By Arif Currimjee

The Mauritian export sector has performed well in 2022 so far. For the first six months of the year, it has achieved a growth rate of 18% compared to 2021 with all sub-sectors growing at double-digit rates. In US dollar terms, growth was around 11%, which is our best overall performance of the past 10 years.

Growth will certainly slow down in the second half of the year. The second semester of 2021 was a strong one, so comparisons become harder and we shall not have the same currency tail-wind. However, the Mauritius Exports Association (MEXA) anticipates that growth for the whole year of 2022 will still be around 13-15%, which is commendable.

However, more recent feedback in September indicates that head-winds are becoming stronger, especially for the Mauritian apparel sector. Customers in general, but especially in the European Union, are becoming nervous and have moved from being understocked in early 2022 to being overstocked now, especially in view of reduced forward demand. As inflation and energy costs impact disposal income, volume brands and retailers expect a serious downturn and are reducing forward orders quite significantly. Recent results from retailers in the United Kingdom confirm these difficulties, and some large retailers in France are facing administration and, even, liquidation. The two markets which we believe are most at risk, the UK and South Africa, represent 50% of Mauritian apparel exports which is matter of concern.

However, feedback from those apparel companies serving the higher-end segment remains positive, and they are seeing strong forward order-books. This is also the case for the other sub-sectors from seafood, watches and jewelry, medical devices and pharma which all remain relatively buoyant for the rest of 2022. However, most exporters are anticipating that 2023 will be a much more challenging year with the greatest downside being in the volume apparel sub-sector.

Two growth enablers

Looking forward, there are two key enablers to ensure continued growth as well as two areas of potential investment into the industrial sector.

The first enabler is the Economic Development Board which needs to urgently increase the visibility of the manufacturing sector through targeted and relevant campaigns in key markets and attract new customers to our region. This is especially important for those companies which are too dependent on risky markets such as South Africa and the UK, and which need to transition to new markets in the US and EU.

MEXA wishes to bring a private sector viewpoint to this process and bring new ideas to improve the effectiveness of EDB’s marketing budget for the export sector.

Adding complexity to our textile and apparel industry is essential to ensure its long-term competitiveness.

The second enabler is the Industrial Finance Corporation of Mauritius (IFCM), which has been set up in record time. Operational six months after its birth in the 2021 national budget, IFCM is already playing an important role in developing alternative trade finance tools. Their new supply-chain factoring product meets the needs of exporters and supports those companies who are facing increased demand but whose balance sheets may not offer the necessary comfort to commercial banks. We look forward to the continued support of the Ministry of Finance as well as the Bank of Mauritius in providing the necessary resources to finance IFCM’s growth.

Investment opportunities

The Renewal Energy Framework announced in the last National Budget has significant potential. Our members represent over 28% of total energy usage, and there is a real interest by them to invest into production of solar energy once the necessary conditions are in place. This will allow them to have a long-term visibility in their energy costs and plan their future investments which are likely to be energy intensive. Moreover, it will allow them to reduce their carbon impact and become more competitive in a market where all buyers are focusing on sustainability as a key supplier requirement. Indeed, if these investments were widespread, Mauritius could position itself as a uniquely sustainable manufacturing hub. I would urge the government to move quickly in this respect as there is a unique window of opportunity to generate private investment in the manufacturing sector.

The second opportunity for investment is more specific to our textile and apparel sector which still represents almost 50% of our exports and which is our most developed industry, both in terms of breadth and depth.

MEXA believes that adding complexity to our textile and apparel industry is essential to ensure its long-term competitiveness. In this respect, we have a vision to position Mauritius as the most sustainable and sophisticated textile producer in the region with the ambition to serve regional and African markets. The Ministry of Finance has, through the IFCM, financed the McKinsey study on this vision.

The McKinsey team shall be presenting their study. We hope that it will provide a clear roadmap on how Mauritius can attract Foreign Direct Investment into the textile industry. However, the next steps will be even more important. We need to identify the structures and resources which will be necessary to operationalize the strategy and pitch Mauritius to foreign industrialists as well as key buyers who need to be convinced to move their supply chains to our region. Our lack of success in attracting FDI into the industrial sector to date would indicate that we may not have these resources locally, and we shall need to be clear-headed and take the right decisions that will bring results.

Arif Currimjee
Arif Currimjee is the president of the Mauritius Exports Association.