The Economic Development Board: Birth by Forceps or Stillborn?

The EDB could become a key player in the future development of Mauritius if only its implementation is done within the framework of good governance principles

One of the most interesting proposals included in the last budget was probably the one about setting up an Economic Development Board (EDB). It was the nearest we could have come to a Ministry of Economic Planning and Development – an institution whose mission would provide, among other things, for taking a medium to long term view of the national economic development trajectory by providing a framework for streamlining our national economic priorities.

According to Gerard Sanspeur, who is generally viewed as one of the godfathers of this project, the EDB would have essentially four objectives: supply strategic thinking and institutional support to ensure more coherence in economic policy; promote Mauritius as a platform for competitive manufacturing as well as a services export hub; market Brand Mauritius, and handhold foreign direct investments into as well as from Mauritius. In order to achieve these objectives, the EDB would be born out of the merger of several institutions (Board of Investment, Enterprise Mauritius, Financial services Promotion Agency, etc.,) which are presently individually engaged in similar promotional and facilitation activities.

The idea of setting up such an organization is obviously not new in the local political context and has been mooted in some form or the other ever since the Ministry of Economic Planning and its adjunct the Economic Planning Unit were foolishly abolished. The MMM had peddled, in its heydays as a socialist leftist party, the concept of a powerful Planning Commission tasked with streamlining public and private investments. More recently, in 1995, the Labour party had instituted a “Policy Unit” under the PMO. In practice this turned out to be more of an advisory body for the Prime Minister and seems to have suffered from the absence of the kind of clout needed for it to be an effective operational unit. Not to mention the fact that the then MMM ally did not particularly appreciate the people who had been appointed to lead the institution.

One suspects that in spite of the varying circumstances and economic environment in which they have been flagged, these attempts have often failed to take off for more or less similar reasons. First and foremost among these is the negative sentiment that these attempts always seem to incite among Ministers who fear that their privileges and scope of action would necessarily be encroached upon by such institutions. Indeed the introduction of such high level policy making bodies in an environment where a Cabinet system of government prevails is bound to be very tricky because the demarcation of lines of authority and reporting are seldom clearly defined.

Furthermore, Ministers sitting in Cabinet are elected representatives of the people and tend to view any delegation of powers to a “non-elective” institution with suspicion. A blatant case of such displacement of the centre of gravity of decision-making was severely censured in the highly critical Chilcot Report of Inquiry on the decision of Britain to join the Iraq war. It strongly condemned the process whereby the then Labour Prime Minister, Tony Blair, had bypassed his Cabinet and had instead opted for ad-hoc group meetings with selected Ministers without formal minutes and proper recording of proceedings.

These recurrent meetings dubbed as “sofa government” were described as being prone to “group think”, and contributed to the Chilcot Report’s views that the whole process of decision-making leading to the engagement of British troops in the American-led adventure in Iraq was flawed.

Although we are here talking here of a more structured organization, set up by Act of Parliament, the mechanics at work in such situations are no different. It therefore leads one to conclude that the setting up of the Economic Development Board is most likely to meet with some formidable obstacles coming from within government itself. It will therefore require a strong-willed driver determined to placate such opposition for the Board to ever see the day.

There has not been much “external” opposition worthy of mention to the Economic Development Board project except perhaps for the one coming from one of our most competent economists and economic commentators – Eric Ng. Eric, who is a close friend and respected “opponent” when it comes to prescription of solutions for our secular economic problems, has written a highly ideologically charged paper against the very notion of “economic planning” which can be summed up in the following sentence,

« qu’est-ce que cette personne (the eventual CEO) du haut de sa tour d’ivoire pourra bien connaître que les entrepreneurs au contact de la réalité économique ne savent pas? »

This is indeed the classic response of liberal economists to any suggestion of “interference” into the workings of the free market and the sacrosanct “invisible hand”. Eric Ng then proceeds rather maliciously to compare the proposed EDB to the old and now notoriously failed system of Soviet planning and the more light handed approach of the French “planification indicative” which are put in the same lot.

In any case, one must give it to him that Eric makes no bones of the fact that he is a free marketer and firm believer in the maxim that open and free markets remain the most appropriate mechanism to ensure maximum efficiency in resource allocation as well as wealth distribution in the national and global economy. It is on these grounds that he questions the very usefulness of an institution like the EDB which he equates to a “concept désuet qu’est la planification économique”.

Such opposition or obstacles as described above notwithstanding the government has considerably raised the stakes regarding the implementation of this measure announced in the last budget. In his summing up of the budgetary debates, the Prime Minister and Minister of Finance stated the following: “we cannot anymore have a fragmented approach to the promotion of our country abroad, be it to promote our exports or inward and outward investments. The present approach is fast becoming inefficient and cannot be relied upon to deliver on the kind of outcomes we need to take Mauritius on the new development lap. The entire economic model needs therefore to be reviewed. These are some of the main reasons why the Economic Development Board Bill has been brought to the House.”

For those, including the author of these lines, who believe in the concept of the developmental state, the Economic Development Board could become a key player in the future growth and development of the country if only the rhetoric is followed by a proper implementation within the framework of good governance principles. Otherwise one is left to wonder what would be worse between a shoddy execution and no implementation at all. The latest indications are that the EDB may yet be another good concept which never sees the light of day…

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