By James Hall
MAPUTO, Mozambique, Apr 1 2002 (IPS)

During a year of world economic downturns and a regional recession that affects all Southern African nations, the island states off the continent’s Indian Ocean coast are performing better than their mainland counterparts.

“That Seychelles and Mauritius are doing better than South Africa or Botswana has more reason behind it than just tourism, which anyway has seen a global drop in business since September 11 (terrorist attacks on the United States),” says Maputo investment broker Pereira Caldeira.

The pitfalls of a one-industry economy, tourism in the case of Seychelles, are apparent in the relatively low growth rate of 1.2 percent the island nation experienced last year.

Still, Seychelles has the highest per capita share of any nation’s wealth, 6031 U.S. dollars per person, of the 14 countries that comprise the Southern African Development Community (SADC), compared to 3750 U.S. dollars in diamond-rich Botswana and 2929 U.S. dollars in South Africa.

South Africa, the regional powerhouse, is Africa’s most industrially developed country.

“A high per capita share in gross domestic product is easy to achieve, even if you have a GDP (gross domestic product) of only 800 million U.S. dollars like Seychelles does, if your total population is only 79,000,” says a Southern African diplomat posted in the Indian Ocean area. “But the bottom line is, individuals in that country are better off.”

Seychelles’ currency is one of the strongest performers in SADC, even though the Seychelles rupee declined 17 percent in value against the U.S. dollar last year.

This drop must be compared to the 24 percent depreciation of the South African rand, the region’s strongest currency, to which the currencies of Lesotho, Namibia and Swaziland are tied.

It must also be compared to the 30 percent fall of Mozambique’s currency, the metical, the 45 percent depreciation of the Zimbabwe dollar, and the 60 percent drop in value of Zambia’s currency, the kwacha.

The strongest performer of any of the region’s currencies last year was achieved by the Mauritius rupee, which suffered a relatively small drop of 9 percent against the U.S. dollar. It is to this island nation that economists turn for lessons in prosperity attainment.

Of all SADC countries, Mauritius, with its 1.7 million people, had the lowest consumer inflation last year, 4.2 percent (compared to 6 percent in mainland South Africa, 12 percent in Mozambique, and 56 percent in Zimbabwe).

Mauritius’s low consumer inflation happened despite the need to import over long ocean distances consumer goods, and the island’s inability to tap into the regional power grid and land transportation infrastructure that would lower energy and transport costs through economy of scale.

Real growth last year hit nearly 9 percent, a regional high that far outdistanced Botswana (7.7 percent), South Africa (3.1 percent) and Mozambique (2.1 percent). Next to Seychelles, Mauritius had the highest per capita share of national wealth in the region, 3963 U.S. dollars per person.

Economic projection for the third Indian Ocean Island nation of the region, Madagascar, is being distorted by incipient civil war.

“The wild card factor of political conflict is one element that can torpedo any economy,” says Alex Erwin, South Africa’s trade minister.

As factions supporting rival presidential contenders blockade highways that are keeping exports from reaching foreign markets, the World Bank is no longer confident that its projection of 5 percent growth for Madagascar in 2002 can be sustained.

However, if the contested presidential election is resolved, Madagascar like Mauritius is in a good position to seek foreign direct investment and expand its economy.

The reasons for the Indian Ocean island nations’ bright prospects are several. Though a part of Africa, they are perceived as island paradises divorced from the conflict associated with mainland nations of Southern Africa.

Madagascar’s current presidential crisis shows how quickly a betrayal of that perception can affect economic performance and investment.

Madagascar’s foreign debt is relatively high for a small country, 4.5 billion U.S. dollars, compared to 5.8 billion U.S. dollars, 5 billion U.S. dollars, and 5.2 billion U.S. dollars respectively in much more populous Zambia, Zimbabwe and South Africa.

Madagascar’s exports worth 890 million U.S. dollars are nearly half of Mauritius’ 1.56 billion U.S. dollars exports, and Mauritius has a lower external debt of 2.9 billion U.S. dollars.

All three nations, Madagascar, Mauritius and Seychelles, are in positions of increasing exports through their one abundant natural resource that is of escalating value on world markets: seafood.

The Southern African nation with the longest Indian Ocean coastline, Mozambique, is expected to enjoy the region’s highest growth rate in 2002, 8.9 percent, due to an ongoing economic recovery concentrated on seafood exports and tourism.

“If and when tourism picks up worldwide, and indications are this will occur later this year, the island nations will be back in business, particularly Seychelles,” says Claudia Ndaba, a travel agent in the South Africa’s Indian Ocean resort Durban.

While national air carriers from Switzerland to Swaziland are going bankrupt, tiny (two jets) Air Seychelles remains economically strong by serving the tourist trade. Investors are developing new casinos on the nation’s largest island, Mahe, and beachfront hotels on picturesque Praslin.

Club Med is expanding its Mauritius resort. A total eclipse of the sun best viewed in June over Madagascar has drawn attention to that island’s unique environment of fascination to visitors.

“The islands are meant to be enjoyed as they are, and not be mined, cultivated or built upon for factories,” says travel agent Ndaba. “They are Creole islands, a mixture of peoples who have settled there from all over, and this cosmopolitan nature gives them a connection to the wider world, even as they languish in peaceful isolation.”

As an economic lesson, the islands are showing that if political peace is maintained, size does not matter when it comes to prosperity.

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