The economic situation of Mauritius is frankly dire and we must accept this to be able to change the way we’re looking at things. Tim Taylor, Chairman of Scott & Co, in an interview with Aufait, explains why he is worried about the future of Mauritius for whom the worst of this Covid crisis is yet to come.
The government has been very critical of the private sector. What do you think of this “alone against all” approach adopted by the authorities?
The economic situation of Mauritius is frankly dire, not that we are seeing the consequences yet. Those, I think, will come next year. Whether it’s in June, July, October, I don’t know. It will not be in the first quarter. From the second quarter onwards, we’re going to see some fairly dire stuff. There are people, in the private sector, that would not survive.
Though they say we’ve got to reinvent the tourism industry, we’ve got to reinvent that, we’ve got to do things differently. That’s wonderful to say. But when you’re drowning, the first thing you want to do is save your life. Then you can have a look at whether your shirt or trousers are looking nice and where you might want to go.
At the moment, some of the population are suffering but most of them, with the Wage Support Scheme, are not suffering. I think we’ve got enough foreign exchange to take us into next year. We’ve got the goods on the shelves. This Christmas is going to be as good as last Christmas.
“25% of its costs are being covered by the Wage Support Scheme, but 75% are not being supported.”
But, the people that are really suffering, for example, the hotel industry is really suffering. 25% of its costs are being covered by the Wage Support Scheme, but 75% are not being supported. Okay, they’ve got some local tourists, which is good, but it’s probably only 10% of the revenues they would normally get. So I think they are hurting very badly and they’re going to hurt some more.
Is the government doing the right things to protect businesses and jobs?
“They are going to have to cut some costs and some of those costs have got to be employment costs.”
In America, they decided to protect incomes, not jobs. In the UK, they decided to protect jobs. Here we’ve gone further than even the UK. Because in the UK, you were allowed to make people redundant without any penalty. Here, when you are taking any kind of wage support scheme, you can’t make people redundant.
What the government is doing here is protecting jobs. I understand that. But if we look at the medium term, there could be a real problem, because if the hotel industry is going to get back on its feet, it is going to take 2 or 3 years to do it. They are going to have to cut some costs and some of those costs have got to be employment costs. We’d be better inspired to protect incomes.
Are you satisfied with the governance structure put in place within the new entity, the Mauritius Investment Company (MIC)?
We are slightly in the dark on the governance structure. The MIC is a very good thing. Some of the things it says it would do are misguided. They say they can have a logistics hub in Africa, I don’t think that’s the MIC’s job. Its job was to support the really important industries here in Mauritius, or to a degree lessen the Covid effect. I think they are doing a good job in that field. I see that Lux Island Resorts has agreed on a loan. Sun Limited also. I understand negotiations are going on with other hotel groups. That’s good!
“I hope they do proper due diligence on whoever they lend money to and that the terms that they lend are reasonable for them and for the taxpayers, whose money this is.”
It is very difficult, sitting on the outside looking in to know exactly how the governance works. There is Lord Desai, as the Chairman, who is obviously not physically present in Mauritius. There are people on the board who are respectable and competent. But, in the past, we have seen governance in parastatal bodies lacking. I think it is much too early to say whether it will lack in the MIC or not. I hope it doesn’t. I hope they do a good job. I hope they do proper due diligence on whoever they lend money to and that the terms that they lend are reasonable for them and for the taxpayers, whose money this is. It is difficult to say the MIC has got bad governance at the moment, We will see with time.
Tim Taylor, you were the first Chairperson of the National Committee on Corporate Governance. How do you explain the contrast that exists in the governance of private and public companies?
I took the chairmanship of the National Committee on Corporate Governance in 2001 and I was the chairman until 2015 when Mr. Bhadain kicked me out. Governance has always been around. But there was not that much emphasis on it if you look back at the beginning of this century. We worked extremely hard with the private sector to improve the governance and I think it has improved. Perhaps we need to put a bit more pressure on again.
