Anil Gujadhur

Targeting the right Resources and Product-Mix

We have to go on extending our product and service range, for our economic survival, without leaving any stone unturned which ought to have been turned over

— Anil Gujadhur

Of the 525,000 in employment in Mauritius, 42,000 are engaged in the Primary sector (Agriculture, mining and quarrying, artisanal fishing, etc.), 140,000 in the Secondary sector (Manufacturing, industry, etc.), and the greatest numbers, 343,000, in the Tertiary sector (Services such as trade and finance, ICT-BPO, medical, legal, etc.). The three sectors account for 7%, 27% and 66% respectively of all jobs. Back in the 1970s, the greatest numbers were employed in the Primary sector. The situation has so changed today that certain planters are asking to be allowed to import labour due to the scarcity of workers to tend to activities in that sector. The point to note however is that Mauritius has inexorably shifted towards the provision of services during several past decades, given that the two other sectors have not generated profitable employment for our labour force to the extent needed.

The question is: can we sustain our economic development and employment levels in the years to come by pressing on with the services sector? If we go by the examples of advanced economies, such as the US, UK, and EU countries, the economy usually has capacity, through what is known as the multiplier-effect, to sustain a considerably large services sector. Economists tend to think however that a country with a strong manufacturing base has a better chance of facing up to economic downturns than one which depends extensively on the provision of services.

There is an argument that both manufacturing and services should somehow move in tandem. An efficient services sector will provide manufacturing solutions (through research, innovations and increased demand) that will give a competitive edge to a country’s manufacturing activities. This is how Europe and America have gained unassailable positions in aircraft manufacture, for example, thanks to the technology edge they’ve kept developing.

A country like Mauritius does not have the track record in areas such as these but it could engage in other types of manufacturing by finding its own level of efficiency in whatever it chooses to produce. Before 1997, South Korea was not in the business of digital technology appliances; it now is the powerhouse of Samsung, a strong competitor to America’s Apple’s iPhones and iPads. Being in the game, rather than out of it, helps a country to keep abreast of fast-changing technology. Such a strategy should give a better stability to our economic production base, so that if one of the sectors comes across temporary storms, the others would nevertheless pull us up in the meantime and thus weather the storm.

Economic history has shown that if we come to depend too much on single lines of economic activity, we face serious difficulties. Imagine, for instance, if we were relying solely on sugar production today. The economy would have been in a very sorry state with the recent disbanding of export quotas and successive reductions in the EU sugar price under the Sugar Protocol. Even after adding textile manufacturing in our production apparatus, we saw the shock caused by global textile trade liberalisation once the Multi Fibre Agreement went away in the early 2000s.

Moving on to the provision of international financial services has helped but we remain vulnerable to mounting pressures raised against us by rival international finance service providers and social lobbies in other countries, the latest being the recent row created against us by Action Aid in Nigeria and last week’s criticisms raised in Kenya against our Double Tax Avoidance Treaty with that country. We are not insulated against adverse developments and that is a good enough reason to keep giving an impetus for the economy’s ever-wider embrace of activities and market reach. Entrepreneurs should be willing, given this kind of market dynamics, to keep taking a fresh look at generating new production potential in diverse other fields where we can develop a competitive edge.

Even the provision of services in the digital world poses new challenges. We hear from time to time about cyber wars among countries. This means that countries or companies have been developing digital devices by which they can capture another’s operating digital platform or disrupt it severely. In such a context, we cannot afford to leave to chance cyber-security for a sector such as the provision of international financial services. Even within a country, its financial system has a pivotal, vital role to play as the transmission mechanism for settlements of payments such as salaries, standing orders, clearing of securities trades and custodial services, etc., within single financial institutions and more broadly at the level of the domestic financial system. It is easy to imagine how much havoc a breach of cyber security can cause internally, destabilizing the entire financial system. We would be at even greater risk if we operate, as we do indeed, a 24/7 Internet platform in the provision of international financial services.

All this shows that we have to go on extending our product and service range, for our economic survival, without leaving any stone unturned which ought to have been turned over. Our focus should be on matters such as this to move the country firmly forward – i.e., keep enlarging the production base with due balance, keep tagging on to what’s moving up on global markets and parry all risks associated with that moving forward process.

 

Anil Gujadhur

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