Odile Mackett, University of the Witwatersrand

Debates about women’s unpaid reproductive labour have been going on since the first woman received cash for her services. Reproductive labour includes cooking, cleaning, and caring for the elderly, the sick and children.

It’s important to make the distinction between paid and unpaid reproductive labour. Paid reproductive labour is performed in exchange for money or a wage. Unpaid reproductive labour is done for free, and usually for the household in which the individual lives.

This reproductive work has traditionally been undervalued by both formal and informal institutions in societies, whether paid or unpaid.

As paid reproductive workers, women often find themselves in occupations that are highly feminised. These are jobs which consist of a large percentage of female workers, such as work in domestic service, health care or clerical work. This is either because those are the only types of jobs available to them or because their ‘skill set’ is said to be conducive for that type of labour. These types of occupations also tend to be lower paid and more insecure than other occupations.

As unpaid reproductive work, on the other hand, the work of women has gone widely unnoticed and is excluded from things such as the calculation of a country’s gross domestic product (GDP). Even though the calculation of GDP is said to consider goods produced within the home, quantifying the value of goods produced for use within the home is still a challenge for statisticians.

The production of goods and services within the home has typically been carried out by women, as girls and boys are socialised about their respective roles within the household from a young age. As women entered formal paid employment, many thought (as per the prescriptions of traditional economic theory) that the reproductive labour burden would equalise between men and women. But this didn’t happen.

The gap between men and women in paid and unpaid work remains vast, and women who are in paid jobs often still perform these duties in addition to their wage labour. Women are estimated to spend up to five hours a day more on unpaid reproductive labour than men. To cope with these responsibilities, these tasks have increasingly become ‘outsourced’ to people who live outside the household. Examples are employing a domestic worker to clean, employing a nanny to care for children, or ordering take-aways rather than cooking in the home.

Even where these tasks are performed outside the home, women may be left to pay for them or ‘manage’ the employees who perform them.

Women’s extended working days have thus become normalised, despite the adverse effects this has on women’s progression within the labour market and their general well-being.

The COVID-19 pandemic has forced a fresh look at this state of affairs. It has shone a light on the impact that poverty, inequality and unemployment have on people every day. This includes the hardships women face and the burden placed on them to manage responsibilities on a daily basis.

Drivers

Some of the reasons women have been adversely affected by the current pandemic include the fact that health workers and other essential service workers are disproportionately female. In addition, women are more likely to be employed in insecure jobs.

An underestimated problem is the fact that the institutions to which women traditionally outsourced their domestic duties have been closed down to prevent the spread of the coronavirus for extended periods. Domestic workers and nannies have been sent home, and schools, restaurants and fast food outlets have been closed.

As a result, all these services have had to be performed within the household.

This has worsened existing inequalities between men and women. In countries like the UK and the US, women have started spending more time than men on childcare and home schooling, but have also been more likely to lose their jobs as a result of business closures.

In South Africa, more than half of women reported that they were temporarily absent from work during the lockdown. Men have not been as severely affected. Women have also been more likely to lose their jobs than men. The loss was more likely if the individual had lower levels of education or was employed in the informal sector.

In addition, a greater percentage of women compared to men reported living with at least one child, and women also tended to have more children in the household compared to men. This has resulted in more time spent on childcare, whether they remained in employment or not.

This pandemic has thus highlighted how important the work of women is to the ongoing functioning of our society. Women are currently saddled with the ongoing education of the future workforce of the country while schools gradually reopen. They are also more likely to be doing the cooking, cleaning and caring in the home. Or they are managing whoever is being paid to do it instead.

This again highlights the need for governments to take a gendered approach in policy deliberations for relief during and after the pandemic. Numerous recommendations have been made including the provision of basic social protection to informal sector workers – many of whom are women – and ensuring women are adequately represented in discussions related to relief measures.

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Charles Telfair Centre is an independent nonpartisan not for profit organisation and does not take specific positions. All views, positions, and conclusions expressed in our publications are solely those of the author(s).

Main image source:freepik.com

Office for Innovation, Learning, Teaching and Research (ILTR), Charles Telfair Campus – Odylle Charoux, Director of Innovation and Change Management; Shafiiq Gopee, Head, Office of Learning and Teaching; Vikash Rowtho, Head of Research.

During the COVID19 lockdown, the Charles Telfair Campus (CTC), a private higher education provider in Mauritius, transitioned all its learning, teaching and assessment activities online without interruption. In this case study, the team behind the Office for Innovation, Learning, Teaching and Research (ILTR)  explains how CTC’s collaborative leadership model, its culture of support and the optimisation of its structures and networks have, together with everyone’s hard work, ensured the successful continuity of learning for all CTC students.

An unprecedented global disruption

According to UNESCO, the education of 1.5 billion students, from 160 countries, has or continues to be impacted by the COVID-19 pandemic. For some, sadly, education came to a stand-still, but for others contingency plans to ensure the continuity of learning were rapidly deployed. In March of 2020, when the Mauritian Government announced the country’s lockdown, it was estimated that 850 million individuals had transitioned to alternative forms of teaching and learning worldwide.

Following the lockdown announcement, all local universities in Mauritius moved online with various degrees of success. Institutions better equipped for online learning, such as the University of Mauritius, Open University of Mauritius and most private institutions managed to transition to some form of online teaching delivery, but not all could deliver assessment online. During the lockdown, the Charles Telfair Campus (CTC), a private higher education provider in Mauritius, transitioned all learning, teaching and assessment activities online without interruption. The campus managed to maintain student engagement and performance throughout the transition:

“The entire CTC student population switched to studying online the moment confinement was imposed. Although this period has been challenging for everyone, the success of this rapid transition reflects the agility and commitment of our staff to their students, as well as the efficacy of the various systems and processes already in place at our campus. Covid-19 gave us the opportunity to test our institution’s values as driver of change and people actions during difficult times. Today, I can proudly salute our staff for the amazing job done. I also salute all CTC students for their maturity, positive attitude and excellent academic achievements, despite all the obstacles encountered this semester”. Dr Jeremy Charoux, Executive Director, Charles Telfair Campus, July 2020.

CTC’s successful transition from face-to-face to online learning and teaching was achieved thanks to three key factors: transformational leadership, a culture of commitment to students experience and operating structures.

Leadership in Learning and Teaching

At the onset of the Covid19 pandemic a contingency plan, to pursue operations in the event of a campus closure was prepared by the Executive Director in collaboration with the Pro-Vice-Chancellor of Curtin Mauritius and the CTC Management team, including the three members of the Office for Innovation, Learning, Teaching and Research (ILTR). It was agreed that an immediate switch to virtual delivery, with no pause or disruption to the academic calendar and no change to timetables for both students and instructors, would take place to allow continuity in students’ learning. This was followed by an academic staff meeting during which the pedagogical implications of the online transition were reviewed and best practices discussed. On Wednesday 18 March, an immediate country lockdown was announced by the Mauritian Government. On the very next day, all classes at CTC transitioned to an online delivery mode and all academics were asked to continue to deliver the curriculum to help their students meet the semesters planned learning outcomes. Instructors were encouraged to select the learning strategies and tools which they saw as best fit to meet the needs of their students and the constraints of their curriculum.

During ‘normal’ times, the ILTR team plays a leading role in empowering and motivating CTC academics in their task of delivering high-quality learning and teaching experiences to the diverse, 2000-strong, student population. To achieve this mission, ILTR team members strive to keep up to date with best global practices and scholarly research in education. As it is the case for other institutions of Higher Learning, the biggest challenge remains the sharing of lessons learnt with the passion required to inspire others to adopt them.

