unit 17 -enterprise support schemes gempages.intnet.mu/neoxionix/hans/supergem/unit 17.pdf · unit...

Entrepreneurship/Leadership/Innovation- MGT 2251Y

Unit 17 1

UNIT 17 ENTERPRISE SUPPORT SCHEMES - ROLE OF GOVERNMENT

Unit Structure

17.0 Overview

17.1 Learning Outcomes

17.2 Introduction

17.3 Financial Support

17.3.1 The Development Bank of Mauritius

17.3.1.1 Booster Loan Scheme

17.3.1.2 Loan Schemes for SMEs

17.3.1.3 Transitional Support to Small Companies

17.3.1.4 Normal Loan Scheme for Agricultural Sector

17.3.1.5 Special Loan for the Agricultural Sector

17.3.2 SME Partnership Fund

17.3.3 Enterprise Mauritius

17.3.3.1 Grant for Marketing Trips

17.3.3.2 Technology Diffusion Scheme

17.3.3.3 Funding to Improve Product Quality Standards and Package

17.3.3.4 Productivity and Competitiveness Improvement Scheme

17.3.3.5 Enterprise Development Fund Scheme

17.3.4 National Empowerment Foundation

17.3.5 Trust Fund for the Integration of Social and Vulnerable Groups

17.4 Non-Financial Support

17.4.1 Small and Medium Enterprise Development Authority (SMEDA)

17.4.2 Agricultural Research and Extension Unit

17.4.2.1 Agribusiness Opportunities Existing at AREU

17.4.2.2 Opportunities under the Value Added Chain

17.4.3 National Women Entrepreneurship Council



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17.4.4.1 Marketing Development Services

17.4.4.2 Advisory Services

17.4.4.3 Information and Research Assistance

17.4.4.4 Consultancy Services


17.4.6 Human Resource Development Council (HRDC) and Mauritius Employers

Federation (MEF)

17.4.7 National Institute for Co-operative Entrepreneurship (NICE)

17.5 Other Support Institutions

17.5.1 Co-operative Division

17.5.2 Registrar of Companies

17.5.3 Ministry of Environment

17.6 Reasons for Government Policy towards SME’s

17.7 Summary

17.0 OVERVIEW

In this Unit, you will be introduced to the various enterprise support systems offered by financial

and non-financial support institutions for the promotion of the SME Sector in Mauritius.

17.1 LEARNING OUTCOMES By the end of this Unit, you should be able to do the following:

1. Identify the various financial support institutions involved in the promotion of the SME

Sector.

2. Appreciate the range of services offered by financial institutions.

3. Distinguish the various sources of non-financial support in the promotion of SME’s.

4. Outline the contribution of non-financial support institutions for the promotion of the SME

Sector.

5. Distinguish between support institutions so as to identify relevant support required according


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to the business idea.

17.2 INTRODUCTION

Access to finance is one of the major constraints for start–ups and is often a barrier to growth

later. The establishment of the Business Facilitation Act in October 2006 has had an empowering

effect on the launching new of entrepreneurial ventures in Mauritius. In its vision to transform

the SME Sector as one of the major pillars of the Mauritian economy, the government has put

forward various financial packages and incentives for potential entrepreneurs. Such incentives

are now made available to entrepreneurs by institutions and other stakeholders in the SME

promotion sector. However, it has been observed that some potential entrepreneurs are

developing the misconception that support institutions will provide them with the idea for

business and even develop it for them. Institutional support only serves as facilitation,

entrepreneurs should come up with innovative ideas.

This Unit explores the various financial incentive packages available to support SME’s coming

from in the various SEM support institutions namely the DBM, SEHDA, NWEC, among others.

A word of caution is necessary before going further: all schemes and attached conditions

mentioned in the text apply only as at date of publication of this manual. Subsequent changes

will be dealt within the next edition.

