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REPORT

ON THE
RESTRUCTURING OF THE
SMALL AND MEDIUM
ENTERPRISES DEVELOPMENT
AUTHORITY

OFFICE OF PUBLIC SECTOR GOVERNANCE (OPSG)


PRIME MINISTERS OFFICE

JUNE 2013

Report on the Restructuring of the Small And Medium Enterprises Development Authority

TABLE OF CONTENTS
1.0

2.0

INTRODUCTION

1.1

Background

1.2

Terms of Reference

1.3

Methodology

THE SMALL AND MEDIUM ENTERPRISES DEVELOPMENT

AUTHORITY

3.0

4.0

5.0

2.1

Role and Objectives

2.2

Operations

2.3

Vision and Mission of the SMEDA

2.4

Structure of the SMEDA

2.5

SMEDA Services

ORGANISATION STRUCTURE AND HUMAN RESOURCES

10

3.1

Organisation Structure of SMEDA

11

3.2

Merger of SMIDO and NHPA

11

SMEDA FINANCIAL POSITION

13

4.1

Current Financial Situation

13

4.2

Financial Performance

13

4.3

SMEDA Shops Operation

14

OVERVIEW OF THE SMES SECTOR

16

5.1

Contribution of the SME Sector to the Economy

16

5.2

Problems facing the SMEs sector

16

5.3

SMEs supporting institutions

17

5.4

Multitude of Schemes for SMEs financing

18

6.0

PROPOSED ORGANISATION STRUCTURE FOR SMEDA

20

7.0

TEN NEW PROPOSALS FOR A MORE EFFECTIVE SMEDA

22

8.0

CONCLUSION

25

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1.0

INTRODUCTION

1.1

Background

1.1.1 The Small and Medium Enterprises Development Authority (SMEDA) is a


parastatal

body

established

under

the

Small

and

Medium

Enterprises

Development Authority Act 2009 to make better provision for the promotion and
development of small and medium enterprises. This Act repealed and replaced the
Small Enterprises and Handicraft Development Act 2005 under which the Small
Enterprises and Handicraft Development Authority (SEHDA) was created following
the merger of the Small and Medium Industries Development Organisation
(SMIDO) and the National Handicraft Promotion Agency (NHPA).

SMEDA

operates under the aegis of the Ministry of Business, Enterprise and Cooperatives.
1.1.2 The new legislation provides new definitions for small and medium enterprises on
the basis of turnover (a small enterprise less than Rs.10 M, and a medium
enterprise between Rs.10 M to Rs.50 M). As per the SMEDA Act, the SME
definition includes enterprises in all economic sectors. In order to avoid detailed
sector-specific criteria, turnover criteria is used across sectors i.e. no
differentiation between services and manufacturing sectors has been made for
small enterprises, and the thresholds for small manufacturing firms also reflect
small service firms.
1.2

Terms of Reference

1.2.1 The Office of Public Sector Governance (OPSG) has been requested to provide
support to parastatal bodies in collaboration with line Ministries, in the preparation
of their restructuring plans. SMEDA has been identified as one of the parastatal
bodies needing a restructuring plan in 2013 with an objective of reaching a 5%
return on its capital investment. The restructuring plan needs to be approved by
Cabinet before the end of the year so as to meet the KPI of the European Union.
1.3

Methodology

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Report on the Restructuring of the Small And Medium Enterprises Development Authority

1.3.1 For the purpose of this assignment the following methodology and approach have
been adopted:
(i)

Meeting and discussions with the Managing Director and staff of the SMEDA.

(ii)

Discussion on future orientation of the SMEDA with the Management and


Ministry of Business, Enterprise and Cooperatives.

