WASHINGTON, D.C., January 21, 2010 — The World Bank Board of Executive Directors today approved a US$20 million loan to finance the Manufacturing and Services Development and Competitiveness Project in Mauritius. The project’s objective is to support enterprise growth, competitiveness and employment creation in manufacturing and services sectors. The project was prepared at the request of the Government of Mauritius (GoM) to support the development of the private sector with emphasis on Small and Medium Enterprises (SMEs) to widen growth opportunities and accelerate job creation.
Mauritius, a small island country, has achieved remarkable economic and social success. Major structural transformation of the economy over the last two decades has moved the country from a mono-crop economy with low per capita income to a more diversified middle-income country. Between 1968 and 2009, gross domestic product per capita grew from US$260 to more than US$6,000. This remarkable record of economic growth was the result of successful policies, institutions and preferential market access for the country’s sugar and textile exports. The country is undergoing transition from dependence on trade preferences to global competition. Mauritius, nonetheless, remains vulnerable to external shocks, as evidenced by the recent global financial crisis.
As part of its fiscal stimulus package, GoM has been pursuing a series of short-run interventions to save jobs based on direct support to firms and workers, and targeted sectoral incentives. Jobs have been saved, but there is cognizance that such interventions are not sustainable beyond the short-term horizon and in a more protracted downturn. The Government’s emphasis astutely remains on continuing to support the competitiveness agenda for development of the manufacturing and services sector.
“The project is designed to underpin GoM’s ongoing reform efforts to support enterprise competitiveness – particularly that of SMEs – through the provision of quality Business Development Services (BDS); strengthening of policy and institutional support for existing public sector institutions which support SMEs; and enhancing access to finance. The operation has become more salient and timely with the global economic downturn that has triggered difficulties for the enterprise sector,” said Asya Akhlaque, World Bank’s Team Leader for the project.
“There is widespread agreement that given the size of the domestic market, distance from export markets, and the lack of natural resources, Mauritius’ strategy for private sector-led growth must lean toward high-value, knowledge intensive, and niche markets in manufacturing and services sectors,” noted Constantine Chikosi, World Bank Country Representative in Mauritius. “Within this long-term vision, Mauritius must diversify and expand its export base, and improve its competitiveness. This becomes all the more critical in the midst of a global crisis where some export-oriented companies need to restructure to remain competitive.”