Over the years, the ILTR team adopted Transformational Leadership Strategies developed by Bernard Bass, which proved successful both during normal time and during the forced Covid-19 transition to online learning. One such strategy was the creation of ONE Leadership Team, consisting of all Faculty Heads and ILTR team members, to provide academic direction for the institution together, in a collegial and cohesive manner. A second strategy was to conduct weekly meetings when entire faculty engaged in exploration of scholarly research, shared teaching experiences, tested new learning and teaching practices and resolved issues through consensus. The focus was on developing passion, providing inspiration and giving choices while facilitating decision-making. Ruslan Desyatnikov argues that Bass’ Transformational Leadership style can help organisations deal with the agility required to succeed in such crisis situations as the COVID-19 Pandemic:

“Transformational leaders see the bigger picture to better understand the extent of the crisis before executing the response. They seek the counsel of those closest to the situation and harness others’ know-how to create a logical, flexible and adaptive plan.” (Desyatnikov R, 17 July 2020).

During a ‘post-mortem’ reflection on CTC’s transition to online delivery conducted on 27 July 2020 with all academics, staff shared their online transition experience.They described their experience as very challenging but successful and enriching in terms of student engagement, continuity in student performance and professional growth. The ILTR also conducted a poll among all its academic staff using a digital questionnaire adapted from “How to Teach Online: Providing Continuity for Students”, a MOOC offered by FutureLearn (2020).

Interestingly, according to this poll, the biggest challenges for CTC staff: i.e. keeping students interested and engaged (35% of staff), and pastoral care (21% of staff) were also recognised as dimensions of success: i.e. keeping students engaged (22% of staff) and supported (17% of staff).

Monitoring Progress and Targeted Student Support

Supporting students during online study is essential for success. Tony Bates identifies the primary source of support as the instructor who guides, mentors, moderates, and provides student feedback and assessment:

“Particularly in online environments where students can feel isolated, your continuous feedback is essential to supporting their learning…. Where students feel the instructor is not present, both learner performance and completion rates decline. For such students, good, timely learner support is the difference between success and failure”. (Bates T, 2019)

One of the major pre-occupations of the ILTR team was how to monitor the impact of the online approach on each learner throughout the crisis, to ensure timely support by Heads of Faculties and instructors. One simple, but highly successful tool used for monitoring the progress and support of individual students was the introduction of Google Sheets for students to provide quick feedback to their instructors about each learning session, share their progress or raise issues.

Beyond academic issues, students needed further support on aspects such as availability of digital tools, poor bandwidth or feelings of loneliness and anxiety, amongst others. More formal student evaluation surveys, using Qualtrics, were thus run by the ILTR team during the lockdown period. The results were analysed and immediate remedial support was activated by all concerned, including lecturers, administrative staff, counselling professionals or IT support staff.

Academic Team Support

Much effort was deployed by the Heads of Faculties, to ensure that all staff remained connected, engaged, informed and supported throughout the confinement. Proceedings of all group meetings were documented and shared for follow-up actions. The Heads of Faculties were key in maintaining the resilience, collegiality and can-do attitude which prevailed amongst the academic staff. They took the time to listen to concerns, expressed gratitude for extraordinary work being done by individuals and encouraged sharing of best practice and know-how. They led by example by taking on board the tedious task of following up on students’ issues, calling those who did not join classes to motivate, get feedback, and liaise with support teams to solve identified problems. They remained on-call throughout the day, including evenings and weekends.

Structure, Networks and Digital preparedness

Another key factor for successful online delivery is, of course, access to IT tools, the internet and a minimum level of digital preparedness. During this pandemic, the digital divide prevailing in less developed countries meant that education was and is still completely disrupted for millions of students. In Mauritius, the rate of mobile phone uptake, as well as the rate of internet uptake for 2019 both exceed 100%. Yet, the Covid-19 pandemic revealed important disparities in the ability to harness the power of technology and the internet within the Mauritian society. The constraints were varied, ranging from unsuitable devices, lack of skills, challenging home environment, poor or interrupted internet connection and regular power failures.

Unlike some other learning communities in Mauritius and beyond, the CTC community has the advantage of being well-equipped for online studies. Lecturers and students own a personal laptop or other digital devices, have access to the internet and use a range of modern software tools during their studies.

The acquisition of digital dexterity is an integral part of the CTC curriculum and about two-thirds of the student population use Blackboard, a reputable Learning Management System (LMS). These students and their instructors had the required structure for the online transition. The other third, who could not access Blackboard, had picked up some knowledge of LMS and their functionality from their peers and could create their own online learning systems by combining simpler available software. Full online delivery of courses was, however, a totally new practice for most faculty members and students.

An additional advantage for CTC online transition was the continuous support of its international academic partners during the crisis period. For example, Curtin University, through its Pro-Vice-Chancellor, ensured that all assessment tasks were transformed by the Unit Coordinators in Perth for the local context, including solutions to cope with the local power cuts or poor internet bandwidth. Curtin also ensured that students received the training required prior to engaging in proctored, online examinations on their own. Similarly, our North and South Metropolitan TAFE partners quality assured all assessment tasks which our lecturers had to modify for remote learning

Lessons Learnt and Future Plans

The teaching semester for CTC ended at the end of June, with students completing final assignments or proctored exams on-line, at home. Most CTC students scored well; some doing better than during the face-to-face teaching era. CTC’s collaborative leadership, its culture of support and the optimisation of its structures and networks have, together with everyone’s hard work, ensured continuity of learning for all CTC students.

In the event of further lockdowns, CTC is confident in its ability to deliver its courses online. We also know that, with better preparation, more time and increased knowledge of online tools and pedagogy, we can do better. While it has been truly inspiring to witness our colleagues’ and partners come together to assure continuity of learning and support students in the rapid transition to virtual learning, there are still uncertainties and challenges ahead. We must prepare for a future where online learning, in one way or another, will probably play an important role in education. Our goal is to ensure that our learners receive the best possible learning experience while achieving their educational objectives without disruptions in the event of any further crisis such as a second wave of COVID-19 infection or other unforeseen similar catastrophes.

Charles Telfair Centre is an independent nonpartisan not for profit organisation and does not take specific positions. All views, positions, and conclusions expressed in our publications are solely those of the author(s).

Main image source: Photo by Peter Olexa from Pexels

Vasilis Kostakis, Harvard University and Jose Ramos, Victoria University

What if globally designed products could radically change how we work, produce and consume? Several examples across continents show the way we are producing and consuming goods could be improved by relying on globally shared digital resources, such as design, knowledge and software.

Imagine a prosthetic hand designed by geographically dispersed communities of scientists, designers and enthusiasts in a collaborative manner via the web. All knowledge and software related to the hand is shared globally as a digital commons.

People from all over the world who are connected online and have access to local manufacturing machines (from 3D printing and CNC machines to low-tech crafts and tools) can, ideally with the help of an expert, manufacture a customised hand. This the case of the OpenBionics project, which produces designs for robotic and bionic devices.

There are no patent costs to pay for. Less transportation of materials is needed, since a considerable part of the manufacturing takes place locally; maintenance is easier, products are designed to last as long as possible, and costs are thus much lower.

Take another example. Small-scale farmers in France need agricultural machines to support their work. Big companies rarely produce machines specifically for small-scale farmers. And if they do, the maintenance costs are high and the farmers have to adjust their farming techniques to the logic of the machines. Technology, after all, is not neutral.

