“The Labour Party needs a collective intelligence and a shared responsibility and not a one-man show”

Interview: Rama Sithanen — 
‘Tongue in cheeks, the electorate listened to Berenger and voted for ‘Ramgoolam through Boolell’! Whether this is enough to redeem him completely is another question’
‘The MMM has lost a sizeable share of its traditional electorate and the PMSD has obtained what it actually represents’

In the wake of the outcome of the by-election in No.18 constituency, we have thought it fit to interview Rama Sithanen, former minister of finance and an old hat in politics who has been professionally away from it for a while, which gives him the advantage of ‘recul’. In his opinion politics will trump economic considerations in the remaining time of this government’s mandate, though there are pressing economic matters that it needs to address if it is to challenge the undoubted resurgence of Labour in No.18. The poor show of the newcomers and of the MMM and PMSD are evidence that party allegiance is still the dominant factor in winning an election, and this will influence not only future coalitions but also the choice of the electorate, especially in the rural areas, when push comes to shove in 2019.

 Mauritius Times: Do you have the feeling that regime change might be in the offing after the electoral win of the Labour Party in the Belle Rose-Quatre Bornes by-election? If so, how soon can this happen, and what could precipitate it: politics or the economy?

Rama Sithanen: While it must be humble in its success, the landslide victory in Belle Rose-Quatre Bornes augurs well for the Labour Party (LP) as it will have landmark consequences. It is first and foremost a significant accomplishment for the LP after its debacle in December 2014. The electors have also cast a strategic vote, ‘un vote utile et intelligent’ to signal that the LP is the only real alternative to the MSM government. As the MMM has lost a sizeable share of its traditional electorate and the PMSD has obtained what it actually represents, one can expect the next election to be a fierce battle between the LP and the MSM. The only question is whether each major party will go separately as they have been clamouring or will the First Past The Post (FPTP) logic impose a realignment of political forces through pre-election alliances.

It is no secret that the numerous scandals, allegations of fraud and corruption, political cronyism in appointments and the forced resignations of many Ministers have made Government highly unpopular. Hence the reason for not fielding a candidate in a constituency where it won the seat in 2014. The size of the victory is such that Pravind Jugnauth will have no choice than to try to build a coalition to face the LP. Many of his MPs, especially in rural constituencies, will feel threatened by the rise of the LP as the ‘vases communicants’ shift towards Labour. I believe the economy will be relegated to the backburner and politics will be in the driving seat.

If the MSM cannot find a viable electoral partner, it will try to go all the way to the end of its mandate as it has a large majority in Parliament. Why call early elections if the chances of winning are very slim? But there will be instability as the PM tries to handle irreconcilable differences. There will be blackmails from many quarters as the government will be perceived as weak.

On the other hand, if the MSM strikes a deal with another party, it may go for a snap election to take advantage of a new dynamism, if any, to mitigate the damage.

* Let’s look at the economy first: give us your objective assessment of how is it doing right now, and in what state do you expect the economy to be in 2019 or beyond when a new team takes over – if things were to run their normal course, and politics does not creep in to justify early elections?

Growth is very marginally higher at 3.7% in 2017 than the 3.6% of 2016, and construction has picked up after many years of decline. But there are many clouds hanging on the horizon and a few colourable devices used to hide the true size of the public debt and the unemployment rate. It is clear that politics will trump the economy in the two remaining years of this mandate. And there will be the temptation of economic populism and scorched earth policies. Already there are accounting tricks used to hide the true level of public debt by treating the loan for the Metro Express as preference shares.

Equally the unemployment figures are being massaged by removing many from the labour force because these unemployed persons apparently do not meet the three criteria of ‘being unemployed, available for work and ACTIVELY looking for a job’. Since 2015, more than 20000 people have been arbitrarily removed from the economically active population with that stratagem – and which makes of Mauritius one of the upper middle income countries with the lowest labour participation rate in the world! This is evidenced by the very low number of jobs created during the last three years. They promised to create 60,000 jobs over the three years 2015-2017 or 100,000 over their five-year mandate. The actual number of jobs created between Jan 2015 and Dec 2017 is around 13,000 – an average of 4300 per annum. And these include many part-timers and many youngsters who are under the Youth Employment Programme and other apprenticeship schemes. If these are adjusted, hardly any net jobs have been generated.

