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Mr. Chikosi, head of the World Bank office in Mauritius:

"Mauritian firms can enhance their ability to compete internationally"

In February, the World Bank opened its first ever office in Mauritius. The goal is to assist Mauritius as it makes the difficult transition from dependence on trade preferences to competing in the global economy. Over the past 30 years, the Bank has assisted in over 60 projects in economic growth and poverty reduction. The most recent is a $30 million Development Policy Loan to support government reforms in trade, economic policy and investment. It is also supporting projects to reduce traffic congestion and improve sewerage and sanitation. The Bank has provided technical and advisory assistance, such as a recent report on modernizing the pension system.

The head of the Bank office in Port-Louis is Constantine Chikosi, a Zimbabwean national. In the following interview with Pamela de St. Antoine, Weekend's correspondent in Washington, Mr. Chikosi discusses the World Bank's work in Mauritius.

The World Bank and Mauritius have had a relationship that dates 40 years, to 1968 when Mauritius gained independence and joined the Bank. Since then, Mauritius has evolved from a one-crop economy based on sugar, to a diverse economy based on agriculture, tourism, financial services and textiles. As the economy evolved, so has the Bank's role. Mauritius can borrow easily now on the international capital markets, and the Bank's role has been more a provider of technical assistance. Why, then, has the Bank decided to open an office in a country that seems to need its help less and less? Wouldn't it have made sense to put an office in another country on mainland Africa?

You are right in pointing out that Mauritius is a middle income country, but we need to understand that this does not mean its progression to a fully developed country is a "home run". What we see happening in Zimbabwe, Ivory Coast and Kenya is testimony that even middle income country economies are fragile and can relapse into low growth or worse. African middle income countries, in particular, continue to need the Bank's support, albeit that support has to be varied from what we provide in some of the poorer countries. The Bank's office in Mauritius was established at the request of the Government. Mauritius is currently facing a challenging phase in its economic history - trying to manage the transition from dependence on sugar and textiles to a more high tech, services oriented economy. Yes, Mauritius can borrow on the international capital markets, but the World Bank's financing comes with in-depth sector knowledge which countries in this situation find invaluable in designing and implementing critical reforms. The question for the World Bank in Mauritius is not whether we should be there or not, but whether we have the agility to provide flexible, non-traditional products and services that are customized to the country's evolving needs.

In your opinion, what will replace textiles and sugar now that these export sectors have lost their protected markets?

One of Mauritius' more foresighted public investments was the digital platform that permits access to broadband internet services virtually anywhere on the island. This creates the possibility for new sources of growth for the Mauritian economy. Driving from the airport in Mauritius, you can see Cyber City under construction on land that was previously under sugar cane. Call Centers and other information technology services are growing at a fast pace. Tourism is also growing very fast and has partially compensated for the shrinkage in sugar and textiles sectors - aided by the island's image as a safe holiday destination. Of course, this growth in the number of tourist arrivals will flatten sooner or later, otherwise you risk destroying that which tourists come here to enjoy. Other promising new sources of growth are medical tourism and land based oceanographic industries. There is also evidence of a revival of the textile industry. With its reputation of being a business friendly country and its bilingual tradition, Mauritius also aspires to become an exporter of commercial arbitration and dispute settlement services to investors and governments in third party countries.

As many other countries in the world, Mauritius is seeking ways to become more energy efficient and to decrease its carbon emissions that contribute to global warming. Mauritian officials have said they want to expand programs that encourage the use of solar, wind and biofuels, including bagasse based on sugar cane. What can the World Bank do to help in this area?

With so many tourists flying into Mauritius from distant locations, Mauritius's carbon footprint is large. The level of adoption of existing technologies that promote efficient energy use practices is still low and there is much room to do better in this area. A comprehensive report on energy policy has just been released. One practical measure that is needed is to begin implementing some of the report's recommendations, perhaps through the budget. The World Bank can help by developing some of the recommendations into implementable measures and sector programs that encourage absorption of the energy saving technologies and the use of alternative, renewable energy sources. Through the Clean Development Mechanism (CDM), the World Bank is providing funding, on grant terms and specialist advisory services, in support of the Government's efforts to achieve this.

In the past, the Bank's work in Mauritius has primarily been with the government. In what ways might the World Bank Group, with a full-time presence in Mauritius, reach out more to the private sector, which plays a very important role in the economy, and to civil societies (non-governmental organizations). For example, what is the International Finance Corporation (IFC), the arm of the Bank that deals with the private sector, doing and does it plan to expand its portfolio?

Let us keep in mind that the World Bank's office in Mauritius is only a liaison office, with minimal capacity to provide service to the government or to engage other stakeholders. Nevertheless, both MIGA (Multilateral Investment Guarantee Agency) and IFC are active in Mauritius. The IFC is engaged in both the lending and advisory services aspects of its operations. Going forward, there are great new opportunities for increased involvement of both MIGA and IFC in Mauritius, particularly in infrastructure.

Traffic congestion is a growing problem in the country. What is the Bank doing to help?

At the request of the government, the World Bank is preparing a transport sector project for which a Project Preparation Facility is already in place and is disbursing. More than this, the World Bank is supporting the Government's efforts to implement the Cabinet's recent approval of the ring road and harbor bridge projects under public private partnership arrangements. We need to step up our support to government in building its ability to develop public-private partnership infrastructure projects (as opposed to the traditional government funded projects). While infrastructure bottlenecks are recognized as a constraint to competitiveness and growth of the economy, available public resources are not going to be enough to address the problem. This means finding effective ways of tapping private investments for infrastructure.

Which countries in sub-Saharan Africa offer the strongest opportunities for investment by Mauritian private sector companies, especially those involved in sugar, textiles and tourism?

Trade and investment opportunities for Mauritian companies abound in the COMESA and SADC countries. The frustration felt by Mauritian businesses is that trade barriers in these countries remain a formidable constraint to the free movement of goods, services, investment and people. That is why the Bank is helping governments deal with the social costs of economic adjustment and trade liberalization. In the sugar sector, the historical links between Mauritius on the one hand and Mozambique, Malawi and South Africa on the other remain strong.

Mauritius has been building new economic ties with India to take advantage of that country's enormous economic growth. How do you see these ties growing? Also, given similar growth in China, should more be done to build long-term trade opportunities with China?

With the strengthening of the trade nexus between China and India on the one hand and Africa on the other, Mauritius' geographic location between these two trade centers must present economic opportunities that can be exploited. One area where Mauritius stands to benefit more from its close ties with India is in technology and innovation. With the Mauritian government now seeking to reorient the economy towards high tech services, we find that the country's research and development institutions are lacking in entrepreneurial culture and alignment with the country's new strategic directions. By just absorbing existing technology (never mind creating new technology), Mauritian firms can enhance their ability to compete internationally. Here there is much the country can learn from India and China (India especially) in exploiting science, technology and innovation in a more strategic manner for enhanced global competitiveness and growth.

a m e r i c a n   s c e n e

WEEK-END --- dimanche 6 avril 2008