It looks slightly quiet at the moment, but I have no reason to believe that the Corporate Governance Committee doesn’t work well. I think they want to do the right things for corporate governance. The private sector actually responded very positively.
We worked really hard with the public sector. What’s the problem in the public sector? Well, how does governance work? It works if you have people of competence and integrity on the boards of companies. And if they are allowed to do that job without interference from a shareholder or from whoever.
Now, in the public sector in the parastatals, the boards are nominated by the government, by the Minister. And of course, there’s a temptation to nominate people (in a way, it’s quite normal) in whom you have confidence; people who are going to deliver the program that the government has set out, etc.
So it’s quite normal that they should want to hire people who are positive about what their agenda is. The problem that we see is that sometimes people that are appointed don’t have the competence, or perhaps the integrity, to actually carry out those governance roles at the level of the parastatal boards.
There are things that happen elsewhere, from which we can learn. In Australia and New Zealand for instance, if you want to be a director on a government board, you must make an application. You have to fill in a form where you put your experience and etc… then send it off to this sort of governance center.
And this body sends it to the Minister. The minister will choose from people who are willing and competent to serve on that particular parastatal. We did actually send all this to the government some years ago. I think it was Xavier Luc Duval, who was the Minister of Finance at that stage. And needless to say, nothing happened.
Governance improved considerably in the private sector. Obviously, there’s still stuff to do, and sometimes it doesn’t work as well as it should. But in the public sector, it went in the other direction. It is sad for Mauritius. I’m not sure when it’s going to change.
Private companies, notably those listed on the Mauritius Stock Exchange, publish the amount of donations to political parties, which remain opaque as to the amounts received. Isn’t that an anomaly that needs to be corrected?
Yes, of course, it is. Both the National Committee of Corporate Governance and the old JEC, the forerunners of Business Mauritius, made this recommendation to the private sector, that any money given should be a cheque made to the name of the political party. And then it should be actually published in your accounts, how much you gave. I can proudly say that in the last election, we gave nothing, but that’s another matter.
Obviously, if we’re going to get a handle on the financing of elections, political parties should have accounts. They’re the only people in Mauritius who don’t need to produce accounts. Companies have to publish accounts and you, as you probably know, you’ve got an account every year that you have to submit to the MRA.
Frankly, it is an anomaly that there you’ve got the political parties with tons of money, lots of funds flowing and they’re not even in a way constitute bodies. They should produce accounts. And in the accounts, it should say where the money came from, and what you did with the money. That’s how it works elsewhere. And that’s exactly how it works in the private sector, and this is how we should progress with the political parties. But of course, no one is interested. Well, no one appears to be interested in getting it right.
Why does good governance matter for a little country like Mauritius?
“the government hasn’t gotten money. It only has money that it takes from the taxpayers”
It doesn’t matter how big or how little the country is. Governance basically ensures that resources go to the right places. We mustn’t kid ourselves, the government hasn’t gotten money. It only has money that it takes from the taxpayers, whether it’s the VAT, whether it’s income tax, the corporation tax, or the odd parastatal, that might make a profit.
The money comes from the “peuple”. And I think governance matters because the “peuple” should be reassured that the money that they are actually contributing to the national exchequer is managed and spent appropriately. So it is to ensure that the stakeholders, who own the resource behind but who do not actually manage the money, are not cheated. That’s why governance is important.
What is your outlook for 2021?
“You can’t possibly have your pension higher than the minimum wage. This is total nonsense!”
The biggest problem we have at the moment is the pension scheme. The pension went up from Rs 6,000 to Rs 9,000 a month. And apparently, in four years’ time, it will reach Rs 13,500 whereas the minimum wage is at Rs 10,000. You can’t possibly have your pension higher than the minimum wage. This is total nonsense!
We’ve got to take the pension out of the political domain. The political parties have to say, we’re not going to use the pension to get votes. And then we can put up a technical committee to see what the level of pension should be, for whom and how we fund it. Then the CSG can come in.
