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Definition Of Smes In Mauritius Economics Essay

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SME includes enterprises in all economic sectors. The turnover criterion is used, that is no differentiation between services and manufacturing sectors has been made for small enterprises. Medium-sized enterprises are generally more sophisticated by nature and level of technology, while small enterprises are usually characterized by their more 'developmental' level of operations."

Historical background:

SMEs in Mauritius can be traced back to the 1960's. Local entrepreneurs were promoting companies to meet the demand for import-substituting goods which was the first step towards creating a formal SME sector in the Mauritian economy. Thus in 1976, the Small Scale Industry Unit (SSIU) was set up at the Ministry of Industry and Commerce.

The SSIU became the Small Industry Development Organization (SIDO) in 1983 in a view to have a more integrated policy.

In 1988, there came a provision of the legal framework in the form of Small Scale Industry (SSI). Through the Industrial Expansion Act of 1993, the Small & Medium Industries Development Organization (SMIDO Act) was created with an expanded role to consolidate and further develop a modern SME sector in the country.

Eventually the SMIDO Act was replaced in 2005 by Small Enterprises and Handicraft Development Act (SEHDA). The SEHDA was created following a merger of SMIDO and National Handicraft Promotion agency (NHPA). The main aim was to be the centre of excellence for servicing SMEs and also to rationalize and optimize the use of resources to the small business sector in Mauritius.

Initiatives to promote SMEs:

The Business Facilitation and Counseling Unit of SMEDA offer the following services:

Business counseling

Assistance to prepare business plans

Information on business registration, that is, permits and clearances required to start business.

Marketing assistance

Training

Information on various loan facilities

Help to locate specialized services provided by other institutions

Expansion/ modernization of existing business

The SMEDA further provide management-based programs and also skill-based programs such as handicraft. The SMEDA also conducts Training Need Assistance (TNA) annually to identify other training needs among existing SMEs. In addition the SMEDA organizes training programs, seminars, workshops and conferences to raise awareness and capacity building of SMEs. The IVTB, Institut de la Francophonie pour l'entrepreneuriat (IFE) and the Mauritius Employers' Federation offers several training and education programs and courses.

Support to SMEs:

The following institutions play a crucial role in enhancing the competitiveness of SME sector by acting as facilitators, provider of financial support, training, consultancy services, marketing and export assistance:

Small and Medium Enterprise development Authority (SMEDA)

Agricultural Research and extension Unit (AREU)

Enterprise Mauritius (EU)

National Computer Board (NCB)

Ministry of Business Enterprises and Cooperatives (Business Enterprise Division)

Human Resource Development Council (HRDC)

Development Bank of Mauritius (DBM)

Mauritius Post Cooperative Bank (MPCB)

The Mauritius Standards Bureau

State investment Corporation (SIC)

Furthermore fiscal incentives such as exemptions of land conversion tax are offered. There are also other non-fiscal incentives like building and land use permits. Also various loan schemes for SMEs are available at the DBM Ltd, especially in the phase of crisis like the euro zone. There are other leasing schemes for acquisition and modernization of equipment by SMEs. New Micro Enterprises Scheme for women has also been introduced.

In addition there are also financial support such as services offered by the Restructuring working Group (RWG)-National Resilience Fund and the schemes of Mauritius Business Growth Scheme (MBGS).

The SMEs are governed by several key legislations:

SMEDA Act

Labour Act

Remuneration Orders

Business Registration Act

Business Facilitation Act

Employment relations Act

Companies Act

SME Legislations

Local Govt act

Across the world today, it is well-known fact that SMEs play an important, perhaps a major, role in employment creation. The chairman of SEHDA believes that the contribution of SMEs to economic growth is undeniable and it is with much vigor that major support institutions in Mauritius have allocated resources to the development of entrepreneurship.

SMEs & Employment

As in most countries, SMEs have been viewed to be an employment generator engine and Mauritius is no exception. SMEs are contributing nearly 37% to the GDP and employing more than 50% of the workforce. It is said that SMEs create more employment than large enterprises because mainly they tend to be more labor-intensive that requires lesser capital spending on technology.

SMEs & Exports

An increase in export not only boosts the level of sales and employment but also extend the life cycle of goods and services. It has also been analyzed that Mauritian SMEs which have potential to export only do so when opportunities arise as they view themselves unable to compete in the international market. Trading in the regional blocs like COMESA, SADC, among others also increases export level.

SMEs & Innovation

Since SMEs often face survival risks in market competition, thus they tend to innovate to perform better. This also brings economic growth. A technology centre will be set up to help SMEs continuously adapt, innovate and improve their technology. In this endeavor, SMEDA will renew contacts with foreign institutions such as CSIR, DTI (South Africa), NSIC (India), SMEDA (Pakistan) and MATRADE (Malaysia).

Globalization & Mauritian SMEs

SMEs are already experiencing unprecedented challenges as a result of trade liberalization in line with the globalization process, the WTO regulations and the dismantling of our safety nets (Multi Fibre Agreement, Sugar Protocol). This situation is being further aggravated by economic turmoil in our major markets, cut throat and unfair competition from imported products coming from low costs countries.

Enterprises will have to innovate in order to be pro-active in handling the negative impact of globalization. To support and assist entrepreneurs, the SMEDA is providing several services to consolidate their competitiveness and growth, such as trade fairs, craft shops and exhibition centre, market research and counseling, preparation of strategic plans and liaising / networking with public and private sector sister organizations.


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