17.3 FINANCIAL SUPPORT

17.3.1 The Development Bank of Mauritius (DBM)

The main function of the Development Bank of Mauritius (DBM), as its name suggests, is to

promote the development of business by financing their projects. The DBM has been empowered

to design various financial packages for SME development.


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The financial schemes provided by the DBM are detailed below.

17.3.1.1 Booster Loan Scheme

The Booster Loan Scheme is meant for SME’s having viable projects. It is a pre-requisite that

applicants for the booster loan scheme hold the Business Registration Card and be registered with

support institutions like SEHDA, AREU, IVTB or the Mauritius Tourism Promotion Authority.

Similarly, Women Entrepreneurs are expected to be registered with the National Women

Entrepreneurship Council.

The Sectors of Activity that are financed by the Booster Loan Scheme include:

- Manufacturing.

- Agriculture and Agribusiness.

- Handicraft.

- Tourism.

- ICT.

- Services.

- Small Livestock Breeding Activities.

- Working Capital Finance for Manufacturing and Handicrafts up to Rs 50,000/-.

- Small trades.

Terms and Conditions Applicable

The maximum loan ceiling amounts to Rs 150,000/-

Applicable Interest Rate: 9% per annum

Repayment period: Up to 5 years

Security: (i) General Floating Charge

(ii) Decreasing Term Assurance (DTA)

A general floating charge on all assets applies. This means that the present and future assets of the

person taking the loan can become liable in case of payment default. Entrepreneurs should generally

be careful when agreeing on such terms.


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17.3.1.2 Loan Schemes for SMEs

Such loans are available at a ceiling of Rs 2.0 million, with interest rate of 11.5% per annum and are

repayable over a period of up to 6 years. They are meant for the following sectors:

- Manufacturing.

- Trade and Services.

- Transport.

- Printing and Polishing.

- Professionals.

- ICT.

- Construction (Industrial/Commercial Purposes).

The loan may be used as working capital.

17.3.1.3 Transitional Support to Small Companies

This scheme is operational since September 2008 and provides support to small companies that are

facing cash flow problems for the purchase equipment for modernisation of their units and to meet

their working capital requirements or to restructure their existing borrowings.

Terms and Conditions

Loan Amount : 20% of turnover up to a ceiling of Rs 1.0 m

Interest Rate : Repository Rate

Repayment : 3 – 5 years for purchase of equipment

: Up to 5 years for restructuring of loans

Security : Fixed Charge on equipment

Pledge of Income Proceeds

Eligibility : The enterprise must be a legally established corporate entity with a

turnover not exceeding Rs 5 M. The company must have been in operation

for at least 5 years or otherwise the company should have been facing cash


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flow problems since September 2008 when the worldwide problem of the

financial crisis came into prominence.

Special Conditions: (i) The company must provide a business plan and/or a

restructuring plan justifying the need for support.

(ii) The shareholders shall inject 25% from their own sources.

(iii) Where the company already has a loan at the DBM, the existing

liabilities plus the new loan shall not exceed Rs 2.0 M.

Validity: Up to December 2010.

17.3.1.4 Normal Loan Scheme for Agricultural Sector

DBM provides loans up to a ceiling of Rs 2.0 M repayable over a period of up to 7 years to support

activities in the agricultural sector. It carries interest at the rate of 10% for loans up to Rs100,000

and 11.5% for loans above Rs100,000.

Sectors of Activity Financed:

- Sugarcane plantation, replantation, derocking, mechanisation, irrigation.

- Vegetable, fruit and flower plantation, mechanisation, derocking.

- Livestock Breeding.

- Tobacco Cultivation.

- Transport Utility Vehicle.

- Fishing and Aquaculture, including bank fishing.

- Agro-processing, food preservation and other agricultural diversification projects.

- Sea food hub. This loan scheme has been set to assist potential and existing entrepreneurs in

the field of agribusiness.

