Building a Mauritian Digital Economy | Reboot or Catalyst?
Few days following Budget 2021 – 2022 and there are mixed feelings about the measures announced to enhance the ICT sector within the business community. While many were calling for bold measures to address current and future challenges, the road to building a digital economy is very far.
In this article, I am going to share key insights on the progress of Mauritius towards a digital economy and outline critical comments on measures announced in the Budget 2021 – 2022.
What is a Digital economy?
A Digital economy brings together various economic activities and uses digital technologies including infrastructure, people, services, and data. The main stakeholders of a digital economy usually include the government, private sector, and any individual using digital means to create value through their economic activities.
The ICT sector maintained a steady growth over the years but is yet to reach its maturity level. Besides the “traditional” areas of the ICT sector such as BPO, we are still to go the full spectrum with AI, Cryptocurrencies, and other innovative technologies. However, while it is important to start somewhere, before aiming too high, we need to ensure we have a solid base including the infrastructure, policies, intellect, and procedures in place.
So, where is Mauritius on the journey to becoming a Digital economy?
Assessing the readiness of a nation to build a digital economy should be based on three key indicators as proposed in the G20 Toolkit for Measuring the Digital Economy. These indicators include Infrastructure; Empowering Society; and Innovation & Technology Adoption.
Assessing the digital infrastructure ecosystem of Mauritius
As any other sector, Information and Communication Technology (ICT) requires fundamental infrastructure both physical and digital, as well as digital security as a trust enabler, to operate effectively.
The government of Mauritius has put much focus on building the physical infrastructure required to enhance the connectivity across the country. Investment in these areas contributed to an increase in broadband subscribers for both mobile and fixed connections.
Below a graph showing the progression of fixed and mobile subscriptions over the years.
Source: Statistics Mauritius
However, broadband connectivity is still very expensive as opposed to other countries of the world. According to an analysis of 211 countries’ broadband prices, Mauritius ranks 110th worldwide with an average cost of $50.59 for broadband connectivity. This represents an increase of $0.29 from 2019 from the same study.
Source: https://www.cable.co.uk/
Prices in Somalia are down resulting from the National Communications Act passed in 2017 which allowed further investment in the telecommunications sector. The country is heavily dependent on mobile internet as a way to do business transactions. Other initiatives from the Somalian government included a unified licensing framework to protect the market competitiveness and a reduction in taxes from telco companies.
Moreover, in Budget 2020 – 2021, the government announced Data Technology Park at Côte d’Or as the centrepoint to enabling a data driven economy in fields such as AI and “additive manufacturing”. One year later, we are still to see the realisation of this project while the country is facing new challenges resulting from COVID-19 pandemic.
In last years Budget, the government also announced Deep Artificial Intelligence Centre aiming “provide the necessary support for start-ups, existing businesses and government services to achieve a major digital transformation” – (Budget Speech 2020 – 2021). With pressing needs, those infrastructure will be required to properly set the country on the path to digitisation.
Fortunately, even if physical infrastructure is lagging behind, policies announced are progressing. For instance, as announced in Budget 2016 – 2017, the government has successfully launched the The Regulatory Sandbox License earlier this year as well as the The Financial Services (Peer to Peer Lending) Rules 2020.
Recently the Financial Services Commission issued the Financial Services (Robotic and Artificial Intelligence Enabled Advisory Services) Rules 2021. This comes with the aim to provide a regulatory framework to promote the adoption of new and emerging technologies. There is still room for further improvements to integrate emerging technologies such as AI and Blockchain within other industries including financial services, among others.
How far Mauritius is empowering its society on the road to a digital economy?
To enable growth within a digital economy without widening the gap between traditional and modern sectors, empowerment through the “knowledge economy”, financial support, and resources are crucial.
Budget 2021 – 2022 focuses on digital literacy at a tertiary level. For instance, the Minister of Finance earmarked Rs 33 million in an e-Learning Management System driven by 3 universities. While having an e-learning platform isn’t enough, the government announced the launch of the Digital Industries Academy which will allow the integration of young graduates in the job marketplace.
