Africa success story Mauritius fetes independence

By Ed Harris

PORT LOUIS (Reuters) - Mauritius must diversify its economy to keep its place as one of Africa's most prosperous nations, the prime minister said on Wednesday as the island celebrated 40 years of independence.

With just 1.3 million people, no mineral resources and far from major markets, the palm-fringed Indian Ocean island flourished in the first decades of independence using trade preferences from Europe on its key sugar and textile sectors.

But with those preferences ending and increased competition from low-cost clothes producers, Prime Minister Navin Ramgoolam's government has begun to open the economy, boosting sectors like tourism, banking, seafood and call-centres.

"We have to adapt to it whether we like it or not," Ramgoolam said after a tree-planting ceremony at the lush botanical gardens in Pamplemousses, outside Port Louis.

"But we're doing very well."

Unlike many of its African neighbours, and other Indian Ocean islands, Mauritius has maintained enviable political stability, with the exception of occasional ethnic riots.

Thanks largely to that stability, the World Bank and other groups now rank Mauritius as Africa's top country for economic freedom, ease of doing business and good governance. On Tuesday, the IMF said Mauritius would grow about 7 percent in 2007/08.

Wednesday's celebrations included a military parade and fireworks, with South African President Thabo Mbeki the guest of honour. Many Mauritians were taking advantage of the national holiday to relax at home with friends and family.

Uninhabited before the Dutch took over in the late sixteenth century, Mauritius was briefly abandoned in 1710, before being colonised by France and finally seized by Britain in 1810.

It finally won independence in 1968 as part of a trend of decolonisation across the continent.

"When we obtained independence, we were a poor country with income per head of about $225," independent Mauritian analyst Pierre Dinan said. "Today we are a middle-income country with about $6,000 if not even more."

"THE MAURITIAN MIRACLE"

Poverty remains widespread, however, particularly among Mauritian Creoles, who are descendants of African slaves.

Pushing its advantages of a bilingual, well-educated workforce, simplified work permits, low costs, political stability, and a time zone that allows daytime dialogue with Sydney and New York, Mauritius is competing for global business.

But businessmen note strains throughout the transport infrastructure, such as delays at the port and airport, traffic jams, and problems with the water supply system.

Razia Khan, Africa researcher at Standard Chartered Bank, said diversifying would require large investment.

And with Mauritius competing against resource-rich countries like Nigeria and high-growth centres like Dubai, private cash could be hard to find, the London-based analyst said.

"If Mauritius wants to move up on the value chain, there needs to be more government spending. But in terms of finances, they are more constrained," Khan added.

Nobody, however, expected Mauritius to do as well as it did with trade preferences coming to an end, Khan said.

Back in 1968, some pundits said over-dependency on sugar, vulnerability to terms of trade shocks, rapid population growth, and ethnic tensions would doom Mauritius to failure.

But between 1973 and 1999, for example, real GDP grew an average 5.9 percent per year compared with an average 2.3 percent in Africa, an IMF paper on "the Mauritian miracle" said. (For full Reuters Africa coverage and to have your say on the top issues, visit: http://africa.reuters.com/)