The alarming trend -the contribution of the manufacturing sector to gross value added at basic prices have dropped to just 0.3 % in 2023 and its growth in 2023 was as low as 2.1% . The share of the EOE sector in manufacturing 's value added at basic prices has fallen to 29% in 2023 from 40% in 2010 . It share in gross value added is a mere 3.7% in 2023 compared to 6.3% in 2010.
Though there are small firms that are producing goods of high value for exports -- food products, garments, printing items, leather and jewellery of internationally competitive design, they seem to be the exceptions in the SME sector. Most of the improvement in the ease of doing business seems to have solely encouraged investment in tabagies and minor food processing (personal and household goods), restaurants and in construction (mason-builders).
Why is that we do not have more successes in the sector? Why is it that we do not have more SME entrepreneurs joining the league of high quality product exporters?
Our SMEs seem to be perennially faced with requests such as finance, skilled labour, technology, R&D and training facilities. Bank lending against security is hard to come by and bureaucracy continues to pose other impediments to their growth. The SME sector also has problems to survive, thrive and move into exports. It continues to be constrained by lack of finance and financial instruments, high rates of interest and high rentals, short reimbursement periods, and a lack commercial and industrial space. The Small and Medium Enterprises that have recently taken advantage of the new opportunities in the regional markets are particularly extremely vulnerable to the exchange rate volatility because of their low resource base and the lack of support from financial institutions.
It seems that we have totally lost sight of a sector which is the future and the answer to our pressing needs in terms of job creation, especially the importance of creating an environment and building an infrastructure which would have allowed SMEs to risk capital at reasonable rates. We believe that the whole SME sector needs a beefing up in terms of a more proactive competitive strategy to enable the sector to upgrade itself, become internationally competitive and secure its share of regional and world trade.
The sector needs a more pro-active competitive strategy : ( as proposed by SMALL & MEDIUM ENTERPRISE CHAMBER -SMEC).
The main elements :
* Made in Moris" Branding Support-Simplified Branding Process
Facilitate the acquisition and utilization of "Made in Moris" labels for SMEs. Streamlining the branding process will enhance product visibility and marketability both domestically and internationally.
* Technology and Innovation Support
Proposal: 80/20 Technology Investment Scheme
Establish a funding mechanism where the government covers 80% of costs associated with acquiring new technologies for SMEs. This scheme aims to boost operational efficiency and technological advancement.
* Taxation and Financial Incentives
Proposal: Zero-Rated VAT on B2B Transactions
Extend the zero-rated VAT status, which currently benefits export transactions, to include local business-to-business (B2B) transactions. This reform will alleviate the financial burden on SMEs and enhance their competitive edge within the domestic market.
* Financial Facilities with Banks
Proposal: Preferential Financing Rates and Fee Revisions
Negotiate preferential interest rates and revised or exempt bank charges for SME financing. This initiative aims to reduce the cost of capital and improve financial accessibility for SMEs, facilitating growth and operational stability.
* Reform of the Competition Commission
Moreover,
a. We must start by a Write-Off of COVID-19 Loans for SMEs
We propose the complete write-off of COVID-19 loans issued to SMEs specifically for employee salaries during the pandemic. These loans were crucial for job preservation but were not utilized for business expansion. To ensure equity, we recommend that large, profitable companies that also received COVID-19 loans repay these amounts to the Mauritius Investment Corporation Ltd (MIC). This would enable the reallocation of funds to support SME recovery and growth.
b. Protection for local manufacturers (Filet de protection)
Need to re-input taxes on imported goods such as (Garments, Shoes, Furniture & Other). This measure will bring fund to the government. At the same time to put a quota on imported goods must apply to big retailers, priority should be given to buy from local manufacturers where the same measure has been applied in South Africa.
c. Anti – Dumping (Competition deloyal)
Actually there is a bulk of used garment sold on local market.Authorities must banned this product to enter Mauritius.At the same time live sales on social media networks must be regularised.
d. Subsidized Freight Scheme
Proposal: Freight Cost Reduction
Implement a government-subsidized freight scheme to lower logistics costs for SMEs. This measure will enhance competitiveness by reducing the expenses associated with shipping and distribution.
e. Education and Training Support
Proposal: Partial University Fee Funding for SME Employees
Provide partial funding for university education for employees of SMEs. This initiative will support the professional development of the workforce and improve the skills and capabilities within the SME sector.
f. Infrastructure and Utility Support
Infrastructure Development Assistance
Proposal: Government Funding for Infrastructure
Allocate government funding for essential infrastructure developments at new SME locations, including utilities such as electricity and water. This support will lower entry barriers, reduce operational costs, and facilitate business establishment.
g. Market Access and Promotion
Local Marketing Platforms for SMEs
Proposal: Establishment of Market HUBs
Create permanent Market HUBs in each locality to provide SMEs with platforms to showcase and sell their products. These hubs will enhance market visibility, attract tourists, and stimulate local economic activity.
h. Export Promotion Initiatives
Proposal: Warehousing in Africa
Support SME exports by establishing warehouses in key African markets such as Botswana and Kenya. This initiative will broaden market access, enhance distribution capabilities, and increase the global presence of Mauritian products.
I. Software and Training Support
Proposal: Full Funding for Software and Training
Offer full government funding for the purchase of essential business software and associated training programs. This initiative will help SMEs adopt advanced software solutions and ensure their staff are adequately trained to use these tools effectively. Enhanced software capabilities will improve productivity, efficiency, and competitive advantage for SMEs.
J. Integration with Hospitality Sector
Hotel-SME Integration
The strategy needs a two-pronged approach:
First: A short-term (1-2 years) strategy that will help to consolidate, restructure and modernize the competitive niches identified in the different sectors and benchmarked to international standards. The short-term focus will be competency development, quality and export promotion. Some of these niches need to be detailed out for some sectors, especially in tourism, financial services, ICT and the knowledge industry
Second: A medium- to long-term strategy to identify new growth poles or niches, create new capacities and competencies, capture inter- and intra-sectoral linkages and higher value-addition, to provide new vehicles for investment and finance, foster innovation and capacity diversification and for export expansion.
This competitive strategy will have as main pillars innovation and technology, export expansion and diversification, training, finance and promotion of international strategic partnerships. In the tourism industry, the gradual process of democratisation of the sector will open up opportunities for the different market segments with greater benefits accruing to local residents, different sectors and groups especially the lower income groups, SMEs and low-skilled operators. The sector policies will have to be formulated such that they reflect the new thinking that the benefits from tourism activity should be spread more evenly throughout the society.
The democratisation of the sector will mean a policy orientation that does not focus uniquely on the up-market segment but also on the low-to-middle segments. Such policies that redefine the sector and its parameters to be more inclusive will offer us enormous possibilities to revitalize the agricultural and rural economy, support the sustainable development of rural areas, develop community-based tourism with a cultural content, agricultural tourism ecolodges, family owned hotels, guest houses, eco accommodation, traditional organic and authentic products and Mauritian cuisine, environmentally friendly hotels, green holidays, sports clubs providing services.
Conclusion: This comprehensive strategy outlines the strategic measures to enhance operating conditions for SMEs in Mauritius. By addressing key areas such as financial relief, taxation, infrastructure, market access, and technology support, we aim to foster a more supportive and dynamic business environment. These initiatives will drive SME growth, contribute to economic resilience, and promote inclusive development.