17.3.1.5 Special Loan for the Agricultural Sector

Operators involved in the activities listed below can also take advantage of loan facilities up to a

ceiling of Rs 1.0 M at 9% per annum repayable over a period of up to 7 years. The scheme is

designed to encourage in preference the specific agricultural practices as given below.


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The scheme is payable to:

- Sugarcane - fine derocking and irrigation.

- Potato and Onion Cultivation.

- Fruit and Flower Cultivation.

- Biotechnology.

- Hydroponics and Tissue Culture.

- Off Lagoon Fishing – Purchasing of fishing vessels and engines.

- Production of Agricultural Seedlings.

- Storage of Agricultural Produce – Construction of Sheds/Store.

17.3.2 SME Partnership Fund

In its efforts to democratise the economy, the Mauritian government has established a revolving

fund to the tune of Rs 200 millions to promote the emergence and consolidation of SME’s. This

fund which is also known as the SME Partnership Fund was created as a partnership by the

Government, the State Investment Corporation and the DBM with the collaboration of Commercial

Banks. The SME Partnership Fund would assist by investing its own fund in the projects of SME’s.

it will normally invest in viable projects with well defined business plans having a clear objective

and forecasts.

The SME Partnership Fund invests in approved ventures requiring an investment lying within the

range of Rs 300,000 to Rs 3,000,000. The fund will invest as a shareholder in the SME project with

the promoter having the majority of the shareholding. It is not the mandate of the institution to claim

any share of the profits generated by the SME. However, the Fund will give the SME the

opportunity to buy back the shares held by the SME Partnership Fund to eventually become the sole

proprietor of the venture, thereby regaining autonomy. SME’s normally have a maximum of 5 years

to redeem SME Partnership Fund’s share in the company. SME’s requiring investment above Rs 3

millions will be offered a maximum of 7 years to redeem back the SME Partnership Fund’s share in

the company. If the SME is not in a position to buy the shares held by SME Partnership Fund, the

shares of the latter can then be offered to an interested third party.


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The SME Partnership Fund invests in productive sectors like:

(i) Prospective Industries.

(ii) Industrial Support Services.

(iii) Agro-industry.

(iv) Tourism.

(v) Information and Communication Technologies.

(vi) Value-Added Services, for example Agro Processing.

The scheme is essentially a hybrid form of Venture Capital.


This institution is a collaborative partnership between the private sector and the public sector, and

basically operates as a Trade Promotion Organisation (TPO). Enterprise Mauritius runs the

Enterprise Development Fund also known as EDF. The aim of this fund is to avail assistance

programme for SME’s in terms of specialised resources designed to accelerate business

development and market expansion. Such specialised resources can include capacity building and

empowerment facilities to the SME. Cash grant is not provided. Enterprise Mauritius may cater for

the financial implications in the appropriation of food safety standards certificate (HACCP).

Enterprise Mauritius offers various forms of support to industries as detailed below.

17.3.3.1 Grant for Marketing Trips

The purpose of the grant is to enhance marketing and market penetration abroad. This grant is

normally available to manufacturing companies or SMEs which want to export. A maximum of 6

such marketing trips may be financed. This includes cost of travel and accommodation. The

beneficiary may be given an equivalent of $1000 per marketing trip.


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17.3.3.2 Technology Diffusion Scheme

This scheme enables at the acquisition and implementation of specialised software/information

systems related to production. Other beneficiary projects would include consultancy related to

technology acquisition and diffusion as well as the production of assistive technologies except

equipment. Textile and non textile manufacturing companies operating since at least one year are

eligible for this scheme. Grants of the order of Rs 1.0 million may be made available to eligible

beneficiaries. However, for the maximum ceiling of Rs 1.0 M the beneficiary will need to

contribute at least 25% of the sum. It is to be mentioned that disbursement to beneficiaries is

subject to conditions and personal diagnostics that will be carried out by Enterprise Mauritius.

