The First 100 Days

Editorial

It is now more than 100 days since the present government was voted to power on May 5^th, and one may want to take stock of what, if anything, has changed so far by the exercise of power after the last elections. The Conservative/Liberal Democrats coalition in the UK came into power around the same time as the Alliance de l’Avenir in Mauritius. The UK coalition has given very clear signals about what it is heading for as concerns the way Britain will be governed under it. It has announced budget measures lately which show that it is emerging as one of the most audacious and radical governments the UK has had. Dramatic shifts of policy have been announced with the objective to overhaul the British state from the difficult straits it is currently finding itself in. This overhauling is going to involve sensitive areas like schools, the health service, the police and the welfare system. Instead of getting bogged down into the debate of whether to favour Keynesian solutions through increased spending or to tackle outright the problem of an unacceptable level of the budget deficit, the coalition has decided to shrink government and slash the budget despite forebodings of a very difficult economic condition for the UK. Among its boldest measures, one sees it raising some taxes (mainly the VAT) but relying mostly on cutting down large swathes of government spending to bring the budget deficit to a reasonable level. A whole range of decentralising and transferring power to what has been called ‘Big Society’ is on the way as a means of reducing the demand for “more government”. This radical shift towards less of central government may succeed or fail, given that the weak economic conditions are still around. But what is remarkable is the nudge the new government has given to policy that has set everyone thinking in a new direction.

We have had nothing as deeply thought-out for Mauritius in about the same time after elections as it is the case out there. During the first 100 days over here, we have had cases like the controversy triggered by one Minister over whether we should get our supply of oil under bilateral arrangements from Mangalore, India, or through an international bidding process. The Minister has had to go back on his stern pronouncements in this regard and we got not only the oil supply contract firmed up by the selfsame Minister with the Indian supplier but we also had an arrangement in place for our future supplies of oil to be freighted exclusively by a tanker to be owned by a local business group. Last week, we also had the issue of government sponsorship of an artist group to a representation that was to be made in America. The concerned Ministry had not given support to it as there were fears about frustrating diplomatic susceptibilities had the play been staged in the US. Finally, apologies were tendered by the Ministry to the artist for having failed to deal with the matter as it should have been dealt with.

A couple of weeks before, temporary shacks set up by squatters on government lands in the village of Dubreuil were razed to the ground. Many genuinely poor families who were living in those shacks were consequently left without a shelter. This incident projected a poor image of those behind the decision to raze the shacks. Against this background, the government found temporary accommodation for those among the squatters who were identified as being truly destitute. The government now has plans to lodge them more permanently at a later stage. It was one misjudgement too many. Last week, a Cabinet member qualified the MSM as a “very small” party in the government when there should have been no need to drive a wedge for the Opposition to work upon; that Cabinet member appeared to be fully in agreement with what the MMM had been clamouring on house tops before the general elections. Another area of uncertainty is the problem of road congestion. As of now, we are not quite sure whether the Light Railway Transit will materialise as a way of easing the hardening traffic congestion problem or whether it is the bus-way that will be privileged as a solution to the problem.

On Friday last, the Minister of Finance came up, after some 100 days in office, with an Economic Restructuring and Competitiveness Programme (ERCP). This programme, which is a more comprehensive action compared with the various misfirings we referred to earlier, is in response to the crisis which recently hit the Euro zone. The effect of this crisis has been felt in our exporting sectors and our tourism. This vulnerability is the consequence of our traditionally pronounced dependency on the markets of the Euro zone. The main recommendations of the ERCP are to restructure our enterprises both to improve their productivity and to enhance their financial management. The objective is to make them efficient enough for them to be able to trade with markets outside of the Euro zone as well. This policy of market diversification is dictated by the fact that due to the process of rebalancing currently taking place in the global economy in the wake of the recent economic crisis in the West, there is scope to diversify our export markets towards countries like China, India, South Africa and Brazil, amongst others.

The Support Package underlying the ERCP aims to bring in technical support to restructure enterprises and reduce their indebtedness towards banks to improve their efficiency for global markets. It is to be financed by up to Rs. 2 billion to be provided by the government, Rs. 2 billion through the acceleration of implementation of projects under the Public Sector Investment Program, Rs. 3 billion from public sector institutions, Rs. 2 billion from the Bank of Mauritius while the balance of Rs. 5 billion out of a total expenditure of Rs. 12 billion is to come from the private sector by way of equity.

All of it hinges on the preparedness of the enterprises in question to take the suggested overhaul both on the technical production side and on the financial restructuring side. If the enterprises are not forthcoming for the suggested repairs, one needs to know how this entire process will be triggered into concrete shape. How will the coordination be done to achieve tangible results in the time frame the ERCP is giving itself? In the meantime, the representatives of the enterprises have already indicated that they have their eyes instead on the exchange rate of the rupee. There has been no mark of enthusiasm in the private sector as regards the fund of Rs 5 billion it is expected to contribute in this respect.

It is to be seen how far implementation of this programme will unlock new opportunities for us to compensate for whatever losses of demand we will face from our traditional markets. This is a small step that goes in the direction of decision-taking which the British government has highlighted as being the scale of the challenge facing individual economies. It will be noted that really advanced countries like Singapore and China do not depend on foreigners giving them good credentials. They do whatever needs to be done, whether foreigners applaud it or not. That is how they have landed into bio-medical sciences and space technology. If we have to partner effectively with Africa, we need to identify where exactly we need to work together, how soon and with what consequences for the well-being of our people. We need to know with precision what exactly our economic outposts in these regional countries are going to consist of and how we are going to put the necessary resources together to make of that a workable proposition.

It is quite clear that Mauritius has to get away from the beaten track. It has to stop blundering and losing its way compromising between conflicting demands of lobbies. It should start giving tangible shape rather to the bigger picture. The time is ripe for actions and results. The global stage is admitting only the serious players who can demonstrate that they know what they want and how concretely they are heading themselves for the goals they have set for themselves. One should not possibly expect all the answers to the deeper questions on the economic and social orientation of the country within the short span of 100 days in our case. However, we will lag behind if we take too much time to make the specifics of our endeavours clear in a near term. This is what Britain has already done. Let’s be real instead of fumbling our way from one episode to the next.  

* Published in print edition on 20 August 2010