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AfricaMoney | November 13, 2016

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Mauritius manufacturers increase scope of ambitions; broaden manufacturing base

Mauritius manufacturers increase scope of ambitions; broaden manufacturing base

The manufacturing sector in Mauritius has successfully diversified into new products such as jewellery, watch parts and complex medical devices, with shipments of manufactured goods – excluding the traditional agro-products, textiles and garments – having gone up by a healthy 36% to Rs 8.3 billion over just four years from 2009 to 2013. (Image: Global Village Directory, Ravior)

Mauritius has long been famed as a tourist paradise and it is, unfortunately, rather a well kept secret that manufacturing is an important pillar of the economy, contributing nearly 17% of the GDP in 2013, with a healthy growth of 4.5% over 2012.

However, even though manufacturing has been bolstering the island economy, the sector in Mauritius has been known to be largely limited to sugar milling (0.3% GDP contribution in 2013), food processing (6.4% in 2013) and textiles (4% in 2013), with most of the manufacturing activities being concentrated in these three sub-sectors.

But lately, the manufacturing sector in Mauritius appears to be taking a turn for the better. This is illustrated by shipments of manufactured goods – excluding the traditional agro-products, textiles and garments – having gone up by a healthy 36% to Rs 8.3 billion over just four years from 2009 to 2013.

According to an in-depth study by The Africa Report, Mauritian entrepreneurs are no longer content with merely canning tuna and spinning yarn, but there is a renewed thrust on producing high-end goods ranging from watch parts to complex medical devices.

Besides, the Mauritian manufacturing sector has also recorded significant growth in output of high-value-added products on the back of textile goods having moved up the value chain.

Giving a further boost to export-oriented enterprises, the exports of jewellery and related goods went up by an annualised rate of nearly 12% between 2008 and 2013, according to data released by Mauritius’ largest financial services group, the MCB.

African companies are waking up to the potential of the Mauritian manufacturing sector. More and more such companies are basing their operations in the island economy.

One such firm, whose case study is chronicled in The Africa Report is Zimbabwean luxury jewellery brand Patrick Mavros, which established a workshop and design studio in Mauritius in 2006 after considering a number of countries in the region.

Forbes Mavros, who is in charge of the brand’s Mauritian operations, hails Mauritius as the Switzerland of Africa.

He notes that the decision to come to Mauritius was easily made up because it offers a user-friendly environment for investors and looked like an attractive option, particularly when one considers that Zimbabwe was undergoing significant economic turmoil at the time, with hyperinflation to boot.

Incidentally, the Mavros family had only known the country as a holiday destination till the time they decided to relocate, but they were aware that Mauritius already had some skilled labour in the jewellery sector as an erstwhile diamond polishing centre.

Mavros stresses that they never came to Mauritius for tax reasons but instead were attracted to the island economy by the sensible policies that are in place to encourage investment, as well as the stable political and economic environment that prevails here.

It also helps that the company can import a lot of its raw materials duty free and hire craftsmen from Zimbabwe.

He also noted that it is relatively easy to get work permits if one follows the process and ensures that skills transfer takes place to a local craftsman over time.

It is not just in jewellery manufacturing and diamond polishing, but producers have also located competitive niches in areas such as medical devices, high-end tools and watch parts for international brands.

In this context, The Africa Report spoke to representatives from Natec Medical, an international firm that established operations in Mauritius in 2000 after also considering Mexico, India and China.

Miroslav Secerov, vice-president of marketing and sales at Natec, notes that the country offers a lot of opportunities for entrepreneurs, with low taxes, a stable and business-friendly environment, and a geographic location near fast-growing India all counting in its favour.

However, challenges remain. Lack of access to sufficiently skilled labour, limited research and development, and infrastructure gaps are some of the factors contributing to a high cost of production.

It is easier to get people in textiles, information technology and banking but the challenge is when one is looking at creating or designing new products, rues Secerov.

But all is not lost. The government is proactively trying to address such issues, and a USD 3.4 million fund launched this year to finance research and innovation is expected to go a long way towards helping plug the gap.

All Mauritian companies are eligible to apply for a grant of up to USD 170,000 per project, giving them a research edge if they choose to avail the government funding.

Secerov adds that Mauritius has also taken great sides in protecting intangible assets such as intellectual property, patents and brands, which are essential for companies that are investing in research and innovation.

Other support measures that are in place include an investment tax credit scheme for high-tech manufacturing. The LEMS Forex programme also provides interest rate relief, government funding for export promotion and a fast-track system for work permits for export- oriented enterprises.

Finally, connectivity – both sea and air – remains a challenge for exporters.

Having identified the port as a major hub of the economy, the island will invest Rs 3.2 billion this year to improve the port at Port Louis by deepening the navigation channel, extending the quay and upgrading the multi-purpose terminal.

Air connectivity for business travellers remains an issue. However, a revamped international airport, the Sir Seewoosagur Ramgoolam airport, as well as greater commercial agreements and code share arrangements between Air Mauritius and major international airlines may allow the airport hub to be developed further.

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