Economy

Lokal is beautiful: MCB rethinks our economy

25 Jan 2019

MCB Group presented at a conference at the Caudan Arts Center on Wednesday 23 January, the results of a study commissioned from the French firm Utopies, aimed at identifying economic leaks and proposing related solutions. This study is the first concrete proof of the Group's commitment to sustainable development through its "Success Beyond Numbers" manifesto, launched last November.

Entitled "Lokal is beautiful", this report was presented to an extended audience composed of different stakeholders from various spheres; namely the public and private sectors, NGOs, SMEs, and the press, amongst others.

The first finding of the study related to the attraction of external wealth is an important pillar in the Mauritius economy. Although necessary, it is not sufficient to bring lasting prosperity to the island. Mauritius's income can be explained by the island's ability to capture international revenues (exports, labor income, capital) but also to circulate them locally: incomes entering the territory will generate other revenues and local wealth, resulting in a virtuous effect with new trade and new income ... until the ricochet effect fades. This multiplier effect will be higher if the territory is able to limit the leakage of wealth (imports, income paid to foreign investors ...).

Without this effect, the territory functions a bit like a pierced bucket, which does not manage to keep the wealth that enters. Yet, while Mauritius’ external revenues have been growing for 20 years, the country's multiplier effect, that is to say its capacity to circulate these riches, has gone down by 25% in 10 years. It is therefore essential to stimulate a new form of local entrepreneurship and help new local sectors emerge. This movement is necessary to guarantee both globalisation and sustainable prosperity in Mauritius.

The new island: Fab, Circular, Smart

Today, three economic scenarios are possible:

1) Let the economy follow its current but very uncertain course with an annual GDP growth of 3-4%: income / capita would only be doubled by 2035.

2) Multiply external incomes by two without modifying the downward trend of the multiplier effect: this would imply major transformations and raises major questions. Is Mauritius able to double industrial exports, tourism flows and financial activities in a few years?

3) Increase the external income by 50% and the multiplier effect by 25%: the analysis shows that this scenario is credible and possible by 2025.

However, the first two scenarios are not without social or environmental consequences. And it is imperative today to rethink Mauritius’ development model in order to make it inclusive and to create prosperity for the country as a whole.

We must therefore:

- Encourage the response to local needs with local resources, to produce locally what is no longer or insufficiently available

- Increase the value of what is exported by Mauritius, generating more income based on locally rooted knowledge and know-how, particularly through the sophistication of Mauritian production.

 To do this, three tracks are drawn.

Make Mauritius a "fab island"

Make Mauritius a "manufacturer" island with micro-factories, Fab-labs professionals, Fab-shops, incubators, partnerships, start-ups - companies.

A circular island

Produce with the material resources of the territory. Repair, restore value, recycle (local loops), reuse waste

A Smart Island

Create value rather than products. It is a business model based on digitalisation (peer to peer, collaborative platforms, blockchain or artificial intelligence-based applications).

The full “Lokal is beautiful” report is available on lokalisbeautiful.mu.

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