Growth is still below par at less than 4%. We were told it would be 5.7% every year since 2015. GDP per capita in US$ is lower in 2017 than in 2014. Growth is also very lopsided. Tourism is doing well while the export sector is in deep trouble. Financial services is holding up while manufacturing continues its decline. ICT is alright while agriculture in under duress. Government stated that the share of manufacturing would reach 25% in 2018. It has declined to a very low 14%. The construction sector has bottomed out after five consecutive years of decline. We are still at a lower level than we were some years back while the share of investment to GDP remain slow at 17% instead of the 25% promised. Worse, the quality of investment is poor with most going into real estate and little into plant, machinery, technology and the productive sectors.

The trade and the balance of current account deficits are higher as exports revenues are going south. The reserves are being propped up by the capital inflows from global business.

* The electoral victory of the Labour candidate in No. 18 might be a reflection of the electoral mood in the country at this point in time, and one would therefore not expect the government to take unpopular measures prior to the elections. As a former Finance minister, given the state of the economy right now, can it be possible for a government to reverse its political fortunes through the adoption of popular economic measures and the completion of its government programme?

It looks difficult as the Government is embroiled in too many scandals and they keep piling up. While Pravind Jugnauth may mean well, he is surrounded by too many who have absolutely no clue what they are doing. Also, I believe it is not possible to do justice to such a key ministry as Finance at this critical juncture without a full-fledged Minister, wholly dedicated to addressing the economic challenges. The Ministry cannot be on auto pilot or directed by advisers. It explains many inconsistencies and incoherences as there is a glaring lack of analytical rigour. I shall mention three such incoherences.

While we all welcome the Minimum Wage (MW), it has been poorly planned and executed and is very confusing. What is the relationship between the MW and the negative income tax in its current shape? Why are some non-wage benefits included in the computation to reach the MW in the EPZ? Why two classes of employees, one with a state subsidy of Rs 500 per month and another with a subsidy of Rs 860 per month? Why are SME discriminated against as they will receive only Rs 500 compared to Rs 860 in the EPZ? What happens after 2018? Will the subsidy continue for EPZ and non- EPZ companies? Why nothing has been done to address the acute problems of relativity? A person earning Rs 8400 will gain nothing while someone drawing Rs 6500 will end up with Rs 9000. While it is good for the latter, it is terribly unfair for the one earning Rs 8400 as relativity has been upset. A supervisor may earn less than the person working under him!

Second, how can the Central Bank lower interest rate in the face of growing underlying inflationary pressures? Especially when oil prices are rising and we have to factor in the second round effects of the minimum wage? Third, the adoption of a special exchange rate for the US$ in favour of some selected export enterprises sends the wrong signal. It is discriminatory as it treats similar enterprises differently and it harms the interests of many export companies. The more so as there are better ways of supporting these firms as argued by the IMF.

While the economy is likely to crawl on the slow lane of the motorway with tourism growth slowing and global business facing uncertainties, voters will likely remember the multiple scandals that have rocked the Government. People will recall the likes of Soodhun, Dayal, Yerrigadoo, Bhadain, Tarolah and the various appointments tainted with cronyism and the other abuses of power.

The government is pinning a lot of hopes on the significant public investments in infrastructure to produce a feel-good factor. Even if this will boost the construction sector, there are downside risks such as implementation bottlenecks and delays. Also, investment remains low as a share of GDP at 17% and FDI is too much tilted towards real estate development. There will be significant import leakages and negative impact on the budget deficit and public debt.

* As for the by-election itself, what does an analysis of the voting pattern as well as the abstention inform you about the opinion of the electorate on the opposition parties other than the LP as well as on the MSM, which though absent from the by-election, was very much present in No. 18?

