History Of Entrepreneurship In Mauritius Business Essay


Several measures and policies have been implemented since independence regarding SMEs, the priority of the government of maximizing social welfare has been considered through the creation and promotion of entrepreneurial businesses. The origins of SMEs in Mauritius begins in the 1960s when Mauritius was experiencing a timid industrialization change-over with the main objective of supplying the local market with imported goods and helping the country to gain a certain autonomy. At that time, the government was encouraging the production of different types of commodities such as manufacturing of blades, electrical bulbs, batteries, soap, welding and steel work for construction, refining edible oils, plastic industry, food canning, industrial poultry breeding, yogurt manufacturing, biscuits, shoes and so on for the domestic market. The Ministry of Commerce and Industry established the Small Scale Industry Unit (SSIU) in 1976 which in 1983 became the Small Industry Development Organization (SIDO), the primary aim of such company was to provide general advice and guidance to small businesses and in 1988, the Small Scale Industry (SSI) experienced a true change-over through the presentation of the Small Scale Industries Act. This act promoted the development of the SSI by adopting a legal definition of SSI, voluntary registration of SSI, duty exemption on production equipment and the setting up of an advisory board. The Industrial Expansion Act 1993 consisted of the SMIDO Act which was considered as the next landmark in promoting entrepreneurship in Mauritius, the idea was to establish a framework for consolidating, expanding and enhancing the competitiveness and developing a SME sector. The government implemented a Ministry of SMEs in December 2003 and two years after the Small Enterprises and Handicraft Development Authority (SEHDA) was created following the union of the SMIDO and the National Handicraft Promotion Agency (NHPA). The SEHDA main objective was to promote a more effective and efficient use of available resources allocated to the entrepreneurial sector in Mauritius. The SEHDA Act 2010 was replaced by the Small and Medium Enterprises Development (SMEDA) Act and this was the latest development with regards to the SME policy framework in Mauritius. The SMEDA nowadays works under the aegis of the Ministry of Business, Enterprise and Cooperatives and represent one of the most well-known organizations promoting entrepreneurship in the Mauritian economy.

Definition of entrepreneur and entrepreneurship

Who is an entrepreneur?

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The term entrepreneur has been defined in various forms over the past years based on professional experience of individuals or based on observations and researches made to understand what an entrepreneur is. According to the Irish-French economist Richard Cantillon (1725), an entrepreneur is someone who accepts to pay a certain price for a commodity (for instance materials) and to resell it at another price thus deciding about the practical use of resources while consequently admitting the risk of enterprise. The French economist Jean-Baptiste Say (1803) stated that a business person is an economic agent who regroups all factors of production- land, labor, and capital and produces a product as such shifting economic resources out of an area of lower productivity to a higher one. The American management consultant Peter Drucker (1964) stated that an entrepreneur is one who looks for and respond to change, thus enjoying opportunities by converting a source into resource. Another definition implied that an entrepreneur is an individual starting a new business in a new market where no one before has started business, this was stated by W.B. Gartner in 1985. Thus it can be seen that the definition of an entrepreneur varies according to time and according to observations and perceptions of people who considers it as mainly individual making money by accepting to take risks to achieve his/her goal.

But in order to understand clearly the concept, a simpler but direct definition should be considered and as such, an entrepreneur is an individual who decides to take the risks of managing a business and especially manipulating factors of production such as land, labor and capital for the sake of making profit. The main characteristics that an entrepreneur should possess are enthusiasm, intelligence, creativity, determination, courage to take risks, communication skills, human relation abilities, business secrecy, administrative ability, ability to manage pressure, leading skills, technical knowledge, problem-solving skills and so on. Entrepreneurs are classified based mainly on

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Functional characteristics - being innovative, imitative, skeptical, cautious, or resistant to change.

Development angle- being eager for expansion, survival, efficient, or concentrated only on local trading.

Types of entrepreneurial business- manufacturing, wholesaling, retailing, or service business.

Nine personality types of entrepreneurs- being an improver, advisor, highly qualified, highly creative, visionary, analyst, optimistic, leader, determined.

Types of motivation- motivated by profit, rewards, and self-fulfillment.

Types of area- urban or rural entrepreneurs

Types of gender- male or women entrepreneurs.

What is entrepreneurship?

The term entrepreneurship has also been defined by some researchers, economist and consultants where different meanings have been developed in order to clarify what it is really. According to the economist Joseph Schumpeter in the 1930s, entrepreneurship employs the concept of "gale of creative destruction" where past innovations on the market are replaced by new ideas thus implementing new concepts for boosting economic growth. The two American economists Peter Drucker (1970) and Frank H Knight (1921) stated that entrepreneurship deals with taking risks for the sake of making money , the acts of free enterprise is often subjected to no guarantee that the individual will be able to challenges the market uncertainties. Entrepreneurship is considered to be a major driver of economic growth for a country according to the American economist David B. Audretsch, in Mauritius for instance, SMEs re greatly participating in the development of the country, especially in reducing poverty and unemployment.

But for now, let us define what entrepreneurship is really. It is the process of increasing business interests by adopting creativity and innovation in a way to set up an enterprise. It is the action of an individual involve in minimizing the use of resources and taking risks in order to generate profits. In Mauritius, free enterprise is usually referred to as Small Medium Enterprises (SMEs) where a small enterprise is defined as a business generating an annual turnover of around 10 million rupees and medium enterprise is defined as a business having an annual turnover of not more than 50 million rupees. The SMEDA in collaboration with the Ministry of Business, Enterprise and Cooperatives aims at promoting emergence and competitiveness of SMEs, advising the Ministry regarding how to control the SMEs sector and implementing support programmes.


