Getting Ready to Grow – What do we need to change to get better?

It is difficult to prepare for the future when the present is changing so rapidly.

Mauritius is a small country, and the main advantage of a small country is that it can effect change quickly.  It is easier to tidy your sock drawer, than it is to spring clean your house.

The Board of Investment say that we have decided to position ourselves as the investment and business gateway between Asia and Africa.   They asked Singaporean consultant, Ong Boon, what he thought of this positioning and what we should do.  His response is summarised in the seven points below, and I have added my ten rupees worth of evaluation to these points.

One, enhance connectivity like air travel and internet capacity & reach.

Oh yes!  The more difficult and expensive it is to get here, the more we cut ourselves off from the world.  There is no logic in our current air fare structure and the shortage of alternate service providers causes frustration.
Internet Capacity: It can’t be too much to ask a little country like ourselves to get a decent bandwidth for our internet services.  Our current internet speed is one of the WORST IN THE WORLD.   And yet we have the submarine cable passing through our country.  This is probably the biggest thing to fix with the least effort.
Two, invest in infrastructure to enable growth.
After many years of dreaming for a miracle, we are now building roads like crazy.  Keep this up.  Try for slightly wider roads, so that we can overtake that pesky moped.  Another great move was the development of the Ebene business park.  This reduced the pressure on Port Louis, and cut many hours travel time to thousands of workers.  I wish we had a railway that circled the Island.   The strain on the roads caused by heavy duty vehicles would be reduced, not to mention the frustration of driving behind them.
Three, create value by being a hub (again based on connectivity), beyond being just a gateway.
This is Ong’s polite suggestion that our strategy of being a Gateway is not substantial enough.  I totally back him on this.  We don’t appreciate how good we are sometimes.  The added value Mauritians can provide by becoming the financial hub, or the information hub, or the head office hub, is immense.  Of course, to become the financial hub we would have to adopt a more realistic approach to due diligence.  To become an information hub, we need more bandwidth.  To become a head office hub, we need a more friendly visa application procedure.
Four, map ahead on scenarios, but beyond creating options for scenarios, develop the agility to meet changing situations.
Agility requires speed.  Bureaucracy is the sand in the economic gearbox.  Get rid of it.   Mauritius has a vast civil service for its size.   In many cases it is protected employment, sometimes political.  Fair enough, every country that I know has an unofficial ‘Jobs for Votes’ program.   But politicians who love their country more than their jobs should know that there is a point of diminishing returns.  The more tangled and unnecessary the red tape, the fewer jobs are created outside the public sector.  For the economy it is great to have high employment, but if one bureaucrat kills the possibility of hiring two private sector employees, then we have a problem.
Agility also requires versatility.  Businesses need to develop the ability to choose and execute an alternative action. This comes from experience more than anything.  Mauritius has a disadvantage here. Because we are small, we don’t get to see many things first-hand.  Our judgement is often simplistic.  This is where the importation of expatriates can help.  Each foreigner brings with them their experience.  If we want to be good in Africa, we need experts from Africa. And we need to integrate them into our country so that they form part of the team.
Five, remove hindrances and enhance productivity across sectors.
A lot of this is covered in the previous section.  Mauritius scores really high in the ‘Ease of Doing Business’ category, when compared to other countries.  I would like to see this efficiency working through the system to include customs and clearing red tape, visa applications, building permit applications, less ‘licensing’ for no apparent purpose, and a weeding out of unproductive civil servants matched with an increase in salary to those that produce.  Singapore pays its civil servants salaries that are often higher than the private sector.  And they are efficient.
Six, identify and build-up new wings or platforms for economic growth.
We were great in the late Eighties.  We adopted Export Processing Zones and allowed textile companies into these zones.  They mopped up unemployment and effectively changed Mauritius to what it is today.  In 1992 we introduced a set of enabling legislation to develop the financial services sector.  Five years ago, we introduced IRS and later RES housing schemes to attract capital and people.
The EPZ’s are shrinking due to Chinese competition.  The Financial Services Sector is battling in the face of additional reporting requirements, changing legislation and insane due diligence standards.  The IRS schemes are stagnating due to the high purchase price, silly management (in some) and most of all because people seem to have run out of money.  The RES schemes have a mixed performance with many half finished shells.
Nearly each success has come from removal of restrictions.   Nearly each failure from the addition of restrictions.
Seven, and probably most important, continually develop human capital in a sustained and committed way.
Of all the things on the list, this is the most achievable.  Mauritians are hungry to learn, enjoy the benefits of good role models and are well educated.   We are good here.  Let’s build on this.
Thanks Ong Boon.
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