2017 – Cautious optimism?

While cautiously optimistic, this is not a game-changer and we cannot be unaware that a large number of clouds hover ominously around the skies as we embark onto 2017

Our economy is far more complex than it was twenty years ago when it could be said to rely on three main pillars: sugar, textiles and tourism. Offshore activities, the sea-hub, IT industry, financial services, real estate developments for foreign buyers (under RES, IRS or today, the Smart City appellations), even the development of tertiary education opportunities have all added new dimensions to an economy that has grown at a steady 3.5-3.8% despite the massive financial crisis of 2008, the dim growth rates in many of our foreign markets or the explosive rise of crude oil prices that hovered over the national economy for several years. 

Buoyant sectors, in IT and financial services for instance, helped cover up for sectors undergoing difficult transitions while government and private sector actively prodded alternative sources of future growth: renewable energy, marine resources or blue economy, port and airport cluster activities, to mention a few.

Many respected analysts from public and private sectors reckon those middling rates of 3.5% could be boosted up under the right mix of policies and circumstances. Mauritius Inc was under-performing compared to the South and South-East Asian engines of growth. But analysts were equally at pains to point out that transition to higher performances would require a major coordinated and planned effort touching all factors including entrepreneurial morale, business facilitation, clear decision-making, respect for the rule of law and at least a medium-term visibility horizon.

Even if no “miracles” are expected, moving from one plateau of performance to another tends to require hard, intelligent and coordinated planning, as we already know or suspect from our own past experiences. To continue expecting that a coordinated development strategy or Plan could or should emerge from the top-hat of a Minister of Finance on Budget day places inordinate expectations on that annual exercise and on the incumbent, brilliant, talented or persuasive though he may be. However much we respect the ambit, competencies and centralisation inherent in the MoF, political calculations and shorter electoral time horizons ingrain risks of ad-hocism, of “big project” orientation and may not do full justice to the country’s need for longer-term integrative strategic planning and development abilities.

On a side-note, the latest rather large slippage in the Ease of Doing Business ranking, should be a wake-up call. Not everything will go better simply because we have more or more frequent meetings of so-called High-Powered or Fast-Track Committees. While not disputing the necessity of a mechanism for regular public-private sector exchanges, such announced or requested “ad-hoc” high-level committee mechanism only suggests that our normal “system” for handling development projects and priorities is creaky, cumbersome, unreliable, inefficient or, still worse, erratic and ineffectual. In short, we should gear ourselves to fixing the “system” rather than adding a further layer of chief cooks to stir the broth.

Volatility is in the air

On the political front, volatility is in the air. With the resignation of the PMSD over the controversial proposal designed to deprive the Office of the DPP of its Constitutional independence, the political context of growing simmering frustrations has acquired a new subversive dimension. An upcoming ministerial reshuffle, always a tricky affair at best, promises hard bargaining that could extend over long weeks, sorely testing the limits of the MSM-ML tandem now in office. Undoubtedly, political considerations could continue to overshadow economic development agendas and handicap clarity of strategic or operational decision-making in the first few months of 2017.

There may be some comfort that major public investment projects, some initiated by previous incumbents, namely the 20-25 billion Rs Light-rail project connecting Curepipe to Port-Louis, which necessarily implied a total redesign of the road/bus/rail terminal at Victoria Square, or the Bagatelle Dam, not too early whatever the costs, will at last enter start phase. Even the common-sense development of the harbour into a petroleum and bunkering hub with Indian expertise, part of the strategic cooperation partnership offered by PM Modi almost two years ago, has at last found grace with government. But with political volatility a primary consideration, their smooth implementation remains fraught with unknowns and the ride ahead could still be tumultuous.

If the perspective of continued political instability throughout early to mid 2017 is bad enough, the course of events have conspired to throw in a spateful of other factors that may harbour their own germs of instability. For instance, several high-profile cases come up for judiciary procedures and hearings between January and March. These have been detailed elsewhere in the press and, in brief, concern the former PM Navin Ramgoolam, the PM-in-waiting Pravind Jugnauth, the former Minister Raj Dayal, the PMO special advisor Prakash Maunthroah and the DPP.

To these matters, may be added the quango entered into by Cabinet decisions regarding two block-buster affairs where massive legal damages and reparations in foreign independent jurisdictions have been entered. Whatever the bien-fondé and merits of the Bramer/BAI and the Betamax litigation, observers will stand guarded against the possibility of arbitration outcomes that could have massive repercussions on the local political and social scene. One can understand that government remains rather tight-lipped on both pending claim procedures and the hearing dates for final resolution or award, but developments during 2017 are not excluded.

Rotten apples

Equally disquieting are the reports in the press concerning the latest hearings of the Commission of Enquiry into drug trafficking matters and their potential political ramifications. There is a perception that key institutions like the Police, Customs, Prisons and National Coast Guards could have been infected by well-connected “rotten apples”. One wonders whether the NSS or the ADSU should not train their Dobermans, their CCTV cameras elsewhere than on peaceful university campuses or on the idle banter of Ministers, MPs and political agents who seem to know anyway that they are watched night and day.

On the political front, the PMSD and its new-found Leader of the Opposition, Xavier Duval, have a real challenge to develop their bark and bite in as mordant a fashion as Mr Berenger, a veteran office-holder in Parliament. Opposition parties and even independent MPs will no doubt try to coordinate their ability to put the MSM-ML team on the backfoot in Parliament. But we suspect the real power shifts will continue to take place outside the august Assembly.

Captains of productive sectors of the economy and observers in general have decried the excessive focus last semester on the political dimensions of our collective governance. Private local investment at about 17% of GDP since 2015, remains well below signs of a confident, buoyant economy. The level of Foreign Direct Investment has remained under-par and probably heavily skewed towards one-off property purchases. But, there are signs that some large private projects may start picking up pace in 2017 and, on the strength of public and private investments planned, that the economy may end up humming at 3.8-4.0% during 2017, provided external unknowns stay within bounds and we are not dragged into our own political vortex.

While cautiously optimistic, this is not a game-changer and we cannot be unaware that a large number of clouds hover ominously around the skies as we embark onto 2017.

U.C.

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