NMH transactions on the Stock Exchange. The Public should know

Political Caricatures

It may be recalled that the Financial Services Commission had opened an investigation into the different steps followed on the trading floor of the Stock Exchange on Tuesday, February 16, 2016 in relation to the transfer of 45.5 million shares of New Mauritius Hotels Ltd (NMH). The regulator had retained the services of the accountant Kriti Taukoordass to establish the chronology of the events relating to the transactions of New Mauritius Hotels.

Kriti Taukoordass had compiled a list of offences that would have been committed at the time of the transaction, including “Market Rigging”. The public is least concerned by the agreement in the Supreme Court Mediation Division between the NMH and Kriti Taukoordass or the ICAC “semblance” of an investigation. The FSC should demand that Mr Taukoordass complete the interim report and submit a final report. Whether it is the interim or the final report, it should be made public.

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Mammography machine broken down since August 2018: Is this a priority?

Patients undergoing treatment for breast cancer are distraught. Since August 2018, the authorities have been trying to repair the mammography machine at Victoria Hospital. It is unbelievable that such a crucial machine for diagnosing cancer among women is out of order for so long. There are presently about 100 patients on the waiting list at Victoria Hospital. They are being asked to be patient while the disease is taking its toll. Many patients are being referred to the Mauritius Family Planning Welfare Association (MFPWA) and many have to fork a substantial amount of money for treatment. People are scared all the time. If they are sick, they think: who will pay?

Many NGOs have been canvassing for every regional hospital to have a mammography machine. They find it abnormal that there is a single equipment of this type in the public service. With the progression of breast cancer from year to year, shouldn’t the authorities be doing more in terms of early detection at the age of 40 by making it cancer screening tests mandatory? Is this not a greater priority needing more resources than the Metro Express and Safe City projects… that are consuming so much of our limited resources?

We also have the case of the patients of Moka Eye Hospital who have been waiting since the beginning of last December for treatment of Keratoconus – a progressive eye disease, which causes progressive nearsightedness and irregular astigmatism to develop, creating additional problems with distorted and blurred vision. It would appear the Pentacam Corneal Topography System equipment has broken down and is undergoing repairs. It will hopefully not be a long wait.

Shouldn’t we be creating a society in which everyone has a chance to live a long, healthy life? Is there anything more important than proper health care for our population?

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Global Business Sector: Substantial fall in FDI flows to India

FDI equity flows routed through Mauritius declined sharply by $ 6.8 billion from $9.8 to only $3 billion for the first half of the year 2018, reflecting the impact of the amended DTAA. The authorities, who had turned a deaf ear to the warnings of the small operators of the sector that the elimination of capital gains exemption under the Mauritius-India tax treaty as from April 2019 was bound to impact adversely on the future growth of the financial services sector, have now realised that Mauritius needs more time to adapt to the new conditions of the treaty.

At the time of the re-negotiation of the treaty, we had cautioned government that it was overestimating the potential for developing alternative financial services activities, such as captive insurance, securities business, or wealth management and that the negative impact on the economy might be more severe than expected. We had suggested that it would have been wiser to negotiate better terms for treaty revision, such as on a maximum capital gains tax applicable in India, during a transition period of 5-7 years, and a limited taxation of interest on bank credit, instead of settling for compensation for the major losses to Mauritius stemming from the treaty revisions, especially regarding the capital gains tax exemption.

But the then Minister of Financial Services was boasting that with the new treaty «il y a tout un boulevard qui s’ouvre à nous». Now, he and his ex-colleagues of La Cuisine, have hopefully become being wiser after the event.

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What’s happening in Agalega?

There all kinds of bits and pieces of information that are being circulated about Agalega. A hundred Indian workers are already present for the largest construction site the archipelago has ever known, namely the construction of a 3000-metre long airstrip and the development of a mini-port. “What is happening is shocking and disturbing. Thirty-two panels were placed to indicate the locations of new buildings to be built. It reads that there will be a “guest house” for VIPs, a hospital for VIPs, etc. They take half of the North Island,” says Arnaud Poulay. Some the inhabitants have been informed by the contractor, Afcons that they will have to evacuate their homes because of the construction site. The inhabitants of Agalega are very angry and surprised by the turn of events,” he added

The agreements binding India to Mauritius, concluded on March 11, 2015, relating to Agalega, will remain secret. “The agreement signed between the Government of the Republic of India and the Government of the Republic of Mauritius is subject to a confidentiality clause. The agreement, in toto, is subject to confidentiality. So there can be no full or partial disclosure,” said Fazila Jeewa-Daureeawoo, Deputy Prime Minister and Minister of Regional Government, in a written response tabled in Parliament last May. The Great Peninsula will have privileged access to airport and port facilities.

But the lack of dialogue between Mauritian authorities and inhabitants of Agalega is to be deplored.

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Minimum wage: Only a correction, but not enough

Both the World bank studies “Mauritius: Systematic Country Diagnostic (2015) and the “More Equitable Labour Markets in Mauritius: World Bank Report (2017)” have highlighted the fact that between 2010 and 2015, income growth among the bottom 40 percent of the population has been low relative to the average income.