Incentives for entrepreneurship

For the past decades, there have been many incentives and supports given to enterprises for the promotion of the SME sector in Mauritius. The Ministry of Business, Enterprise and Cooperative has been working with different institutions to be able to provide the most services possible to small and medium enterprises, the budget 2012-2013 has considered financial services which include the release of Rs 3bn of loans from the banking sector to SMEs till 2014 at an interest rate of 3% above the repo rate that is 8.5 % and processing costs and related charges will be renounced. Here is a list of the different institutions and support schemes given to entrepreneurs.

Small and Medium Industries Development Organization (SMIDO)

Export Credit Guarantee Insurance Scheme:

Joint effort of SMIDO and SICOM Ltd

Protects the exporting SME against failure of buyer to pay all export transactions after shipment

Pays 85% of the invoice value to the policyholder in cases of default

Export Assistance Scheme

Financial support to enable SMEs forward samples of their products abroad to prospective buyers

50% refund on airfreight subject to a maximum of Rs. 2000 twice a year

Start-Up Scheme

Financial support of up to a maximum of Rs. 100,000 to entrepreneurs to set up their enterprise

Prospective recipients have to enter Business Plan Competition

Training, Consultancy and Benchmarking

Impart new and develop latent Skills, and Knowledge of entrepreneurs in various areas/fields through Training programmes, workshops and seminars

Company analysis and guidance

Business Counseling and Information

Information and guidance to potential and existing entrepreneurs

Assist entrepreneurs to prepare or update a comprehensive business plan

Monitoring of business and advice

Feasibility Study Grant Scheme

Grant equivalent to 50% of the costs of a feasibility study for a viable project

Max. amount granted - Rs. 75,000

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Mauritius Industrial Development Authority (MIDA)

Export Business Support Scheme

Financial support for participation in trade missions organized by MIDA - funding of up to 75% of cost of stand and 25% refund on the cost of air tickets

Financial support for participation in other trade shows - funding of up to 60% of cost of stand and 25% refund on the cost of air tickets

International Credit Checking Service - 50% refund on the cost of each search effected, subject to a max. of 5 company checks per annum

SME Exhibition Centre Virtual Exhibition Centre

Showcase and Communicate products of SMEs to both local and foreign buyers.

Industrial Buildings/ Estates

Rental of industrial buildings tailor-made for SMEs

Overseas Market Testing

Free testing of products in selected markets

Assistance, Advice and Information

Advice on Development of Promotional Tools

Advice on Export Documentation

Product Information in selected markets

Assistance in Market Research

Trade Information Centre

Assistance and guidance for marketing trips

Loans offered by the Development Bank of Mauritius (DBM Ltd)


Max. Quantum Allocated

Max. Loan Amount

Interest Rate 

(per annum)




90% of cost of project

Rs 200 000



Financing of Production Equipment

70% of cost of equipment

Rs 3 m

10 - 11%


Technology Improvement Scheme

60% of cost of project

Rs 1 m



Working Capital

70% of cost of stock

Rs 400 000 to Rs 1 m

10 - 12%


Business Sector

70% of project costs

Rs 3 m



Construction of Office & Commercial Space

70% of project cost

Rs 3 m



Construction of Industrial Building

60% to 90% of project costs

Rs 3 m

11.5% to 12%


Printing & Publishing

60% of cost of new equipment

Rs 3 m



Local Newspaper

60% of the cost modernization

Rs 2 m



General Service

70% of cost of project

Rs 3 m



Freeport Sector

75% of working capital requirements

Rs 1 m



ICT Sector

75% of cost of project

Rs 1 to 5 m



Joint Venture with Overseas Partners


Rs 1 m



Export Development Fund

(for Overseas Market Surveys and Participation in Trade Fairs)

70% of project cost

Rs 100 000



Selected Investment Schemes


Qualifying Activities

Key Incentives

Export Enterprise

http://smido.intnet.mu/images/bullet.gifManufacture of goods principally for exports

No customs duty or VAT on raw materials and equipment

Corporate tax of 15%

No tax on dividends and capital gains

60% remission of customs duties on buses of 15-25 seats

50% exemption on the normal registration fee for the purchase of land and buildings

50% relief on personal income tax for 2 expatriate staff


Pioneer Status Enterprise

http://smido.intnet.mu/images/bullet.gifActivities involving above average technology and skills 

http://smido.intnet.mu/images/bullet.gifActivities likely to enhance industrial and technological development

No customs duty on raw materials and equipment as per schedule list

Corporate tax of 15%

No tax on dividends


Strategic Local Enterprise

http://smido.intnet.mu/images/bullet.gifManufacture of goods for local market

http://smido.intnet.mu/images/bullet.gifActivity likely to further economic, industrial and technological development

Corporate tax of 15%

No tax on dividends


Small and Medium Enterprise

http://smido.intnet.mu/images/bullet.gifManufacturing activity subject to an investment in production equipment not exceeding Rs 10m

No customs duty on production equipment and raw materials as per schedule list

Corporate tax of 15%


Freeport Enterprise

http://smido.intnet.mu/images/bullet.gifOperations in the Freeport 

http://smido.intnet.mu/images/bullet.gifGoods for export only

http://smido.intnet.mu/images/bullet.gifStorage, assembly, redistribution and logistics

No Corporate tax

No tax on dividends

No customs duty on raw materials, goods and production equipment

Reduced port handling charges for all goods destined for re-export

Barriers to entrepreneurship in Mauritius

Development of entrepreneurs in Mauritius

List of organizations engaged in promoting entrepreneurship

Small and Medium Enterprises Development Authority (SMEDA)

Mauritius Industrial Development Authority (MIDA)

Development Bank of Mauritius ( DBM)

Board of Investment (BOI)

Mauritius Freeport Authority (MFA)

Association Of Mauritian Entrepreneurs ( AME)

Human Resource Development Council (HRDC)