Transcript Subtitle
Republic of Mauritius
From Mono crop to Diversification
and Economic Resilience
Republic of Mauritius Ministry of Finance and Economic Empowerment
Outline
1. Economy at Independence
2. Development Strategies and Basis of Success
3. Economic Diversification
4. Importance of Tourism Sector
5. Mid 2000s Fundamental Reforms
6. Impact of Reforms
7. Impact of crises and Measures taken (2008 onwards)
8. Achieving Success: Mauritian Development
Macroeconomic Unit /
Background: At Independence
Economy
Income per Capita
Unemployment
Monocrop: Sugarcane
Sugar >91% of total fob exports
USD 200
High and rising unemployment
( >16%)
Low
School Enrollment
State of
Mauritius in
1968
Quality of Living
Demographics
labour and capital productivity
Low in both Primary &
Secondary
Low Standard of Living
Poor access to Water, electricity &
Decent dwellings
Growth rate of 3%
Low Life Expectancy (61 male; 66
female)
High Infant Mortality (64)
Poor Infrastructure
Infrastructure
Monocrop to Diversification and
Economic Resilience
2006 + : Open economy with
Diversified Services
Income per capita @ $8600 (2011)
1990s: Export of Services
Income per Capita @ $3000
1980s: Industrialization & Tourism Development
Income per Capita @ $1500
1970s: Sugar - 70% of export revenue
Income per Capita @ $ 200
Macroeconomic Unit /
Development Strategies
Primary goals: Industrialisation, Diversification, Employment Creation
Building blocks for economic
independence
1st Strategy: 1960s
2nd Strategy: 1970s
From middle to
high income
3rd Strategy: 2006+
Mix strategy of import
substituting and export
led industrialisation
Paradigm shift to
openness and global
competitiveness
(Tea, Tobacco)
Tourism
Use of preferences (EC
and US sugar quotas;
Multi-Fibre Agreement
quotas; African Growth
and Opportunity Act)
Transition to services
economy and move from
4 to 8 pillars
Widen Circle of
Opportunities
Empowerment &
Solidarity
Maurice Ile Durable
Corporate Social
Responsibility
Economic diversification:
From low to
middle income
Agriculture
Tourism
Labour intensive -import
substituting
industrialisation
Population Control
Rural Development
Programmes
Investment in road
network, education and
other basic infrastructure
Basis of Success in 1970s
Favourable Climatic Conditions specially in early 1970s
Very High Sugar Prices in Both Quota and Non-quota Markets
Sugar Protocol Arrangements
Non-Reciprocal preferential market access under Lomé Convention
Industrialisation and Consolidation of Labour Intensive EPZ Industry
Fiscal and Monetary Incentives to EPZ Enterprises
Government Pump Priming Policies for Infrastructure Development
Successful Sectoral Specific Policies in Diversification and Consolidation of Economic Base i.e.,
EPZ and Tourism
Political Stability
Enabling Institutions
Basis of Success in 1980s
Successful Stabilisation Programme
Stand-by Arrangements
Structural Adjustment Lending
Devaluation
Containment of Public Recurrent
Expenditures
Tightening of Domestic Credit
Liberalisation of Deposit and Lending
Rates
Removal of Restrictions on Imports
Major Changes in Industrial Policies
Export Led Industrialisation
Recovery of World Economy By Mid
1980s
Strengthening of Economic Ties with Asia
and Europe
Lome Convention
Sound Macroeconomic
Management
Consensus Building and Social
Safety Nets
Cheap Supply of Educated Labour
Force
Flexibility and Adaptability of
Workforce – Bilingual and high
mobility of labour
Strong Public/Private Sector
Participation with government
playing a facilitating role
Commitment to Success
Culture of Hard Work and Saving
Political Stability
Evolution of Key Sectors 1990-2011
30.0
1990
25.0
20.0
15.0
10.0
5.0
0.0
2000
2005
2011
Tourism Sector and Market
Diversification
No. of Hotels and Tourist Nights
Tourist Earnings (Rs bn) and Tourist Arrivals
(000s)
1200
45
40
35
30
25
20
15
10
5
0
1000
800
600
400
200
0
1
2
3
4
5
6
7
Tourist Earnings(Rs bn), RHS
70.0
8
9
10
11
12000
115
10000
110
8000
105
6000
100
4000
95
2000
90
0
12
85
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Tourist Arrivals (000s)
No.of Hotels (RHS)
Tourist Nights
% of Tourist Arrival by Region
60.0
50.0
2009
40.0
2010
30.0
2011
20.0
10.0
0.0
EUROPE
AFRICA
Macroeconomic Unit /
ASIA
OCEANIA AMERICA OTHER &
N.STATED
With Euro Crisis Mauritius
has been investing in market
