Is it a development model imposed on us by a detached ruling elite out of touch with ordinary people’s lives, realities and hopes?
By Rattan Khushiram
In last week’s interview to this paper, Nikhil Treebhoohun, economist and former director of NPCC , raises an important question: what does the population really want? He said: “The transition to a high income economy has been on the cards for the last 5-6 years. As mentioned before, this requires an annual growth rate of at least 7% per year. The country must become more productive. But does the population really want this? Or should we instead like Bhutan go for a Happiness Index or like the UK go for a Wellness Index?”
Similarly in this week’s editorial ‘A quand un umuganda mauricien?’, J.P. Arouff of Business Magazine raises the issue of our social and economic development in such terms : “Construire un pont, une école, nettoyer les drains ou encore aider les personnes en difficulté sont autant de tâches auxquelles s’acquittent les Rwandais en ce jour spécial. Ce concept fédérateur véhicule des valeurs très fortes. C’est d’ailleurs ce qui a permis au Rwanda, décimé par le génocide, de revenir de l’enfer et de se reconstruire un avenir.”
We are regularly having debates and discussions on all aspects of our economy and society especially on the quantum of growth, but very little on our model of development and the quality of our growth. Yes, there have been ample discussions on our potential growth rate, the need to achieve the status of a high income economy by such and such date – whatever be the means to achieve that – but especially by boosting consumption or/and unproductive public and private investments. It’s as if we have no choice but to drive forward to realise a still higher growth rate than the previous year. But is this what the population really wants or is it a development model imposed on us by a detached ruling elite out of touch with ordinary people’s lives, realities and hopes?
Apart from some radical political parties usually positioned on the fringes, why don’t the mainstream political parties, the media, academia and others question the very basis of our development model? Why do we have to continue with the smart cities and real estate schemes with the result that a large part of the population is being crammed into smaller and smaller and relatively poorer areas? Why do we continue to graft on our economy imported concepts of economic development like the tax-centric Global Business Sector and unproductive FDI inflows that have not delivered in terms of competitiveness, technology, management know-how and jobs? On the contrary, these huge capital inflows have been the cause of the appreciating exchange rates and contributed to the gradual decline of our manufacturing sector – the so-called Dutch disease.
The elite and the intelligentsia, snug in their echo-chamber, have imposed upon us the tyranny of “no alternatives.” which we used to call the TINAs. We have become numb, incapable to break that spell that prevents us from seeing that an economic system that doesn’t deliver for large parts of the population is a failed economic system. All the issues pertaining to encroachment on our beaches, our coasts, our environment, our islands like Ile-aux-Benitiers and the plundering of our natural resources and our Exclusive Economic Zone are testimonies of a failing economic system.
The frenetic race to necessarily realize above average GDP growth rates by any means (more of bricks and mortar to copycat Singapore) is an obsession of the oligarchy-dominated private sector corporates and their lackeys; it is not necessarily that of the population. But they do succeed in tricking them along with their discourse on the “trickle-down” benefits down the line. But that’s a minor piece of the big pie, mere crumbs at the table or leftovers like the minimum wage or the negative income tax to buy the workers in.
But gradually as the population see the certainties of their world fade away and the resulting inequality of economic outcomes strips away the democratic veil that hides the true workings of such a model of development from the majority of citizens, the people of this country will realise that there are alternatives to this model of development which is neither desirable nor workable. Alternatives which are actually far more resilient, sustainable and inclusive, far more oriented towards achieving quality growth than the race to the bottom and far more targeted towards improving happiness and welfare indices rather than the Doing Business indicators. Under these alternative models, the “umuganda mauricien” is realizable. That is what inclusive economic and social strategies are all about.
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A More Pro-Active Competitive Strategy for Smes
The Forum-Debate on the SME sector – Re-thinking the Small and Medium Enterprises (SME) sector -by the policy forum of the MMM, with participants who are actually involved or have done some research on the sector, raises some critical issues. Despite all the attention and cheering about our improved ranking in the Doing Business indicators, we are told that the SMEs have to go through all kinds of hurdles to set up a business and obtain access to finance despite injections of some Rs 7 billion in the MauBank.
All the efforts at designing dedicated institutions for the SMEs seem to be mere rebranding. Most of the improvement in the ease of doing business appears to have solely encouraged investment in tabagies and minor food processing (personal and household goods), restaurants and in construction (mason-builders). Why is it that we do not have more successes in this sector? Why is it that we do not have more SME entrepreneurs joining the league of high quality product exporters?
SMEs are perennially faced with challenges such as access to finance, skilled labour, technology, R&D and training facilities. Bank lending against security is hard to come by and bureaucracy continues to pose as impediment to their growth. The SME sector is also having problems to survive, thrive and move into exports. It is constrained by lack of finance and financial instruments, high rate of interest and high rentals, short reimbursement periods, and lack of commercial and industrial spaces. SMEs that have recently taken advantage of the new opportunities in the regional markets are extremely vulnerable to the exchange rate volatility because of their low resource base and the lack of support from financial institutions. It seems that we have totally lost sight of a sector which is the future and the answer to our pressing needs in terms of jobs creation. We have failed in creating the necessary infrastructure and accompanying environment/incentives which would have allowed SMEs to raise capital at reasonable rates.
Indeed the sector needs a rethink. The whole SME sector needs a beefing up in terms of a more pro-active competitive strategy to enable it to upgrade itself, become internationally competitive and secure its share of regional and world trade – for e.g. the setting up a SME Industrial Technology Research Institute, patterned along the Taiwanese model, South Africa and Singapore technology research institutes. It will scour the world for cutting edge technologies and use its own laboratory facilities to assess their appropriateness to local conditions and build pilot versions to demonstrate them to prospective local investors. This is the way to go if we aspire to add quality to our growth.
* Published in print edition on 23 November 2018