The Price to Pay for Mismanaging Public Institutions
Privatising the “Jewels of the Crown”
The Development Bank of Mauritius (DBM) was the successor of the Agricultural Bank of Mauritius, an institution set up in 1936 to support the growth and diversification of the agricultural sector of the country. Set up in 1964, the DBM was a continuation of the Agricultural Bank intended to serve as an instrument to provide capital (in a capital-hungry Mauritius) for the growth and development of agriculture, industry and tourism in Mauritius.
Like the Cooperative Bank, it was a landmark financial institution of the country designed to take risks and fill gaps that private commercial financial institutions were not prepared to take. The Cooperative Bank was de-licensed despite it having had a brilliant record of achieving towards the uplift of smaller producers of the country. Today, we see that the DBM has followed in the defunct cooperative bank’s footsteps. It has lost its shine, having been privatised and reduced to a faint shadow of what it has been and achieved in the course of its relatively long history.
Seeing the present condition it is in, no one will believe that it is the same DBM which has for long challenged private commercial institutions to play their role in uplifting the country’s apparatus of production. We must have lost the ship somewhere on the way because we would have been more minded to save the half penny worth of tar that eventually cost us the loss of the entire ship.
Former Attorney General, Rama Valayden has, in a lucid interview given to l’express newspaper on Saturday last, deplored the decadence that many of our flag-bearer public institutions have been running into. His view is that there is something deliberate about the manner in which those institutions are being misdirected towards their own dilapidation. The ultimate objective would be to tie them up eventually, after they have been allowed to almost ruin themselves in serial mismanagement, with certain international predators in a so-called strategic partnership deal for redress.
Mr Valayden has enumerated a series of state-controlled institutions that have been giving signs of cracking up or are likely to become candidates for eventual seizure by such international predators on the lookout of privatisation deals. According to him, there is a process of wilful letting-down of our “commanding heights” in the public sector enterprises. Under this logic, as failures succeed each other among public sector undertakings, eventually it is not only the likes of Air Mauritius, the airport and the State Trading Corporation that will follow in the footsteps of Mauritius Telecoms going into foreign hands. Even sensitive sectors such as our water and energy, are likely targeted for eventual privatisation after they have been reduced to the status of lame ducks economically. He thinks there is a deliberate policy towards privatisation, something that was confirmed, if at all it was necessary, in the last budget of the government. He suggests that Ministers have no power of decision in such matters which form part of deals targeted by international forces who have the sole quest for profits.
There have indeed been signs that we in Mauritius fall in the geographic zone of influence of a specific European power. It will not be farfetched to assume that it would be in the interest of such powers to consolidate their economic dominance in places like ours or in the region as a whole. Experience has shown that investors from those places do not come into a location for contributing to its economic and social development. They are here to make money by leaving no quarters to any potential competitor in the field of their occupation.
Consumers are made powerless and ‘rents’ go on increasing in the monopoly or quasi-monopoly positions which those investors come to occupy. It becomes near impossible to dislodge them from the sectors they are excessively dominant in at the risk of going down in the numerous index rankings we are so fond of quoting whenever we have pride of place and position.
Mauritian economists have not been smart enough so far to look into the details of market dominance exerted by certain brands in particular segments of economic demand. If they probed deep enough, they would come across the limited choice and severe constraints consumers are often reduced to, at the risk of having to buy up items of dubious quality from the so-called competition.
Should the international agenda of privatising play itself out, as contemplated by the former Attorney-General in his interview, conditions of living would become much tougher for the ordinary citizen in Mauritius. By that time, the decision-makers who brought them in in the first place will no longer be here and held accountable for their errors of judgement.
There are rare occasions when the country’s stakeholders rise above petty considerations in an insular place like ours. Oftentimes, our decision-makers have been unable to look at the bigger picture to ward off the intended permanent damage done to the painstakingly laid down infrastructure going to support our real independence.
The continuing fragilization of public sector enterprises making them candidates for eventual privatisation amounts to an outright denial of an indigenous genius capable of no lesser achievements than the predators from overseas. This is achieved by placing the square pegs in the square holes. Now that the thinking has been properly oriented in this respect, some will have to rise to the occasion and prevent the “jewels of the crown” from being thrown away with dissolute neglect into the hands of outsiders who really don’t care for you.