With these initiatives, it is important to ensure that our curriculum follows and provides updated knowledge, which is not only relevant today, but prepares young graduates for the near future. There needs to be a proper alignment between supply and future demand to cater for the aspirations of the country in new sectors like AI, medical, among others. Sadly, these siloed initiatives may create more disparity between the primary and secondary sectors. For the country to move ahead on this digital journey, having everyone on the bandwagon will be beneficial.
For example, drone technology could be used to improve crop harvest, machine learning and automation to improve food distribution, GPS and mobile application to improve transportation, 3D printing for quick change, are areas still to be explored in the country.
The road to reach there is still long but focusing on the SME sector, which represents almost 55% of employment and accounts for 44% of our GDP. This represents a great opportunity to further digitise this sector and yield more opportunities for revenue, productivity and economic growth. With COVID-19 reshuffling the cards and pushing organisations to find new avenues, access to existing support and tapping into new ones are ways to expand the digitisation of the SME sector.
e-Government – just a buzzword?
The government has announced a few measures to guarantee access to support for various sectors through the digital transformation of the public sector. This is a long term project with the digital transformation of our tax system as the main “success story”. In fact, Ease of Doing Business 2020 report ranks Mauritius 13th worldwide; Paying Taxes ranking 5th worldwide.
In Budget 2021 – 2022, the government announced the extension of the i-Council to all local authorities to improve effectiveness and efficiency of services being delivered to the public. With the country ranking 1st in Africa and 63rd worldwide with a score of 0.7196 in the 2020 E-Government Development Index, we look forward to more progress in this area.
Source: E-Government Development Index (2020)
However, I believe there needs to be proper governance, project management and sufficient resources to keep the momentum going. For instance, from the Ease of Doing Business Report, the country seems to be lagging behind when it comes to “Getting Credit” and “Trading across Borders”. As such, enabling technologies to cater for these could increase the attractiveness of the country to do business.
Building a nation of innovators through technology adoption
The pandemic has urged governments and the private sector around the world to find new ways to generate revenue and create value. For example, in Africa, we’ve seen the emergence of drone technologies to support food and medical aid distribution.
According to last years’ Global Innovation Index survey, Mauritius is ranked 52nd worldwide (out of 130 economies). However, the country is lagging behind in various areas including knowledge, research, and business sophistication. With recent investments and announcements coming out of the two last Budgets, we can only hope to see progress in building a nation of innovators.
Source: Global Innovation Index 2020 Report
The digital transformation of the public sector as an enabler
To support the digital transformation of the public sector, the government announced key measures in both Budget 2020 – 2021 and 2021 – 2022. The MRIC plays a key role in driving the innovation agenda. The extension of the I-Council Project is among the recent measures announced.
Some of the key measures from Budget 2021 – 2022 to foster innovation include:
- The setting up of a FinTech digital lab as well as an Open-Lab for banking and payment solutions
- A digital centralised information exchange system to facilitate motor insurance claim recoveries
- A total sum of Rs 125 million is being earmarked for Ministries to finance research projects in priority fields
- The Emerging Technologies Council which is being set up, will be a prominent addition to the research landscape, especially in new technologies such as Blockchain, AI and IoT
Moreover, with the implementation of a Sandbox for innovative technologies, there is a clear aim to fasten digital adoption within the public sector while modernising the procurement processes. Given that the current procurement framework doesn’t allow public bodies to “test” new technologies prior to implementing, this measure may reduce wastage and time constraints if properly implemented.
Building a digital economy
With still a lot of announced measures from Budget 2020 – 2021 to be implemented, I believe there is a need to build trust within the business community first on how feasible these measures are. To do so, the government should broaden the reach of the digital transformation journey to different sectors; siloes will only limit the progress.
There needs to be an equal balance of efforts to create an integrated ecosystem comprising both private and public sector. A shared effort also means shared investments, not only in infrastructure, but also in knowledge development and ease of access to digital resources. Initiatives creating the openness of key digital elements such as open data and APIs will also help in developing innovative solutions by the private sector.
Will these remain only announcements? Only the future will tell.
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