Recently it has been observed that there is a refreshed and renewed interest on the contribution of entrepreneurship internationally. Even, Mauritius, although it is small in size, has acknowledged the significance of entrepreneurship to its nation. To demonstrate is interest the government, other decision makers and institutions are encouraging a greater amount of people, including youngsters of the new generation to start up their own business for their career and to get more involved in entrepreneurial activities. Some of the measures taken to promote and enhance the entrepreneurial culture in the Mauritian economy has been the government is offering support to entrepreneurs and is also easing the procedures to encourage more people, especially the young people to embark on entrepreneurial ventures. Adequate training facilities and advices are being given to new entrepreneurs and even existing one to improve the efficiency and to be more competitive. Moreover to alleviate the problem of lack of finance, and the level of risk associated with owning a business, lack of adequate support by relevant institutions such as Small and Medium Enterprises Development Authority (SMEDA), Small and Medium Enterprise Partnership Fund, Mauritius Business Growth Scheme Office (MBGS), Enterprise Mauritius National Empowerment Foundation (NEF) and Development Bank of Mauritius (DBM).
Definition of Entrepreneurship
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Entrepreneurship can be defines as process undertaken by an entrepreneur to increase his business interest. It is an exercise involving innovation and creativity that leads towards establishing his enterprise (Brown and Upton). Entrepreneurship creates wealth for the person and for the country. It is the most powerful force of the economy.
Entrepreneurship is concerned with process of seeking for new opportunities without paying attention to the scarce resources presently available.
Entrepreneurship lies more in the ability to minimize the use of resources and to put them to maximum advantage. Entrepreneurship can also be defined as the process of organizing the scarce resources in the best way possible so as to minimize costs, maximize profit and to enjoy in the long term more benefits.
It is to be noted that an entrepreneur is someone who organises and manage a business enterprise and that takes all the risks of investing capital in the industry of his choice in the quest of getting high level of profits. So entrepreneurship is concerned with taking the initiative required from the entrepreneur to brings innovation, deal with finance and do any necessary business activity's effort to transform innovations into economic goods.
Moreover, entrepreneurship involves the process of doing adequate market research so as to detect the available new opportunities to bring new products and services or to bring improvement in existing product and services through innovation. Entrepreneurship means to arrange the scarce resources in the best way possible so as to benefit from any opportunities for long term gain
Ultimately, good entrepreneurship may be differentiated from the effectiveness in taking risks independently so as to make maximum revenue in the economy on which the business is operating. For this to be done, the entrepreneurial process should be in the most creative and innovative way possible which often require a wide range of skills and the ability to think creatively to answer for the need of the market.
Definition of Small and Medium Business Enterprise
As per the SMEDA Act, the SME definition includes enterprises in all economic sectors. In order to avoid detailed sector-specific criteria, turnover criteria is used across sectors i.e. no differentiation between services and manufacturing sectors has been made for small enterprises, and the thresholds for small manufacturing firms also reflect small service firms.
Medium-sized enterprises needs are defined separately from small-sized enterprises as those enterprises require different support measures and have other objectives. The former are generally more sophisticated by nature and level of technology, while small enterprises are usually characterized by their more 'developmental' level of operations.
In Mauritius, a small enterprise is said to have annually a turnover not exceeding 10 million MUR and for a medium enterprise it is between 10 million MUR and 50 million MUR.
Procedures to Start a Business in Mauritius.
The Business Facilitation Act has been established to adapt to the modern business environment of Mauritius. It gives a legal structure that enables any business organisation to operate on the ground of self- adherence to understandable and simple guidelines. It also helps foreign investors and motivate foreign workers to come and bring their skills, ability and know how in the economy.
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This framework encourages small enterprise to initiate in the business world in the shortest time possible as the legal framework and regulation. These steps are not big constraints to them as they has been simplified and made accessible to anyone who wishes to star business.
To start up a business enterprise in Mauritius the entrepreneur should firstly decide what will be his business structure. The Companies Act 2001 provides for different types of companies namely: Domestic Companies, Limited Companies, Private Companies, Small Private Companies, One person Companies (Which consist of a sole shareholder/Director who is responsible to nominate a secretary to manage the company in case of his incapacity or death), and Dormant Companies.
