RS 10bn Mauritius Bailout

Mauritius needs to be growing at 3.5% or above, to service its debt and keep growth steady.

$300 million in stimulus.

This year's growth has been lowered all the way down from 6.3% to 5%. And next year Mauritius will be close to that 3.5% threshold. I think the 3.5% is pretty safe in the sense that a lot of the financing for the construction industry is already in place, a lot of the projects will either continue through 09 or start in 09 regardless.

The two major sectors to watch are Finance and Tourism. Which combined account for about 40% of the economy (in long term growth terms) and really where most of the growth comes from outside of construction and textiles.

I think the ICT sector will be fine. It will give us sometime to breathe in the ICT sector as well as respond to many of the complaints in the ICT sector, such as lack of skills and infrastructure.

The Indian government has been changing some laws to ease access to foreign financing in India - that should hopefully keep the Finance sector busy. It is also a greate opportunity for the Finance industry to re-assess it's model though, as you will see immense pressure come against tax havens. I really think they should push ahead with the African Commodities Exchange and work to change the banking regulations and to really push Private Wealth Management.

The Property sector will be fine, although the pace of construction and these RES will probably slow down, it will be boosted by two major factors. One, it is a place to stash your cash during a downturn (the only thing that would put people off would be deflation; although the quality of property in Mauritius is of such high quality, people invest in Mauritian property more so for tax status or property value, not as investment, or to flip). Secondly, with continuing friction in South Africa, the appeal of Mauritius is back on their radar screen from incorporating companies to peace of mind. I also think Europeans will still be interested in Mauritius especially those who have pulled out their money from the stock markets, and are looking for a place to put that money to work. With regard to the property sector - the most important thing is to really to assess, where does Mauritius want to go with this, and how will we integrate a property market into our economy. How do we get the Properties that are being built to generate cash for the economy? People buying and selling property is a nominal cash flow. What really generates $ from a vibrant property market are the related services to the property. Internet, TV, Shopping, Banking, Laundry, Transportation, Labor services, entertainment, retail, etc.

What people should be looking to do across all sectors and all players, prviate and public.

Is how to adjust our models, be it tourism, property, financial services, to adjust to what's coming ahead of us. And crucially how do we become more productive and efficient. Thirdly, and this is a huge loss to Mauritius, are the loss opportunity costs/variables. A lot of the projects/developments that have been going at breakneck speed over the past 2 years, are poorly
integrated. There is a serious lack of vision beyond doing anything that will generate cash.

For instance, the IRS developments have been done in complete isolation to many other services and industries which could have been pushed, such as private wealth management (in the finance sector), shopping, eco-friendly technology (don't just allow people to buy stuff from Germany, we can at least start of with companies that service, and produce parts), organic food (this would be a national security concern also, lets produce some of our own food), building and servicing yachts (manufacturing), the entertainment scene, print media like magazines, a national theater, African Heritage museum, an annual fashion show, grand prix (fed by many other related industries) > all these things can be viewed as a whole from the tourism perspective: you have the long term client in the IRS people, and the short term clients in the tourists who come for a week, the growing return of Mauritian diaspora, the business hub. We are turning from being a mostly green island to becoming a concrete one; what are we going to do with all this concrete? It's also a time for Mauritian companies who are well capitalized to tap the region, East Africa and the Middle East in particular. Anything within 5hrs flight time. And most importantly put the incentives there for people to be allowed to use their imagination (not just legislation, but knock down monopolies, and barriers to entry) - the government doesn't have to think of everything; it's job is to intelligently pull things together, to maximize productivity, create efficiency, and allow innovation. This is only an example for the IRS area, but many of the concepts from the IRS area can be integrated into other sectors, people putting and managing their private wealth - could be a springboard for investment into our own economy and the regional economy. Private wealth would also draw investment funds to be based in Mauritius as well. There things from the tourism and IRS sector which can naturally fit or complement the regional hub concept. Mauritius should have a national plan, a 3 to 5 year plan, like Singapore has.

Nestle is opening a manufacturing plant for Africa in Mauritius.

http://africa.reuters.com/business/news/usnJOE4BJ06W.html

by Namiko