Saturday, September 20, 2008

Invest in Africa: Between Nigeria and Mauritius

Obi Iwuagwu, 18 September, 2008

The occasion was the mega fair, which held last week in Xiamen, China, (September 8 - 11) that featured the 12th China International Fair for Investment and Trade (CIFIT); African Commodities Exhibition 2008; and the 4th Cross-Strait Travel Fair. Several countries and companies from Africa, Europe and America attended. For me, however, the high point of the four-day event was the International Investment Forum, which provided opportunity for participating African countries to market their economies to attract investments. For majority of participants, most of the presentations were not new (mainly propaganda). However, the presentation by the Minister of trade and Industry of Mauritius stood out. As the man spoke, I was practically glued to my seat as I kept thinking about my own country Nigeria, where we went wrong and how we can immediately reverse this ugly trend. At the end of his presentation, I engaged him in a little discussion and the information he volunteered further motivated me to go searching for more on this island country. What I found will surprise you. But first, let's try to compare briefly the situation in Nigeria and Mauritius.

In terms of geography, Nigeria is located in West Africa bordering the Gulf of Guinea between Benin and Cameroun, while Mauritius is in Southern Africa, an island in the Indian Ocean, east of Madagascar. Nigeria is endowed with numerous natural resources including Natural Gas, Petroleum, tin ore, coal, limestone, zinc and arable land, while Mauritius has just arable land and fish. Whereas Nigeria became independent in 1960, Mauritius gained her independence in 1968. Also both countries were colonized by Britain. Further more, Nigeria has a population of over 140 million, which is growing at about 2.4percent, while the population of Mauritius is just over 1.25 million and is growing at the rate of 0.8 percent. Infant Mortality Rate in Nigeria stands at 93 deaths per 1000, while in Mauritius it is 12.5. Life expectancy in Nigeria is just 47 years, while it is 73 years in Mauritius. Nigeria's economy depends largely on crude oil, while Mauritius has diversified her economy to depend on agriculture, industry and service. Nigeria's economy is growing at the rate of 6.4 percent, while that of Mauritius is 4.6 percent. At the same time, Nigeria's per capita income is about $1,500 with over 60 percent of the population living below poverty line while for Mauritius the figures stand at $13,000 and 8 percent respectively. Above all, the World Bank's Doing Business Report has just ranked Mauritius number one in Africa with an amazing growth in foreign direct investment (fdi). The foregoing obviously shows that Mauritius is doing better than Nigeria, but you would then ask why?

The answer is very simple. Whereas Nigeria has built her economy around one product (oil) practically adding little or no value to it, Mauritius on the other hand, has since independence metamorphosed from a mono-crop economy essentially based on the cultivation of sugarcane into a robust and diversified economy, resting on agro-industry, export-oriented manufacturing, tourism, financial services and information and communication technology (ICT). But the country's rapid rate of industrialization would appropriately be attributed to sound economic management, strong institutions, a clearly defined development policy and strong partnership among government, business community and civil society. And unlike Nigeria where poverty levels remain high, the achievement in Mauritius has been reflected in more equitable income distribution, increased life expectancy, reduced infant mortality and a much-improved infrastructure. At present, the country has one of the highest standards of living in Africa.

Manufacturing is in deed, what has spearheaded the country's economic growth. The country was in fact, one of the few developing economies to have embarked on the creation of an Export Processing Zone (EPZ) early in the 1970s. Today, its EPZ has become the main foreign exchange earner and single largest sector employer. It employs about 30 percent of the country's workforce and is heavily dependent on textiles and apparels. This growth in manufacturing is propelled by an industrial development policy, which has passed through three phases: Import Substitution Strategy in 1962 to reduce dependence on a basically mono-crop economy; Export Expansion Strategy in 1970 owing to a rapid exhaustion of the exiguous domestic market; and the three pronged policy phase 1998 - 2010, encompassing industrial deepening, export diversification and selected import substitution.

At the same time, the country is equipped with a highly skilled labour force critical to the emerging technology based businesses. In fact, it has recently positioned itself as the premier ICT hub of the region. Its competitive advantage lies in the country's ability to provide huge cost savings, which enhances the profitability of companies, state-of-the-art infrastructure, ICT security legislation, skilled bilingual manpower and attractive fiscal incentives. At the moment global ICT players from India, US, Europe and China are already doing business in Mauritius.

On the whole, what has fueled the dramatic economic transformation of Mauritius include: political, economic and social stability; pro-business environment with government acting as facilitator; dynamic private sector very receptive to foreign investment and open to joint venture collaborations; high level of protection for investors; close historical, political, economic and cultural ties with countries on the competitive edge of technology and information society (India, China, Europe and North America); attractive package of fiscal and non-fiscal incentives including high level facilitation services; ease of doing business; young, dynamic and competitive workforce with first-world qualifications, skills and exposure; state-of-the-art infrastructure and reliable support services; and, good governance in investment promotion especially with regard to predictability and transparency of government laws, regulations and procedures and accountability of institutions dealing with investors. Nigeria certainly has a lot to learn from this tiny island country.