A Development Board

Mauritius Times – 71 Years

Private enterprise in Mauritius lacks initiative — it’s “private unenterprise.” The only alternative is for a Government Development Board to be set up

By Peter Ibbotson

Last week, I suggested that the economy of Mauritius needed diversification if the national income was to be maintained. I also suggested that a very real help to such diversification would be the setting up of a Development Board with certain statutory duties: to stimulate, facilitate, and undertake the development of industry and of agricultural undertakings or projects not already sufficiently well established (including the tourist hotel industry). The main objectives of such a Development Board would be to increase employment prospects within Mauritius and to improve the external balance of trade by expanding the production of locally made goods and foods. In the initial stages, three lines of approach would appear to be indicated: expansion of existing local industries, encouragement of new local industries, and stimulation of investment from overseas.

Port-Louis Central-Market in the early 1960s. Pic- Vintage Mauritius

Economic development requires the best possible use of the three factors of production — labour, raw materials, and finance. In Mauritius, there is a surplus supply of (mostly low-grade) unskilled labour, a paucity of raw materials except clay and coral sand (which could, in certain circumstances, be used as the raw materials for a cement industry), but a good supply of agricultural land, and a considerable amount of capital investment concentrated mainly in the mono-crop sugar. That means Mauritius exhibits all the phenomena of a plantation economy. The absence of minerals has prevented the building up of a manufacturing industry, and the price of land has so soared as to make any considerable expansion into crops other than cane impracticable (without fully subsidised agriculture). Cane alone employs a large labour force, besides being suited to local conditions and yielding a high return per arpent. In any case, historical accident made Mauritius a producer of basic raw material to be exported to the colonial power in exchange for consumer goods and capital equipment. In other words, the philosophy of colonialism in the nineteenth century exploited Mauritius, and the present-day economy is an unhappy hangover from those days.

The small secondary industries which have grown up have done so in spite of the economic system, not because of it. To manufacture a local product to replace the imported article cut directly at the interest of the importer, who had previously drawn his commission on importing a branded product with an assured sale and was now asked to handle a local product of unproved quality and problematical demand. Nonetheless, vested interests of importers must not be allowed to stand in the way of economic development. The whole is greater than the part; the economic well-being of Mauritius is more important than the private profit of a few importers. How can the economic position be improved? Professor Arthur Lewis, whose advice has often been sought in and by colonial territories, says that if there are metallic ores, then try and develop heavy industry. Otherwise, such development is impossible except uneconomically. Alternatively, try and develop secondary industries based on processing any raw materials or natural produce found locally; or try and produce consumer goods, relying on a plentiful supply of local hand labour to outweigh the cost of importing the raw materials in whole or in part. Any type of industry could be encouraged which can absorb a high percentage of labour cost in the finished article, or in which the products are very bulky and so incur heavy freight charges in relation to total value.

The attack on the balance of payments can be two-pronged. Local or imported raw materials can be fabricated and exported in order to earn revenue; or the products can be sold locally (even if made from imported raw materials) in order to reduce import costs. (Clearly, raw materials would cost less than manufactured goods so that the balance of payments, put in very simplified terms, would be reduced by at least the amount of the labour cost in the manufactured imports.) Ideally, the effort should be directed at building up an export industry; but the second prong of the attack should not be neglected, provided that the locally-made product is at least as good as the imported product and costs less rather than more.

It has been established in the Caribbean that industry which is highly capitalised needs fewer workers but pays higher wages per worker. Low capitalisation is concomitant with large working staffs but lower wages per worker. Thus, a soft drinks factory employing 50 workers had a capital cost of £70,000 — that is, capitalisation of £1,400 per worker. Against this, a mixed citrus and banana plantation employing 200 workers had a capital cost of £74,000 (capitalisation of £370 per worker) and paid average annual wages of only £93 per worker. A raw sugar factory would call for capitalisation of £8,500 per worker, with correspondingly higher wages per worker.

A cement factory in Mauritius would need high initial capitalisation per worker, and the wages would therefore tend to be high. If there is continued disinclination to utilise the existing clay and coral sand (plus bagasse ash) for cement manufacture, then the local clay could well be used to manufacture hollow clay blocks and other domestic building products. Coral sand could have a building use; certainly, coral block can be utilised in certain types of constructional and foundation work. Fishing, like the fishing industry of many another colony (e.g., Barbados, Fiji, Seychelles), is at present under-capitalised and under-organised. Has every effort been made to utilise sugar by-products in the most efficient manner possible?

And, given efficient production and distribution, there is no reason why market gardening and fruit farming should not be so developed that import of vegetables and fruit could virtually cease. Market gardening is essentially a small man’s business, but the actual marketing of fruit and vegetables calls for a marketing cooperative or a marketing board (the one arising from the growers’ own initiative, the other from government sponsoring). If the yield of sugar per arpent continues to increase, there is every reason to believe that the export quotas under the Commonwealth Sugar Agreement could be met from the estates; thus, the land at present farmed by the small planters and métayers could be released from sugar and turned over to market gardening — unless the small planters and métayers grew sugar under an internal quota system, so that some of the estate lands became free for market gardening.

A Development Board could assist all such undertakings; it could also assist the establishment of secondary manufacturing plants relying on imported raw materials. Barbados and Malta, which are like Mauritius in that they are small, overcrowded islands, have each established a Development Board in the recent past. In its first year of operation, the Barbados Board provided capital for a new printing works, mechanisation of a limestone quarry, establishment of a frozen fish processing plant, mechanisation of a furniture works, the buying of a new packaging plant for a confectionery works (confectionery ought to be made in Mauritius), set up a shoe factory, and expansion of a plant for the manufacture of acetylene gas. In later months, the Board has materially assisted the development of the tourist hotel industry.

In Malta, the Aids to Industry Board has launched a drive in the last six months to attract new industries; new factories at low rentals, tax concessions, and grants are among the inducements to set up in Malta. Nine firms are already going ahead; they include a cotton mill to employ 500 and a car assembly plant to employ 250. Another eleven applications are under consideration by the Aids to Industry Board, including projects varying from plastics, clothing and knitwear to the propagation of plant cuttings. Reviewing the success of the Board’s campaign recently, The Times said that the great attraction of the island to industrialists was presumably “a source of abundant and relatively cheap labour.”

Admittedly, Malta is near expanding markets in Europe, Africa, and the Middle East, while Barbados can catch the American market, and Mauritius is more remote. But Hong Kong is far from the markets to which it exports great quantities of clothing, and Japan can compete with the European market in Europe itself. There is no reason why Mauritius cannot compete on the world market despite its comparative remoteness from centres of population; and development of the tourist industry can be aimed at capturing some of the East, South, or Central African tourists.

But private enterprise in Mauritius seems to lack initiative; in fact, it is rather private unenterprise! Given that lack of energy and initiative, the only alternative is for a Government Development Board to be set up, charged with the statutory duties outlined at the beginning of this article. And it should be set up under the managership of an energetic person who realises the importance and vital urgency of economic development and diversification in Mauritius.

7th Year – No 317
Friday 23rd September, 1960  

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