SME Bill : between optimism and controversy

The Small and Medium Enterprises (SME) Bill was passed on Tuesday at the National Assembly, with amendments, allowing the creation of SME Mauritius, which replaces the SMEDA. The Bill also gives way to the creation of a Registrar post for small and medium companies. However, while many are against the Bill, others have called it a blunder.

The SME Bill is a new and refreshing departure for the Small and Medium Enterprises, trusts the Minister of Business, Enterprise & Cooperatives, Sunil Bholah. Passed on Tuesday at the National Assembly, the SME Bill, according to the Minister, aims to do away with the “bad habits of the past” that were unproductive and to provide a modern and favourable legislative framework. Unlike the SMEDA, which was a parastatal entity, the new SME Mauritius is registered as a private company and will see the appointment of a Registrar post, where an officer will be based at the Ministry of Business, Enterprise & Cooperatives.

How will this bill contribute to boost the SME sector and what are the drawbacks? Osman Badat, CEO of Baines Trust and Corporate Services Ltd and Vijay Ramgoolam, former Director of the SMEDA, share with us their views on the matter.

 Osman Badat : “A new and ambitious vision for the SME sector”

The CEO of Baines Trust and Corporate Services Ltd states that he sincerely does not understand why so many people have voiced out against the SME Bill. According to Osman Badat, “the main purpose of the SME Bill is to repeal the current SMEDA Act 2009, as we have a new and ambitious vision for the SME sector, as elaborated in the Master Plan.” He declares that the main changes are structural.

“The Bill does mention the objectives and composition of the Board of SME Mauritius Ltd. As a separate legal entity, SME Mauritius will appoint its own Board, which will have its own terms of reference and as a ‘public interest entity’, I hope that SME Mauritius will implement the principles of good corporate governance so that everything is transparent.”

Regarding the appointment of a new Registrar, Osman Badat trusts that it is a continuation of what is currently being done by MyBiz. There is no conflict at all with the Registrar of Companies and their functions and duties are different.

“Having SME Mauritius set up as a limited company is a brilliant move, in the sense that the composition of its Board is not imposed by law (i.e. SME Bill). This may lead to positive growth, as we can have people who understand business or who are part of the SME sector themselves as Board members rather than only nominated government officials,” he says.

Osman Badat believes that what is more important is the implementation of the Master Plan. “The Master Plan is the result of an in-depth study of the SME sector in Mauritius. I have read the paper and I am confident that if we implement the recommendations, there will be a significant, constructive change to our economy.”

What is the importance of such a Bill for our Mauritian SME sector? “There are clear targets where to take the SMEs. For example, the SME contribution to exports is currently a mere 3% of its totality. The target is to increase it to 18% by 2026.

It is one of the few reports I have seen that is in line with the overall strategy for Mauritius. For example, there is a clear fit with making Mauritius a high income economy by 2030 and the report elaborates how this will be achieved. To implement a new vision, you have to form the people. This takes time and as a minimum, it takes 10 years. I don’t think we will reap the benefits immediately but eventually, it will have a substantial impact,” explains Osman Badat.

Vijay Ramgoolam : “The SME Bill is of no use”

Vijay Ramgoolam is categorical. He trusts that the SME Bill is of no use. “I believe that there is absolutely no use in making it a private company,” he utters. Director of the SMEDA between 2006 and 2010, Vijay Ramgoolam says that all Small and Medium Enterprises around the world are financed by the government in order to allow their development. “I believe that the SME Mauritius Ltd will be the only one in Mauritius that is financed by public money but will not generate revenue. We need to seriously look at the measures taken to develop the SMEs! Why not boost the SMEDA as a parastatal body instead of turning it into a private company?”

According to Vijay Ramgoolam, Minister Sunil Bholah must come forward to clear many questions on the SME Bill. “For example, he said that the SME Bill will break with the ‘bad habits of the past’ and that the SMEDA has not done well in recent years. Minister Bholah must validate these claims,” he argues. He explains that the SME sector is not an easy field to handle and that only someone with expertise can shed light on this issue.

Vijay Ramgoolam also criticises that double registration. “What is the purpose of it? Why wait 15 days to register while the Registrar of Business only takes one day for the same exercise? Again, I appeal to the Minister to provide some explanation. What we need is Business Facilitation.”

He also highlights the fact that SME Mauritius will operate in total secrecy, as it is registered as a private company. “Secrecy is very dangerous. This means that neither parliamentarians, nor the Public Accounts Committee, nor the director of the audit and not even the ICAC will be able to question this entity. No one will be able to enquire about what it is doing, about recruitments of staff or allocation of contracts even if there are conflicts of interest,” he states.

Regarding the assurance that Minister Bholah gave regarding loss of jobs by employees of the SMEDA and the redeployment of those who will not be hired, Vijay Ramgoolam does not think that it is appropriate. “When redeployed, who will hire these people?

If the SMEDA was closing down, I could understand this but it is only changing ownership. Can we ask employees to leave despite years of employment? If they are hired elsewhere, will they acquire the same rights? How to match the conditions that exist in a parastatal entity to a private company? Will their benefits remain the same? There are so many questions that the Minister should answer.”