UNITED NATIONS
ECONOMIC
AND ^
SOCIAL COUNCIL ^
Distr.
LIMITED
E/CN.I4/CAP.2/IHP 6
10 October 1967 Original: ENGLISH
SCCNCMEC COMMISSION FOR WHIGA Conference of African Planners
Second session
Addis Afcafca, 4-15 December 1967
ECONOMIC PLANTING IS
(Preaented by the Government of Mauritius)
M67-13O5
E/CN.14/CAP.2/IHT1 6
ECONOMIC PLANMING IK MAURITIUS
Economic Planning in Mauritius' hasdeveloped to deal with two " " "
types of .problems: ■ firstly., the noc-d to rationalise the Government's' ' own capital expenditure, and secondly, to solve the island's acute" " ' ' economic diffioulties. Though they sr8 obviously interconnected, in ' tracing the course of planning in-Mauritius, it is better to' cover'the" "
two problems separately. • :: - ■■ : •
Public Sector Capital ;ixpenditur3 Prr,m.M« 1957-70
1. The,first major effort at planning-the public sector was the five- ''
year Capital Expenditure Programme which began'on 1st July 1957 and "
which bpre the title "A.Plan f.r Mauritius". This was the work of the "
Government's Economic Planning Committee and the need'for regular ro- ' '
views,was recognised right at the beginning; three progress reports werepublished .by the end of 1959.
2. The devastating oyclones 'Alix' and 'Carol' in early i960,completely
upset-the assumptions on which the Plan had been based and imposed, a. new set of urgent needs on the Government. The Plan was therefore wound up at the end of June I960 and replaced by the "^construction and Develop ment Programme 1960-65" which was dra,n up in consultation with an Economic Survey Mission, led by Professor Meade. The Plan made provi sion for expenditure of Es 354 million (£26.6 m.).3- Owing to the difficulty experienced" in carrying ou~t many projects
at the desired rate, it was decided in 1964 to extend the programme by one year, to 1966, and raise the total a.penditure ceiling t. Rs 400 m.(130 m.). Sven so, it proved impossible to complete some projects by
the end of June 1966 and these had to be phased for'completion in the next programme. Delays were occasioned by difficulties with finance■extended negotiations over contracts; and changes in the requirement for'
particular projects requiring new designs. Some targets for loans to- 'the private sector were not met because of a decline in demand resulting '
from changing economic circumstances.
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4- Final expenditure on the 1960-66 Programme by the end of June'1966
amounted to Rs 324 m- compared with a total of Rs 357 m. which" had been ' planned. The difficulty in keeping expenditure up t0 the planned rate , ' was also matched by a similar difficulty in keeping the balance between
the main sectors of expenditure (See Table i). Thus administration and infrastructure both absorbed more money than was originally foreseen while social services and economic services (aids to industry and agri culture) both fell substantially boloTv their targets. . . . -
5- The njw plan drawn up to rsplace .thu Roconstruction &nd Development Programme was mor^ ambitious and had a changed emphasis. The Fublic Sector Development Programme 1^66-70 foresaw expenditure of Rs 337-5 m-
(L25-3 m.) to give an annual rate of expenditure some 50 per cent higher than in the previous programme. The emphasis is on the development' of"
agriculture and industry with less importance placed on infrastructure.
The rate of expand!ture on industry and agriculture is planned to be five times higher than was achieved in the previous, programmej on social services it is tu be nearly 50 per cent higher but on infrastructure a slight decline is expected.
iS I
Breakdown of Capital ffxponditurs in the Public Sector 1960-70
Reconstruction & Development Programme P.S.P.P.
60-65 60-66 66-70
Target Actual Target
Rs m. % Rs m. % Rs m. fo
Administration . . ■
Law & Order 32.8 9.3 41.0 12.7 27.7 8.2
Agriculture &
Industry 51.8 I4.6 36.7 11.3 ' 129.0 38-3
Infras true ture 139 - 8 39.5 161.0 49.7 98.529.2
Social Services 129-6 36.6 85.3 26-3 82.0 24.3
T-TAL 354-0 100.0 324.0 100.0 337.5 100.0
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6. . The.P..S.D.P. was the first Programme, to be prepared by .the Economic Planning Unit, following a report on the island's problems written-by the Unit's first head, iv.A.B. Hopkin. The Programme was prepared against a background of substantial information cn foreseeable development trends and prospects f,r the different sectors of the economy and it was'ln-l tended to be part of a National Plan for th* whole economy. However, after one year of the new Programme the old problem of underfulfilment has reappeared. The main roas.n appears to be that the existing machinery
•for planning and executing projects is not capable of managing a 50 per cent increase in one year. As underfulfilment occurs unevenly it produces distortions in the Programme. Thus it is much easier to spend money on a primary school than on a loan for a new'industry. The school is usually built to a standard design and can bo put out to contract with very
littla ado. The industry has to have marketing and technical feasibility studies, funds have to bo arranged, technical assistance.sought from outside, protection granted by Government and- so on. Starting from the same point the school could be ready to open its doors in a year, whereas the factory might not begin producing for throe years and even then face
1 teething troubles'.
