What’s in the Budget 2019-2020 to consolidate our so-called “Africa Strategy”?
Every year, the government is trying to bolster its Africa strategy by announcing new measures and this year the theme chosen is to expand the economic space of Mauritius by deepening economic diversification. It seems we are on an asset acquisition spree in new territories.
However, I believe, we need to take stock of measures announced in previous budgets, i.e. two to three years ago; for example what’s the status of the Mauritius Africa Fund, the special economic zone in Senegal, and land secured in Côte d’Ivoire for the Zone Franche de la biotechnologie and ICT. How much has been invested to-date and what progress has been made?
While I am very pro-Africa, and a firm believer we need to be closer to the growth of the continent, we need to have a cohesive vision and approach. Coming with different measures without a cohesive approach is like shooting in the dark for the sake of shooting. I believe we need a sniper approach for a number of reasons. We are a very small country and have very limited financial resources and hence need to make the most of each rupee we invest in Africa. While the intention of government seems good to have a closer relationship with Africa, the question I have is how do we make sure that we do the right things, and if the right thought process has been adopted with experts who understand the potential of the continent and more importantly where the continent is going to be in the next 10 to 20 years, and what strategically can Mauritius benefit from. We are neither China nor USA that can play geo-political cards and have huge financial means.
Do we have the financial muscle to play in the gas space in Mozambique?
Firstly, the potential collaboration in the gas space was announced by the Mauritius government earlier this year and it seems the announcement last night was just a reminder.
The gas sector in Mozambique is something which is on the cards for a number of years and whereby Mozambique will become one of the world’s biggest producers of gas, and even often compared to the Qatar of Africa with the potential of supplying the whole of Europe with more than twodecades of LNG. Big multinational companies such as Exxon Mobil, Anadarko, Bharat, Oil of India etc. are well entrenched in Mozambique to tap on this opportunity. While the intention might be good from the Mauritius government, we need to really understand the role that Mauritius will play. It’s not totally clear as of yet. What does it mean to set up a regional value chain? Which part of the value chain?
Overall, it’s a sector which requires deep-pockets and also which is at the mercy of global fluctuations in prices. For example, global prices have fallen down significantly and have an immediate impact on the viability of extraction. We saw both Anadarko and Exxon putting hold on their gas projects over the last 3 years, and it’s only this year that they are putting more resources for extraction. When the Mozambique government initially announced around 2014 that gas will be produced as from 2020, we are now moving to 2022. So, it’s important that Mauritius is careful and knows whether it is playing in a sector in which it has expertise and also which is within its control. Let’s wait and get more clarity in terms of the role of Mauritius.
Let’s talk about textile. Isn’t it better to relocate in Asia (China and Bangladesh)?
For sure a number of the key textile companies in Mauritius have already expanded beyond the borders of Mauritius to places such as Madagascar, Bangladesh and India. Those who have chosen Bangladesh and India have done it for two reasons, cheaper jurisdictions to produce and also a big market which includes India and other emerging Asian markets to sell to. Hence Asia has an edge over Madagascar.
As for Madagascar, the Mauritian government had announced a couple of months ago, this tie up with its Malagasy counterpart for the development of The Moramanga Textile City located along the main economic corridor of Antananarivo-Toamasina. Conceived as a Special Economic Zone entirely dedicated to textile-related activities and consisting of the construction of several industrial buildings over 80 hectares, the corridor will accommodate factories across the entire textile and fabric value chain. We need more information as to what the real role of Mauritius is? Are we co-investors with the Malagasy government, are we funding the infrastructure, who is in control us or the Malagasy and how do we make sure we have secured our position in this deal?
The announcement to develop projects at the Naivasha Industrial and Technology Parks stems from the recent visit of the President of Kenya to Mauritius couple of months ago…
…Again, we have to wait and hear what Mauritius government really intends to do. Also bearing in mind that the last couple of years, Kigali in Rwanda seems to be more aggressive than Kenya in being positioned as the tech-hub for East Africa. For example, Chinese multi-billionaire Jack Ma has set up the flag of Alibaba in Kigali for its African strategy.
I think the easiest project for Mauritius in the tech space would have been to invest in Mauritius and create the environment to entice African tech companies to move to Mauritius. We can easily become the Silicon Valley of Mauritius. Provide a package of tax incentives, relocation of people, and even subsidise rentals for those African tech companies. There are a number of government owned buildings that are sitting empty.
Finally, we’ve been talking about the Senegalese Industrial park since 2015…
Indeed, this was first announced in 2015 when Vishnu Lutchmeenaraidoo was the Finance minister. The city of Diamniadio has started construction, albeit slowly and land has been allocated to the Mauritius government. It’s important for government to genuinely assess what progress has been made and see whether it’s strategy of enticing Mauritian private sector corporates to Senegal is working or not.