So the farmers decide to design the agricultural machines themselves. They produce machines to accommodate their needs and not to sell them for a price on the market. They share their designs with the world – as a global digital commons. Small scale farmers from the US share similar needs with their French counterparts. They do the same. After a while, the two communities start to talk to each other and create synergies.

That’s the story of the non-profit network FarmHack (US) and the co-operative L’Atelier Paysan (France) which both produce open-source designs for agricultural machines.

With our colleagues, we have been exploring the contours of an emerging mode of production that builds on the confluence of the digital commons of knowledge, software, and design with local manufacturing technologies.

We call this model “design global, manufacture local” and argue that it could lead to sustainable and inclusive forms of production and consumption. It follows the logic that what is light (knowledge, design) becomes global while what is heavy (manufacturing) is local, and ideally shared.

When knowledge is shared, materials tend to travel less and people collaborate driven by diverse motives. The profit motive is not totally absent, but it is peripheral.

Decentralised open resources for designs can be used for a wide variety of things, medicines, furniture, prosthetic devices, farm tools, machinery and so on. For example, the Wikihouse project produces designs for houses; the RepRap community creates designs for 3D printers. Such projects do not necessarily need a physical basis as their members are dispersed all over the world.

Finding sustainability

But how are these projects funded? From receiving state funding (a research grant) and individual donations (crowdfunding) to alliances with established firms and institutions, commons-oriented projects are experimenting with various business models to stay sustainable.

 

These globally connected local, open design communities do not tend to practice planned obsolescence. They can adapt such artefacts to local contexts and can benefit from mutual learning.

In such a scenario, Ecuadorian mountain people can for example connect with Nepalese mountain farmers to learn from each other and stop any collaboration that would make them exclusively dependent on proprietary knowledge controlled by multinational corporations.

Towards ‘cosmolocalism’

This idea comes partly from discourse on cosmopolitanism which asserts that each of us has equal moral standing, even as nations treat people differently. The dominant economic system treats physical resources as if they were infinite and then locks up intellectual resources as if they were finite. But the reality is quite the contrary. We live in a world where physical resources are limited, while non-material resources are digitally reproducible and therefore can be shared at a very low cost.

Moving electrons around the world has a smaller ecological footprint than moving coal, iron, plastic and other materials. At a local level, the challenge is to develop economic systems that can draw from local supply chains.

Imagine a water crisis in a city so severe that within a year the whole city may be out of water. A cosmolocal strategy would mean that globally distributed networks would be active in solving the issue. In one part of the world, a water filtration system is prototyped – the system itself is based on a freely available digital design that can be 3D printed.

This is not fiction. There is actually a network based in Cape Town, called STOP RESET GO, which wants to run a cosmolocalisation design event where people would intensively collaborate on solving such a problem.

The Cape Town STOP RESET GO teams draw upon this and begin to experiment with it with their lived challenges. To make the system work they need to make modifications, and they document this and make the next version of the design open. Now other locales around the world take this new design and apply it to their own challenges.

Limitations and future research

A limitation of this new model is its two main pillars, such as information and communication as well as local manufacturing technologies. These issues may pertain to resource extraction, exploitative labour, energy use or material flows.

A thorough evaluation of such products and practices would need to take place from a political ecology perspective. For example, what is the ecological footprint of a product that has been globally designed and locally manufactured? Or,to what degree do the users of such a product feel in control of the technology and knowledge necessary for its use and manipulation?

Now our goal is to provide some answers to the questions above and, thus, better understand the transition dynamics of such an emerging mode of production.

Vasilis Kostakis, Senior Research Fellow at Tallinn University of Technology, Affiliate at Berkman Klein Center, Harvard University and Jose Ramos, Lecturer, Globalisation Studies, Victoria University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Charles Telfair Centre is an independent nonpartisan not for profit organisation and does not take specific positions. All views, positions, and conclusions expressed in our publications are solely those of the author(s).

L. Amedee Darga, Managing Director, StraConsult

The African Continental Free Trade Area (AfCFTA) ambitions to develop a single African market for goods and services. Amedee Darga reviews some of the key factors that will be needed to transform the AfCFTA ambition into a successful reality. AfCFTA is an opportunity for Mauritius to reap greater benefits in terms of exports and investments through increased intra-African trade. Yet, for this, Mauritius will need to build more supply capacity.     

Fifty-four out of 55 African countries have signed to launch an African Continental Free Trade Area (AfCFTA) that will involve a market of over 1.0 billion consumers. As the AfCFTA unfolds, it is not a matter of whether it should be, but of how to make it growingly real and effective. Of the 54 signatories, 30 have already ratified and deposited the required instruments. This shows a very high level of political support for the AfCFTA. However, as with all such great ambition, it will be a long road before we have a quasi-single African market. After all, even for Europe which started with The Single European Act in 1986, the single market is still not completed as such.

The stated objectives of the AfCFTA are to boost intra-African trade and to create a single market for goods and services. The inclusion of services is a major step here. Long term, the agreement is looking at the establishment of a Continental Customs Union. In March 2018 the texts of the Protocols on Trade in Goods, Trade in Services and Dispute Settlement were adopted at an Extraordinary Summit held in Kigali, Rwanda. There will now be a succession of rounds of negotiations to define agreed tariffs reductions, rules of origin and specific commitments for the five priority services sectors. The five sectors being: Business services, Communication Services, Financial Services, Tourism and Travel and Transport.

Attempts and Achievement till now.

The determination to boost up intra-African trade is not new, it has been underway on a regional basis for the last forty years in certain regions. The share of intra-African exports as a percentage of total African exports has increased from about 10 per cent in 1995 to around 17 per cent in 2017, but it remains low compared to levels in Europe (69 per cent), Asia (59 per cent), and North America (31 per cent).

However, if we look at the share of intra-regional economic community trade in total trade in Africa, in 2016, we will note deeper levels of integration for example in SADC (84.9 per cent), followed by COMESA (59.5 per cent), CEN–SAD (58.4 per cent) and  ECOWAS (56.7 per cent).

Furthermore, it is also most interesting to note that:

The 10 leading intra-African exportersin 2015–2017 were Eswatini (70.6%), Namibia (52.9%), Zimbabwe (51.6%), Uganda (51.4%), Togo (51.1%), Senegal (45.6%), Djibouti (41.9%), Lesotho (39.9%), Kenya (39.3%) and Malawi (38.3%).

Here again, those figures however may imply some realities which are not explicit unless they are disaggregated. For example, are all exports of Zimbabwe truly intra-African of simply exports to South Africa for re-export to the outside world? Does Senegal really export 45.6% of Senegalese produced goods to its region or is it a port of transit for goods from external countries on re-export to other West African countries in its region?

The Key Success Factors

There are key factors that will determine the speed at which the grand design will progress and the rate of success will be achieved.

1. How the flying geese will behave.

The flying geese paradigm is now well established since coined in the thirties and gained popularity sixties with Kaname Akamatsu with regards to the development of South-East Asia. It simply refers to the flying geese inverse “V” formation and means that not all countries in a region manage to develop at the same speed at reach the same level, but as one emerges faster, it has the power to create a favourable draft that pulls others faster if the others do what it takes to move in the draft.

Of the 54 countries of the African continent, there are some economically muscular players like Egypt, Morocco, Nigeria, Kenya and South Africa. Interestingly, these five countries are in the five regions of the continent. They have the potential to be the lead geese of the flying geese formation in their respective regions even if right now, a country like South Africa is somewhat of a limping goose. However, they could also be a drag if they try to put spanners in the wheel on some of the key success factors by imposing Rules of Origin, Non-Tariff Barriers or technical barriers.