diversification: India, China
and Russia
Tourism Sector
Tourism growth
Earnings
rate
(Rsand
bn)share of GDP (%)
Tourism Employment (thousands)
14.0
45.0
40.0
12.0
40.0
10.0
35.0
35.0
8.0
30.0
6.0
25.0
4.0
20.0
2.0
15.0
0.0
10.0
-2.0
30.0
25.0
20.0
15.0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 10.0
2011
5.0
5.0
-4.0
-6.0
0.0
-8.0
% growth rate
% of GDP
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Macroeconomic Unit /
0.0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Mid 2000s Fundamental Reforms &
New Development Paradigm
Maurice Ile Durable
Doing Business Environment
Investment facilitation
Greater openness/attracting foreign
capital, skills, talents, expertise,
ideas
Fiscal Policy Reforms
Low flat income tax rates of 15%
Tax expenditure reforms
PFM Reforms
Labour Market Reforms
Reducing energy consumption
Leveraging renewable sources:
Solar, Wind, Ocean-based
Arts & Culture
Promotion & Development of
artists via: grants, training, and
festivals (Kreole, Film)
Solidarity
From job protection to worker
protection
Targeted social safety nets
Empowerment programme
Flexibility
Social housing
Workfare
Education & Healthcare
CSR
Vulnerable Groups
Empowerment Programme
Trust Fund
National Empowerment
Fund(NEF) targets the highly
vulnerable
Operates via NGOs/Grassroot
movements
Building material for housing
Training programmes in Literacy &
Numeracy, and Life-skills
Transport/Shoes/Food for K-6
Special programme for re-training
of unemployed women
Microcredit schemes
Intergrated Social Development
(Housing) Programme:
Eradication of Absolute Poverty
EAP & Ministry of health
conducting screening of children to
provide glasses, hearing aids, and
provide for other disabilities
Lease-to-buy over 25yrs
Civic, Literacy & Numeracy
training
Job placement for at least
one adult in household
Collaborates with trust fund on
educating children in K-6
Use of “green” technology:
biogas, composting, solar
heaters
Collaborates with NEF on the
integrated social development
approach
Widening the Circle of Opportunities
Widening the Circle of Opportunities
Shift in Labour Market
From Manufacturing (Sugar/Textiles) to Services (Tourism/Tech)
Workfare programme emphasising training & re-skilling
Training programme for unemployed women
Creation of better post-college institutions offering wider curricula
Support for development of new entrepreneurs & SMEs
Assistance for outsourcing and encouraging the virtual office
Maurice Ile Durable
Reducing Energy Consumption
Alternative Energy Sources
Incandescent bulbs replaced with
CFLs (1 Million to date)
Wind turbines in Mauritius &
Rodrigues (almost operational)
Government subsidy for solar
water heaters
Mini-hydropower stations
Bus modernisation scheme
Replacement of fleets with
energy efficient and less
polluting buses
Street & Traffic light replacement
Large scale composting for
agriculture
Waste to Energy
Gas(Landfill) to Energy
12
Impact of Reforms
Real GDP Growth Rate & Unemployment Rate (%)
Unemployment
rate
80
GDP Growth
70
10
Unemp
falling
8
Public sector debt as a share of GDP
Improved debt
ratio
60
6
50
40
Rising
Growth
4
30
20
2
10
0
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
0
16
Exports of goods and services (Rs bn)
14
200.0
Growth in
Exports of
goods and
services
160.0
140.0
12
Rs bn
180.0
Jun-04 Jun-05 Jun-06 Jun-07 Jun-08 Jun-09 Jun-10 Jun-11 Jun-12
FDI (Rs bn) & Investment Rate (% of GDP)
Improved
FDI &
Investment
Rate
25
23 R
a
t
21 e
10
120.0
100.0
8
(
6
80.0
27
)
19 %
4
60.0
40.0
17
2
20.0
0
Macroeconomic Unit /
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
0.0
15
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
FDI
GDFCF as a % of GDP
Economic Success
AFRICA
• 1st. for Doing Business environment,
• 1st open economy,
• 1st. in paying taxes index,
• 1st. in 2011 Mo Ibrahim Index,
• 1st. in Global Competitiveness Index 2011-12,
• 1st. in Travel & Tourism Competiveness Report
2011,
• 1st. in Global Information Technology Report
2010-11,
• 1st.Global Gender Gap Index 2011,
• 1st. in Open Borders Index 2011,
• 1st. in Democracy Index 2011)
• 1st.2010 Environmental Performance Index,
• 1st.in Quality of Life Index 2011,
• 1st. in Political Instability Index 2009/2010,
• 1st. in Women’s Economic Opportunity Index
2010, &
• 1st. in
Knowledge
Economy Index.