The abstention is explained by probably three factors: the absence of a candidate from government coupled with its campaign to intimidate civil servants and employees of parastatal bodies, State Owned Enterprises (SOEs) and municipalities to abstain. It had an effect as anybody who would vote was perceived to be for an opposition party. Second, some people thought that there was no real issue as Government would keep its majority in Parliament. Third, many are disappointed with the politics of the big parties and did not turn up.

The MSM was very present in the election for two principal reasons. It did everything to either have people abstain or to vote against the LP. Second the election was a vote against the MSM to the extent that electors chose the only real alternative to the current Government.

It seems to me that the LP was disadvantaged by the abstention as many civil servants and employees of parastatals and SOEs did not vote. They said so during the campaign as many had to sign letters that they would not participate in electioneering. I also think that Bhadain took most of his votes from the Labour pond. In fact he did better than the MMM candidate in five schools where LP usually does well.

* Another defeat for the MMM in a long list of seven consecutive defeats at the polls since 2005 under the leadership of Paul Bérenger – that’s one too many, even by Mauritian standards. Party leaders should step down when their parties hit the rocks, shouldn’t they?

It is for the MMM to decide about its leadership. Berenger is a charismatic leader and difficult to replace. There is no culture of leaders resigning after an electoral defeat as is the case in many advanced democracies.

What happened to the MMM was expected even if the extent of the defeat has shocked many including the MMM itself. It has a glorious past but has failed to adapt its offer to the changing political and demographic landscape and the social transformations. More importantly, the demographics that constituted its core electorate have considerably dwindled. Its appeal has significantly waned.

One group has left it in droves and migrated to the LP. We saw it in Ollier and Beau Sejour. Another group’s vote was fiercely competed for among the MMM, PMSD, Diolle, Bizlall and the LP. We encountered it in St Jean, Beau Sejour, Pere Laval and Palma NHDC.

A third group was encouraged to vote for the party that could win nationally and not to remain in the opposition. It worked in Ebene and La Source. I honestly do not think another MMM candidate would have made a difference. The ground has simply shifted away from the MMM. And this is amplified in a highly fragmented contest. I have friends in the MMM, and they surely know about these shifts.

* If the MMM leadership were to listen carefully to what voters, but mostly to those who abstained, said on Dec 17, an electoral alliance of the MMM with the MSM should be ruled out – leaving the MMM to fight it out against the Labour Party at the next general elections. What do you think? Or not so simple, would you say?

It will be a very difficult choice. Between the subjective preference to go alone and the objective reality that could impose an alliance with its risks. As the MMM has lost a sizeable share of its core electorate and polled only 14% in No. 18, it will not be able to negotiate from a strong position. However going alone may be worse. It will be a tricky risks-and-rewards exercise. It will be torn between the desire to go alone with the prospects of losing in many constituencies and the realpolitik of an alliance with the MSM to have a fighting chance in as many constituencies as possible. The same applies for the MSM. It may be tantamount to a Hobson’s choice.

The MMM presented Berenger three times as Prime Minister or President with enhanced power (1983, 1987 and 2010). It lost all 30 seats in the 10 rural constituencies in 1983, was thrashed 28-2 in 1987 and well beaten 29-1 in 2010. Even in 2005 – in alliance with the MSM and sharing the prime ministership with Pravind Jugnauth – the MSM-MMM alliance lost 26 to 4 in these 10 constituencies. This is the stark electoral reality. And we saw what a three- or four-cornered contest delivered in a constituency as No. 18 which is not representative of the demographics of many constituencies where LP has the high potential to do better. In a three-horse contest in the by-election of Flacq-Bon Accueil in 1998, a new candidate (Faugoo) of the LP won easily with 42% of the votes against Anerood Jugnauth of the MSM while Dulloo of the MMM was a very distant third with only 15% of the vote. The choice would therefore be a very tough one for the MMM.

* To come back to the leadership issue – the Labour Party’s: Navin Ramgoolam lost the Dec 14 election, and Arvin Boolell’s victory has in a way salvaged the party’s honour. Boolell has also made known his interest in the LP’s leadership. Who do you think would best defend the party’s colours in 2019?