2. Supply Side Capacity

This is a most important success factor. Africa is handicapped by a severe supply-side capacity and supply chain constraint. You cannot trade more if you don’t have much to sell. A large number of African countries are heavy commodity producers whose exports out of Africa are not transformed or value added. One striking example is cotton. Africa exports close to 1.6 million tons of cotton but imports fabrics and garments massively from the rest of the world. This commodity is a case where the potential for regional supply chain and value addition has not happened partly because of lack of investment and partly because of narrow nationalistic perspective. Supply-side capacity requires industrialisation. Industrialisation requires conducive conditions for doing business, from infrastructure capacity to fiscal policy. One country, Ethiopia has well understood this and has seen its industrial sector, its exports and its GDP grow by an average of 9% per annum in the last ten years.

3. A Maze of Preferential Access.

African countries, mainly the Least Developed Countries have signed in other preferential trade agreements with other non-African partners, mainly the European Union. The question is how will the preferential market access between African countries be more preferential than the market access granted under such other agreements. For sure African countries have some potential competitive advantages such as labour cost and physical proximity to markets. provided transport infrastructure is to the required level. Today it costs more to transport goods from Dar es Salaam to Lusaka than from China to Dar es Salaam! Capacity and cost of electricity and water is another success factor to be addressed for a number of countries. With electricity at US$ 0.09 per Kwh and a relatively low-cost productive labour, Ethiopia has attracted Chinese, British and Turkish investments despite being a landlocked country.

4. Non-Tariff Barriers

Giving preferential access through lower tariff should not be nullified by countries imposing Non-Trade Barriers (NTBs). NTBs refer to restrictions that result from norms and standards, or specific market requirements that make importation or exportation of products difficult and costly. Some countries under the Common Market for Eastern and Southern Africa (COMESA) and Southern African Development Community (SADC) are well known to have abusive use of NTBs when trading with other African countries.

5. Fiscal constraint

The fiscal policy and fiscal flexibility of a country can have an impact on its willingness to open to preferential tariffs. Many African States rely heavily on corporate taxes and custom taxes to finance state expenditure. Custom tariff represents for many countries between 20 to 30% of state revenue. Countries with a narrow private sector base, low employment levels and high imports are often caught in a vicious circle where they cannot earn revenue from consumption taxes and corporate tax.  These countries tend to be the slowest at implementing preferential tariffs for neighbour countries.  It is in recognition of this fiscal constraint factor that the region’s largest trade bank, Afreximbank has unveiled a $1bn financing facility. It will enable countries to adjust in an orderly manner to sudden tariff revenue losses as a result of the implementation of the AfCFTA Agreement.

6. Rules of origin

This is a fundamental criterion needed to determine the nationality of a product and is in all trade negotiations a ferociously fought factor. This could make, break or put a brake on the progress of the African Continental Free Trade Area (AfCFTA) that entered into force in May. The rules could be a game-changer for the continent if they are simple, flexible, transparent, business-friendly and predictable.

Those regions that will have in place some of the above listed key success factors, and those countries that will in the same stride create conducive business environment will become extremely attractive for investment in their productive sectors, hence boosting their supply-side capacity. As it stands now, East Africa clearly has the stronger conditions to move faster in the game and offer preferential market access to a population of about 250 million people.

The Benefit for Mauritius

Mauritius is reaping some exports and investment benefits from its relative integration into the region, but the lack of coherence in policy, focus and action means the country is benefitting much less than its full potential.

In 2018, Mauritius Intra-Africa exports accounted for 23% of Mauritius’ total exports and imports for 13% of total imports.

However, it is to be noted that Mauritius mainly exports clothing and fabrics to the rest of Africa. Of the top 10 intra-Africa export products five products are items of clothing or fabric accounting for 30% of Mauritius’ intra-Africa exports for 2018.

While the specific provisions of the AfCFTA are negotiated (and that could be arduous), Mauritius can already benefit more from its membership in its two existing preferential trade areas, the COMESA and SADC, notwithstanding their limitations. The recent 2020 – 2021 budget of the government has announced one measure that can boost Mauritian exports from the already existing supply capacity to the region. The plan to set up Mauritius Export Warehouse in Tanzania and Mozambique will definitely support a number of Domestic Oriented Industry. Some are already gearing for Tanzania which is a more immediately obvious market than Mozambique.

However, the attractiveness of the regional market and preferential access already available under COMESA and SADC commands that Mauritius attracts investment to rapidly build more supply capacity. A few clear lines of potential are:

• Attracting investment in the Freeport for the manufacturing of consumer and intermediate goods.
• Supporting investment in the circular economy for the production of reconditioned household appliances. The latter will see increased demand as the middle-class consumption grow in many of the African countries.
• Supporting investment in the sourcing of primary products and commodities for transformation and value addition to Africa and the rest of the world.

There are some exports of services from Mauritius to Africa but data on the value and target markets are not readily available.  Mauritius has good potential to export a range of services in the context of the priority services lines set by the AfCFTA, namely Business services, Financial Services, Tourism and travel. Our trade negotiators should fight all the way during negotiations to ensure that the highway is opened for the benefit of Mauritius.

Notwithstanding its structural dysfunctions, Africa has seen its economies on a growth path during the last fifteen years. The AfCFTA does not immediately guarantee trade – but it does chart a road to travel for increased Intra African trade opportunities. Many countries will be slow movers in opening up, but on a variable geometry approach to implementation, some countries will move faster.   Mauritius has the capacity and should gear up to be an early mover to pick up all the fruits it can and set its nest on selected target markets.

Charles Telfair Centre is an independent nonpartisan not for profit organisation and does not take specific positions. All views, positions, and conclusions expressed in our publications are solely those of the author(s).

Ali Mansoor, Chairman of the Regional Multidisciplinary Centre of Excellence (RMCE).

As Mauritius battles with the economic impact of the current pandemic, its aspiration to graduate to an advanced economy status will take more than an increase in its Gross National Income per capita.  In this article, Ali Mansoor reminds us what an advanced economy classification entails. He highlights that advanced economy graduates such as Singapore possessed key enabling factors. Mauritius will need to pay attention to these enablers to succeed in its aspirations.

Context and background [1]

With a GNI per capita reaching US$ 12,740 in 2019, on July, 1 of this year the World Bank reclassified Mauritius as a high-income economy. While this is a symbolic accomplishment, it does not necessarily imply a sustainable achievement for Mauritius. The current crisis will most probably shift Mauritius back to upper-middle-income status by 2021.  A more meaningful achievement for Mauritius would be to graduate to the International Monetary Fund (IMF) advanced economy status.

An advanced economy is a term used by the IMF to describe the most developed countries in the world.  The IMF uses three main criteria aggregated over several years to capture the sustainability of the status:  (1) per capita income level, (2) export diversification, and (3) degree of integration into the global financial system.  Advanced economies are also countries that typically have a high Human Development Index scores and good institutions. Hence, countries classified as high-income countries by the World Bank will not automatically be classified as advanced economies by the IMF.  The World Bank considers as high-income countries any country that has a gross national income per capita of US$12,535 and above. The IMF’s advanced country classification, on the other hand, considers whether the three criteria listed above are sustained over time.

Mauritius is poised to become an advanced economy …. if it can demarcate itself from the many countries that fail to exit the Middle Income Country Trap

Graduating to an advanced economy status has proved hard relative to moving from low income to emerging economy status. Since 1960, only 16 countries have achieved advanced economy status [2].

So what are the key differences between the emerging economies that graduate to advanced economy status and those who have not?

