Kevin Teeroovengadum is somebody who speaks his mind. Whoever at the head with no competence and no sense of leadership is a recipe for disaster, he says.
The resignation of Vishnu Lutchmeenaraidoo as External Affairs Minister and member of the National Assembly in March will be remembered for his surprising statement on the historical low level of the economic growth of 3%. Do you think he was right to express his feelings on that issue?
I cannot say whether he was right or wrong or what were his motives. History has shown that politicians are not the most rational people and often have more politically motivated agendas than the real interest of the country and its people. That's not the case in Mauritius only. However, on the issue of economic growth, we are consistently below the 4% growth level over the last 10 years.
What is your take on the economic growth of the country?
Firstly, it's not a pretty picture globally. Following the global financial crisis that we faced 12 years ago, and despite the huge amount of money which has been injected in it, the system is running out of steam. Apart from the fact that world economy is slowing down, the indebtedness of many countries has increased to levels much higher than before the financial crisis, the ongoing trade war between the USA and China, the chaotic Brexit process, the "gilets jaunes" movement in France, the rise of nationalism/ extremism in parts of Europe are coupled with the threat of terrorism in places we once thought safe. To cap it all, we are witnessing the growth of Artificial Intelligence which is replacing millions of people. That's not fiction, it's real!
Against this backdrop, Mauritius with its 3.7% growth can be considered to be not in a too bad situation. But in order to get out of this middle-income trap we should aim for a much higher growth (at least 5%). A very possible achievement should we have the right economic policies, a sound vision for the country and decent execution capabilities.
Targeting a high economic growth implies a high flow of FDI within the country. According to the Economic Investment Board's estimates, total FDI for the present calendar year is expected to reach Rs 17 billion. Is that achievable?
We have averaged around Rs 15 billion yearly over the last couple of years and no significant growth in FDI. On top of that, if you work it out in US$ terms, FDI seems to be on the downtrend. Alas, Rs 17 billion is not a target that will help Mauritius achieve a 5% gross domestic product growth.
We have to be honest with ourselves and ask the relevant questions. Is it the global economic situation, or is it that Mauritius is unable to attract foreign investors? Yes, global situation plays a role, but the reality is that we are not giving ourselves the means and tools to bring in FDI. We should have a more nimble/proactive approach. We cannot stick with the same cooks and recipes that worked well in the past but seem to be lost in today's world. We need a disruption in our thinking on how to attract significant levels of FDI. We need deal makers with proven track record at the forefront to go and bring in investors to Mauritius and also cut ongoing red tapism to deliver relevant permits and to be consistent with the messages we send to the investment community.
Looking at the composition of the FDI figure we find that almost 60% go to the realty sector. Investors seem more concerned with speculation and a quick return rather than investing in a sector creating growth and lasting employment. What is your view?
Real estate has been a big driver of FDI since 2005. For years now we knew that a number of sugar companies sitting on huge land banks had to commercialise their assets and the easiest way when Mauritius opened itself up to the world was to allow foreigners to buy properties. But in the last couple of years, the sector has undergone tougher times. Several smart city projects are on paper but few developments are visible. There's a structural problem in terms of our real estate sector standing vis-à-vis other global jurisdictions which have become more attractive than Mauritius. We need to drastically reposition it by professionalising the sector at various levels and make of it a vibrant pillar. Also, the bureaucratic process to obtain relevant development permits is still too cumbersome.
I agree that FDI in the property sector alone is not ideal. We need to have other thriving sectors that will bring in FDI and create medium to long term employment, especially for our younger generation. Take the example where big German companies (Bosch, Volkswagen) are setting up assembly plants in Rwanda and Ghana. Mauritius needs to be proactive to show what we can offer these big companies to ensure that they move to Mauritius instead.
«So if we aspire to be like Singapore, then we need to act like Singapore.»
There's another missed opportunity: Mauritius could easily have set up the environment to encourage tech companies to locate here, like being the Silicon Valley for Africa. There are amazing African start-ups and they should be welcomed to use Mauritius as their start-up base in the spirit of "live work play". Kigali, Cape Town and Accra seem to be moving in that direction, again at our detriment.