(iii)

Analysis of the financial statements of the SMEDA

(iv)

Analysis of various schemes for SMEs financing

(v)

Analysis of services provided by other SMEs supporting institutions

(vi)

Discussion with The Federation of SMEs

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2.0

THE SMALL AND MEDIUM ENTERPRISES DEVELOPMENT AUTHORITY

2.1

Role and Objectives

2.1.1 The Small and Medium Enterprises Development Authority (SMEDA) operates
under the aegis of the Ministry of Business, Enterprise and Cooperatives and
provides support and facilitates the development of entrepreneurship and SMEs in
Mauritius. SMEDA is governed by a Board whose mission is to establish SMEDA
as the institution to promote, serve, support and strengthen SMES to face up the
challenges of globalization.
2.1.2 The objectives of the SMEDA are, among others, to promote a conducive business
environment and empower SMEs to emerge and grow; provide a service delivery
network which increases the contribution of SMEs in the national economy and
enhances economic growth; enhance the competitiveness of SMEs; to devise and
implement development support programmes and schemes for SMEs; and to
facilitate, assist and provide the necessary support to SMEs to gain market access
and business opportunities and to compete successfully in the national and
international markets;
2.1.3 The functions of the Authority as provided by Section 5 of the Act are as follows:
(i) Provide core support services, particularly entrepreneurship development,
business facilities, counseling and mentoring services;
(ii) Implement and operate a registration scheme for SMEs;
(iii) Facilitate access to industrial space, finance and other productive
resources;
(iv) Empower product specific and sector specific SMEs to enhance their
delivery capabilities;
(v) Coordinate with other support organizations and stakeholders in the
fulfillment of its objectives;
(vi) Facilitate networking among SMEs and the development of linkages
between large enterprises and SMEs
(vii) Promote technological and management capabilities of SMEs;
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Report on the Restructuring of the Small And Medium Enterprises Development Authority

(viii) Ensure that SMEs; in respect of which a registration certificate is issued,


benefit from every incentive which the government grants to them, and
assist them to obtain the incentives;
(ix) Identify best practices and disseminate them to SMEs;
(x) Organize and encourage participation of SMEs in fairs;
(xi) Conduct surveys in the SMEs sector and provide market intelligence for
those enterprises, including providing reports on various economic
indicators;
(xii) Implement, coordinate and monitor assistance programme provided to
SMEs;
(xiii) Collaborate with other local and international agencies dealing with SMEs,
to develop the local SMEs through:
Skills enhancement programmes for their officer; and
Participation

in

seminars,

workshop

and

capacity

building

programmes;
(xiv) Identify projects for the development and promotion of SMEs;
(xv) Facilitate and coordinate research relating to the development of SMEs;
(xvi) Sensitize the public at large on entrepreneurship;
(xvii) Provide incubator facilities for SMEs;
(xviii) Devise and review policies relating to SMEs;
(xix) Coordinate initiatives of public sector agencies and of the private sector
relating to SMEs;
(xx) Coordinate entrepreneurship activities carried out by public sector
agencies and the private sector.
2.1.4 The major services to be provided comprise, inter alia, adequate and appropriate
support and assistance by SME support institutions to enterprises, dissemination
of information and awareness of SMEs on available support as well as facilitation
of enterprises through ease of doing business. The performance indicators for the
SME sector for 2013 under the Ministrys PBB are the preparation of 50 business
plans for start ups and industries
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Report on the Restructuring of the Small And Medium Enterprises Development Authority

2.2

Operations of the SMEDA

2.2.1 The activities of the Authority are carried out by the six divisions namely: Business
Development, Training and skills Development, Marketing and Promotion,
Business Support; Administration and Finance, and Documentation and Research
Centre.
2.2.2 The priority objective for the SME sector according to the PBB Document
Estimates 2013 and Indicative Estimates 2014 & 2015 would be to increase share
of SMEs contribution to the GDP. However, no percentage has been given for the
expected increase in GDP. The CSO Census of Small Establishments released in
2007 revealed that 92,000 SMEs employed 209,000 persons and accounted for
20.8% of GDP. Accordingly, the sector accounted for around 41% of total
employment and generated a gross output worth Rs.42.1 bn. The next census is
underway.
2.2.3 The operations of SMEDA involve primarily the provision of core support services
to