The Rise of Entrepreneurship in Mauritius.
In developed or developing countries entrepreneurship plays a fundamental role as it is said to have a positive impact on economic growth. Entrepreneurship is said to promote the formation capital and the creation of wealth in an economy. It increases the level of employment, decreases the amount poverty, increasing the level of standard of living and it is the road to prosperity. Entrepreneurship is said to answers for the needs and wants of its stakeholders in a creative and innovative way.
In Mauritius, even it is a small country, entrepreneurship has greatly contributed in job and wealth creation in the economy this means that periods of economic growth tended to have a positive correlation with an increase in the number of new businesses started (Gavron et al., 1998).
To give rise to entrepreneurship in Mauritius, the government has decided to be more entrepreneurial. Thus, the policy makers are devoting much attention to help greater amount of individual to embark on entrepreneurial ventures mainly to tackle the problem of unemployment and to generate wealth in the country. It is said that whichever be the size of an organisation in an economy it can be more entrepreneurial we would improve our productivity and compete more effectively in the world marketplaces" And Mauritius has been trying to become more entrepreneurial so as to be more competitive on the marketplaces even at international level.
It is to be acknowledged that entrepreneurial activities in Mauritius, which comprise mainly of the small business sector, contribute enormously in employment creation and the nation's overall wealth (Gungaphul and Boolaky, 2009). In 2009, there were about 75,000 to 100,000 small and medium enterprises (SMEs) and they generated 43% of total employment (Parliamentary Debate, 2009). In other word it helps to reduce the level of unemployment thus contribute to raise the standard of living of the nation as it help to increase the amount of Gross Domestic Product (GDP).
SMEs produce 37 percent of our GDP, that is, some 120 billion rupees worth of output. They give employment and provide a living to 250,000 men and women. And it is there that the culture of entrepreneurship takes root grows and democratises the economy.
The fact that the government is giving incentives to individual to start their own businesses is contributing to a large extent in reducing the rate of unemployment in Mauritius.
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The vision of the Prime Minister of Mauritius is to make the economy a nation of entrepreneur(Budget Speech 2008/2009), and also to make SMEs the number one job provider by 2015 (Budget Speech, 2010). To make this vision achievable, the government has developed a port folio of strategies, for instance it has make finance, registration, education and training more easily accessible amongst other initiatives.
It is to be noted that the government of Mauritius is not alone in this battle as there are also many institutions which are giving support to individual to start up their own business and to be independent. For instance, there has been entrepreneurship specific education which has been modestly started in the mid 1990's in the form of crash courses in the areas of management, marketing and finance which were provided by support institutions such as the Small and Medium Industries Development Organisation (SMIDO).
Later on the younger generation are also introduced in the programmes. This Programme aimed at assisting young people aged 18-30 and who were interested to start their own businesses in the future to write their business plans and provide other support in the field (SMIDO, 2006).
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Another factor that has contributed to the rise of entrepreneurship in Mauritius is the increasing amount of entrepreneurship education and business formation. It has been noted that there are up to now about sixty tertiary institutions which are established in Mauritius and most of them are giving entrepreneurship courses with the aim of delivering a more entrepreneurial workforce in the economy. Some studies acknowledge the importance of such education as a means to boost start up intentions, survival rates and growth (Katz, 2007; Lans et al., 2005) and in general, studies have concluded that entrepreneurial training positively influences an individual's perception to start a business (Dickson et al., 2008).
Moreover, the fact that more women are becoming powerful entrepreneur also contributes for the rise of entrepreneurship in Mauritius. Nowadays, a greater amount of women are undertaking entrepreneurial education and training in order to launch their own business enterprise. According to Central Statistics Office there are some useful statistics about entrepreneurs in Mauritius through the figures on self employed persons which proves that women are increasingly turning towards entrepreneurship and are also generating employment for others it is a comparative analysis over a 10-year time span (1990 to 2000). The result provides some interesting differences between male and female entrepreneurs.