7- An attempt to reduce the -amount of overfulfilment is now being ' made through the Economic Planning Unit which'is supervising the execu
tion of the Programme. All ministries have began tu report quarterly to S.P.TJ. on the progress made on the projects for which they are responsible.
It is then up to the 3.P.U. to see Khat can be done to remove the
obstacles in the way of development and how to deal with the major bottle necks, such as lack of qualified staff in the Ministry of Korks to do ' the detailed planning of building projects or late delivery of plant and
machinery froin abroad.
8/ Another problem that is causing concern is a possible shortfall of
resources. The programme as originally written had a 'gap' ofRs 52 a'.
U3.9 m.) which it was hoped would be filled by resources attracted from "
outside. However, some major projects, involving the construction of '
dams for irrigation, have failed so far to attract external assistance.'
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r Ft. is hoped thai;-efforts to secure assistance from local sources will
prove successful, although the prospect is not bright.
9- A decade of planning in the Public Sector has helped to guide
economic development on th, right lines but three problems still remain:
a) how to ensure that projects are carried out on schedule;
b)- how to evaluate the merits of different projects where thara is a disagreement on .technical rather than economic
noeas;
c) whether to be optimistic about resources and face the :
possibility of cutting back later or whether to be pessimistic and therefore miss valuable development
opportunities.
Planning to Solve Economic Problems
1. Mauritius is faced with several acute ac.nomc problems which havo provided the background to the Public Sector Capital Expenditure Programmes described above. The first is overpopulation, with an increase of around 3.0 per cent a year for nearly twanty years. At the 1944 census the population was only 419,000 vrhorsas by the end of June 1967 it was 773,573, an increase of 85 per cent. As tha total land surface area of Mauritius is only 713 square'miles, the density of population is now 1,085 to the square mile, am.ng the highest in th.. world and probably unique among countries dependent almost entirely on agriculture.
2. This brings us to the second problem; the dependence on one crop - sugar cane. Sug.ar cane covers 47 per cent of the surface area of the island; the sugar industry still accounts for ovor 30 per cent of G.2.P.
and exports of sugar and its by-products come to 97 per cent of domestic exports. In the past increases in the population could be counter
balanced by increasing sugar production but this is no longer feasible owing to the lack of suitable land and more recently the poor price obtained for extra sugar on the- World market. In fact, since the early ninetecm-fiftios, tha value of the industry's output has grown by no more than 1 per cent a year while the population has grown at 3 per cent.
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3- The answer to the problem of the one-crop economy is diversification, but the small size of Mauritius makes this difficult. In the first place, the shortage of unused land makes it difficult to diversify agriculture by growing new crops (except tea), although there is. some scope for in
terline cropping between the sugar cane. History and institutional
factors make it difficult to show to farmers that there would be advantages in actually giving up cane production, and any alternative crop must also be cyclone resistent, which further limits the possibilities. Diversifi cation into industry is made difficult 'by the small size of the internal market. Although income lavels are high by African standards (G.N.P. per capita at market prices in 1965 was £9l) this is not sncugh to offset the small number of people so that the market in Mauritius for many pro
ducts cannot provide a large enough outlet for even the smallest size of factory in many industries. Expert outlets have besn found in some cases but competition among developing countries is fierce, while markets in developed countries are becoming increasingly restricted.
4. These problems have been well known for many years and comprehensive investigations were made by visiting experts from the CJ.K. in the late nineteen-fifties and early 'sixties. The major studies were the Titmuss Report on Population and Social. Policies; the Meade Report on the Economy and the Balogh Report on the Sugar Industry. Arising out of the last mentioned report, two bodies were set up to help deal with the country's economic problems; the iiiconcmic Planning Unit within the Government, to establish the machinery of planning, and the Development Advisory Council to act as a link between Government and all the various interests
in the private sector.
5- The terms of reference for the Economic Planning Unit which was set
up in April 1965 ware as follows:
Functions of the Economic Planning Unit
First, it will be their task to dra--r up the 'Plan' or Development Programme which will 'set out the lines of development of the economy, and which, once adopted by Ministers, will become the accepted basis of
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Government policy and, it is hoped, also the framework of private sector economic effort. The plan may be regarded as having two parts:--
(a) as far as the Public Sector is concerned, it will
contain a series of expenditure, programmes for individual sectors similar to t.,Gse which have constituted the
Development Programmes of ths pastj
(b) as far as tho private sector is concerned, it viill sot
out for each main industry a picture of prospective development in tsrms appropriate to that industry which can be the basis both of Government action in relation to tho industry and cf tho industry's own investment, man power and development efforts.
