Economic Evolution: Five decades of progress

The Republic of Mauritius will celebrate its 50th Independence anniversary next year. The festivities start as early as this year and will culminate in a grand celebration next year. While the event is an opportunity to celebrate five decades of progress, it is also an occasion to reflect on the challenges facing us and determine how to sail through smoothly in the next five decades.

From a monocrop economy based solely on sugarcane to a widely diversified innovation-driven economy, geared towards emerging sectors, Mauritius has successfully carved its extraordinary path towards progress, inspiring our African neighbours. Who does not remember British economist James Meade (subsequently Nobel Prize Winner in 1977), when in 1976, he predicted a gloomy future for Mauritius? Famous writer V S Naipaul was of the same view. But Mauritians have spared no effort to relentlessly take their destiny in their own hands and built this country to what it is today. 

Successive governments since Independence in 1968 have, through their respective economic policies, brought their share to the development of our economy, where today the sugar sector has evolved into a cane industry with several value-added by-products and other sectors have emerged as strong pillars, such as tourism, manufacturing, financial services, information technology or real estate. 

The ‘economic miracle’ has been more or less seen every decade in our post-independence history, as the country has seen an average growth rate of 5% at the peak of its achievements. 

The 70s: From sugarcane to manufacturing

The decade following independence saw the emergence of ‘import substitution industries’ when the then government offered a pack of incentives to encourage local manufacturing of basic needs in order to reduce imports and saving foreign exchanges. Thus we started producing toothpaste, detergents, soaps, biscuits and others. The same decade saw the ‘Knowledge Hub’ taking shape, with the birth of the Mauritius Institute of Education and other institutions and the widened role of the University of Mauritius. 

The 80s: Textile boom

The 80s saw the arrival of foreign investors from China, Singapore and Hongkong mainly, to set up textile factories in Mauritius. The textile sector absorbed mass unemployment and at its peak, as many as 80,000 Mauritians were employed, predominantly women. At that time, foreign workers for this sector were unheard of.  The textile sector was geared mainly towards export, through the defunct Export processing Zone, a scheme abolished in 2006. 

The 90s: Tourism and financial services

The third decade after independence saw the tourism sector taking off. At the same time, the financial services sector emerged as an important economic pillar, as well as the Freeport sector, which in turn boosted the logistics sector. Our national airline, Air Mauritius, also celebrated its silver jubilee during that decade, whilst extending its network of global destinations. 

The 2000s: ICT/BPO and real estate

The cyber city at Ebène became a reality during this decade. The ICT/BPO sector has become a very strong economic pillar of Mauritius, employing more than 23,000 persons directly and creating thousands of indirect jobs. The urban development at Ebène also boosted the real estate sector with the advent of intelligent buildings and office blocks. Subsequently, the residential market for foreigners kicked off, with the introduction of firstly the Integrated Resorts Scheme, and then the Real Estate Scheme. About Rs 40 billion was received into Mauritius as Foreign Direct Investment during this decade, and the Business Facilitation Act 2006 acted as a major catalyst, opening the country to the world and attracting investors, professionals and retired high net worh citizens choosing to stay here and also buying properties. At the same time, the seafood sector developed and this paved the way for the forthcoming ocean economy. 

The 2010s: Ocean Economy, Africa Strategy

Since 2010, new sectors included the Ocean Economy, Renewable Energy and Biotechnology. The country also started to capitalize on its strategic geographic location to act as a springboard for global investment into Africa. Indeed, Mauritius has in the past, at the time of the East India Company, played a major role as Star and Key of the Indian Ocean. Recently, an air corridor has been launched on the Asia-Singapore-Mauritius-Africa route. 

The current decade is one of innovation and enhancement of existing sectors, such as agriculture which is evolving into bio, and financial sectors which is now proposing new differentiated products to attract global funds. Similarly, we are seeing the emergence of economic zones, light engineering parks, etc and the upgrading of our infrastructure, such as roads and buildings. The main project yet to be implemented is the light rail one, which kicks off today. 

Major challenges

Five decades of economic progress does not mean all is rosy in the island. Inequalities in the distribution of income and wealth are broadening the gap between the rich and the poor. Eradication of poverty is a major challenge. Other social ills include the proliferation of drugs, rampant criminality, rising unemployment, declining values, etc. Other pressing issues concern a growing ageing population, housing crisis, climate change impact, environmental degradation, etc. Mauritius had previously aimed to be a high income nation by 2020 but this seems highly unachievable. On the other side, the ‘democratisation’ of the economy is not really happening, and entrepreneurs still face major obstacles. Corruption is another major issue. The youth seems disillusioned by politics and young graduates are apprehensive for their future. The economy on its side has to face stiff global and regional competition, as our neighbours are rising while our growth is staggering. We have come a long way during the past five decades. It is now time to reflect on our past mistakes and shortcomings so that we can plan ingeniously for the next five decades…