Dr Bhavish Jugurnath : “Policymakers haven’t shown enough effort during the past decade”

Dr Bhavish Jugurnath, economist, says that by ranking 25th out of 190 countries in the World Bank’s Doing Business Report 2018, Mauritius confirms its leading position on the African continent.  “I believe this goes in line with the last three Budgets which laid great emphasis on Business Facilitation issues. The Doing Business Report 2018 has reported improvements in ranking in 8 out of 10 indicators namely ‘Starting a Business, Dealing with Construction Permits, Getting Electricity, Registering Property, Paying taxes, Trading Across Borders, Enforcing contracts and Resolving Insolvency.

Mauritius witnessed a significant jump of 24 places with respect to its last year’s ranking (49th), reaffirming that the country has improved its business regulations and is narrowing the gap with the global regulatory frontier. In the recent report, it is commendable to note Mauritius’ score went from 75.45 as per the revised Doing Business Report to 77.54. This 2.09 increase implies that since last year, the country has improved its business regulations.

We should not be simply comforted of being first in Africa. We should instead compare Mauritius with top performing countries and then find out how to match them.

I believe, what is also noteworthy, Mauritius has consolidated its position as the most competitive economy in Sub-Saharan Africa ahead of other countries such as Rwanda (41), Morocco (69), Kenya (80), Botswana (81) and South Africa (82). This indicates, in my opinion, the government should consolidate on the strategy to make Mauritius an African Business Hub.

The economist adds that “FDI has created tremendous opportunities for our economic development and helped to boost the performance of local firms as well as the globalisation of some of them. This has undeniably raised Mauritius stature among developing countries. Mauritius needs massive investment to sustain high quality economic growth, particularly in the financial services, energy and infrastructure sectors.

Policymakers are looking at FDI as the primary source of funds. It is important to keep in mind that FDI on its own is not a panacea for rapid growth and development. What Mauritius needs is to put in place a comprehensive development strategy, which includes being open to trade and FDI. This should go a long way in fulfilling the ultimate goal of permanently eradicating poverty.

In terms of the Ease of doing business report, as the country transitions moves up the development ladder, more needs to be done by policymakers to unlock the areas of competitiveness conducive to a knowledge-driven economy: higher education, especially its quality; the use of ICTs and ability to absorb new technologies, where it has steadily declined over the past decade and the capacity to innovate, about which business leaders are particularly concerned and an inadequately educated workforce.

Can Mauritius be in the Top 10 in the coming years?

Dr Bhavish Jugurnath: “If we look backwards, since 2006 Mauritius embarked on a vast reform program of business facilitation with the promulgation of the first Business Facilitation Act, against the backdrop of global competition ending trade preferences. Various schemes such as the Export Processing Zone were abolished, in favour of a level playing field for all enterprises. The economy was at the same time opened further to foreigners, mainly investors and professionals.

As from 2010 other reforms took place with the objective of rebalancing growth. Since then, Mauritius remained more or less in the Top 25 of the Doing Business Survey of the World Bank, until the first significant decline in 2014, from the 20th to the 28th place. In 2015, we dipped further, losing four more places to settle at the 32nd position. In 2016, the 49th rank was a big blow to the country, even though we remain first in Africa.

Interestingly, Rwanda, which ranks 56th worldwide, came second in Africa. In the latest report, Mauritius has been ranked 25th out of 190 countries. In my opinion, Mauritius has the potential to be among the top 10. But I am more convinced that policymakers haven’t shown enough effort during the past decade to be really in the Top 10. In a contest, we should know how to position ourselves and what we want to achieve. We should not be simply comforted of being first in Africa. We should instead compare Mauritius with top performing countries and then find out how to match them.

We have to have a clear strategy to achieve this aim of being in the top 10. I believe one way to achieve is for the government to strengthen and promote policy reforms to catalyse private investment. Promoting a well-functioning private sector is a major undertaking for the government. It requires long-term policies of removing administrative barriers and strengthening laws that promote entrepreneurship.

Resolving gender disparities will also be critical to improving the functioning of the labour market, and hence inclusive economic growth, as the gender wage gap is stubbornly large and the female participation rate is strikingly low.

Resolving gender disparities will also be critical to improving the functioning of the labour market, and hence inclusive economic growth, as the gender wage gap is stubbornly large and the female participation rate is strikingly low (both roughly 50%). Beyond the labour market, a wider reform effort could drive stronger growth and alleviate fiscal constraints.

In the fiscal sector, public spending efficiency could be enhanced by reducing subsidies and improving the targeting of social assistance programs. Improvements in the quality of public services and a renewed regulatory reform effort would lower business costs and consolidate Mauritius’ reputation as a leader in this area, and support its strategy of being a regional trade and services hub.”