Lessons from Africa’s economic pioneer

Tom Minney

Innovative policies adopted from the first days of independence have kept Mauritius ahead of most of Africa, creating a steadily growing economy, with well-regulated trading and financial systems.

Considered a ‘paradise’ island for its glo­rious beaches, great resorts and hospitable people, Mauritius is also a hunting ground for economist-explorers searching for good news in Africa. For decades, the country has been an example of innovative eco­nomic management, and its successes con­tain lessons for other African nations.

Preparations began for independence with a warning in 1961 from Nobel prize-winning economist James Meade that the country was a strong candidate for eco­nomic failure, with its heavy economic de­pendence on one crop (sugar), vulnerability to terms-of-trade shocks, rapid population growth and potential for ethnic tensions. And yet, since independence in 1968, Mau­ritius has successfully climbed the tradi­tional steps of economic development.

It moved from a low-income economy based on a primary commodity into manu­facturing, especially textiles, and then into services including tourism, real estate, in­formation technology (IT) and financial ser-vices. It has maintained average GDP growth of 4.6 percent a year from 1977 to 2008, de­spite a series of severe shocks, including sig­nificant changes in approach from its trading partners, global crises, major political up­heavals and geographical constraints.

Commentators are positive. The Inter­national Monetary Fund forecast in March 2012 that real GDP growth would be 4.2 percent a year from 2014-2017, and that income per capita would grow by 3.6 per­cent a year. Mauritius is consistently ranked highest in Africa in the World Bank’s Ease of Doing Business tables. Economists have delighted in studying the lessons. A recent study by Jeffrey Frankel of Harvard Uni­versity’s Kennedy School of Government highlights the premium the country places on education and free schooling, the demo­cratic tradition and its ability to change and evolve, especially with the establishment of its successful export processing zones (EPZs) and its global financial centre.

Mauritius learned about EPZs from China in the 1970s, and has been among the African leaders in running them suc­cessfully, with strong participation by lo­cal entrepreneurs. Industries such as sugar and textiles initially benefited from trade concessions, but many adapted to become competitive once these concessions ended. Frankel cites the successful Compagnie Mauricienne de Textile, which has worked hard to remain competitive and profitable in the global textile industry.

The old sugar wealth is being put to work in high-level real estate and manufacturing and even power generation. Upmarket tourism flourishes. Mauritius is a leading investment channel, including for offshore investors, and has been a key channel for funds flowing into India and Africa. Now it is positioning itself as a gateway for investors into Africa, both as a base for funds and as a bridgehead into the continent. Mauritius also seeks to lead in information and communication technology (ICT) and to lure foreign graduates.

Above all, Mauritius has proven resilient, adaptive and able to score highly in terms of world-class policy and implementation. There are bottlenecks, however, including water supply (it hopes to learn from new solu­tions being applied in Singapore), electricity and roads, and while it does well in avoiding dire poverty, there is scope to reform the basic education system and continue the drive from welfare to work for the poorest.

As an open economy, Mauritius remains vulnerable to global crises, whether in tourism, the financial markets or even sales of its prod­ucts. But it is clearly better placed than many countries, in Europe, the Americas or Africa, to deal with the current turmoil. It continues to seek diverse new drivers for its economy.

Mauritians seem to realise they need to compete internationally. Many say they would rather stay on the island than move abroad, so they have a strong interest in ensuring it re­mains one of the most pleasant, inviting, stable and competitive places to do business. Sin­gapore may be ahead in competitiveness, but Mauritius is watching and learning.

About the author:

Tom Minney is an economist specialising in Southern Africa


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