Income growth of the bottom 40 percent of the population has been disappointing and has increased at an annual rate of 1.8 percent compared to 3.1 percent for the population at large. As a result, the middle class has shrunk during that period and has become increasingly vulnerable to falling back into poverty, putting growing pressure on the bottom 40 percent of the population to achieve or retain their middle class status.

Thus the minimum wage was not a big deal. It was a correction of the growing inequality among the poor and lower middle class. But that is not enough, as it does not tackle the source of the problem. The more vulnerable fail to obtain an equitable share of income growth because of their lack of skills and they face the risk of falling back into poverty. Thus, as recommended in these reports, more should be done; in the short term, large targeted training programs could be envisaged for retooling the Mauritian labour force in line with current market requirements, thus boosting employment and income generation.

Do not only distribute goodies, give them the tools that will empower them and expand their skills…!

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The Negative income Tax: A premature decision

In its annual report of June 2018, the BOM indirectly confirms that the Negative Income Tax (NIT) measure introduced in Budget 2017-18 was just a copycat version of the Earned Income Tax Credit (EITC) from the IMF 2014 Article IV Consultation – Staff Report. It also adds that the IMF report considered the introduction of such a system in Mauritius to address two persistent problems, namely the poorly targeted social safety net system, and low youth and female labour participation, viewing it as a long-term option given the underlying costs.

Yes, the IMF Article has cautioned us that we should not be in a hurry to implement the EITC/NIT. Why the rush? To score quick wins on the populist side thanks to the NIT! Like the “free” tertiary education measure announced without prior planning and proper assessments or consultations.

Is not irresponsible on the part of our policy makers to adopt and implement part of the IMF recommendations while neglecting that part which recommends that a proper assessment be carried out on the objectives of NIT, the sizes of the potential benefits and administrative costs and availability of fiscal space over the medium term before envisaging any such measure? When it comes to the percentage rate of the NIT, is the rate proposed giving enough for a humane standard of living without removing the incentives for earning more on your own? Is it not presently a poor or negative way of incentivizing self-sufficiency? At this stage of our development, is it not another guaranteed income of the state that encourages consumption rather than human capital formation?

All those countries that have implemented an EITC programme have a highly skilled and versatile workforce and have put in place an ongoing and intensive process of skill formation that enhances workers’ flexibility and employability. Are we really aware of our priorities, given a consolidated budget deficit, inclusive of off-budget expenditures, of 5% of GDP and a level of debt higher than 64.2% of GDP as at September 2018?

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The Minister of ICT: Ambitious plans of nano-satellite, AI and blockchain technology

With some 100 teachers trained in coding, 2300 upskilled under the Digital Youth Engagement Programme and 3000 under the ICT Awareness Programme for Senior Citizens, the Minister thinks that the country is thus ready to launch its own nano-satellite and maybe our own version of Sophia – the latest human-like robot. But the stark reality is that the ICT sector is already showing signs of deceleration constrained by labour and skill shortages and uncompetitive tariffs for international bandwidth connectivity and is finding it increasingly difficult to move to higher value services.

Mauritius’ innovation system ranks 75th in the 2018 Global Competitiveness Index, far behind other middle-income countries. This undermines the country’s ability to attract additional FDI and, more importantly, to absorb global knowledge and technology. Mauritius is underperforming in many Scientific and Technology (S&T) and innovation indicators, including low in R&D expenditure, has few S&T journal articles and patent applications…And our children completing primary education lag behind their peers in comparator countries with regard to basic literacy, math, and science skills.

With 48% of the unemployed aged below 25 years, we should be aligning the country’s resources for such priorities, thus putting in place the building blocks for sustainable development instead of these farfetched elitist policies for development of AI and nano-satellites. The Sugar, Manufacturing, ICT, Financial Services and Energy sectors are facing all kinds of difficulties and will need additional resources to keep their heads above murky waters. These are the priorities for now!

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Education reform: Further challenges ahead

As little bits and pieces of information concerning the implementation of the educational reform gradually find their way in the public domain, we feel that there are reasons to be concerned. There is need for greater communication between the authorities and the general public. It is important if we want to get everybody on board.

For example, for the “Academies” which will have to face the realities of co-education, it is as much a question of upgrading and adapting the physical infrastructure for proper planning especially as regards the level of support to teaching staff and the ideal student-to-teacher ratio and class size. On the “Extended Stream” system, there are enough of indications that we are heading towards a dead end. A rethink is necessary on the challenges of combining a specialised academic programme with providing adequate vocational training or else we will be banging our head against a brick wall: after four years of mainstream education forced upon unwilling students, we will be faced with another batch of student failures and frustration.

If we are indeed talking about a genuine educational reform, the whole teaching environment will have to be modified. In Academies, we will have to invest heavily in teaching labs that give the students more tools and greater autonomy to study at their own pace instead of the traditional spoon-feeding chalk and talk. It also frees the teacher for more of creative supplements for the students. This will also free the teacher for more of creative supplements for the students. The way that the authorities are going about the reform at their own pace and in a piecemeal manner makes us doubt whether our reformers are prepared for such needed changes to overhaul the whole education system.

* Published in print edition on 18 January 2019

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