17.3.3.3 Funding to Improve Product Quality Standards and Packaging This financial support targets aimed at local companies who want to improve their product quality

standard and other related procedures that will increase the marketability of products and increase

these firms competitiveness. The scheme caters for costs involved in product testing, cost of

upgrading and designing new packages and labelling. SMEs in the manufacturing sectors are

eligible for this grant. A maximum of Rs 500,000 can be granted to the requesting company.

However, there are conditions attached. This will include on site visits to be carried out by officials

of Enterprise Mauritius. The applicant may be required to provide details of his/her project by way

of a clearly defined business plan and the provision of financial statements.

17.3.3.4 Productivity and Competitiveness Improvement Scheme

This package finances manufacturing companies to increase productivity and competitiveness of

manufacturing companies through:

Application of Industrial Engineering Practices.

Production Process Improvement.

Business Process Re-engineering.


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Supporting Product Development Programme.

The scheme is applicable for manufacturing companies reckoning at least one year of operation.

This scheme is a cost sharing program. It is borne by both the promoter and Enterprise Mauritius.

As mentioned for other support schemes, there are conditions attached for beneficiaries. For

instance, a diagnosis prior to the start and post monitoring of the project will be carried out by

Industrial Engineers from the Enterprise Mauritius. Applicants are requested to submit their audited

management accounts together with a business plan and documentary evidence attached to the

application.

17.3.3.5 Enterprise Development Fund Scheme

The Enterprise Development Fund Scheme, also known as EDF is a grant scheme. It enables

SME’s in the manufacturing sector to gain access to specialised expertise geared towards increasing

their exports, capacity building and enhancing competitiveness. The scheme is applicable to

manufacturing, non-financial and non-tourism service sectors.

Eligible Activities are:

- Market Development

- Internal Business Capability Building

- Product Development

- Business and Operational Excellence

- Projects Supporting Innovation and Technology

- Business Development


Formerly known as the Empowerment Programme, this institution was set up to provide assistance

to SMEs that are encountering operating difficulties. The National Empowerment Foundation

(NEF) offers a multitude of support services to SME’s. As part of a financial incentive package, the


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NEF runs the Quasi Equity Fund. This is funded by the institution managed by the DBM. This

fund has been designed for companies requiring a financial support exceeding Rs 100,000 and not

having the possibility to provide collaterals. This funding in the form of a loan can fund up to 75%

of the cost of the project and may reach a ceiling of up to Rs 500,000. Value addition is one major

factor that is considered prior to the disbursement of this particular loan. A business plan may be

required accompanied by appropriate supporting documents regarding registration with support

institutions. The business plan would enhance the credibility of the promoter and increase the

chances of approval.

The DBM may contribute up to 49% of the venture. The National Empowerment Foundation also

facilitates the procedures for loan application from commercial banks like the MPCP or otherwise

the DBM itself through its Booster Loan Scheme. The National Empowerment Foundation also

funds entrepreneurship training programmes according to the specific needs of the industry.

Professional business development officers would also assist in the mentoring of SME projects by

the provision of feasibility studies, needs, analysis, financial plan preparation and marketing plans

among many other services.

The mentoring of projects is a co-financing scheme where the National Empowerment Foundation

will cater for 90% while the promoter will only have to invest in 10% of the mentoring cost. It is

worth mentioning that mentoring is a major process towards helping start-up industries during their

early stages of development. This is a critical phase that will decide whether the SME will survive

in the competition or not. Eventually, the National Empowerment Foundation is playing a key role

in the development of SME’s through mentoring services.

17.3.5 Trust Fund for the Integration of Social and Vulnerable Groups

This institution was created with the objective of helping people from vulnerable groups. The

institution assists families where the combined husband and wife income does not exceed Rs

8000. The Trust Fund would assist such vulnerable groups by the provision of soft loans at

reduced interest rates. The loan will be managed by the DBM. The Trust Fund has regional

offices in each of the nine districts of Mauritius to ensure proximity service. The Trust Fund will


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not provide cash grants but will rather assist through the provision of equipment financing

schemes. This implies that applicants will have to define and justify their needs through their

project/business plans. The Trust Fund may act as facilitator in the preparation of projects or in

performing needs analysis. The applicant will have the responsibility of securing quotations for

his/her needs with respect to equipment. Such quotations serve as evidence in applications for

grant request that will eventually be considered for payment by the DBM.