Due to the rising importance of entrepreneurship to the economy and the government's policy to foster an entrepreneurial culture, there is definitely a rising interest for individual to go towards the supporting agencies, such as Small and Medium Enterprises Development Authority (SMEDA), Small and Medium Enterprise Partnership Fund, Mauritius Business Growth Scheme Office (MBGS), Enterprise Mauritius National Empowerment Foundation (NEF) and Development Bank of Mauritius (DBM), to take part in the entrepreneurial activities.
Moreover, the government is paying more attention in helping a sound environment for the small and medium enterprises (SME's) that is an environment which is health and conducive. This is because it is undeniable that SME's are key drivers for the Mauritian economy and they are helping in overcoming the problem of socio-economic disparity. Another reason why, the state and other decision maker are encouraging entrepreneurs to undertake more economic activities , is that they know that the among the members of the Mauritian citizens there are many people who have the necessary knowledge and intellectual capital which will help Mauritius to stand in case of crisis on national and global level.
Moreover, the government and other policy makers have established a strategic planning in order to promote the rise of entrepreneurship in Mauritius in order to face the global financial crises. This plan consist of giving the entrepreneur the adequate support in terms of financial packages and for the new small companies their corporate taxes are relatively low, and in addition they receive many forms of grants and subsidies. For example, the government and other institutions like the Agricultural Research and Extension Unit (AREU), and the Leasing Equipment Modernisation Schemes (LEMS), which help the SME's in terms of advices and the purchase or lease of machines and equipment.
Ultimately, it can be added that the rise of entrepreneurship is due to the rise of globalisation and international trade, which is the fact that there are less barriers to international; trade nowadays, this force the Mauritian entrepreneur to be more competitive and efficient in order to survive on the global market. For example, it is a fact that one of the pillars of Mauritius is its Sugar industry, but till recently we were using traditional method for the working in the field. But as we are in severe competition with Cuba and Brazil among other which large producers of sugar cane, the Mauritian entrepreneur which involve the owners of sugar cane field are forced to import more sophisticated equipment and machines to be more efficient, productive and competitive on the global market. And it is the case in all the operating sectors in Mauritius, be it in at Secondary or Tertiary level of business activity.
Fall of Entrepreneurship in Mauritius
On the other hand there are many factors that hinder the rise of entrepreneurship in Mauritius. These factors are known to be the barriers to entrepreneurship.
One of the main reasons why entrepreneurship level is not rising is that the best students which are expected to be potential entrepreneurs and good leaders prefer to go in foreign countries to work and use their skills overseas as the feel they are better rewarded over there. This is known as brain drain. These potential entrepreneurs know that they are valuable but will not be rewarded for the money and time invested in their studies. They think that the amount of profit they will earn in Mauritius will not be to their expectation and they believe that the grass is greener in foreign European countries.
Lack of industrial space is another major hindrance to the development of the SME sector. It is also an environment hazard as many micro entrepreneurs use residential and other non-industrial space for their operations. To remedy that situation Government is constructing an additional 175 units in industrial estates at five sites. They will be available to a wide array of SMEs, including mechanics, carpenters, metal workers, manufacturers and furniture makers.
Another reason why entrepreneurship is not experiencing a rise in Mauritius is that many of the potential entrepreneur which has been receiving the appropriate academic and even professional training are not willing to start their new business as they believe that it is not worthless to invest their savings in terms of capital in an industry which is found in an economy which relatively instable or where there is a cut through competition. And due to the fact that they lack experience as they will be new in the labour market, they will be out of the market due to these fierce international competitions that the Mauritian entrepreneur has to face.
In addition many of the potential entrepreneurs prefer to use their savings in a bank and wait to earn interest rather than putting their money at risk a business organisation which they are not sure to get his money back or even earn a profit. Thus, they prefer to save their money and seek for a job where they are sure to earn a fixed amount of money in terms of salary by the end of each month. In such school of thought, it is believed that youngsters undertake entrepreneurial education with the aims of preparing themselves to enter the labour market rather than being motivated to initiate in their own entrepreneurial business activities. They believe that these courses will improve their teamwork skills, and make them more innovative in the way they think.