Governance

As indicated in the above charts, the main differences relate to governance.  Graduates develop strong institutions that make it harder for narrow interests to capture the state apparatus.  A professional and competent merit-based civil service underpins these arrangements.

Open Societies 

Additionally, open societies seem to help. All graduates either were democratic or moved to democracy.

More striking, countries that made the transition were generally able to accelerate growth as they crossed the income threshold, overcoming the effects of an ever-larger base.  This may be because they were continually improving institutions and governance as they moved forward.

Integration into the global economy

Openness and integration into the global economy are key.  Successful transition to advanced economy status is associated not only with relatively free trade and facilitation of Foreign Direct Investment but also openness to migration.

Special Factors

Special factors also played a role in some cases:

• A permanent sense of urgency in view of recovery from a major shock or potential crisis often linked to security considerations as was the case in Cyprus, Czech Republic, Estonia, Hong Kong, Japan, Latvia, Singapore, Slovak Republic, Slovenia, South Korea and Taiwan;
• A clear road map for reforms and economic policies coming from regional clubs such as the EU as was the case for the graduates who joined the EU;
• The presence of a champion for policy reform as was the case in Singapore with Prime Minister Lee Kuan Yew, South Korea with President Park and Taiwan with Chiang Kai-Shek.

Did Mauritius lose its opportunity in the early 90s?

From Independence through the late 1980s Mauritius had many of the characteristics of the successful graduates.  This included champions of policy reform in its first two Prime Ministers, a sense of urgency well described by Professors Meade and Titmus [3], and large scale emigration around independence. Moreover, not only were new institutions built, but their operations were merit-based rather than driven by patronage.  This included global recruiting for talent, inter alia, in the Central Bank, the Development Bank, the State Bank of Mauritius and the Export Processing Zone Development Authority. The country also boasted a relatively strong and competent civil service inherited from the British colonial administration. It mixed some elements of patronage with an emphasis on delivery of results. This was especially true in key Ministries such as Finance, Planning, Tourism and Industry.

As a result, in the eighties, our growth was similar to that of Singapore. However, from the ’90s whilst our growth continued on trend, Singapore experienced an acceleration of growth through the end of the twentieth century.

The main differences may be that after reaching full employment Mauritius made no major efforts to keep improving its economic performance.  There were no transformative policy initiatives until 2006 when Mauritius introduced major reforms to build “a new, open and competitive service platform that [was] fully integrated into the global economy”.  The 2006 reforms were less about achieving rapid economic growth and more a response to the triple shocks of loss of textile and sugar preferences and high oil prices. Meanwhile, Singapore was focused on continued rapid growth.  Inter alia, this meant allowing migration to overcome the limits of a small population and continued improvement of institutions to attract the FDI needed to support its continued transformation. As reviewed in our book [see note 1], Singapore continued on its growth path thanks to the following key policies:

• it integrated into the global labour market: its population rose from 2.4 million in 1980 to 5.4 million in 2013 of whom about 40 per cent were foreign-born. Mauritius kept its labour market much more closed with a population growing from about 1 million to only 1.3 million over the same period and the percentage of foreign-born representing less than 4 per cent of the population;
• it continued to improve its institutions including importing talent;
• it moved earlier, faster and more aggressively to liberalise international trade.;
• it opened its skies: Changi airport was the strategic asset and not Air Singapore;
• it integrated planning and budgeting in policy making;
• it implemented evidence-based policy making including importing best international practice; and
• it limited patronage and rent-seeking by linking pay to performance and actively combating corruption.

How to make up for the lost period since the 1990’s, accelerate growth and rapidly join the Advanced Economies

Notwithstanding Mauritius’ failure to keep up with the best performers since the 1990s, the country has many assets to build upon to make up for lost time. Mauritius is characterised by:

• A good reputation in Africa with strong international ratings;
• Relatively good Health indicators;
• Effective social policies even though inefficient;
• Scope to import labour if required: it has 4 times the landmass of Singapore and one-quarter of its population and has plentiful of water (yet not always efficiently managed) [5];
• Foreign trade that is largely liberalised;
• An absence of significant internal or external security concerns;
• Ease of mobilising financial capital thanks to its investment-grade rating [6];
• The advantage of being sea locked which provides access to global value chains at low cost;
• A diversified and resilient economic base even though much more needs to be done;
• A clear Africa strategy although a more sustained focus on implementation may be required;
• A solid institutional structure to build on, although governance, transparency and focus on efficiency need to be strengthened

Yet, Mauritius still faces economic and institutional constraints that need to be tackled if it aspires to join the advanced economies camp:

• A weak education system incompatible with the 21st-century information age;
• Poor labour market policies including migration;
• Insufficient innovation reflecting the emphasis on rote learning to pass exams instead of creativity in the school curriculum;
• Lack of attention to the Macroeconomic Trilemma, particularly in the wake of an expanded role for the Central Bank: we need to choose 2 out of 3 between Open Capital Account, Independent Monetary Policy and Floating exchange rate;
• Continually weakening institutions with patronage increasingly overriding competence;
• Lack of planning integrated into budget [7];
• Lack of emphasis on performance;
• Need for systems to move to the frontier of public service delivery; and
• More efficient pathways for learning in key institutions.

The way forward

COVID, the EU Blacklist and the CEB procurement scandal all highlight the need to change and may also give us the push needed to go from the complacency that settled in from the 90’s to find again the resolve that propelled us from low-income basket case to successful middle-income country in the first generation after independence.

All countries can live with some degree of patronage if limited to the less important institutions and can also accept some modest rent-seeking if it does not crowd out outsiders with good ideas and initiative. However, key institutions need to be run on the basis of performance rather than by those loyal to the Government of the day.  Where necessary, global talent should be sought.

Strong institutions in key areas will limit rent-seeking by narrow interests that gain control of the State apparatus and facilitate the other required reforms in education, labour markets, planning, housing, agriculture and industry.

Our DNA is based on overcoming challenges by working together. The current crises could be the catalyst required to propel us back onto the path for rapid graduation to the exclusive Advanced Economy club.

Charles Telfair Centre is an independent nonpartisan not for profit organisation and does not take specific positions. All views, positions, and conclusions expressed in our publications are solely those of the author(s).

[1] The charts and content come from the IMF book Africa on the Move: Unlocking the Potential of Small Middle-Income States which the author of this article co-edited whilst at the IMF.

[2]These are: Japan, 1966; Greece, 1970; Spain, 1974; Singapore, 1975; Hong Kong SAR, 1975; Malta, 1980 Taiwan, 1987; Cyprus, 1987; Portugal, 1989; South Korea, 1994; Slovenia, 1995 Slovak Republic, 2003; Czech Republic, 2003; Estonia, 2009; Latvia, 2011.

[3] See The Economic and Social Structure of Mauritius. by J. E. Meade; Social Policies and Population Growth in Mauritius. by R. M. Titmuss, B. Abel-Smith, T. Lynes

[5] Plentiful water has supported poor governance in the Central Water Authority resulting in the island not having 24/7 water supply as should be expected.

[6] Blacklisting by the EU will undermine this asset. Getting off the blacklist will require improvements in Governance, a key enabler to Advanced Economy status.

[7] Linking Performance Budgeting, Performance Management and long term planning within the Ministry of Finance with support from the Ministry of Civil Service may be a good way forward.