17.4 NON FINANCIAL SUPPORT

17.4.1 Small and Medium Enterprise Development Authority (SMEDA)

The SEHDA (now SMEDA) is the organisation responsible for the promotion of small and medium

enterprises in Mauritius. The SEHDA has played a pioneering role in the development of small and

medium enterprises. The institution proposes an array of enterprise development support and

business launching facilities as described below:

- Assisting entrepreneurs to select a business idea.

- Counselling and advisory services to potential entrepreneurs.

- Registration of entrepreneurs to facilitate recognition and access to finance.

- Preparation of business plans for SMEs.

- Organisation of regional/major SME promotional fairs.

- Training to potential entrepreneurs in craftsmanship.

- Provision of a library for assistance and resourcing of entrepreneurs through its information

and documentation centre.

- Monitoring of SMEs from infancy till maturity (newly introduced).

- Organise dissemination activities on entrepreneurship by Business Development Officers.

- Provide marketing assistance.

- Facilitating entrepreneurs in their dealing with other institutions.

- Facilitate the appropriation of financial schemes falling under the DBM namely:

Booster Loan Scheme.


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Quasi-Equity Scheme.

17.4.2 Agricultural Research and Extension Unit

Created in the year 1997 and known as the Directorate of Agricultural Research and Extension

(DARE) to develop the agricultural sector in Mauritius, the DARE restructured itself and now

operates as the Agricultural Research and Extension Unit. It operates under the aegis of the Food

and Agricultural Research Council. It offers support services in the various fields of agriculture

leading to an array of entrepreneurial opportunities in the field of agribusiness. The enactment of

the Business Facilitation Act in 2006 has seen a mushrooming of entrepreneurial ventures.

Today, AREU is playing a major pioneering role in the promotion of agribusiness SME’s.

AREU provides a number of opportunities and support services as mentioned below:

- Provision of extension services to small planters by way of advisory services in new

trends, latest technologies in agriculture, etc.

- Support to SMEs through its Business Development Unit with the help of the Extension

Division.

- Participate actively as a major stakeholder in SME promotion activities organised by

SEHDA and other stakeholders.

- Facilitates the application for agribusiness grants by DBM.

- Issue of the ‘Bona Fide’ Certificate to assist entrepreneurs in their start up.

- Assist in the preparation of business plans.

17.4.2.1 Agribusiness Opportunities Existing at AREU

AREU provides technical and business advice in the following sectors:

- Fruit and vegetable production.

- Hydroponics.

- Miniature Vegetables.

- Mushroom Production.


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- Quality Declared Seeds.

- Production of Tissue Culture Plantlets.

- Livestock Keeping.

- Value Added Products for example, Agro-processing opportunities.

- Dehydrated flowers, bouquets, etc.

17.4.2.2 Opportunities under the Value Added Chain (Agro-processing)

Opportunities under the Value Added Chain (Agro-processing) include:

- Fruit bars.

- Crystallised fruits.

- Dehydrated/dried fruits.

- Pickles.

- Preservation in brine.

- Chips Making.

- Pressed flowers (pressing cards).

- Jams, Jellies, Marmalades.

- Minimally processed foods.

- Packaging techniques.

- Production of Export Quality Syrups and Juices.

- Information on Agro-processing equipment.

- Food Preservation Techniques.

- Marketing techniques for processed products.

