Vodou is a Haitian Creole word that formerly referred to a small subset of Haitian rituals. It is descended from an 'Ayizo' word [a dialect cluster from Benin] referring to "mysterious forces or powers that govern the world and the lives of those who reside within it''. The mysterious forces that hypnotises the governing minds of the Mauritian Private Sector have a distinct 'Vodouesque' trait, both in essence and in posture…
Grotesque irrationality is gift wrapped into an 'economic victim' strategic scenario to lean on seasoned central bankers and economists who engineer our monetary policy and monitor inflation targeting econometric data. Voodoo Economics seem alluring to our private sector who cajoled a business-as-usual model attuned to stimulus packages and public funds subsidisation of sectoral investments with a minimised risk exposure and a maximum profit margin with tax exempt supernormal earnings. This cozy business culture has been the norm since Independence in 1968, in a bid to replicate the Colonial paradigm of dominant economic groups' secured privileges over our national economic destiny since the early 18th century.
With the current prolonged post-subprime crisis, the chicken has come home to tikka grills. When the going is good, the private sector reaps the full benefit ; whilst when the going gets tough, the State [taxpayers' money] foots the bill in a psychology of moral suasion and collective 'patriotic' surge.
Nobel Prize Stiglitz vacation onto our shores gave a flimsy excuse to our Joint Economic Council to push for 'Quantitative Easing' as a magic wand to brush off the economic curse on the febrile porosity in the private sector growth projections, profit margins and Corporate Financial earnings ratios. It was a Joint Economic Circus of the unfunny sort, whilst the economic strategy of our Republic pedaled into weak productivity ratios and slipped away from high competitiveness index globally.
The foresight of the BOM Governor led to his repeated staunch warnings to engineer urgent and thorough structural adjustments within the private sector Business Models so as to manage risks and graduate to a global strategic efficiency mode without safety nets to cushion a free fall in base line earnings. Local Voodoo magicians squandered Additional Stimulus Packages in the pre-2010 fiscal years, and the chorus now hums the same tune with a slight twist [re-adjusted Mauritius Rupee Valuation] ; Lobbyists considered the Repo Rate as an easy strategic lever to loosen the pressure on the private sector to shield their business-as-usual posture in the face of dire scenarios wrecking the Euro Zone in terms of the volatility and intrinsic weakness of the Euro currency, and amidst an implosion of the Euro Zone growth rates fast approaching asymptotically negative territory.
The intrinsic strategic myopia was stubbornly entrenched in our private sector in the face of a calamity visible to the average downtown hawker who sniffed a China-centric business model in due time at the right trade cycle phase. Our Tourism industry leaders are still pondering whether they should depart from a bankrupt euro-centric marketing strategy to woo the hoard of lavish spending Chinese tourists onto our shores… Stubbornness when combined with ethno-sensitive stupidity is fatal, and the bill is expected to be lodged at the door of public coffers ! The national airline and our national tourism strategy are all Government funded efforts and the tax breaks are dipped into the hotel industry pockets with silver linings… Something is indeed akin to Voodoo Economics in our Motherland !
The regulatory and policy role of the central bank is prioritized in engineering financial and monetary stability with an inflation target that does not erode either purchasing power parities or savings ratios within our macro-economic environment. It is not a political lever to act as an insurance premium for the lack of proactive strategies of the private sector.
Crisis management seem to be a window of opportunity for our private sector to harness maximum [subsidies] windfall gains that cajole their shareholders despite the lack of tangible value additions to the target markets and to society at large. Commercial banks resolutely opt for risk averse investment profiles, and secured loans are the panacea of cash strapped small and medium enterprises who are coerced by archaic bankers to part with fixed assets to secure a hefty compound interest-indexed cash flow funding that may be recalled without due notice at the bankers' whims and fancy.
Private networking and special [subjective] status allow some clients to benefit from loans forgiveness whilst BOM Governor is right to be alarmed about non-performing loans momentum in the Mauritian private sector. The commercial banks seem to have politely sidestepped the BOM gentle suasion to soften the commercial banks allergy towards SME lending ratios. It is tragic to find our local banks shy away from incubator businesses, new technology and ICT start-ups. Has commercial banking assumed the status of a fat-laden civil service in the financial world ? Repo rate softening pressure is no longer a proxy econometric variable for widening interest rate margins to swell commercial banks earnings ratios to obscene proportions.
The Monetary Policy Committee Repo Rate status quo is a potent signal to lobbyists with an ostrich mindset buried in the sands of time. Risks-averse commercial banking and non-performing loans levels in the private sector are a benchmark of the severity of outdated business cultures that put our economy in the jaws of doomsday scenarios. The curse of interlocking directorates and cross-shareholding make sectoral monetary assistance a perilous siphoning of public funds to multi-faceted coffers within correlated stables.
The Budget exercise of 2013 should lay the foundations for a further structural adjustment of our economy. Adjustment, however, does not entail the undermining of worker rights and stalling decent compensation wage rates, nor the ring fencing of 'us and them' business models, nor the pollution of fiscal and macro-economic policies through the worker layoffs threats, nor persistent reluctance to invest in innovative projects and long-term niches with national impacts. Concurrently the Pay Research Bureau is woefully irrelevant at a time where public funds may not reward public sector laxity and oversized civil service incidence on GDP. Our Financial Secretary is wholly accurate in his posture to shatter 'business-as-usual' doctrine in the Civil Service as a Non-Option Scenario. The Cabinet should not bow to socio-cultural fetishism in major Policy Re-Engineering for a New Horizon Mauritius.
Public funds already underwrite human resource development, tax planning largesse, whilst private sector net profits are invested abroad with a global portfolio with returns not ploughed back into the source investment base subsidized locally. Profits are thus siphoned offshore and the cash flow is being fuelled through demands for relaxed repo rate, and soft rupee index, and further investor incentives to simply maintain a status quo that highjack national interests, and compromise the future of a whole population.
Government's role is ever more crucial in enhancing public interest and the common good so that the welfare [Pareto optimality] levels of the Nation at large is not leisurely traded for the idiosyncrasies of the few. In that light, the patriotic role of the BOM Governor and his array of central banking economists to thwart lobbyists' myopia is a lifeline for our economic survival.