Professor Lina Pelliccione, Pro-Vice Chancellor Curtin Mauritius, Professor Linley Lord, Pro-Vice Chancellor Curtin Singapore, and the Curtin University Risk & Assurance Team

In this paper, Lina Pelliccione and Linley Lord review how Curtin University’s values-led system and effective risk management structures across its national and international campuses have fed a culture of risk management, agility, care and communication. These have been instrumental in the university’s resilience and ability to adapt and successfully transition to fully online learning during the current pandemic. In light of Curtin’s success, the authors propose some guiding principles that may be helpful to other organisations in preparing for and surviving future crisis incidences.

Curtin’s values: Building on a foundation of integrity and respect, and through courage, we will achieve excellence and have an impact on the communities we serve.

What role do universities play in times of crises? What can we learn about resilience that will help individuals and organisations grow following this current global pandemic? Professor Deborah Terry, AO, Universities Australia Chair, Vice-Chancellor, Curtin University in her address at the Australian  National Press Club Address, 26 February 2020 explained that:

Curtin University is a leading global university with a mission to transform lives and communities through teaching, research and its industry and community relationships. It has campuses in Western Australia, Malaysia, Singapore, Dubai and Mauritius and is ranked in the top 1% of universities worldwide in the highly regarded Academic Ranking of World Universities (ARWU) 2019.

Curtin University, like most education Institutions, has been impacted by COVID-19. This includes concern for the safety of staff and students in all their locations and financial losses resulting from the closing of borders to international students. Similarly, the sudden need to move everything online and to self-isolate has put significant pressure on university systems. Suddenly, the university community had to navigate new learning, teaching and research environments.

Values Led Learning Organisation

Curtin University is a values-based learning organisation, with proactive risk assessment and dynamic Prevention Preparedness Response and Recovery (PPRR) systems in place.  There are sophisticated and mature communication protocols which help ensure people stay connected and have access to relevant information.  These key elements have proven essential in such a complex global organisation spanning different countries, cultures and importantly, Government Authorities.  This paper outlines these elements concluding with some key guiding principles that may be helpful to other organisations in preparing for and surviving future crisis incidences.

Curtin has a strong risk management culture which, coupled with a dynamic critical incident approach, has enabled the University to act swiftly to respond to COVID-19.

Risk Management Culture & Critical Incident Approach

Curtin University has a distributed leadership model (1). This has proven to be well suited to its global network of campuses, especially during these challenging times. Curtin also has a strong risk management culture which coupled with a dynamic critical incident approach has enabled the University to act swiftly to respond to COVID-19.

The Risk Reference Tables developed by Curtin are based on ISO 31000, the international standard for risk, guiding how risks are evaluated, assessed, measured, accepted and reported. As well as establishing a common language, the use of semi-quantitative measures removes some of the subjectivity of assessment processes and allows risks to be assessed across all Curtin’s locations.

Curtin uses five different rating tables: Controls; Consequence; Likelihood; Risk Matrix; and Risk Acceptance Criteria.  The Consequence rating categories include key areas (listed below), which, if impacted would have a significant effect on Curtin’s ability to achieve its goals. Not surprisingly, the nine consequence categories have all been impacted by COVID-19.

Curtin Risk Reference Table – Consequence ratings categories

The regular use and monitoring of the risk framework as a benchmark has been essential for building a strong appropriately calibrated risk management culture.  Adding to this is the confidence in and success of the Critical Incident Approach (PPRR) adopted by the University. These systems and protocols are embedded in the culture, enabling individuals to respond within an understood framework that recognises the particular context reflected in different campus locations.

Outlined below are the key stages of the Critical Incident Approach adopted by Curtin. The focus is on the Australian context but the principles apply across all locations with global issues considered and managed by the Critical Incident Management Team (CIMT). The CIMT consists of University Executives, Directors and Managers, who together, provide stewardship in times of crisis. Members are selected based on the appropriate knowledge, skills, experience, authority and accountability to resolve the incident and facilitate a coordinated approach.

As a learning organisation, there is a culture of sharing, gathering and analysing information, together with regular reviewing and reporting.

Prevention and Preparedness – In line with the PPRR approach, the University has appropriate controls and processes in place.  Key elements include the critical incident management framework, the alert matrix, emergency management plan, pandemic plan, and the CIMT structure. As a learning organisation, there is a culture of sharing, gathering and analysing information, together with regular reviewing and reporting.

The CIMT normally meets monthly where function leaders and alternates practise as a team. CIMT reviews and considers a range of emerging threats and implements outcomes from lessons learned to strengthen the CIMT framework. To strengthen its preparedness, the CIMT uses its external networks to form collaborations with State and National agencies, other universities, emergency providers, and subject matter experts.

The University’s Incident Alert Matrix is aligned with Risk Reference Tables providing clear understanding of the nature of incidents wherever they occur and the level to which these should be escalated.  Ongoing disclosure of incidents is actively encouraged across areas in all locations and links to Curtin’s risk culture. Understanding the severity levels are critical to identifying and prioritising incidents against agreed levels of Yellow, Amber and Red.  This helps avoid individuals applying their personal risk appetite and provides a shared view of Curtin’s risk appetite.

The PPRR Continuum below, illustrates the rhythm and flow of prevention actions, preparedness that instructs an Incident/Emergency response. The CIMT takes stewardship almost immediately after the incident has been assessed as critical.  When critical processes are operational, the Business Response Team takes over to initiate long term recovery.  Once normal operations resume, a key part is capturing lessons learned, resulting in corrective actions.

 Prevention, Preparedness, Response and Recovery (PPRR) Continuum

Putting it into Action

Global framework encompassing local directives and initiatives

Curtin activated the CIMT and its Pandemic Plan on 23 January, after issuing travel safety guidance to staff and students the day before. On 28 February 2020, the World Health Organisation increased the global rating for the COVID-19 virus outbreak to ‘very high risk’ at a ‘global level’ triggering the Australian Government’s activation of its emergency response plan. The Curtin Pandemic Plan is overseen by the CIMT, led by the Chief Operating Officer. As well as implementing the University’s Pandemic Plan the CIMT were bound and guided by Government directives in all its locations. The common mantra advocated by the Vice-Chancellor was always to follow the Government directives of the specific location.

The Pandemic state highlighted some added complexities when dealing in a global arena with campuses around the world. In particular, how each of the local Governments responded to COVID-19 and how quickly each campus could transition staff and students to online learning.

Each campus was required to adapt quickly to their own context while working within a global framework. The framework had to be robust, yet agile enough to allow for differentiated actions. The Senior Executive received updates from the CIMT leader and campus Pro-Vice Chancellors at their weekly meetings. Thus, the experience and learnings from each context contributed to the overall management of the organisation and the well-being of Curtin’s global community.

The experience and learnings from each context contributed to the overall management of the organisation and the well-being of Curtin’s global community.

Values based leadership and risk culture facilitated agile and innovative actions

Additional initiatives supporting staff and students accessible by all campuses were established at the central level. In collaboration with each of our partners, global campuses provided additional support (setting up virtual community groups, IT help, mobilised administrative staff to support students and teaching staff, food packages etc.) to complement those at the central level. The University made special bursaries available to students in need and launched the Curtin Cares campaign to raise additional funds to further support students. Staff and students were also able to access well-being support during this crucial time. This demonstrated a key signature behaviour of the values based and led University; the health and safety of its people, including the wider community which were are at the heart of decisions and their first priority. The general consensus from students across all campuses is that they were satisfied with the way the University has been dealing with COVID-19.

