This is not the time for government to cave in as in the past to tall private sector demands
By Mrinal Roy
Covid-19 has been a traumatic wake up call for the world. People across the world are now alive to the reality that the post Covid-19 world must be materially different from the pre-Covid-19 situation. It must be recast on the basis of the numerous lessons learnt from the pandemic. Countries would therefore have to significantly overhaul their economic model and adapt to the imperatives of a new world order defined by the people.
“In its package of incentives to reboot the economy after the lockdown, the Indian government has recently provided a massive support equal to 10% of India’s GDP to achieve economic self-reliance in a country with an enormous market of 1.3 billion people. These funds will be available to industry and businesses of all sizes and to farmers and entrepreneurs with the aim of keeping manufacturing, markets and supply chains local…”
First and foremost, the world has to cut loose from an economic model which continues to choke the world with more and more carbon emissions, despoils the environment and the world’s rich biodiversity despite the overwhelming scientific evidence of an impending climate change catastrophe on our planet if urgent steps are not taken to drastically cut down and end the use of highly polluting coal and fossil fuels to reverse the adverse fallouts of climate change. A study published this month in the journal Nature Climate Change shows that daily carbon emissions during the Covid-19 global lockdown in early April 2020 decreased by 17% globally to levels last observed in 2006 compared to mean daily levels in 2019. In contrast, one of the thriving economic activities during the lockdown in Mauritius has been the unabated burning of coal in lucrative power plants to produce electricity in the country, proudly showcased on prime time TV recently.
The world must also jettison an economic model which has thrived on and deepened inequality and enhanced the massive accumulation of wealth by a few as highlighted in the annual Oxfam reports and has brought to light in the context of the Covid-19 pandemic the vulnerability, precarity and lack of adequate public health protection and security of large swathes of people in the world.
Covid-19 has also exposed numerous failings of the world economic model to deal with the multiple challenges faced during the pandemic. Countries across the world suddenly found out that they were not sufficiently self-reliant to protect lives and people against the havoc wreaked by the pandemic across the world.
Many countries including some of the richest countries discovered that they were ill prepared to cope with the Covid-19 crisis as they did not have adequate stocks of Personal protective equipment (PPE) used every day by healthcare personnel to protect themselves, patients, and others when providing care, treatment drugs, surgical gloves and masks, etc. Countries including Mauritius scrambled for supplies from friendly countries.
India which advocates the philosophy of “Vasudhaiv Kutumbakam” – ‘the whole world is one family’ and produces some 70 per cent of world vaccines and other drugs promptly supplied key drugs to neighboring countries, the US, the EU, Israel and Brazil to help them fight Covid-19.
Public health protection and security will now be factored in the strategic thinking of countries in the post Covid-19 world. Countries would have to hold strategic stocks of essential drugs and protective gear to assure the health protection and security of the people in the context of the enduring pandemic.
Covid-19 has also underscored the urgent need for countries to assure a certain degree of self reliance as regards essential food supplies. In Mauritius, the full potential of the entrepreneurship of planters and the farming community has not been fully tapped. It urgently needs to be boosted through the support of the promised infrastructure, modern storage facilities, cold rooms and options for direct sale to consumers to maximize the revenue of producers and the land reforms necessary to inter alia ensure that the country is as self-sufficient in agricultural produce and other essential food supplies as possible.
In its package of incentives to reboot the economy after the lockdown, the Indian government has recently provided a massive support equal to 10% of India’s GDP to achieve economic self-reliance in a country with an enormous market of 1.3 billion people. These funds will be available to industry and businesses of all sizes and to farmers and entrepreneurs with the aim of keeping manufacturing, markets and supply chains local.
Covid-19 has also shown that globalization has caused countries to be dependent and crippled by disrupted supply chains. There is therefore a need to build in respect of essential goods and services new supply chains with reliable strategic trade partners rather than low cost but inoperative supply chains.
Covid-19 has also brought to light the unequal way the virus has impacted on the elderly, the people with health problems, obese people, the poor, indigenous people and other vulnerable groups. There is therefore a legitimate clamour for quality health care, health protection and safety of people to be included as a fundamental right by countries.
The new world would also have to build an economic model which makes smart use of new technologies and digital tools especially in the services sector to enhance productivity and value addition through work from home.
There is therefore an imperative need for a big bang. Mauritius cannot be an exception to this rule. The country will therefore have to reinvent itself on the basis of a new ethos and a recast economic model anchored on sustainable development and some of the above fundamental principles and objectives drawn from the lessons of Covid-19 which rally the multitude.
The One-Off exceptional contribution of Rs 60 Billion from the Bank of Mauritius (BoM) is a colossal sum for Mauritius. The chilling history of squandered public funds in state owned companies and advanced to private companies through shoddy due diligence exercises and poor oversight is a gnawing reminder of the inherent risks weighing on these enormous funds. Robust bulwarks have to be put in place to ensure transparency, accountability and management by seasoned professionals under the oversight of an independent, investment savvy and highly qualified board, distanced from any political meddling. The board must regularly report on the state of the funds and be open to public scrutiny. We cannot compromise on these fundamental safeguards.
New ground rules
The determinant factor will however be the ground rules to reboot the economy. Countries across the world are showing the way. If judiciously used, the Rs 60 Billion fund provides a unique opportunity to trigger fundamental and long overdue reforms in the skewed structure of the Mauritian economy. The overriding objective must be to ensure through robust safeguards, strict rules of governance and transparency that the Rs 60 Billion fund is prudently and rigorously managed and that all funds advanced to companies are fully secured by solid guarantees and protected and also provide a fair return.
If properly managed, the fund could be opened to investment by the public who are, in the wake of the significant reduction of the bank rate to help economic operators tide over the Covid-19 crisis, receiving a pittance on their savings.
Doing business is about risk taking. The driver of risk taking is profits. Key questions must be asked. Is the company seeking financial support viable? Is the company operating in a productive sector having positive multiplier effect on the economy? Profitable corporate groups should draw from their own funds to bail out their companies. Private companies receiving public funds should be subject to a rigorous due diligence exercise to ascertain their viability, cede equivalent equity as security, grant board membership to assure oversight of the company’s decisions and strictly abide by principles of corporate good governance, its social responsibility and sustainable development norms.
This is not the time for government to cave in as in the past to tall private sector demands.
On tire notre dernière cartouche. The country cannot afford to go wrong.
Licence to illegality?
The long winded and convoluted narrative by the Minister of Housing and Lands this week about the patent illegality of those brazenly staking a claim on marshy state land and other localities despite repeated government warnings fizzled out in discomfiture. In the space of two weeks, the legal stance of government towards illegal behaviour has swung from extreme harshness to disconcerting leniency. Such licence is anathema to the multitude.
* Published in print edition on 29 May 2020