For instance, here at Scott, everybody is on a pension scheme. We contribute. They contribute. And at the end of their career with us, they get a pension. If they move in between they can take the pension with them. The pension depends on the years of service and the contributions that have been made.
Most of the private sector do this now. And then you’ve got the NPF as well. So, the people from Scott have three pensions, they have the old-age pension, they have the NPF and they have the Scott pension.
Now we just need to understand who’s got what and what we need to do to make sure that the people when they retire, have a decent pension. But it cannot be a political football. It will ruin Mauritius, you know…
We have an amazing situation where the retirement age now is 65 but you get your pension at 60. I mean, come on, this isn’t serious. There’s no political courage to sit down and sort the pension up and that is going to be extremely “grave” for us in the future.
Now, what else is extremely “grave” is the opening up of the economy or the lack of opening up of the economy.
We have to give Mr. Jugnauth and his men, 10 out of 10, for keeping COVID out of Mauritius. They did well. It wasn’t always in agreement, but they did well. But you know, the COVID is around for the next two or three years. So there’s no way we can be 100% sure of keeping COVID out.
Now, we have something positive that has happened, we have the vaccine, which has arrived or up to arrive. Now, how can we use the vaccine? Have they thought of it? Have they discussed it? I mean, we’re in a very different position to France or the UK.
UK today started vaccinating people and they’ve chosen to firstly vaccinate people who are over eighty years old. Why? Because there’s COVID, all over the UK. So there’s every chance that an eighty-year-old could catch it and then he has a problem.
Now, in Mauritius it is not the case, there is no COVID today in Mauritius. The only COVID cases are imported cases. So to my mind, what we should be doing is saying firstly, if you want to come on holiday to Mauritius, get a vaccine. So everyone who comes in is vaccinated.
In the old days, you had to get the smallpox vaccine, otherwise, you wouldn’t get to Mauritius. I remember when I was a boy, when I used to travel backwards and forwards to the UK, you had to have a smallpox certificate. I think you’ll find that most people who want to travel will be very happy, will be prepared to be vaccinated and have a certificate. So people coming in should have a certificate.
Now, who could get it? It’s actually the front liners. Who are the front liners? It’s people working in hotels, it’s taxi drivers, it’s restaurants, it’s boat people. It’s not eighty-year-old people. The average eighty-year-old in Beau-Bassin never meets tourists. But politically they might think it’s better to give it to the eighty-year-old. But if we’ve got a limited amount of vaccine, we should give it to the front liners. And then we should say to people, to the tourist industry, right, you can get on with it. You can bring people in, tourists, providing they are vaccinated, and we will vaccinate your staff.
Now, I think we need to move on that quickly. It would be nice if that was working by Easter time. Now, as far as I can make out, we don’t know what’s happening. But there’s nothing clear coming out about what’s being looked at and what the protocols are. They’ve been talking about protocols to bring back tourists for the last six months. And absolutely nothing has come out. Everything that is proposed is kicked out by the health people, by I don’t know who…the committee that runs Mauritius.
“we need to move on that quickly. It would be nice if that was working by Easter time.”
So I think that is the most important thing that we should be looking at the moment. I don’t get the feeling…It doesn’t appear to be in that direction the government is looking. And if we do not get the hotel industry working again, by October next year, we’ll have major problems: unemployment and no foreign exchange.
You seem to be worried about the future for Mauritius. Is that the case?
We’re a lucky country. One day, someone said to the golfer, Gary Player: “you’re really a very lucky golfer”. And he replied; “you know, the more I practice the luckier I become”. And that’s what it is.
“I don’t get the feeling that we want to accept how potentially desperate the situation is and that is very worrying.”
Yes, I am worried. I don’t get the feeling that the right things are being looked at. I don’t get the feeling that we want to accept how potentially desperate the situation is and that is very worrying. So yes, I am worried but we are a lucky country. Hopefully, we can get out of it. Hopefully, they will actually suddenly come and say hey, yes, we’ve got to change the way we’re looking at things. Hopefully…