Rajiv Servansingh : “We hope that with the current petrol crisis, lessons will be learned”

The year is about to end, but Mauritius is still facing scandals and crises. In this context, economic and political observer Rajiv Servansingh analyses the situation prevailing in Mauritius. Concerning the petroleum crisis, he points fingers at the storage facilities in the country.

This week, the grapevine has been buzzing about Betamax. Do you think that Mauritius runs the risk of facing a petroleum shortage in the future?
Unfortunately, the way our procurement of petroleum products is done today puts us permanently at risk of being short of petroleum products, the reasons being that we have a shipment of about 50-60 thousand of metric tons of products reaching Mauritius every three weeks, roughly equivalent to 23-25 days’ consumption.

The only way to avoid such precarious situations is to increase our storage value for at least one month of reserved consumption. Every country in the world has strategic reserves for petroleum products, except Mauritius. Several governments have neglected this question of strategic reserves of petroleum product. We can only hope that with the current crisis, lessons will be learned and the existing projects will be implemented.

You just pointed fingers at our petroleum storage and other experts also did same. So why hasn’t Mauritius worked on or increased its storage capacity so far?
It is a matter of concerns that plans and projects from our suppliers of petroleum exist for the past eight to ten years as regards to increased storage capacity. But we have failed to implement the existing projects. The projects are all private sectors financed and therefore safely presumed that they are economically viable projects. Bureaucratic and lack of political will have prevented their implementation.

The local political scene has been going through quite disturbed times for several months now. To what extent does this situation affect the economy?
The biggest problem for economic growth in Mauritius for the past ten years has been constant decline of investments as the percentage of GDP. In fact, it has declined from around 23% of GDP about ten years ago to 16% -17% last year. Investment in any country is largely dependent on trust and confidence of potential investors. Any political instability of the kind we have been witnessing over the past three to four years will naturally deter investments into the country.

Political stability, a clear vision and coherence in policy are basic ingredients needed for a country to prosper economically. It is sad to note in all three of the criteria, our country has been performing very poorly over the past years. The future of optimistic projections of 4% growth proposed by the MCCI depends on the government taking the right steps. Whatever additional growth that we may have in 2018 will come as a result of growth in traditional sectors such as tourism, financial services and real estate development. In the case of tourism, the growth will be driven principally by external factors, such as the threat of terrorist attacks in several other competitions as tourists’ destinations.

As for financial services sector, although we are going through the difficult of post DTAA agreement with India, Mauritius remains a financial centre which still offers several transaction. As for the real estate development, the demand for residential property in Mauritius is quite strong and we can expect investment in this sector to be quite high.

The PM said that his government’s economic program is starting to take off. Do you share this opinion?
We can hope this is the case and admittedly, there are some positive signs indicating that we may have a growth rate nearer to 4% than the 3.5% to 3.6% that we have had recently. However, we cannot ignore the fact that the government has already completed three years of its mandate.

Now as we reach the fifth year, there will be some wait and see posture from private investors, as always happens in any country which is preparing to go for general elections. To compensate this, we expect that public investment, that is government expenditure for public infrastructure projects, will be accelerated in 2018.      

Recently Mauritius has been ranked 24th in the Ease of Doing Business. Do you think we can do much better than this?
We certainly need to do much better. We are improving our ranking based on formulation of new rules as well as laws governing and investment of the country. Unfortunately, in practice, most entrepreneurs do not have the kind of feel good mood when they are trying to implement their ventures. So long as our improved ranking is not actually translated into improved processors and understanding from bureaucracy, we run the risk of continuously shooting ourselves in the foot. 

The year 2017 is coming to an end. Has it been a fruitful year in terms of economic growth?
2017 has been a year where we have been afflicted by lots of financial scandals, political instability and lack of decisive action. 

There have been several debates on the Public-Private-Partnership (PPP), yet nothing much has been done. Do you believe this can be a boost to our different sectors?
I have always said that PPP in Mauritius has been one of the key factors underlying the socio-economic growth since independence. Unfortunately, this partnership has not performed well for a number of years now. Even before this government came to power, we have failed to take this partnership into a higher gear which would be more responsive to the needs of the country and which has the ambition of upgrading to a high income economy. One of the reasons for this failure has been the institutional weakening and lack of capacity building in the public sector over the past decades. A partnership flourishes when the actors of this partnership are equal partners and can bring value to the table of negotiations.   

According to you, what could be the main drivers for growth in 2018?
Basically, we need cohesive policy, orientation political stability and a recent PPP in the country. The objective condition for achieving economic growth in the country is real. What we need is leadership and vision which can transform Mauritius to be more prosperous.