17.4.3 National Women Entrepreneur Council

The National Women Entrepreneur Council (NWEC) operates under the aegis of the Ministry of

Women’s Rights, Child Development and Family Welfare. It was been set up since 1999 with a

view to promoting women entrepreneurship in Mauritius. The mission of the NWEC is carried out

by providing training programmes to improve entrepreneurial culture and attitudes in women. The

council also aims to create a facilitative framework to empower existing and potential women


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entrepreneurs.

Support services provided by the NWEC include:

Business Counselling.

Training Programmes:

- Women Entrepreneurship Development.

- Sales and Marketing.

- Human Resource Management.

- Costing and Quality Management.

Workshops and Seminars.

Marketing Assistance:

- Fairs on Special Occasions (Divali, Christmas).

- Market Centre at Phoenix to test launch and market products.

- Counselling.

Business Incubators (2 Incubators already established).

Incubator facilities include:

- Mentoring Services.

- Marketing.

- Finance & Costing.

- Human Resource Management.

- Management & Branding.

- Networking & ICT.

New Services:

- Monitoring Services.

- Micro Enterprise Loan Scheme for Women.

The NWEC is currently decentralising its services to several other regions so as to offer proximity

service women entrepreneurs.


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17.4.4.1 Marketing Development Services

Apart from financial assistance as mentioned in 2.4, Enterprise Mauritius assists potential

entrepreneurs in the identification of new markets, customers, etc. It assists in the promotion and

development of customer relationships and the creation of market development strategies by way of

seminars and other dissemination methods.

17.4.4.2 Advisory Services

Enterprise Mauritius also assists in the development of Industry sector strategies and action plans. It

promotes the formation of business clusters, laying emphasis on the shared group objectives. The

institution also assists small businesses in the development of an integrated market and capacity

building. This is done through a planned strategy for the SME to have access to resources that meet

specific requirements.

17.4.4.3 Information and Research Assistance

The Knowledge Centre which is a specialised, referenced and computerised documentation centre

assist in pro-actively disseminating up to date, strategic and operational information to business

operators and industry stakeholders. Its resources comprise of books and multimedia, magazines,

newsletters and directories amongst other relevant information sources. The Knowledge Centre has

an on-line database that is of particular relevance to business operators. It also provides printing,

photocopy and scanning services at nominal cost.

17.4.4.4 Consultancy Services

As part of its plan to mentor potential entrepreneurs, Enterprise Mauritius can provide expertise in

various operational areas. It assists entrepreneurs in the preparation of professionally designed


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business plans. However, such services require consultancy fees to be paid to the private Service

Consultant.


The foundation ensures for training and placement of the unemployed in established

organisations with a view to increasing their employability. More interesting conditions apply if

business organisations take charge of retrenched workers and those registered under the

Workforce Programme. The National Empowerment Foundation also caters for the reskilling of

enterprise personnel that have been seriously affected by the economic crisis. The address

www.nef.mu may be visited for further information concerning this particular service.

17.4.6 Human Resource Development Council (HRDC) and Mauritius Employers Federation (MEF) In a joint initiative to provide support to SME’s, the HRDC and MEF have put forward a mentoring

scheme for SME’s. The scheme enables SME’s to benefit from the knowledge and expertise of

business people (MEF members). The MEF would act as the coordinator by setting up mentor

teams comprising of individuals from different areas of business.

The objectives of this initiative are to create an entrepreneurship culture and create employment

through:

- Assisting in the re-structuring of existing SMEs.

- Improving management and productivity of SME.

- Creating linkages between small, medium and large enterprises.

The main areas of support includes:

- Advisory Service and Information Diffusion.

- Consolidation and Sustainability Services aimed at consolidating SMEs. Training will

then be provided in the following areas:

Management Techniques.

IR/HR Guidance and Assistance.


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Training and Development.

Marketing and Distribution.

Communication and Network.

Financial Advice.

- Growth Orientation and Development:

The mentors will visit SMEs.

Information about progress of SME will be collected.

Advice and follow up actions with regards to problems.