Macroeconomic
Unit /
AMONG THE TOP WORLDWIDE
• 2012 Index of Economic Freedom
• 2012 Doing Business Index
• 2011 Democracy Index
• 2011 Fraser Institute Index of
Economic Freedom
• 2011 Forbes Survey for Best
Countries for business
• 2010 Environmental Performance
Index
• 2009 Social Institutions and
Gender Index
Impact of Crisis
Risk of:
• Job losses in in Export Oriented Sectors & slowdown in job creation in other
sectors
• Slowdown in Textile, Tourism, Construction and Real Estate sectors
• Drop in export volume of Textile/Apparel & non-Textile manufacturing and
drop in growth of tourist arrival
• Stagnation in FDI flows & drop in Private sector Investment rate
• Possible deterioration in revenue buoyancy of Government, leading to a
deterioration in debt ratio
Managing crisis/building resilience
Measures to unlock growth
Opening economy for international investment flows, increased labour
mobility (including circular migration) and incentive for innovation and
technology transfer
Maintaining a simple and investment friendly tax regime
Level playing field for local and foreign economic operators
Increased investment in capacity building
Front loading public sector investment
Reviving the micro, small & medium enterprise sector
Fiscal Consolidation
Reprioritizing spending to improve public sector investment
Restructuring public enterprises
Contingency planning
Special package to address challenges arising from worsening of global
economic conditions
Macroeconomic Unit /
Performance of the economy – Before and
after the crisis
12.0
Real Growth Rate (%)
10.0
8.0
6.0
4.0
2.0
0.0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
12.0
Inflation rate (%)
Real GDP per capita growth rate
10.0
9.0
8.0
7.0
6.0
5.0
4.0
3.0
2.0
1.0
0.0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
12.0
10.0
10.0
8.0
8.0
6.0
6.0
4.0
4.0
2.0
2.0
0.0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Unemployment Rate (%)
0.0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Labour
Net Job Creation (000s)
25
18
Unemployment Rate (%)
16
20
14
12
15
10
8
10
6
4
5
2
0
0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Growth in Labour productivity (%)
6.0
5.0
4.0
3.0
2.0
1.0
0.0
Base Year: 2000
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Male
Female
Total Unemployment
Social Indicators
Social Functions Expenditure & components as a % of GDP
6.0
13.5
13.0
5.0
12.5
4.0
12.0
3.0
11.5
2.0
11.0
1.0
10.5
0.0
10.0
2000/01
2001/02
2002/03
2003/04
2004/05
2005/06
2006/07
2007/08
2008/09
Jul -Dec
2009
2010
Housing and community amenities
Health
Recreation, culture, and religion
Education
Social protection
Social Functions Expenditure (RHS)
2011
Addressing Youth Unemployment reforms
•
National Youth Employment Program:
building capacity and promoting/ sponsoring employable skills among
the youth through intensive training for positions and provision of basic
job readiness skills as well as some trade-specific abilities;
assist the young person to sustain the employment throughout a
period of time;
build a dynamic pool of skills based on demand from industry
thereby leading to a reduction in foreign /imported labour.
•
Encourage higher participation of women aged 16-25 years.
• Huge possibilities for employment on cruise ships; dispensing training
through the hotel training school (both public and private)
• Developing a contractual employment program with other countries
necessary training and skilling is given to secure higher-end and skilled jobs
in these countries where such skills are required.
Macroeconomic Unit /
Government – Private Sector – Civil
Society
Development Partners
Close
Govt
Private
The People
Consultations between
Government and the Private Sector
Development partners play a key
role by providing financial and
technical support
Encouragement of Civil Society
Organisations
Emphasis on Corporate Social
Responsibility following tax cuts
Innovative
CSR tax to encourage
private sector to work with Civil
Society on tough social issues
Thank You!
Macroeconomic Unit /
Republic of Mauritius Ministry of Finance and Economic Empowerment
Government
The Legislature
The National Assembly
Maximum 5 year term
3 MPs elected first-past-the-post
in 20 constituencies
2 MPs for Rodrigues
8 MPs elected to normalise
representation of minorities
The Executive
The Cabinet
The Prime Minister heads the
Government
The President of the Republic
nominates the Prime Minister from
coalition with majority in the National
Assembly
The President
5 year term
Elected by the National
Assembly
Largely figurehead role (UK,
Commonwealth and Israeli
model)
The Judiciary
The Constitution
Mix of British & French laws
Nomination of Judges to the Supreme
Court
Chief Justice is nominated by the
President after consultation with the
Prime Minister
Puisne Judges nominated by the
President with consent Judicial and
Legal services commission
The Courts
The UK Privy Council
The Supreme Court
Intermediary Courts
Mauritian Rankings
2012 Index of Economic Freedom : 1st in Sub-Saharan
Africa
2012 Doing Business Index : 1st in Sub-Saharan Africa
Global Competitiveness Index 2011-12 : 2nd in SubSaharan Africa
Travel & Competitiveness Report 2011: 1st in Sub-Saharan
Africa
2011 Mo Ibrahim Index: 1st in Africa
Network Readiness Index: 1st in Sub-Saharan Africa
Triple Shock of 2005
1
Dismantlement of the Multi Fiber Agreement
2
End of preferential EU sugar prices
3
Soaring Energy Prices (~$30 to $60 for a Barrel)
Brief History
Île de France
French Colony
1715 - 1810
Mauritius
English Colony
1810 - 1968
Mauritius
Independent
1968 - Present