On the same wavelength,one is tempted to say that foreign investment in manufacture is marginally insignificant whilst this sector needs to be revamped following loss of employment and closure of enterprises. How do you react to this situation?
It's a fact we are not a viable location when it comes to low value-added labour intensive manufacturing processes. Our labour cost is too high and the younger generation doesn't want to work in manufacturing. What's happening in the textile sector was going to happen sooner or later. The question is: do we hang on to the past or do we come up with new tangible sectors that make more sense for employment creation? The answer is self-evident.
Regarding the sugar industry, the situation is also worrying with the price of sugar falling at a low level on the world market, that is Rs 8,800 per ton. Lots of planters are today reflecting about their future. Some small planters have already abandoned their lands. Should we today put a cross on King Sugar as an economic pillar?
We are too emotionally attached to sugar. What was once the key economic pillar is no more. We need to move on and the current number of workers as a percentage of the total labour force in that sector is dwindling yearly.
So what are the options? It's a mix of things: real estate development, energy production, agriculture, amongst others. I believe there's a great opportunity for agriculture. A number of farmers from other neighbouring countries, mainly South Africa, are keen to bring in their expertise and investment in developing this sector but it seems that landowners are banking on real estate and that alone is not feasible. The EDB should focus on that as we could reach the goal of food self-sufficiency if we want to.
Also, when we talk about agriculture, we are still talking about mechanisation which is already a thing of the past as we are moving towards robotisation of agriculture which is revolutionising the way we farm super efficiently. Israel is an amazing proponent of robotisation of agriculture and we can learn a lot from what they are doing with very limited natural resources. Qatar, which has lived under an embargo imposed by its ex-main trading partners since 2017, has managed to create a food manufacturing industry and has become self-sustainable within two years. All we need is to have the willpower!
The tourism sector is presently under pressure with some destinations registering a fall in tourist arrivals. The result in the coming years is that a growth target averaging 3% to 4% may not be achieved. How do you explain this situation?
It's a difficult year for reasons such as the Brexit issue, the "gilets jaunes" movement, an economic slow-down in Europe where are situated our traditional markets plus also the significant downward trend of the Chinese market. We are competing with other "sexier" jurisdictions and we are seeing how travellers' mode of booking and stay preferences are changing with the advent of new booking platforms and the likes of Airbnb.
The big questions we should ask ourselves are: what is the number of tourists we can welcome per year, what's our target and how do we get there? Bearing in mind other important factors that we are facing, the ecological crisis - be it rising sea water levels which is a fact when you take the coastal roads - and day to day pollution from the population itself have an impact on the tourists perception of Mauritius. What will the tourists of tomorrow be? Eco-friendlier for sure. Take the Millennials, will they be inclined to go to a traditional resort, what products and services are they looking for? Have our hotels adapted to this clientele? The same applies to a growing community of vegan and bio and organic- driven travellers.
On a positive side, we are currently at 1.4 million tourists per year. Back in 2005, the target was set at 2 million, which is not an impossible mission when we are currently getting 0.1% of the global tourism market and the latter is set to grow with more people from emerging markets having the means to travel. Another crucial element is that we need to ensure that Mauritius remains a safe place. We've seen what recently happened in Sri Lanka or in New Zealand. Authorities/stakeholders need to ensure that no such things ever happen here.
Following amendments to the DTAA between India and Mauritius, Mauritius has adopted a new model with Africa as an engine of growth for the global business. Is our jurisdiction sufficiently developed to attract foreigners here to structure their investmens in the African continent?
We have to be the place for Africa, and that is not an option, it's a must. We need to attract more people who are investing in Africa to use Mauritius as a base and not just as a "passthrough" for fiscal reasons only. We need to attract African businesses and corporates. After having spent two decades on African ground, I am a firm believer that we can do far more than we are today, we have just scratched the surface. The ability to offer a safer place to live, education for the kids, health for the family, and easiness to transact, etc. is a package deal that we need to offer to African entrepreneurs and corporates. We are not aggressive enough to bring in these African investors to be based in Mauritius. Let's face it: how many of our consulates in Africa are real business development agencies? How many private sector corporates employ Africans in Mauritius? The mindset needs to change.
