NewsSouthern AfricaMauritius: The great clean-up

Sun,19Nov2017

Posted on Tuesday, 30 June 2015 11:55

Mauritius: The great clean-up

By Crystal Orderson in Port Louis

A new breed of ambitious, globally-minded Mauritians will join the job market. Photo©Nasseem Ackbarally/Transterra mediaThe new government elected in December enjoyed a short honeymoon. It is now engaged in dealing with corruption cases, problems in the banking sector and growth levels that are too low to make Mauritius a high-income country by 2020.

A surprise victory for the opposition in the snap December 2014 elections ushered in the Alliance Lepep. It also contributed to the downfall of Labour Party leader and prime minister Navin Ramgoolam.

Young Mauritians don't want to do back-breaking work in the country's factories or even sugarcane plantations

Voters punished his proposals to boost presidential powers, and they then watched gobsmacked as the police arrested him for corruption.

In early February, television news programmes showed police officers carrying bags full of money totalling close to R220m ($6.3m) following a raid on his house.

While the Labour Party called foul, union organiser Ashok Subron argues there is "no justification for the money the prime minister had in his possession and there is no witch hunt. The prime minister has to answer why he had so much money in his vault."

This leaves Militant Socialist Movement (MSM) leader Pravind Jugnauth in a nearly unassailable position.

The MSM rules in a coalition with the smaller Mauritian Social Democratic Party and Muvman Liberater, a group that broke away from the Mauritian Militant Movement (MMM).

Together, they hold 47 out of 62 elected seats in the national assembly. The remaining MMM and Labour Party members of parliament (MP) are fighting for their political survival.

Punished by the people

"They didn't vote for the new government; they voted against the old one," former Port Louis mayor and Labour Party MP Reza Issack tells The Africa Report from his office in Curepipe.

"We were arrogant, made wrong decisions and refused public debates. It was difficult for the nation to reconcile [itself with] this."

For the man on the street, it is unclear whether things have changed.

"Politicians are all the same here in Mauritius: it is all about their families and how they look after each other," laments Anwar Ackerbally, a taxi driver and father of two, as he drives through Port Louis.

The incidence of rotating coalitions certainly backs that up – Jugnauth had already been in an alliance with Ramgoolam, for example.

Others are more positive. "There's a new mood in the country. Things had stalled under the old government. The new team is pioneering new possibilities to help push Mauritius forward," says Ziyad Bundhun, an executive director at Rogers Group, a local conglomerate.

Former president Anerood Jugnauth now heads the government as prime minister.

The octogenarian leader appointed old hands in senior posts in the finance ministry and at the central bank.

Following the surprise victory in December, Jugnauth quickly moved to make some changes in the financial sector and fired central bank governor Rundheersing Bheenick and deputy governor Issa Soormally.

He appointed Ramesh Basant Roi, who was governor from 1998 to 2006, to lead the institution.

It was just in time, perhaps. Jugnauth was barely in power for three months when a banking scandal rocked the island, threatening the country's offshore banking sector and its reputation as a regional financial hub.

The industry contributes about 10% to the country's $11.9bn gross domestic product.

In April, the central bank revoked the licence of British American Investment's Bramer Bank and also placed its insur- ance unit, BAI Co., into administration.

Jugnauth claims that there are links to a $690m Ponzi scheme and that the lender risked depositors' funds.

Clients had been rapidly withdrawing their money from Bramer Bank since December.

Jugnauth and good governance minister Roshi Bhadain stepped in to calm investors.

"This is also to show to the world that we are not prepared to sweep anything under the carpet. I can reassure you that going forward people will see that we mean business and we want to do things in a transparent manner," Bhadain says.

The ruling party claims the people gave them a mandate to clean up after the previous administration.

Bankers are putting on a brave face.

"This is an isolated case. There have been reassurances to the investor community, and the deficiencies in the system will be corrected," says AfrAsia Bank deputy chief executive Kamben Padayachy.

Rogers Capital's Bundhun is more critical and explains that there were people who were aware of the scandal but political protection allowed the perpetrators to get away with it: "This is a test for the financial sector, and we would like to see the government appointing a commission of inquiry to look at what happened and look at all aspects in order to protect the country."

Short-term goals

The authorities are, however, convinced that they have dealt with the issue and can now concentrate on growing the island's economy and diversifying away from the tourism, textile and sugar sectors.

For finance minister Seetanah Lutchmeenaraidoo, this means junking talk of the previous government's 'Vision 2020' programme and focusing on more concrete short-term ambitions and growing the local economy by investing in cities and infrastructure.

Lutchmeenaraidoo's 2015/2016 budget, presented in April, showed lacklustre 3.5% economic growth in 2014.

The International Monetary Fund predicts that this will rise to 3.9% for 2015, but the slide of the rupee against the dollar is another concern for the economy.

More pressing in the long term is meet- ing the demands of the country's youth.

At the University of Mauritius, carefree students walk around the campus chatting in Creole, French and English.

They form part of the new breed of ambitious Mauritians who see themselves as part of the global economy.

"Young Mauritians don't want to do back-breaking work in the country's factories or even sugarcane plantations; people have aspirations," says professor Jocelyn Laval Chan Low.

And it is these ambitions that are leading Mauritius to look to Africa for its future growth.

With the economic recovery looking weak in the EU – Mauritius's main economic partner – local companies see the emerging economies in Africa as a key centre of growth.

"Africa is one area where we would like to feature. [Mauritius] is an attractive financial services centre, and we want to sell and offer our expertise to other African countries," says Bundhun.

While there has long been talk of the country increasing its investment in the continent, Budhun wants the country to start 'Africanising' its approach and to be seen to be serious about partnering with Africa.

According to Faeeza Ibrahimsah, communications director at the Mauritius Chamber of Commerce, all the government agencies are working together to market the country.

Bundhun adds: "The new government has put out all the right signals about investing in Africa. We may be an island, but we are on the continent. I really see Africa as the market where we want to be."

This may be even more necessary if an important tax treaty between India and Mauritius is altered.

The countries signed a double taxation avoidance agreement in 1983 that played a key role in developing the Mauritian financial sector and encouraged India-focused investors to route their money through the country.

Discussions are ongoing and Indian prime minister Narendra Modi's government insists that it will not fundamentally alter the deal but just wants measures to prevent abuse of the treaty.

"There have been murmurs for more than a decade, and we would welcome some clarity on the issue to put it to rest once and for all," says AfrAsia's Padayachy.

While the uncertainty has brought some pain, it could ultimately be beneficial if Mauritian firms begin to look elsewhere for new opportunities borne out if its location close to Asia and Africa. ●



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