SMEs,

particularly

entrepreneurship

development,

business

facilities,

counseling and mentoring services; implementation and operation of a registration


scheme for SMEs; and facilitate access to industrial space, finance and other
productive resources. The main services are provided by the Business Facilitation
and Counseling Unit and the SME Resource and Technology Centre (SRTC).
2.2.4 The Business Facilitation and Counseling Unit of SMEDA assist people who intend
to set up their own business. Information is provided to potential entrepreneurs on
how to find and develop a business idea, where to seek assistance, how to
prepare a business plan and the necessary clearances and permits required to
start an enterprise. Assistance is also provided to existing entrepreneurs who want
to expand, diversify or modernize their business. The services of the Business
Facilitation and Counseling Unit are provided at the head office at Coromandel
and at two outstations at Goodlands and Rose Belle.

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Report on the Restructuring of the Small And Medium Enterprises Development Authority

2.2.5 The SME Resource and Technology Centre (SRTC) enables entrepreneurs to
obtain the necessary information on business ideas, new technology, and sourcing
of raw materials, amongst others.
2.2.6 Other programmes have been launched at the SMEDA incubator Centre to
supplement the existing activities of SMEDA. These are the Start-Ups
Entrepreneur Scheme, the Digital Literacy Programme and Cloud Computing,
Creative Craft Incubators in Ceramics and Pottery, Pyrography, Silk Painting,
Fashion and Design, Coconut Craft, Wood Craft/ Sculpture, Painting on Wood and
Ship Models.
2.3

Vision and Mission of the SMEDA

2.3.1 The vision of SMEDA is to be the centre of excellence for servicing SMEs.
Whereas its mission is to establish SMEDA as the institution to promote, serve,
support and strengthen SMES to face up the challenges of globalization.
2.4

Structure of the SMEDA

2.4.1 The SMEDA is administered by a Board known as the Small and Medium
Enterprises Development Board, which consists of a Chairman and Members of
the various Ministries responsible for the subject of SMEs, Finance, Industry,
Cooperatives, Environment, Youth and Sports, as well as from these organizations
directly related to the promotion and development of small and medium
enterprises. The Managing Director is the Chief Executive officer responsible for
the execution of the policies of the Board and for the control and management of
the day-to-day business and activities of the organization. She is supported in her
task by officers of various cadres.
2.4.2 SMEDA head office is at Coromandel and operates an office at Curepipe, Rose
Belle, Triolet, Bon Accueil and a branch in Rodrigues.

2.5

SMEDA Services

2.5.1 SMEDA provides a variety of services to the SMEs but with little success. SMEDA
should not aim at servicing all the 100, 000 SMEs because it is simply not feasible
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Report on the Restructuring of the Small And Medium Enterprises Development Authority

and not cost effective and lot of them will survive and prosper without the support
of SMEDA. It should rather concentrate on those which need badly its assistance
and provide them all round support for them to grow. With the phasing out of the
duty free and tax rebate to SMEs registered with SMEDA, less entrepreneurs are
inclined to seek registration. SMEDA should move closer to the entrepreneurs
instead of expecting them to come to its head office at Coromandel.
2.5.2 SMEDA should be able to establish its priority sectors and use the information
available at the Registrar of Companies on new enterprises being registered and
monitor them closely especially at the infant stage.
2.5.3 There is a need to define the micro enterprise which should obviously become the
major clients for SMEDA, small and medium already defined in the Act.
2.5.4 Table 1 below shows that SMEDA, during the last 7 years, has been able to
register some 2000 new SMEs a year, out of which an average of 640 were still in
operation. This gives an indication that mortality rate is very high that 2 out of 3 do
not survive.
Table 1: Small and Medium Enterprises registered during the period 2005
2012
Enterprises

