SME Equity Fund in Mauritius: what foreign entrepreneurs need to know

Mauritius is a hospitable destination for foreigners who want to set up a business enterprise. Support from the government agency SME Equity Fund Mauritius is even possible. This possibility arises if a foreigner participates in a business venture where the majority shareholder is a Mauritian citizen and thus with majority voting rights in the enterprise.

Small and mid-sized enterprises in Mauritius have a potent role in growing the country’s economy. In one recent study at the Université des Mascareignes, it was estimated that SMEs contribute some 40 per cent to the country’s GDP and account for 55 per cent of the country’s total employment. SMEs’ link in the supply chain is also vital to Mauritius attracting transnational companies which need sound domestic suppliers.

Development scheme incentives

Given the SMEs’ pivotal role in the Mauritian economy, the Ministry of Business, Enterprise and Cooperatives of Mauritius launched in 2016 a ten-year plan for the Small and Medium Enterprises.  Central to this plan is the country’s SME Development Scheme. It provides SMEs a generous preferential rate of 3.4 per cent with no personal guarantee required on eligible projects.

Tax exemption is another hefty incentive under the SME Development Scheme. SMEs approved under this scheme don’t pay corporate taxes on their first eight years of operation. All of their production equipment are also exempt from value-added taxes. The scheme also requires that an SME which employs a foreigner must hire a Mauritian counterpart to facilitate the transfer of technology.

The government has identified several priority sectors eligible to apply for incentives under the SME Development Scheme. These sectors include information and communication technology, export services, green and renewable energy, agribusiness, aquaculture, and handicraft.

SMEs in Covid-19 economic healing

Significantly, the government is further boosting its support for SME ventures as part of its pump-priming measures to help the Mauritian economy recover from the adverse effects of the Covid-19 pandemic. The most recent steps along this line were spelt out in the country’s 2020-2021 budget presented to the National Assembly this June.

Following are some of the highlights for SMEs in the new budget:

• MUR10 billion investment from the Development Bank of Mauritius for SMEs at a 0.5 per cent per annum concessional rate
• Margin of Preference under Public Procurement raised to 40 per cent from 30 per cent for SMEs holding the “Made in Moris” label
• Broadening of access to Maubank factoring facilities to ease the SMEs’ cash flow
• The Stock Exchange of Mauritius to set up a Venture Capital Market dedicated to SMEs and start-ups, thus adding another source of SME equity fund in Mauritius

Continue Reading :

Mauritius sweetens foreign investment incentives

Simple steps for foreign entrepreneurs to invest in Mauritius