Economic freedom of Mauritius explains its current success

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Eustace Davie | Director | Free Market Foundationmail me |


Mauritius is of serious significance to countries in the Africa sphere. Its high ranking means that the economy of the country is organised in a manner that brings great benefits to its inhabitants.

This island country is ranked 7th out of 162 countries in the Economic Freedom of the World Report 2020.

Mauritius has increased its economic freedom ranking from 43rd in 1990 (SA 61st ) to 7th in 2018 (SA 90th). GDP per capita in constant 2017 US$ increased for Mauritians from $7,990 to $22,208 (177.95%). Over the same period South Africa’s GDP per capita increased from $10,296 to $12,631 (22.68%).

Other countries have shown similar rapid growth in GDP per capita and in every case the growth has followed deliberate policies to liberate the economies from suffocating government controls.

Casting the net wider than general economic activity

Tito Mboweni, South Africa’s Minister of Finance, could do well to take note of the lockstep increase in GDP per capita that can be achieved by increasing economic freedom, but the net must be cast wider than general economic activity.



The factors for attention include a drastic reduction in the marginal tax rate (Mauritius 15%, SA 45%); Mauritians have greater freedom to own foreign currencies; and foreign trade is more liberalised than South Africa’s.

The greatest difference, though, appears to be that while Mauritians might have differences, they have learned that everyone is better off if they work together to improve conditions for the entire population.

Mauritius is merely one country that has climbed up the economic freedom ladder and doubled the average incomes of its citizens in less than two decades.

There are more, but in every case higher incomes go hand in hand with increased economic freedom. Governments who refuse to recognise this obvious truth, are not considering the interests of their citizens.

An inclusive-style constitution

The economic success of Mauritius did not come about ‘by accident’ – meaning that the citizens of Mauritius exerted a positive influence on the events in their country that led to the success they have achieved. This began with the adoption of an inclusive-style constitution on gaining political independence from the British.

The new constitution of Mauritius provided for a National Assembly consisting of 70 members to be elected on the first-past-the-post-system. The number of members of the assembly was increased from the 34-member Legislative Council created by the British in 1947, which contained 21 elected members.

A unique feature of the new assembly was that eight of the seats were to be filled on a ‘best loser’ system intended to ensure representation for under-represented communities. The four constitutionally recognised communities were Hindu, Muslim, Chinese and General Population.



In August 1967, the first election, held under the new constitution, was fought between a coalition of pro-independence parties led by the Labour Party (LP) and an opposing coalition led by the minority-representing Parti Mauricien Social Democrate (PMSD), who remained uneasy about independence despite the safeguards in the constitution.

As it turned out, the LP won the election, capturing 39 seats in the National Assembly, an overall majority that allowed the party to push through an independence vote, leading to independence from Britain on 12 March 1968.

Coalition governments made up of from two to five parties governed Mauritius from independence. These coalitions differ from co-operative arrangements between political parties in other countries designed to capture control of government, in that the Mauritian coalitions are formed before the elections and not afterwards.

Coalitions are formed based on sharing of the spoils of victory, so horse-trading between the parties takes place in advance of the elections. This often allows small parties to extract valuable concessions from larger parties relating to numbers of parliamentary representatives and positions in government.

The legendary Sir Seewoosagur Ramgoolam, the first Prime Minister of Mauritius, was able to negotiate presiding over four governments and to remain in office from 1967 to 1982.

Sir Anerood Jugnauth, who defeated Sir Seewoosagur in the 1982 election, lost office again in 1995 to Dr Navinchandra Ramgoolam (son of the former Prime Minister) but regained the position again in 2000 in coalition with Paul Bérenger (who became Deputy Prime Minister and Minister of Finance), with whom he made an unusual pre-election pact – that he would hold the post of Prime Minister for three years and would then relinquish it to his coalition partner in order to become President, a position he held for some time

A successful democracy with great diversity

The names of the political parties that were involved in governance of the country would not generally have been expected to engender expectations of sound economic policies that would result in high and enduring economic growth.



It is, for instance, impossible for the average non-Mauritian to comprehend the success of this nation that is so diverse in ethnicity, languages, and religions.

Its early years were turbulent, marked by labour union strikes, unrest, and militant politics. In 1971, the government instituted a state of emergency, arrested more than 100 labour union leaders and politicians, banned some of the labour unions and suspended elections until 1976, when it also lifted the state of emergency.

This was not a propitious beginning for the young democracy. However, the democratic record was to improve considerably from that point onward, militant politics having been exchanged for moderation and participation rather than confrontation.

Contrary to probable expectations the secret of the success of the democracy would appear to lie in the method of coalition forming that has become a permanent feature of the island’s politics.

Against all odds, a stable democracy, the establishment and maintenance of sound institutions, a peaceful and stable society, and favourable economic outcomes have been achieved.

The country has developed a record of peaceful changes of government and is regarded as a successful democracy, a record that is more consistent with a homogeneous population than one of great diversity.

An entrepreneurial approach to politics

What we observe appears to be an entrepreneurial approach to politics that is constrained by vigorous trading and competition.



The spoils of office have greater value in a thriving economy, so ideologies give way to pragmatic decisions aimed at improving economic and social outcomes.

Achieving election is dependent on gaining the confidence of the voting public that a particular coalition of parties will most improve their economic and social fortunes.

The success achieved by Mauritius ‘against all odds’ will be best understood by those who know the benefits of economic freedom. Those benefits extend well beyond higher incomes into binding the very fabric of a nation, as they have done in Mauritius.


 



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