Food & Beverages


Leather & Garments
Wood & Furniture
Paper Products &
Printing
Chemical, Rubber,
Plastic
Handicrafts, Pottery
Ceramics
Jewellery & Related
Items
Fabricated Metal
Products
Profession/Vocation/

In
Operation
2005
473
886
262
69

New
Total
New In
Registered Registered Operation
2005 - 2012 2012
2012
1884
2357
607
1819
2705
670
236
498
98
72
141
26

Total in
Operation
2012
1081
1556
360
95

46

62

108

28

74

476

990

1466

373

849

67

63

130

27

94

251

338

589

126

377

764

2274

3038

788

1552

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Report on the Restructuring of the Small And Medium Enterprises Development Authority

Occup
Trade & Commerce
Business Support
Service Sector
Others
Total

1463
67

5054
158

6517
225

1431
48

2894
115

338
5,162

866
13,816

1204
18,978

248
4,470

586
9,632

(Source: SMEDA)

3.0

ORGANISATION STRUCTURE AND HUMAN RESOURCES

3.1.

Organisation Structure of SMEDA

3.1.1 SMEDA is presently headed by a Managing Director who is supported by a


Director, 4 Managers and 5 Assistant Managers. It has a total workforce of one
hundred staff and its organization chart is shown below.

ORGANISATION CHART OF SMEDA


SMEDA BOARD

MANAGING DIRECTOR

Director

Manager (1)
Business
Development
& Support (V)

Manager (1)
Manager
Administratio
(1)
Andetailed
Organi Training &
& Finance
Skills Dev.

Manager (1)
Marketing
&Promotion

(Research Unit)

3.1.2 The four Managers are responsible for the following operations:

Administration and Finance

Training and Skills Development

Business Development and Support

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Assistant
Manager
Assistant
Research
UnitManager

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Report on the Restructuring of the Small And Medium Enterprises Development Authority

Marketing and Promotion

3.1.3 The technical staff comprises only of twelve Business Development Officers and
seven Extension Officers. Out of the 100 staff on the establishment of SMEDA,
nine staff are posted in Rodrigues. It has been reported that the posts of some
fifteen staff who are over fifty would be phased out as per the last PRB report.
These comprise the post of Director and other Extension Officers, amongst others.
3.1.4 As a general rule, an organisation should be staffed in such a way that two third or
more of its workforce are involved directly in the core functions of the organisation.
Staffed involved in supporting services should be at the minimum. At SMEDA, the
opposite may apply.

As frontline staff, there are only 12 Business Development

Officers and 7 Extension Officers and they are expected to service the SMEs
across the island. The remainder is doing office or other duties.

3.2

Merger of Small and Medium Industries Development Organisation (SMIDO)


and the National Handicraft Promotion Agency (NHPA)

3.2.1 The present bulky and heavy structure of the SMEDA is the result of the merger in
2005 of the then Small and Medium Industries Development Organisation
(SMIDO) and the National Handicraft Promotion Agency (NHPA) into the Small
Enterprises and Handicraft Development Authority (SEHDA). This SEHDA was
renamed SMEDA with enactment of the new law on small enterprises in 2009.
3.2.2 Prior to the merger SMIDO had 45 employees and NHPA had 67 and SEHDA was
set up with all these employees without any attempt to propose a conducive
structure for the SEHDA for it to deliver according to its redefined mandate as
provided in the Act. The International Development Partners (IDP) Ltd in its report
on the merger proposed a reduction of 48 employees but apparently was not acted
upon. A new Act was proposed in 2009 to set up the SMEDA and again the
institutional capacity weaknesses were not addressed. In the meantime, 4 CEOs
were appointed to revamp the institution but with mitigated success.

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3.2.3 The number of staff at the SMEDA and there age analysis is depicted in table 2
below.