The latest Audit Report has shed light on several government funds abuses, delays in infrastructure works leading to high overrun cost in ministries and parastatal bodies. Criticisms from some economists and corporate captains are levelled against government spending and the situation in a grossly overmanned public sector which is not at all proportional to the level of services delivered. Should public sector entities be downsized to increase civil servants level of efficiency and productivity? Are private corporate doors still open to welcome the excess of employees ?
Irrespective of the government in office, for years now we have had the same audit reports highlighting the same issues. It almost seems like the audit reports are copy/paste documents of previous ones. The key issue evolve around leadership. Why is it that Rwanda public corporations are being run efficiently? Because there's a clear leadership that cascades down a culture of no nonsense and good governance to each and every stakeholder. If the right people were put in the right job, and processes are efficiently defined and managed within these public organisations, we would most likely need only a fraction of the people working in these state-owned organisations costing a lot to the taxpayers at the end of the day.
As to whether private corporates can welcome them, it depends on the following. First the economy needs to grow more than 5% for the private sector to be able to create jobs. Secondly, for those who were inefficient in the public sector, I am not sure what relevance they would have in the private sector. Thirdly, Mauritians at large cannot just expect to get a job either in the public or private sector, we also need people as entrepreneurs, a nation of entrepreneurs rather than civil servants in the public or private sector. We need to create the right framework and environment for people to become entrepreneurs. Finally, I am a firm believer that Mauritians should also go overseas and get exposure and then come back with more expertise and experience.
The financial mismanagement of two state owned companies, namely Air Mauritius and SBM Ltd, could be used as a solid argument by some chief executives in the private sector to privatise these organisations through a strategic partnership. Do you subscribe to this idea or thinking?
It's all about leadership and competence. There are no other magical solutions. How come Ethiopian airline has become a thriving commercially viable airline? SBM wanted to have an exposure to Africa, but seemingly they did not bring in the relevant people with African experience. There are great opportunities for SBM in Africa, but they should recruit a professional team of bankers be it from mainstream international or from South African banks that have had dealings in Africa. How can you expect a team who has only operated in Mauritius to ensure sound deals in Africa ?
As for the concept of privatisation, be it whether you are in the public or private sector, when you don't have the competence in the right place and no strong leadership, it will always be a recipe for disaster. We've seen private sector companies going bankrupt. So it is not just in the public sector.
I believe the state can own strategic key companies, as long as you have competent people in these organisations both at board and management levels with no political interference. We need to move away from government-controlled to government-led developments. Look at Singapore, they have a number of organisations owned by government and super-efficiently run. So if we aspire to be like Singapore, then we need to act like Singapore. Even Rwanda is showing us how they are doing it.
You have worked overseas for many years and are in contact on a regular basis with Mauritius. Given that the mainstream political parties are looking for younger experienced Mauritians to strengthen their respective teams, would you be interested to join in? That's politics?
I have worked during most of my career overseas and even being away from Mauritius, I have always tried as much as possible to assist my country. For example, in 2006/07, I assisted in the setting up of Afrasia Bank which is today a successful bank ; in 2009 I brought in the company (Actis) I used to work for to invest substantially in setting up a real estate company whereby we have done major developments worth billions of rupees with Groupe Mon Loisir in Rivière-du-Rempart and Flacq ; in 2016 I brought in Radisson Blu hotels to Mauritius, and I currently sit on a number of Mauritian companies boards where I can input my expertise. So I am always open to add value to my country of birth.
However, politics in its current format doesn't make sense. I firmly believe in today's world of disruption, we need disruption in politics. We need a cleanup and a leadership that will entice younger Mauritian professionals to join politics and take Mauritius to the next level! Else we end up with the same old same at a time when we need a change!