As said before the global business environment has a great impact on the entrepreneurship level in Mauritius. For instance, due to the fact that there is a fierce competition on global level some entrepreneurs will not likely to take the risks of exposing their money in the economy as they may be out of the market at any moment. This due to fact, that sometimes it is better for the economy to import some goods rather than producing it. This is known as the comparative advantage. For example if entrepreneurs decide to manufacture shoes in his factory and that the cost of producing one pair of shoes is Rs 125 including its raw materials, labour costs and other associated cost such as rent and electricity whereas another entrepreneur import shoes made in China at Rs 90 a pair, it is a fact that the former will be forced to leave the market.
However, infant business organisations are usually protected by the state as government encourage the citizens to produce and buy more local goods buy subsidising the domestic producers and by imposing lower rates of tax on their profits. Moreover, the state assists the local entrepreneur by imposing higher level of customs duties on imported goods. Another example where Mauritius encourages the production of local products is the project of rice plantation in our country. This has been a recent project which has creates a few additional job opportunities.
Nevertheless, sometimes it is better to accept that we need to cope with the global business environment to the detriment of the Mauritian level of entrepreneurship because it is important to take advantage of the competitive advantage of other countries over Mauritius, if not our economy will fall.
In addition the level of entrepreneurship is not rising because people believe that there are many important issues that hinder them to undertake their own entrepreneurial business activity namely: lack of initial capital, excessive risks, lack of experience in managing a business, current economic situation, lack of formal help to start a business.
Some other barriers to entrepreneurship is the hassle for getting permits, lack of market as big multinational and other type of large companies has already establishes their market share and most of their customers believe in their brand and reputation as there are well establishes and known producing high quality of goods and services. Therefore, it is difficult for the local entrepreneur to penetrate or even stay in the market for a long period. It has been observed in Mauritius that many shop, supermarkets and other types of business organisations are closing down after being in operation in the market for a few years only a recent example is Phoenix Les Halles which comprises of many retailers which had left the market, some are in the process of liquidation and other are struggling to survive.
In addition, there is fall in entrepreneurship because many entrepreneurs do not have the ability to raise capital and do not have the capacity even though they have the willingness. Furthermore, it is difficult for entrepreneurship to raise as sometime the entrepreneur themselves lack confidence and assertiveness in their capacity, they have poor perseverance and not enough determinant in achieving their dream or vision. Another obstacle to entrepreneurship, is the fact the entrepreneur who want to start up their own business sometimes are jack of all trade and this lack of specialisation very often lead to time management problem and managerial and technical skills problems or they simply frighten to take risks.
As said before major constraints to the rise of entrepreneurship is globalisation. The development of entrepreneurship largely depends on the globalisation of markets. In order to survive and grow in these competitive markets it would be better for the entrepreneur to improve their marketing skills so as to be able to sell their ideas locally and internationally. This will only be possible when the entrepreneur in Mauritius will be able to enhance their strategic orientation skills. This means that the Mauritian entrepreneur should have to shift from their traditional marketing approach to the modern one. This help the entrepreneur to grasps the opportunities and challenges provided are globalisation.
To conclude it can be said that entrepreneurship in Mauritius has experience growth due to the fact that government and other policy makers are providing their support to the entrepreneurs in terms of advice, loans, low tax rates, and training. This assistance has been useful in reducing the level of unemployment and on the other hand contributing to increase the standard of living as the entrepreneur are transforming the resources available in Mauritius be it Land, Labour or Capital into useful outputs for the national and global markets. This rise is also due to the fact that women are becoming nowadays more willing to undertake entrepreneurial business activities. However, the conditions of entrepreneurship are also facing many barriers which prevents from being successful and to rise. As discussed in this assignment some of these obstacles are the global crises, the fact that we need to work according to the concept of comparative advantage which is not of great use to infant firms. Sometimes, the barriers to the rise of entrepreneurship are due to the lack of capital from the entrepreneur for investment, or the fact the entrepreneur is not confident, and not assertive. Moreover the obstacles come from the entrepreneur lack of managerial or technical skills to undertake the entrepreneurial activities.