Sunil Bholah: “SMEs are not making the best of the digital revolution”

The Enterprises Fair is being held this week-end at the Swami Vivekananda International Convention Centre. Entrepreneurs will showcase their know-how. News on Sunday met Sunil Bholah, the Minister of Business, Enterprise and Cooperatives for an overview of the sector. SMEs contribute 40% to our GDP, that is around Rs 118 billion. They employ around 306,900 persons, 54% of the workforce.

What constraints are preventing SMEs from contributing effectively to the Mauritian economy?

SMEs need to revamp themselves to sustain their profitability. They lag behind in many aspects, namely adoption of technology (ICT, e-commerce…), innovative practices, and the production of value added goods and services. Indeed, we have noticed that many SMEs are at crossroads between ‘business as usual’ and developing new ways of doing business. In today’s highly competitive market, innovation can safeguard the sustainability of our enterprises. It is quite unfortunate to see that SMEs are not making the best of the Internet to compete in both domestic and international markets. ICT nowadays plays a prominent role in the field of commerce and trade. However, our SMEs continue to operate the traditional way. How will they be able export? The local market is limited and businesses should produce export-ready goods and services.

Rs 10 billion were earmarked for the development of SMEs. Are you satisfied with the investment made?

The SME sector is fundamental to generating revenue, employment, economic growth and prosperity. This government believes that investing in SMEs is a long-term and smart strategy, with sustainable returns that will inevitably multiply across the country and in the region. Access to finance has always been the most decried barrier for our SMEs. The SME Development Scheme will help start-ups in ICT, manufacturing, bio-farming, aqua-culture, renewable energy, handicraft, and any productive sector which has a high potential in terms of employment creation. They would benefit from preferential lending rates and tax exemptions.

What is your vision for the SME sector and how much of it, in your opinion, will be implemented by the end of your mandate?

We have embarked on a mission whereby we are providing opportunities for all citizens to develop their entrepreneurial skills. There are important challenges which I have noted and which need to be tackled. They are: • Mismatch between the skills supplied by our education system and the skills enterprises seek. We urgently need to create conducive eco-systems for the emergence of greater numbers of highly skilled people. • Limited innovation – when compared with upper middle income countries that have similar population size such as Iceland and Cyprus, Mauritius is under-performing and is ranked 76th in the innovation ranking of the 2014-15 Global Competitiveness Index. A firm’s capacity to creatively transform knowledge and ideas into new products, processes and systems is what will make it experience higher levels of productivity and economic growth. It is this category of firms that is more likely to export, and export successfully • Reluctance to take risks • Bureaucracy remains an important obstacle for SMEs. • The Mauritian market being small, we have no choice than to look forward for an increase in the number of new market entrants and more export. At the level of my ministry, we continuously work on ways of improving enterprise access to managerial and entrepreneurial skills – on top of regular training programs organized by SMEDA. We are contemplating the possibility of devising an entrepreneurship curriculum in the context of a Memorandum of Understanding signed with the Indian government. An interesting example would be the group of women who have been trained by NICE in the production of ECOBAGS following the prohibition on plastic bags. They are today producing, and creating jobs and even exporting to Reunion Island. The community of entrepreneurs has to be proactive and innovative. Through the development of the entrepreneurial eco-system, Mauritius has, in the next five years, the potential to be ranked in the top 100 economies worldwide in terms of the Ease of Doing Business. We want small businesses with big ambitions. Innovation is a driver of growth and we have no choice than to innovate.

What is the objective of MauBank to promote SMEs?

Maubank has been set up in January 2016 as an accessible means for entrepreneurs to secure finance for their projects. However, we have learnt from the past and we definitely do not want MauBank to be a replica of the Development Bank of Mauritius. For SMEs to be the backbone of our economy, we should favour the realisation of feasible projects as well as the creation of bankable enterprises. Only SMEs having those characteristics will gain access to finance.

As the Minister of Cooperatives, do you believe cooperatives are still inefficient?

The Cooperative sector is very successful in many countries. In Mauritius too, it had its golden era. The sector has been a victim of its own success. There are many cooperatives which are doing very well. A Cooperative Credit Union like the Vacoas Popular Multi-purpose Society was dealing with billions. So, stating that the sector is not efficient is wrong. I think this sector has great potential if revamped and managed properly. To do so, I am amending the law because we cannot use the same old laws and principles to face new challenges. We need to adapt. I am proposing an apex body to regroup cooperatives so that they can have more control and deal more easily with issues such as manpower, transport, etc. We are helping the sugarcane planters from cooperative societies to sustain their business through the adoption of fair trade. Altromercato, an Italian company, is partnering with the Mauritius Sugar Syndicate to purchase 4,000 tons of sugar for crop 2015, with a premium of €40 per ton of sugar deposited in a fund called the Fair Trade Value Chain Incentive Fund, which is then used to help member planters in any viable sustainable project. This can motivate those who have abandoned their plantation.

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Major upcoming developments for entrepreneurs

We are coming up with a Master Plan of ten years on SMEs which will be the common thread that will formally define government’s policy. I am confident that the SME Master Plan will be the 'game changer' in navigating the new development path for our SMEs across all sectors until 2025. We are increasing the number of SME parks to provide space to entrepreneurs. A network of incubators will be at the disposal of entrepreneurs in four regions of the island, as we want to spur knowledge based enterprise development, by providing opportunities for knowledge transfer as well as a holistic suite of support services to entrepreneurs. Given the small R&D and technology base in Mauritius, it is difficult as well as costly to develop most technologies domestically, and a reasonable approach would be to acquire or license technologies from more advanced countries. In this perspective, a Technology Fair will be organised under the aegis of SMEDA during the last quarter of the current year – this B2B event will create the most effective linkages between several foreign technology providers and local businesses to facilitate technology transfer and absorption from one end to another.