The planning activity envisaged in (b) is new in Mauritius and the
detailed way in which it will operate has still to be worked out. Not all parts of the private sector can be treated in the same way.
Secondly? the Unit will participate in ths examination of proposals for industrial or agricultural development in particular sectors. It is not envisaged that the Unit would undertake tho entire responsibility for
"feasibility studies" of individual business projects. Its contribution would consist rather in establishing the background to such projects9 i.e., in the evaluation of the potential for development in Mauritius of the industry or1 group of industries in which the project lay. It would also advise on the economic aspects of policy decisions which fall to be made in connection with particular development proposals.
Thirdly, the Unit will advise on.matters of economic policy affect ing the development of the economy, as they arise. This is a continuing function not limited to questions arising in the course of preparation of the plan. Government policy in a number of fields .affects the scale and pattern of economic 'deveTopmGnt; ';fcr example, taxation, labour and wages policy, tariff policy, banking policy, education policy, pricing policy for public services, local taxation. In particular, the Unit will
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Page. 7.
work: in close liaison with the Ministry of Finance, because decisions on public expenditure and taxation have a special degree of importance in- relation to economic development. . ■
Fourthly, and arising-out of the first and third headings above, the Unit will from time to time prepare .systematic revisws of the pro gress of the ecun-jmy and tho achievement of the development planned.
For example, there might be a regular annual economic survey published about the time of Budget, as in many ether countries.
Fifthly, the Unit will play a part in the co-ordination of technical assistance.
6. The Economic Planning Unit has been handicapped in its work by a shortage of qualified staff. So far thes • have all been expatriates, although new efforts will shortly be made to recruit Mauritians. There have never been more than four economists in the Unit and for a long time it was down to 'two- The Unit's first task was the preparation of the Public Sector Development Programme 1966-70 but lack of time and
staff -prevented every project being given the closa analysis which it"
deserved. - tfhile it appeared easy enough to determine-priori ties * in the light of information about funds available, experience shows that it was a serious disadvantage not to h-i'.ve an overall Plan first for several
reasons:
(a) physical capacity to carry out the plan wa.3 overestimated;
(b) available resources were overestimated;
(c) tho -switch to greater emphasis on productive investment (see above) in agriculture and industry required more
■than the allocation of money to reverse the disappoint ing trends in those sectors in the recent past.-
7* To remedy these- defects the Planning Unit began work on a National Plan using as a basis no less than thirty-seven sector tables. While
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work: on these tables led to a great deal of previously hidden informa tion being discovered, as time went by it became clear that tha effort involved was not commensurate with the results achieved in an economy still so heavily dependent on one industry — sugar — for its economic prospects and current well-being. This approach was therefore abandoned after about a
8. Since then the Unit has returned to making forecasts on a macro-
econcmic basis, only breaking the economy clown into sectors where the information is readily available and of major importance. The concentra
tion on sector tables, i.e., the output account, also meant that little attention could be given to the expenditure or income accounts.' This is now being remedied and the work dono is already helping to guide the Unit's policy recommendations. Considerable attention is also being paid to the composition of capital formation and the balance of payments.
In'due course this work will lead to the production of a National Plan which will be able to give a better direction to expenditure in the public sector so that the two lines on which planning has been carried out in Mauritius will at last be brought together.
9- The Unit is also kept busy dealing with particular problems on which its advice is-sought and the assessment .of particular projects.
It has also been given the task of co-ordinating ths provision of ser- yices for a major development in tho.private sector — a chemical
fertilizer factory. A manpower planner, who joined the Unit early in.
1967, is now working on a survey of requirements of trained manpower in public sector and will later turn to the private sector. The results will be incorporated in the National1 Plan and will also indicate the lines on which the educational system should develop. At present, educa tion even to secondary levsl covers a largs proportion of tho population, but very few people are attracted towards any form of technical or
vocational training. Thus the resources devoted to education show a very poor return in economic terms.
10. Economic Planning is now located in ths Premier's Office, and the' Premier is.the chairman of a Ministerial Committee which examines in
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detail every aspect of economic planning before slitting its recom mendations to the Council of Ministers (Cabinet) for decision.
Originally it was situated in the Ministry of Finance which seemed un
satisfactory from many points of view.
11. The other body set up to daal with economic problems, the Develop ment Advisory Council, has not fulfilled all the hopes originally ex pected. In part this has been due to an unfortunate growth in its membership. Originally it was intended to have 18 members but it has grown to well over 30, because of the desire to balance different
sectors and opinions. In consequence it has become rather unwieldy and has been unable to speak with a clear voice on many issues.
Future of Bconomic Planning
It must be frankly admitted that Mistakes have been made in the past and some unprofitable avenues followed. However, Mauritius is now in a position to learn from its mistakes. In future Public Sector
Capital Expenditure will be fitted into a National Plan, the Economic
Planing Unit ,,m work fflore
out the Capital Program; and the Development Advisory Council
