Unlocking our future economic potential
There has been an enduring feeling among citizens that the economy has not been receiving the attention it deserves. It is with the hope that the government will prioritize the economy, rather than indulge in politicking for its own sake, that the people in their majority mandated the new government to power.
Despite the governmental programme given out at the beginning of the government’s term followed in March by the first budget, a conviction was gaining ground that the economy was being relegated to the background while pre-occupations with adversaries and scandals had seized the country’s centre-stage.
The strong statement of SAJ in his elaboration of what is called the government’s Economic Mission Statement on last Saturday appears to be placing the economy once again into principal focus. It was important and necessary to restore the losing sense of confidence in the country’s economic future.
The government’s aim is to give clear objectives for economic and social uplift in the immediate 5 years and follow this up with a 15-year plan in what has been called Vision 2030 – something that will be elaborated in the form of a Blueprint under the responsibility of the PM and with the assistance of experts in various domains. This Blueprint will hopefully map out, as the erstwhile Ministry of Economic Planning used to do, a consistent and mutually supportive cross-sector economic framework to guide in the achievement of our economic objectives in optimal conditions.
First things first, however. The first five years of the government, according to SAJ, will bear on dealing with the issue of unemployment – relieving, if not eliminating, poverty and providing for sustainable and innovative development. If all goes according to plan, the government expects to create some 100,000 additional jobs in the immediate 5-year horizon.
It will do so by expanding existing areas of activity and supporting new ones that have potential for growth. Specifically, the government aims: to increase the contribution of manufacturing activities from the current 18% of GDP to 25%, to provide for the development of an ocean industry, to further develop the country’s financial services sector and to enhance innovation, technology and communication inputs into our structure of production.
Associated projects to achieve this ambition include high precision engineering, pharmaceutical products, light manufacturing, fishing and sea food processing, port development, bunkering, logistics and freighting services, developing new links to add to the substance of our financial services and adoption at a deeper level of digital technology in diverse fields of production such as SMEs, government services, businesses and in physical infrastructure.
The ocean economy is expected to yield the largest number of additional jobs (25,000) in the next five years, followed by financial services, the ICT sector and construction (15,000 additional jobs each), SMEs (9,000), tourism (8,000), manufacturing (5,000). Education, healthcare and biotech, and logistics services are expected to yield the balance of 8,000 additional jobs towards the targeted 100,000 over the next 5 years.
SAJ has appealed to a close public-private sector collaboration towards the achievement of the set objectives, accepting to himself chair and monitor progress and remove impediments coming in the way of project implementation involving capital spending of Rs 75 billion by the public sector and Rs 185 billion by the private sector in the next 5 years. The public sector will mainly provide for cost of improving water, electricity, waste management, roads, port, airport and communications infrastructures. The public service will have to graduate from the mindset of routine administration to become inspired contributors to achieving development targets.
If all this is done smoothly, the government considers that an average economic growth rate of 5.5% will be achieved as from 2017 while the country’s GDP per capita which currently hovers around $9,000 will increase to $13,500 by 2018.
Whatever one might say about the realisability or otherwise of this economic plan, it has the merit to shift our mind away from what was promising to become a totally unproductive, if not de-constructive, phase for our economy. Hopefully, it will put behind the general loss of confidence that was gaining in momentum during the immediately preceding period. What the Economic Mission Statement has also highlighted is that there is much concrete work for the country to attend to so as to beef up the economy, which should have had priority over every other thing.
Going forward, one would expect SAJ to show his mettle at primarily managing economic matters once again, setting aside pure political re-configurations his own party’s members or his political partners in the government might have been concocting. Such things are not the priorities of the country at the present moment. Having voted a new government into power, the people look forward to improvement of their economic and social well-being, not to power struggles among politicians.
But one also needs to go beyond the hype and read in the whole exercise a subtle move at the highest level, a political statement in its own way, to bring the economic agenda and the instruments required for its implementation under the direction and supervision of the PM and his Office. There must be good reasons, other than the mere economic aspect, for this decision.
Nevertheless, an important reason why the shift of attention to the economy is a salutary factor is the current difficult circumstances facing the global economy. Growth is only just sputtering at the global level for the moment. Much as we, as an export-oriented small economy, would wish sustained global growth to finally assert itself, this is not happening. This means we will have a fairly arduous task to set the economy on course again, given prevailing global economic uncertainties.
Occasions such as these require all stakeholders to join hands and go the further mile, despite numerous constraints, to make the country get over the next economic hurdle. The struggle will be tougher given that external market demand continues to be slack and we will have a tough time making inroads on global markets with whatever we produce. Careful balancing of our additional production so as to lift up local demand (and purchasing power) to fill the gap in our production whenever external markets are slow to absorb what we produce, will be critical on the way forward.
It is not only the existing local private sector that will invest the additional amount the governmental plan requires for the next five years. Mauritius has demonstrated in the past that it can use the international private sector to enlarge the economy’s scope, even if the follow-up was handed over at a later stage to local investors, provided the necessary new activities and the dynamism that accompanies them have been put in place. We will have an intense phase of scouting out for credible foreign investors as well in the coming period because one of the advantages with foreign investors is that they usually bring along with them the markets to which our products can be sent out as exports, for both goods and services.
For long enough now, the economy has not received the detailed attention it deserved, especially in the context of a weak global economy. It is a good thing therefore that we have finally decided to give greater precision to the course to be followed by the economy, without subtracting from the merits of the government’s first budget towards charting the course.
At the end of the day, the economic plan of the government will sink or swim depending in large measure on the implementation capacity of both the public and private sectors. As in the past, the drive and leadership to get the projects implemented will have to be assumed by the public sector.
It is also a good sign that the country is realizing the criticality of setting out its long term path, something that was left on the sides for nearly a decade – and to the neglect of which we have had to be reminded by frequent World Bank and IMF reports, which have pointed fingers at the shortcomings we have developed short of identifying and dealing with them in a timely manner. If we have the will we can act together to unlock a brighter economic future for the country, notwithstanding all that has gone wrong.
Tags: Editorial World Bank IMF Economic Mission Statement SAJ Sir Anerood Jugnauth