The island nation of Mauritius continues to be one of the most successful economies in Africa. Apart from its top ranking in several economic indexes, it also came first in the recently published Mo Ibrahim Index on African Governance. Associate Publisher Omar Ben Yedder talked to Rama Sithanen, the country's Finance Minister, who is also the Deputy Prime Minister, to discover the secret of Mauritius' success.
African Banker: What is Mauritius's recipe for success?
Rama Sithanan: There is not one single answer to that question. There are many factors that account for the relative success of Mauritius. We have invested massively in human capital--education, health and housing.
We have embraced a very open economy for a very long time. It's an export orientated economy. I believe sound political leadership is a prime reason for our success. We have been able to generate consensus in the socio-economic paradigm our country needs to embrace.
We have also utilised the trade preferences that were made available to us by the EU and the US very well--as we have done with the development assistance that was put at our disposal.
The other factor is our policy flexibility. If something is wrong; we change. For instance just after independence, we thought that we could alleviate poverty by investing basically in domestic oriented economy. Obviously the size of the market is too small for that. So we abandoned the policy very shortly afterwards, and then we articulated an export led model based on export processing zones (EPZ). And this has helped us.
We also diversified our economy base quite early. For instance, tourism, financial services, textile and clothing, sugar and cane were the main staples of our economy for a long time.
Then we diversified into other sectors, ICT, sea foods, herbs, aquaculture and land based oceanic industry. The strategy here is to broaden the economic base of the country so as to reduce your dependence on one or two products. It also allows you to cushion the impact of external shocks.
At present, we are facing the price of sugar going down, the Multifibre Agreement having expired and three, the price of oil shooting up. So we need to face these daunting new challenges.
What we have done is to considerably improve our business planning. And we put a lot of emphasis on facilitating investment into our country by doing away with administrative hurdles--the 'obstacle races'--and we have also simplified...