence on the promotion of Smart Cities by the outgoing government, when it is known that the unproductive IRS, RES and other “Smart Whatever” have driven up land prices and made them increasing inaccessible to the upcoming generation and the middle class, is even more perplexing.
The MMM will have to convince the voters it has the right people with the right policies, the confidence and the will to undertake bold reforms that go beyond the present mindset of a kitchen-sink approach of throwing every sop and temporary fix at the problem, reflecting both a lack of audacity and cluelessness. This is a party intent on ushering a slew of path-breaking initiatives and decisions for a new economic paradigm that will dramatically change the socio-economic fibre of Mauritius, and especially one that will attend to the interest of “the many, not the few”.
Are they the change we want to see?
We doubt If the contesting parties/alliances are capable or are intent on providing us with an alternative vision of the economy, an alternative model of development with ample creative ideas on developing the local economy, culture, education, sports, the fishing industry… while integrating environmental constraints. They do not seem to be ones that will give shape to a new development model; it will be more of tinkering at the edges. We had thought that the parties would be bracing themselves for a total break with the past – a politics of “rupture” or “du vrai changement”. No, we might end up with more of the same, safely anchored in the status quo.
* Published in print edition on 25 October 2019