Communication – effective and timely is essential

In this current crisis where our world has shrunk to our own home and in many cases, social isolation for a prolonged period of time, communication becomes a lifeline to the outside world. Importantly, there is always a key Communication specialist on the CIMT. They collaboratively developed a dedicated website for students, staff, and the wider Curtin Community. The Vice-Chancellor communicated very regularly via email and video with concise, relevant information. These messages were monitored carefully and contextualised for the appropriate global target audience instilling a high level of confidence in the University.

Final Comment – Key Principles

As a values-led, learning organisation, Curtin University is a place where behaviours and actions are guided by values and learning is deeply embedded in the culture.  The organisation has developed a strong risk management culture and incident/crisis management demonstrating their commitment to the health and safety of people and the organisation.  Their agile frameworks and distributed leadership model across campuses is a valuable blueprint for a global organisation needing to respond to constant change.

In summary, the following key principles have been important in guiding Curtin’s response and will continue to see the organisation through this crisis and what will follow:

• Values based leadership with a priority on health and safety
• A global unified plan that recognises the requirement for a local differentiated approach
• Building an effective risk management culture that informs agile and strategic decision making
• Effective targeted and timely communication

How has your organisation responded to the pandemic? Use the comment section to add other key learnings.  

(1) See also Peter Senge (1990)’s seminal book, the Fifth Discipline, which introduced the concept of distributional leadership where organisational and individual learning are linked.

Charles Telfair Centre is an independent nonpartisan not for profit organisation and does not take specific positions. All views, positions, and conclusions expressed in our publications are solely those of the author(s).

Andy Sumner, King’s College London; Christopher Hoy, Australian National University, and Eduardo Ortiz-Juarez, King’s College London

As COVID-19 slows in developed countries, the virus’s spread is speeding up in the developing world. Three-quarters of new cases detected each day are now in developing countries. And as the pandemic spreads, governments face juggling the health consequences with economic ones as this shifts to becoming an economic crisis.

Our research shows that the poverty impact of the crisis will soon be felt in three key ways. There is likely to be more poverty. It is likely to become more severe. And as a consequence, the location of global poverty will also change.

Having looked at estimates from a range of sources – including the Asian Development Bank, Goldman Sachs, IMF and OECD – we considered three possible economic scenarios stemming from COVID-19, where global income and consumption contracted by 5%, 10% or 20%. We found that the economic shock of the worst-case scenario could result in up to 1.12 billion people worldwide living in extreme poverty – up from 727 million in 2018.

This confirms our earlier estimates that the coronavirus could push up to 400 million people into extreme poverty, defined by the World Bank as living on less than US$1.90 per day – the average poverty line in low-income developing countries. This number rises to over 500 million if using the World Bank’s higher average poverty lines for lower middle-income (US$3.20) and upper middle-income (US$5.50) developing countries.

The potential increase is driven by millions of people living just above the poverty line. These people are likely to be badly affected because many of them work in the informal sector, where there is often little in the way of social security. Such a rise in extreme poverty would mark the first absolute increase in the global count since 1999 – and the first since 1990 in terms of the proportion of the global population living in poverty.

On the intensity of the poverty, the resources needed to lift the incomes of the poor to above the poverty line could increase by 60%, from US$446m a day in the absence of the crisis to above US$700m a day. For the existing extreme poor and those newly living in extreme poverty, their loss in income could amount to US$500m per day.

In terms of where poverty is located, it is likely to increase dramatically in middle-income developing countries in Asia, such as India, Pakistan, Indonesia and the Philippines. This points to the fact that much of the previously poor population in these countries moved to just above the poverty line. In other words, these countries’ recent economic progress has been relatively fragile. We’ll also likely see new poverty in countries where it has remained relatively high over the last three decades, such as Tanzania, Nigeria, Ethiopia and the DRC.

How to respond to the poverty pandemic

COVID-19 poses a significant threat to developing countries, as their health systems tend to be weaker. More severe cases have also been linked to high blood pressure, diabetes and air pollution, all of which are prevalent in developing countries. Meanwhile, there are suggestions that COVID-19 could hinder the treatment of other illnesses such as TB, HIV/AIDS and chronic malaria.

But developing countries generally have a lower proportion of people at high risk from COVID-19 in terms of age (>70 years). As such, economic shocks may pose a greater relative risk to their populations. The question emerges as to whether lockdowns are the best option to contain the virus in developing countries if they entail severe income losses. Estimates of the share of jobs that can be performed at home is less than 25% for many developing countries – much lower than the ~40% recorded in, for example, the USA and Finland. It’s as low as ~5% in countries such as Madagascar and Mozambique.

Consequently, there’s also a clear need for a range of social safety-net policies. These already exist in many developing countries, but their coverage and funding needs to be expanded substantially. Such policies include cash transfer programmes, universal one-off cash payments, in-kind food/vouchers, school feeding schemes and public works programmes. In middle-income developing countries, these are funded by the national government, whereas in low-income countries these are often co-funded by donors. Any set of policies should also incorporate “pay to stay home” or “pay to get tested” schemes.

The long crisis

Looking further ahead, the poverty impacts beyond 2020 are closely related to if or when an effective vaccine is developed. Even if we take the best-case scenario and a vaccine is discovered later this year, it’s uncertain how long it would take to reach the entire global population. It could take years.

There is no guarantee developing countries would get access to the vaccine at a reasonable cost, or if everyone in developing countries would get the vaccine for free. We could end up living in a new COVID-19 apartheid, with the vaccinated and non-vaccinated residing in separate areas and working in different labour markets. This is a startling but very real possibility that no one is talking about much yet.

While this might sound far off, there are already some countries – such as Chile – issuing “immunity passports”. Such passports might determine what work people can do by determining where they can go. This could leave the poorest without access to earning opportunities or only with lower-income opportunities if their movement is restricted.

The crisis is increasingly looking like a long crisis. If so, it will have repercussions on global poverty for years to come.

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Charles Telfair Centre is an independent nonpartisan not for profit organisation and does not take specific positions. All views, positions, and conclusions expressed in our publications are solely those of the author(s).

Ibrahim Malleck, Managing Partner, Ebonia Capital

The decision of the EU to put Mauritius on its list of Third Countries having strategic deficiencies in their Anti-Money Laundering and Combatting the Financing of Terrorism (AML/CFT) framework could hardly have come at a worse time. With the world economy at a standstill due to Covid-19, the EU decided to act on the Financial Action Task Force (FATF) February decision to grey-list Mauritius and hit it hard. The EU did not give Mauritius the time to put up a case.

The country cannot afford to wake up on October 2nd, 2020, and be officially ‘’blacklisted’’. All local stakeholders are committed to working towards the implementation of any pending issues, with the hope that the FATF recognises Mauritius’ efforts, thus sending a clear message to the EU not to blacklist the country. Unfortunately, it has very limited time to convince its international partners.

EU blacklisting and the FATF recommendations

To put things into context, Mauritius’ strong legal environment, the absence of Foreign Exchange Controls, and an educated and bilingual workforce have helped propel the Financial and Insurance sector (banks, non-bank financial institutions and offshore management companies) to third place in terms of its contribution to the domestic economy. The sector contributes about 12% of GDP – within which Global Business contributes 6% of GDP-, and employs close to fourteen thousand people. It has become a pillar of the economy and a blacklisting, compounded by the pandemic blow on the tourism sector, would have a devastating impact on the international reputation of Mauritius, as well as on the domestic economy.

Both the decision, as well as the timing of the blacklisting, are open to debate. Although the list has to be ratified by the European Parliament on  October 1st, 2020, Mauritius is already starting to feel the initial backlash of being grouped together with a number of countries with a much longer list of non-fully compliant FATF recommendations ranging from 22 to 39 compared with only 5 for Mauritius.

