For quite some years now Mauritius has been languishing within the middle-income range,

Rattan-Khushiram

caught in a low growth trap of below 4% due to declining investment ratios, slow manufacturing growth, limited industrial and export diversification, poor labour market conditions and an absence of structural reforms. The current situation of pernicious low economic growth, rising unemployment and lack of prospects for growth is a reflection of its dual economy characterised by low-wage poor country competitors dominating in old/mature sectors/industries and rich-country innovators straddling across sectors/industries under-going rapid technological change.

Our successful evolution through different phases of growth during the past five decades has resulted in a highly polarized economy around a large corporate sector and conglomerates. In the context of limited economic space in a small island state the second generation entrepreneurs born of this economic elite have successfully pursued backward and forward integration and today have exploited the market niches. The entrenchment of the oligarchy-dominated private sector corporates or big companies at the heart of the local economy is striking. The hold of the conglomerates on economic power and wealth has been consolidated over the past fifty years- a legacy of successive regimes. A handful of top companies are generating wealth for a small number of people and have thwarted the level playing field by exercising greater control over new opportunities in the economy. Such that today we have a lopsided dual economy with two different visions of the economy. Indeed, the consolidation of the inherent historic advantages of this economic elite has created a lopsided dual economy ‘à deux vitesses’.

On one side, you have the economic dominance of a rejuvenated version of the old propertied oligarchy which has imposed its model of development. A model of development that advances the private sector’s interests by liberalizing land to unlock massive potential for profits in real estate development for large land owners, that are more advantageous to IPPs in energy, that encourages the employment of foreigners and promotes hotel development for the business oligarchs with public infrastructural investments. With the result that today, the new larger corporations, offshoots of the old sugar barons’ holdings companies, managed by the same families, have become more entrenched.  “Markets and free competition are limited by the actions of the oligarchic families who dominate major plantations, financial institutions, real estate, trade and telecommunications.” BTI 2010 — Mauritius Country Report. Gütersloh: Bertelsmann Stiftung. It is a model of development that reinforces plutocratic private interests as opposed to enlightened national interest- a model of development that seeks still freer hands to push forward a particular economic agenda without conceding much of the entrenched interests and leaving crumbs for others.

But what is intrinsically wrong with this model of the oligarchy-dominated private sector of conglomerates? The conglomerates are squashing competition. They are gaining control of entire markets and finding new ways to entrench themselves. Many of the large firms have acquired or setting up their own start-ups diminishing the opportunities in the long term for other SMEs in promising sectors. And their profits no longer translate into jobs as once they did. Most of the conglomerates also reflect their excellence at less productive activities. The policies that rely on the speculative and unproductive use of our country’s strategic land assets by selling them to foreigners (which has accounted so far for around more than 60% of the FDI inflows during the past five years) will surely generate wealth and some periods of reasonable growth but it will neither be sustainable nor inclusive in the long run. Should we be surprised then that the private sector is not forthcoming with investment in new sectors/pillars? Why? because this model of growth is providing them with a more than reasonable rate of return on the low hanging fruits.

On the other side we have the rest of the economy – the small struggling entrepreneurs, the small planters, the informal sector, the public sector and the rapidly impoverishing middle and lower classes – which is trying to cling to whatever opportunities that are still left for them or to whatever the public sector is trying to provide via yearly budgets and government programmes as enunciated in its long term vision of the economy. A long term vision that reinforces the present model with some apparent modernising touches like development of new growth poles – the ocean economy – and some superficial and broadly populist policies to address widening income and wealth disparities. There are just empty promises – like the minimum wage or the NIT that do not empower workers or boost productivity but encourage consumption – because the State is a mere appendage in this model of development, servicing the dominant private sector. Despite all the accoutrements of a modern state, it has a leadership that is just managing the present – the status quo. Shackled by the imposition of a liberal vision of low taxes and huge concessions to the conglomerates and hampered by its own murky governance, cronyism and patronage that have resulted in abundant state capture, it has neither the resources nor the right policies or the will to implement a new vision of the economy – especially a model that is more inclusive on the production side of the economy.

We are at the crossroads of some serious choices. We need a decisive rupture from the previous economic model and its policies that have focused on some quick short term populist measures and picked the low-hanging fruits. There is frustration over the current status quo and people are restless for change. The combination of a lack of economic opportunity and access to facilities may become a toxic brew.  Problems like unemployment and poverty, instead of being addressed on a sustainable basis, are being postponed by short-term palliatives. All these methods and institutions have run their course and proved to be ineffectual in creating jobs or a competitive economy.  The country has to carve a new vision towards an alternative development paradigm anchored in new realities. Many of our stakeholders, especially the environmental and leftist groups (Lalit and Rezistans ek Alternativ), are already demanding that we reassess the developmental model which is neither sustainable nor desirable or even workable.

The growth model needs to be bold and inclusive. Businesses need to really find new answers; to be a global player and attain sustainable growth via higher value added activities; knowledge excellence and exemplary business practices have to be adopted. Is it not time to dump lower value added activities (cane, sugar, textiles, sea food activities…) while not neglecting other agricultural and agro-industrial production for food security, for now and for future generations? We need an “Optimal Land Utilization Authority, a ridge to reef development of our coastal regions”, equally we have to decide whether it’s smart cities or sustainable use of land and other natural resources, fish farming or protection of marine life, modernisation of the education system via online learning labs or traditional curriculum development and expansion of educational physical infrastructure. For others, technological development, innovation, access to finance hold the key for transition towards a more inclusive and resource-efficient economy. Still others want, to see how we are to decrease the environmental footprint of our products across the value chain; how we develop our cities to have a soul, a living landmark rather than a theme park; how we are to source most of our raw materials sustainably and how the corporate houses are to steadily integrate green practices into their mainstream functioning and open up opportunities for others – a genuine democratisation of the economy in all sectors and at all levels. These initiatives will be the building blocks to achieve a national Vision to provide a shared destination. These hopeful signs will be the precursors of a revolution that Mauritius cannot miss.