Enhancement of networking through business fairs and the organisation of

study tours.

Assist in the promotion of the clustering process.

Promoting linkage between small, medium and large enterprise operating in

similar activities for diffusion of knowledge and technology.

17.4.7 National Institute for Co-operative Entrepreneurship (NICE)

The objectives of NICE are to provide facilities and engage in research and training for the

promotion and the development of co-operative entrepreneurship, philosophy, principles and values.

NICE acts as a facilitator for the consolidation and development of the co-operative movement

through education and training and for the exchange of information in the field of co-operatives.

The institution also promotes and develops capacity building through entrepreneurship and business

leadership.

Courses are offered at the headquarters in Bois Marchand, Terre Rouge and in different localities

around the island targeting rural women in particular.

The training programmes offered by NICE include:

- Co-operative Entrepreneurship Development Programme.

- Principles and Practice of Co-operation.

- Co-operative Book-Keeping and Accountancy.

- Co-operative Management.


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- Co-operative Leadership and Legislation.

- Accounting Standards and Practices.

- Co-operative Financial Management.

- Auditing and Auditing Standards.

- Short Courses in the Various Fields of Entrepreneurship.

NICE operates under the aegis of the Ministry for Business and Cooperatives.

17.5 OTHER SUPPORT INSTITUTIONS

17.5.1 Co-operatives Division

This division also operates under the aegis of the Ministry for Business and Co-operatives. It has a

vision to promote functional and financially autonomous co-operative enterprises. The main services

provided by the co-operatives division include:

- Provision of a legal and institutional framework for co-operatives.

- Formation and registration of co-operatives.

- Audit of financial accounts of co-operatives societies.

- Monitoring and supervision of the activities of co-operative societies.

- Provision of education and training to co-operatives.

- Guidance and technical consultancy services.

- Financial assistance for co-operatives for implantation of projects for the development of

the co-operatives sector.

17.5.2 Registrar of Companies

This institution is the legal body responsible for the registration of businesses. Prospective

entrepreneurs first have to choose an appropriate name for their small private limited company and

submit same to the Registrar for approval. Once the name is accepted, entrepreneurs have to fill

some standard forms and pay prescribed fees to registrar. The process takes a few days. A unique


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business registration number is assigned, which legitimates the Small Business. Financial

Statements then have to be filed with the Registrar of Companies yearly.

17.5.3 Ministry of Environment

The Ministry of Environment has an important regulatory role to play in certain entrepreneurial

ventures. It is concerned with environmental protection issues regarding the set up of specific

businesses, large enterprises and enterprises in the agricultural sector and livestock production. The

prior authorisation of the Ministry of Environment may be required before the enterprise starts

operations.

17.6 REASONS FOR GOVERNMENT POLICY TOWARDS SME’s

A Political debate is still going on as to the role of small firms in the economy. The Free Market

theory propounds the small business as an enabler of democratisation of the economy. Mrs

Margaret Thatcher, former Prime Minister of U.K is reported to have qualified SME’s as a

barometer of freedom, meaning that the freer the society, the more small businesses can therefore

bring competition so as to prevent monopolistic distortion of the market by large firms. As opposed

to the perceived lethargy and bureaucratic stagnation of large firms, small firms can bring

innovation and job creation.

However, the political debate is characterised by an opposing view that small firms are exploited by

large firms. The subcontracting relationship makes small firms become dependent on large firms.

Being given that they can operate at a lower cost (due to lack of unionisation and subsequent poorer

terms and conditions for labour), they are given the less profitable activities to run by large firms.

This explains the general tendency for increase of small firms’ formation during economic recession.


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17.7 SUMMARY

Unit 17 has provided an insight in the institutional framework and mechanisms for financial and non

financial support put forward by the government to promote the SME sector as one of the main

pillars of the Mauritian Economy. Entrepreneurs can contact these institutions for support and

guidance in setting up, financing and developing their businesses.

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