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AfricaMoney | October 19, 2017

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Low growth of 3.3-3.7%leads to lesser profits & hinders Mauritian firms from investing

Low growth of 3.3-3.7%leads to lesser profits & hinders Mauritian firms from investing

Mauritian entrepreneurs need help but feel abandoned by the government, according to business confidence indicators issued by the Mauritius Chamber of Commerce and Industry (MCCI), with the MCCI’s index to analyse economic perspectives for the second quarter of 2015 having been released on Monday, August 3rd.

The Mauritius Chamber of Commerce and Industry (MCCI) released its analysis of economic perspectives for the second quarter of 2015 on Monday, August 3rd, depicting mere growth of 1.9% in the business confidence level compared to 6% growth in the fourth quarter of 2014, and triggering concerns over plummeting confidence levels for entrepreneurs in Mauritius.

The report, however, reveals an increase of 1.9% in the confidence index, over the corresponding period in 2014. This increase was registered over three consecutive quarters but its level remained rather low, estimates the trade body.

According to the MCCI, it can explain the phenomenon of lagging business confidence basis several factors: delay in customer payments that have impacted the finances of entrepreneurs, the presence of unfair competition on the market and finally, the lack of support by decision-makers in the public sector.

According to MCCI economist Renganaden Padayachy, “factors triggering unfair competition were not present during the first quarter of 2015. All in all, 35% of the entrepreneurs surveyed assert that they feel a lack of engagement by the state in terms of assistance to improve their business.”

Besides, the MCCI indicates that hiring intent is positive on balance, but “job creation will not be sufficient to lower the unemployment rate.” Indeed, 70% of the people polled replied that they would maintain their staff whereas 15% even went on to note that they would probably have to dismiss staff because of reduction in their turnover.

On the investment front, Renganaden Padayachy highlighted that the rate is lower than 20% and that “entrepreneurs have actively expressed that they have no motivation to increase their investments for the next twelve months.”

According to MCCI president Hélène Echevin, those who are most affected by the current economic situation are the ‘middlemen’. The reason is that they are ‘too big’ to benefit from certain government assistance that is limited to smaller businesses.

Overall, the increase of 3.8 points in the Business Confidence Indicator (BCI) of the MCCI is not really a reason for satisfaction. This is the stark conclusion that emerges from Renganaden Padayachy’s presentation.

The slow pace of growth in confidence is a major obstacle to the rise of entrepreneurship in the island economy, and the MCCI estimates that Mauritius is far from realising its growth potential.

According to the economist, if the necessary growth signals are not sent to the business community in the coming weeks, the BCI could actually decline in the third quarter. In this context, Renganaden Padayachy estimates that, in the absence of adequate support, companies can neither get enough work to reduce the unemployment rate, or invest more to increase growth.

In the sector-wise break-up, it emerges that the services sector recorded a growth of 6.1% while the commerce cluster contracted by 4.0% with all key figures — be it turnover, investment level, future prospects or prices —turning negative.

Finally, evaluation of investor sentiments over the next 12 months shows that 62.5% of investors think that the rate will remain stable,19.2% anticipate a contraction, while 18.3% are bullish on growth.

 

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