The COVID-19 situation as vector to the emergence of an SME based economic model in Mauritius

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By Rishi Foolell, Freelance Management Consultant and Trainer with a background in BPO


Bridging the socio-economic gap in anticipation to catalyzing national economy and exalting macro business escalation

PART I

A great man once had a dream for his country. He envisioned a population of entrepreneurs contributing to the economic breakthrough of a nation solely dependent on international imports. People, all we had were people, but he saw these people as an asset to the socioeconomic growth of a booming nation. The breakthrough never materialized. Did the dream die? Say the least not in the actual circumstances. The Covid-19 situation has pioneered perspectives that have remained latent all through the last twenty or so years. We have witnessed the limitations of the private sector as a generator of long-term employment as much as the limitations of the government to attenuate social discontent towards prophesied labour downsizing. The government is not a bottomless well of funds and cannot be partisan to either the private sector or the lambda citizen. Economic prosperity cannot be the ground of social unrest, nor can social disintegration be the pebble in the toe to economic continuity. An economy that erects itself at the expense of social integrity is one that collapses sternly at the end of the line, but it is as true that businesses are set up to generate returns and profits. And this is exactly the hot spot where hammer hits steel. If the circumstances are moulded where the civil society is driven towards self-productivity and wealth generation we can anticipate the ascent of a prosperous economy within a healthy social environment. What if a government could bridge the gap between the elite and the precarious? What if the elite tutor a business culture that could revive the entrepreneurship dream of the late 90’s? What if the precarious could aspire to economic self-sufficiency? The implications could be seminal in engendering an unruffled socioeconomic environment, for social stability is undeniably the fuel to a flourishing economy.

Though the pillar of our national economy, the private sector has reached a saturation point when it comes to capitalizing on domestic investments, and as countermeasure has started regionalizing its operations and investments in view to optimize profitability. Africa is the new land of abundance and Mauritian companies have already set foot in diverse economic endeavours on the continent with the undeterred support of the state. A brilliant step towards economic prosperity. The private sector can only sublime in these conditions. But it is a dire reality that companies cannot perpetuate themselves without a stronghold within their domestic markets. In times of crisis, we retreat within the security of our homes and await the storm to pass. Same applies to businesses with externalized markets. In international crisis times they can retreat to their domestic markets and sustain viability until situations clarify. But how to ensure viability if the domestic market is shredded by social unrest and precarity? The tourism sector is one amongst numerous vivid examples. Return to normality is nowhere near. The local market is the logical recourse to viability. But in circumstances where the common citizen strives in the anticipation of losing his financial independence it will be challenging to generate revenues through domestic sales. As long as we have a population that relies solely on incomes secured from an employment within the private sector, we will not make the grade to a consolidated domestic market. With the Covid-19 situation, the private sector, partnered with the state, is being given the opportunity to conciliate economic downsizing and long-term viability. A few figures never harmed intellect. Canada : 77% of new jobs within a span of ten years fostered by SMEs with a yearly average of 40% contribution to GDP. 64% new jobs in the US with a mean of 44% contribution to GDP. EU with 70% job creations and 40% contribution to GDP. It is no more a debatable fact that SMEs boost competitiveness, drive innovation and generate wealth. Within an SME-based economy, macro companies are guaranteed of a sheltered domestic market. Let us keep these figures in mind as we elaborate on the prerogative for the joint venture state-private sector to catalyze a new SME-based economy in Mauritius.

Within the upcoming weeks and months, downsizing will become inescapable for certain economic actors. The private sector conglomerate and the state have the opportunity to turn the situation to advantage by initiating and tutoring an entrepreneurial culture aimed at those who are to be the collateral damages of Covid-19. An estimated 100,000 job losses are predicted by the end of 2020. Neither government nor the private sector has the capacity to generate 100,000 new jobs within the next 5 to 10 years. SMEs can, or at the least hold the potential to. If macro companies cannot sustain new employments, they can facilitate the creation of SMEs that can take the relay of the employment process and in the same time ensure continuity and growth of their own activities. Through an optimized downsizing and outsourcing process, the private sector conglomerate and the state can set the trail for a new era of entrepreneurship in Mauritius, leading to on the one hand to an upscale in profit margins of macro companies while on the other hand instigating an increase in national wealth generation. An SME-based economy stimulates an optimized taxation system, elicits a drop in social prestations and defuses employment-related crisis. The private sector conglomerate has a formative role to play, and should play its role in social upliftment and generating financial independence within the society it is rooted. The last few years have witnessed the economic ascent of elite companies, but at the same time social disintegration lurked. Domination can be achieved through fear, but fear coupled with the bated breath of an ominous future gave birth to the Tunisian situation in late 2010. Will the Mauritian tourism sector survive within similar conditions? A sector that represents a staggering 30% stake of the elite groups revenues. The food production and retail sector will undeniably endure a drastic drop from its comfortable 20% stake when the precarious struggle to consume. Over 60% of Mauritian elite companies’ turnover is contingent on local consumption and more so on social integrity. Without a proper bolstering of the domestic market it will be imprudent for the elite to foresee buoyant results on the long run. The fittest survive not because of exceptional prowess but solely for their ability to adapt to changes, and to changes to their immediate environment.

We are an anomaly on the African continent. Few are the African countries who can still boast control over their national economy. For the past 50 years, the macro industry has blossomed in Mauritius, to a substantial extent, only thanks to the prevailing stability of the social fabric. The macroeconomy of the Arab world survived solely due to capital investments from companies solidly-rooted in their domestic markets. Companies sourcing resources on the African continent are for the most part European, American and Chinese-based. Social strife in providing countries does not distress profits derived by consumption in their domestic markets. Paradoxically it boosts profits through cut-rate labour and inexistent legislative shelter to the workforce. The workforce is not the consumer. The principle nowhere adapts to Mauritius where the workforce is the core end-consumer. The Mauritian macro industry comprises of local investors with local stakes. Safeguarding a sane and cosseted socioeconomic environment equates to safeguarding business viability and continuity. The African model is not the paradigm to pursue. Potent lobbying aimed at replicating models of the type can only be elicited by naïve intellect with no long term foresight. The intent of lobbying should not be a copy-paste process but rather the enforcement of adaptative strategies that advocate for business integrity within the specifics and limitations of the host environment. A repressive business culture which assails social integrity is, beyond reasonable doubt, non-productive for the expansion of the Mauritian macro industry. In the prevailing state of affairs, the longevity of the macro industry is intricately allied to social welfare through individual self-sufficiency. This enterprise should not be construed as a social call-out enkindling macro companies to further fund government schemes. It is a clear-cut concise business optimization process aimed at boosting profitability and viability of the Mauritian macro industry across the Covid-19 crisis and beyond, coupled with a strategic social haul up an action plan.

Rishi Foolell is a Freelance Management Consultant and Trainer with a background in BPO and was a Project Head before going freelance in 2010.