The LP will have to choose in case there are at least two persons who contest the leadership at the forthcoming ‘Congrès’. The choice must be respected if it is done democratically and transparently.

There are objectively three winners in this by-election. The greatest victor and by very far is the Labour Party. Voters still largely make their choice on the basis of party allegiance. The LP candidate won because of the ‘appareil’ of the party, its historical strength in many areas of the constituency, its casting as the only alternative nationally to the MSM government, the tireless campaign of its agents, the excellent election and communication strategy of its cadres and its good organisation and logistics on polling day.

Diolle was a very good candidate but lost massively with only 6% of the vote because she was from a very small party. Yuvan Beejadhur was a smart candidate with a lot of goodwill but collected less than 1% votes because he is not from a major party. Party allegiance still matters significantly in elections. Hence the slogan of the LP ‘Zordi No 18, Dimé Moris’. It is the only party that can win seats in all parts of the country. In the North, East, South, West, Port Louis, Lower Plaines Wilhems and Upper Plaines Wilhems. And many people in No. 18 voted on the basis that the LP stands a good chance to be the next government.

It is of course a personal success for the excellent candidate Arvin Boolell. With his affable personality, Arvin Boolell was the best candidate LP could field. A perfect gentleman, courteous, non-controversial, easily accessible, he gets on with everybody, has no enemy and cuts across social classes and communities.

However the election is also a vindication of Ramgoolam after his many legal problems and the vitriolic criticisms he was subjected to. A seasoned journalist characterises it as ‘un vote du pardon’ for Ramgoolam.

The campaign was tough and rough and directed not against Boolell but against Ramgoolam with force and fury. Berenger summed it all when he cogently repeated ad nauseam that ‘a vote for Boolell is a vote for Ramgoolam’ and that Boolell was simply a ‘paravent’ for Ramgoolam. Bhadain and Duval also hit very hard against him. The victory and more importantly its margin could also constitute a redemption for Ramgoolam as in a democracy there in no greater legitimacy and recognition than the popular vote. Tongue in cheeks, the electorate listened to Berenger and voted for ‘Ramgoolam through Boolell’! Whether this is enough to redeem him completely and endear him to the electorate is another question. It is a good beginning. And as leader of the LP, Ramgoolam did as well as Berenger, Duval and Bhadain combined. An excellent feat for someone so vilified in the campaign.

* Beyond the leadership issue, there is also the manner in which the party functions, the stranglehold of the leadership over the party structures, finances and decision making process. To be fair, it’s much the same with the other parties as well, but for having borne the brunt of that leadership stranglehold, you would agree that democratisation should really start there before moving on to the economy, shouldn’t it?

Agree. The leader must be chosen democratically and transparently. However, I honestly believe that beyond Ramgoolam or Boolell, the LP requires a strong, diverse, multi-disciplinary and talented team to rise to the economic, political, societal, digital, and environmental challenges facing our country in its drive to improve the quality of life of our citizens. It needs a collective intelligence and a shared responsibility and not a one-man show.

The world has become far too complex for political parties to be governed as personal fiefdoms. The LP must reinvent itself with a judicious mix of young and new people, women and the experience and expertise of those who have the practice and knowledge of power. These young people and women must be empowered to understand the complexities of policy making. And the party must align with the aspirations and expectations of a modern, vibrant and diverse society. Then it requires a set of ideas, policies and measures to address the multiple challenges confronting the country. Especially how to ensure robust growth that is both inclusive and sustainable. It must establish policy think-tanks to discuss, deliberate and reach agreement on the best measures and strategies to cure the many problems we face.

The LP has the potential to establish its credibility as a truly national party with a national agenda. It won in all thirteen schools in 18 and took significant votes from all communities. It should build on that momentum and attract people from everywhere to constitute a winnable platform. And it must be present on the ground to sensitise people about the new ideas and the reforms of the LP. The reforms must be about people, ideas, policies, presence and identity.

