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Mauritius looks for its place in the sun

HOW appropriate that Mauritius should have chosen the dodo as its national symbol. A sitting target, the flightless bird was exterminated by Dutch settlers on the Indian Ocean islands in the 17th century. The lesson was clear: adapt or die. It is one Mauritius has taken to heart.

With no natural resources to boast of, apart from its beaches, it has nonetheless turned itself into an economic success story by cannily spotting a series of market niches and swiftly evolving to exploit them.

The question for its l.l-million citizens now is: can Mauritius continue to perform the same miracle of reinvention, or has more than a decade of prosperity dulled its competitive instinct? The niches on which Mauritius has built average per capita incomes of $3 400 may be about to disappear. Most were based on market protectionism, but that is no longer fashionable.

The Lomé convention, which gave Mauritius preferential access to European markets, propped up its sugar industry. An unexploited textile import quota with the US drew Indian and Chinese companies which had saturated their own national quotas to Mauritius's export-processing zone. Local companies, tapping a well educated workforce, soon joined the race to supply the West with high-quality clothing. It was only in tourism that Mauritius competed openly with the world.

Lomé is due to be renegotiated in 2000 and its tenets now jar with the free-trade philosophy of the World Trade Organisation. Other African nations, with cheaper labour costs, are vying for Mauritius's textile contracts.

At the same time, the tourism industry is approaching saturation point, with local operators admitting the islands may not be able to welcome many more than last year's record 487 000 visitors without suffering serious environmental damage.

"We are trying to identify what is going to be the next strategic resource we can build on," says Mitrajeet Maraye, central bank governor. "We have to find our place in the sun."

For some, part of the answer lies on a hill overlooking the capital, Port Louis. It is there that Mauritius's Export and Development Authority (Media) has built Informatics Park, a hangar where foreign companies specialising in information technology benefit from state-of-the-art telecommunications and tax incentives.

D&H Computer Services, a British software company, was one of those lured by the prospect of high skills for relatively low wages. "The skills we need are very expensive in the UK. Here salaries are four or five times cheaper, so we can get new products to market four or five times faster," says director John Douglas.

About 80% of the building is already occupied and Media is thinking of putting up a second. Chand Bhadain, Media's head, believes that, along with the creation of a free port, expansion of offshore banking, manufacturing diversification and the modernisation of the textile and sugar industries, it will form part of the transformation of Mauritius into a busy hub linking Asia to Africa.

Optimists believe that having established a solid international reputation for excellence, Mauritius can remain ahead of the pack even when protectionism evaporates. It should now model itself on Singapore, they say, rather than trying to match low wages offered by African rivals.

But pessimists warn that annual growth rates of over 6% have bred exaggerated expectations. A population used to near-full employment, free education, health care and subsidised foods could be in for a rude awakening.

Businesspeople know that if Mauritius is to thrive in the long term some tough decisions must be made: scaling back a welfare state reminiscent of pre-Thatcherite Britain, slashing a bloated civil service and abandoning a collective wage bargaining system that rewards inefficiency.

But there are few signs of the required political leadership. Thirteen months after wresting control from Mauritius's veteran leader, Anerood Jugnauth, Navin Ramgoolam's government stands accused of incompetence.

It got off to a poor start last year with a finance minister who alienated the business community and drafted a hugely unpopular budget. As political tensions simmer, private entrepreneurs, their order books full but fretting over the future, chafe at the lost opportunities.

"With good planning, we could see per capita incomes going up to $10 000 by the year 2005," says one executive. "But we need decent management, politicians who know what they are doing. At the moment that's missing." - Financial Times

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