Small Medium Enterprises - Subheer Ramnoruth : “SME sector has still tremendous potential for further expansion”

The Director of Whitefield Business School analyses the Small Medium Enterprises (SME) sector for the year 2017. He states that Mauritius comprises some 108,000 SMEs representing 40% of the country’s GDP and 54.6% of total employment.

“The government relies heavily on SMEs to turn Mauritius into a high income economy; the significance of the SME sector cannot be overlooked. The truth, however, remains that 70% of startups close down within their first year of operation. This is not an isolated case that happens in Mauritius only but is rather a global trend. But what’s very interesting in the case of Mauritius is that there are 108,000 companies out of which only 3% of these companies export their goods/services. Therefore, close to 100,000 companies exist to serve the local market consisting of a population of 1.3 million people only. In very simple terms, it implies that on an average, one company serves only 13 people.”

Reality check

He highlights that the Government Vision 2030 has identified the SME sector as one of the key propellers and aims to increase the contribution of SME from 40% to 52% of GDP in ten years time.

“By 2026, the government expects that 65% of the working population would be employed by SMEs. No doubt this is a positively bold vision; but whether or not it is a realistic vision is what I would be more preoccupied with. The latest figures gathered shows that 47% of SMEs have a turnover of less than two million rupees annually and only 7% of them employ over 21 people.”

Moreover, he argues that the SMEs need to have access to finance and over the last years, many measures have been adopted by various ruling governments to provide access to finance. He recalls that finance without access to market would land SMEs into debts that they would be unable to repay.

“The SMEs master plan was right to aim at increasing the number of exporting companies from 3% to 18% in 10 years. In line with this objective, SMEs are encouraged to attend international fairs but fairs have not always been productive in terms of sales. Many fairs are good for building and maintaining a brand but it has not always been fruitful for generating sales, which is a pressing need for all SMEs.”

The director fails to understand why an online Mauritian trade platform has not yet been set up, that would advertise all SMEs product and services to Africa and all target markets.

Streamline processes

According to Subheer Ramnoruth, we cannot 100% agree that the interaction between SMEs and government bodies has been smooth, quick and productive. “Many SMEs and business owners would agree that they still need to visit several government offices and complete lengthy paperwork to be able to operate. Therefore in certain spheres, there is a need to modernise and streamline the public sector processes.”

For him, the 10-year SME plan seems to project a bright future but the fact remains that this document produced in 2017 was partly generated using provisional figures from 2013 that were provided and therefore, the reliability cannot be 100% guaranteed.

“The SME communities do hope that the vision comes to fruition and exceeds the expectation set out in this document. This sector remains one that still has tremendous potential for further expansion in 2018 and the years to come, provided that the right political, legal, technological environment and infrastructure is created and maintained. But most importantly, the entrepreneurial culture and mindset needs to be fostered through proper training and motivation.”