 * The LP and Navin Ramgoolam are speaking a lot about the adoption of “radical politics” by a future LP government. What are your feelings about those radical politics of Ramgoolam?

The LP is speaking about a break from the past — what it calls a ‘politique de rupture’. While there were many achievements under the LP government, it must also draw the necessary lessons from past ‘manquements’ and mistakes. It should show contrition as the only people who do not make mistakes are those who never make decisions. The electorate will acknowledge it.

The world is fast changing. The LP must keep abreast of key issues that will influence policy making in all major areas. It must also practise good governance and operate in transparency and with accountability. It is in that context that there is mention of ‘rupture’. Rupture in the choice of those who will stand as candidates for the LP. At least one third will be women and I hope at least one woman in each of the 20 constituencies.

Rupture with at least one third of Ministers being women. This is a right and not a privilege. Not far from what Macron and Trudeau have done in France and in Canada. Rupture with at least one third of women on the boards of parastatals, SOEs and large private sector companies in order to break the glass ceiling against women.

Rupture by having 50% of candidates who will be new and young. Rupture with the appointment of CEOs of public sector companies by a bipartisan Parliamentary committee. Rupture in ensuring that talent, skills, qualifications and merit determine who is appointed to key positions.

Rupture with the introduction a ‘Freedom of Information’ act. Rupture by ensuring strong, independent and functioning institutions. Rupture with a relentless fight against fraud, corruption, nepotism and drugs. Rupture with a greater role for civil society and NGOs in policy making and implementation.

Some cynics might be tempted to laugh it off. But we must give it a very good try and aim much higher for the good of our country. The LP can do it and it must prepare itself to accomplish that task.

* We hear that you are working on another PhD thesis on the democratisation of the economy – its history, the road travelled, how it floundered along the way, and the way forward. As a seasoned economist, who has had the privilege of occupying the strategic post of Finance minister in different governments which is where the engineering in favour of economic democratisation can/ought to be initiated – we understand the SIT was your doing –, does your experience tell you that this is a feasible proposition in a country like Mauritius inspite of its socio-political history and background?

I am not writing another PhD thesis. However I am doing a lot of work and research as I am extremely worried about limited shared prosperity and rising inequality in income, wealth and financial assets. In America, more than 90% of additional wealth creation has accrued to only 1% of the population while close to 66% has gone to only 10% of 1% (0.1 %) of the population.

In Mauritius, the Gini coefficient has deteriorated to 0.42 in 2015 while we do not have statistics on asset and wealth concentration. Anecdotal evidence shows growing inequality in wealth and assets too, probably much more than income disparity. It will become a source of great concern if this is not curbed. There are ways and means of mitigating such inequality without impacting on entrepreneurship, risk taking, innovation and market forces.

Investment in raising educational attainment, in training and skills upgrading, support for small and medium entreprises, reforms to ensure access and fairness in the labour market, broadening the circle of opportunities, review of competition laws, a more innovative approach to Financial technology (FinTech), investment in quality infrastructure and adopting policies that do not lead to speculative investment in land and property development at the expense of the productive sectors of the economy. Revisiting policies on conversion of large landholdings into property development that heavily distort the allocation of resources, are biased against the productive sectors, add very little to the economy except to the bank accounts of very few companies, are terribly unfair to the nation in terms of resource mobilisation, and discriminatory to small landowners/planters. We should also consider new models of company ownership in the face of increasing returns to asset owners… These are some of the areas we need to act to bring about more fairness and shared prosperity without impacting on economic efficiency.

Of course fiscal, monetary and budgetary polices will have to be calibrated accordingly to meet these objectives. The LP is also working on policies to lower graduate unemployment. These include measures to bridge the gap between supply and demand in the labour market, a greater emphasis on vocational and technical training and skills upgrading, a more focused apprenticeship and support for young entrepreneurship and mentoring. And a better approach in terms of social and welfare policy to eradicate family poverty, foster empowerment of the vulnerable and invest in pro poor infrastructure. It is about inclusive growth and shared prosperity.


*  Published in print edition on 29 December 2017

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