The country cannot afford to wake up on October 2nd, 2020, and be officially ‘’blacklisted’’.

The FATF, via its regional body the Eastern and Southern Africa Anti-Money Laundering Group (ESAAMLG), released a Mutual Evaluation Report in September 2018 which highlighted twenty-one Technical Compliance Issues (total of 40 assessed). Subsequently, in September 2019, nineteen of these were revised, clearly showing the progress that Mauritius was making in addressing the underlying issues. Importantly, Mauritius is largely compliant on three of the five compliance recommendations and partially compliant on the remaining two. There is no recommendation whereby it is fully non-compliant.

Supervision and non-financial business and professions

Interestingly, the five points recently raised by the Financial Action Task Force focus on the ability of stakeholders to carry out effective risk-based supervision, proper anti-money laundering investigations, access to information on beneficial owners, and the lack of targeted financial sanctions related to terrorism and proliferation financing. No direct mention is made of either the banking regulator or Offshore Management Companies, especially in terms of the way they carry out business and apply existing anti-money laundering and financing of terrorism guidelines. It is noteworthy that the country already has a robust legal framework (Financial Intelligence and Anti-Money Laundering Act) which underlines the parameters and provides guidance to all stakeholders in terms of combatting financial crime.

In fact, the fight against financial crime is constantly gaining momentum internationally and over the past decade, a number of banks and other institutions have been heavily fined by the likes of Office of Foreign Assets Control (US Department of Treasury) and the EU, leading to a complete revamp of their internal compliance and anti-money laundering structures. With the implementation of the Common Reporting Standards (CRS) to fight tax evasion, global frameworks have been tightened to prevent tax leakages in addition to illicit flows.  The Mauritius banking sector is considered to be largely compliant, with the FATF clearly highlighting weaknesses mostly with the non-financial business activities (Designated Non-Financial Business and Professions – DNFBP). However, it seems that banks which have been particularly diligent in building up a robust anti-money laundering and combating the finance of terrorism framework, stand to be among the initial losers.

Reduced foreign exchange flows and the macro-economy

Already, the intention of the EU to place Mauritius on their blacklist prevents European Development Finance Institutions (DFIs) such as Proparco, CDC and Norfund, to use Mauritius as an intermediary jurisdiction for onward investments into Africa. Mauritius has been a preferred choice for these institutions for a number of years given the country’s political and economic stability and its strong rule of law. The country will no longer be able to host such structures as things stand.

Considering that other stakeholders such as Private Equity firms and Impact Investors also set-up their Fund structures in Mauritius, often to invest alongside these DFIs across Sub-Saharan Africa, the country risks facing a significant reduction of business in the Offshore sector. Coming at a time when Mauritius is still re-inventing itself after the re-negotiation of its Double Taxation Avoidance Agreement (DTAA) with India which reduced the incentives for investors to route funds through Mauritius, the hope of an ‘’Africa Strategy’’ to boost this sector has suddenly faded. This is all the more worrying given the current post-Covid environment: unemployment is expected to rise to 17% over the coming 12 months and the country can ill afford lay-offs of specialised staff (accountants, fund administrators, lawyers) who form the backbone of Mauritius Global Business sector.

The potential impact on banks is also very worrying. There are early indications that local banks are already facing Enhanced Due Diligence on a number of their transactions with European counterparties [1]. This makes it more costly for correspondent banks to deal with Mauritius and could put pressure on relationships built over a number of years, even decades. Mauritius has built its economic success on the export of goods and services and it simply cannot afford to put its correspondent banking relationships at risk.  It is worth noting that any reduced flows from the Global Business sector will also negatively impact banks in terms of Foreign Exchange flows and deposits.  Indeed, the Bank of Mauritius has recently become a net seller of USD in the market, with commercial banks managing their foreign exchange positions very tightly.

Any reduced flows from Global Business, coming at a time when Tourism inflows are close to zero, will compound the Current Account deficit and push the country’s overall Balance of Payment into the red.

It is vital to grasp the macro-economic impact that Mauritius could be facing. The island operates under a freely-floating currency regime, and over the past decade, Mauritius has benefited from substantial USD liquidity. Any reduced flows from Global Business, coming at a time when Tourism inflows are close to zero, will compound the Current Account deficit and push the country’s overall Balance of Payment into the red. Mauritius will lose an important buffer which has also helped the country’s international reserves and rupee stability. This can only lead to macro-economic instability.

The way forward

The Government, together with financial regulators and other stakeholders, have come together to find ways to prevent any blacklisting in October. In the recent Budget, the Government has clearly stated its commitment to complete the remaining five FATF recommendations by September 2020 and to complement and strengthen the existing legislative framework through a new Anti-Money Laundering and Combating the Finance of Terrorism (Miscellaneous Provisions) Bill, which is to be presented to the House on 23 June 2020. This should send a clear signal to the FATF (and the EU), that Mauritius has taken a dynamic approach to addressing their recommendations and is looking to be proactive and address areas of concern in a timely manner.

Mauritius is facing a very steep uphill battle. By not being stringent enough, especially around risk-based regulation and monitoring, a gap seems to have been exploited by international regulators to take the country to task. Mauritius has worked hard over the past decade to build its reputation as an international financial jurisdiction and to comply with international taxation and financial regulations such as the Common Reporting Standard and the Base Erosion Profit Shifting. The risk of being branded together with countries considered to be fragile states with serious structural deficiencies is serious indeed. The country’s reputation is at stake. The immediate focus must be to limit any fall-out and do everything possible to avoid being blacklisted.

Rethinking economic diplomacy 

However, Mauritius must also ask itself whether it acted quickly enough, particularly on the economic diplomatic front. There was a time where Mauritius was one of the drivers within the ACP when it came to the Sugar Protocol and Multi-Fibre Agreement. Now, as the country aims to attain High-Income country status by 2030, it will need to operate differently. This requires judicious diplomatic lobbying, clear internal policies (understood and correctly applied by all relevant stakeholders) coupled with accountabilities, as well as medium to long term strategies. And the island needs, once and for all, to better monitor sectors such as Gambling and Real Estate, where the risk of AML remains high. It should also apply a stronger risk-based approach across the Global Business industry. The onus is on the relevant regulators to make this happen.

Mauritius has to demonstrate that it is doing the right thing to sustain its reputation and relationships with its international partners. There is no other option.

Mauritius is at crossroads. The global impact of the Coronavirus, coupled with the potential threat of a blacklisting by the EU, should force Mauritius to take some difficult structural decisions. Financial Crime continues to be closely monitored internationally and countries are increasingly expected to tackle issues in a dynamic manner. Mauritius has to demonstrate that it is doing the right thing to sustain its reputation and relationships with its international partners. There is no other option.

[1] evidence at this stage is anecdotal but the author’s feedback from local banks suggests that enhanced due diligence is already starting to affect transactions with the European Union.

Ibrahim Malleck is a Managing Partner at Ebonia Capital a trade and corporate finance advisory firm based in Mauritius. With more than 25 years of leadership experience in corporate banking in Mauritius and across the Middle East, he has worked, among others, for the Mauritius Commercial Bank Ltd, Standard Bank Ltd. and HSBC Ltd. In 2019, he founded Ebonia Capital to provide financial and risk advisory services, as well as funding solutions to entities in Mauritius and across East Africa. Ibrahim has a Masters in International Trade and Finance from Lancaster University.

Charles Telfair Centre is an independent nonpartisan not for profit organisation and does not take specific positions. All views, positions, and conclusions expressed in our publications are solely those of the author(s).