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Table 2: Age analysis of staff of the SMEDA


Grades
Managing Director
Director
Manager
Assistant Manager
Administrative Officer, Commercial Executive
Accountant
IT Officer
Business Analyst/Business Development
Officer/Marketing Officer/Training Coordinator
Information, Research & Documentation Officer
Confidential Secretary
Marketing Assistant Handicraft (ROD)
Senior Extension Officer
Accounts Clerk, Asst Procurement & Supply
Officer, Executive Officer
Extension Officer
Senior Clerk/Word Processing Officer
Technical Assistant
Clerical Officer/ Higher Clerical Officer
Clerk/ Word Processing Officer
Receptionist/Word Processing Officer
Receptionist/Telephone Operator
Handy Worker (Skilled)
Driver/Office Attendant
General Assistant
Office Attendant
Watchman
Stores Attendant
General Worker
Shop Assistants , Sales Persons (NRB)
Total

18-30
yrs

41-50
yrs
2
2

51-60
yrs

60 +
yrs

Total

1
1

1
1
3
5
2
1
1

1
3
1
1

1
1

7
1

4
1
1

12
2
1
1
1

1
1
1

1
1

1
4
3
1
2
1

8
7
1
2
7

1
1

1
4
3
7

(Source: SMEDA)

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31-40
yrs

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2
1
24

1
1

3
4
33

1
4
5
29

1
2
6

6
1
7
1
1
13
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Report on the Restructuring of the Small And Medium Enterprises Development Authority

4.0

FINANCIAL POSITION OF SMEDA

4.1

The Current Financial Situation

4.1.1 All assets and funds of the former Small Enterprise Handicraft and Development
Agency (SEHDA) have been vested in the Small and Medium Enterprises
Development Authority (SMEDA). It has thus received total assets worth of Rs 92
million from the SEHDA including Cash at Banks amounting to Rs 38.9 M. The
Authority has received grants from Government to the tune of Rs.34 M for the
financial years 2010, 2011 and 2012 and the same amount has been earmarked
for the years 2013, 2014 and 2015.
4.2

Financial Performance

4.2.1 The financial performance of the SMEDA for the last three years 2010 to 2012 is
shown in table 3 below:
Table 3: Financial performance of SMEDA for the period 2010 - 2012
Financial Year
Revenue
Other Income
Total Income
Administrative Expenses
Other Operating Expenses
Deficit

2010
35.8
10.5
46.3
(36.1)
(16.2)
(6.0)

2011
49.2
11.7
60.8
(34.5)
(27.8)
(1.6)

2012
36.8
12.5
49.4
(33.0)
(25.7)
(9.4)

(Source: SMEDA)

4.2.2 SMEDA has realised losses to the tune of Rs 6.0M, Rs 1.6M and Rs 9.4M for the
years 2010, 2011 and 2012 respectively. The major cost of the Authority is staff
cost which accounts for around 70% of total cost.
4.2.3 SMEDA is late with the preparation of its Financial Statement, the latest audited
accounts were in respect of the year ending December 2010.
4.2.4 SMEDA during the last few years was not given the level of grants asked for to
maintain its operations. As a result it had to use its own reserves to finance its
budget. With Government willingness to shift its support from institutions to SMEs

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directly, this is not expected to change. Table 4 below illustrates the budget
discipline imposed by MOFED.
Table 4: Budget discipline of the SMEDA
SMEDA

Approved

SMEDA

Total

Proposals

by

Reserve

Budget

2007-08
2009-09
2009 (6 mths)
2010
2011
2012
2013

Rs M
49.8
50.5
37.5
70.6
69.5
63.5
51.7

MOFED
Rs M
22.0
33.5
15.0
34.0
34.0
34.0
34.0

Rs M
13.5
8.3
9.6
13.0
13.0
11.0
6.0

Rs M
35.5
41.8
24.6
47.0
47.0
45.0
40.0

(Source: SMEDA)

4.3

SMEDA Shops Operations

4.3.1 SMEDA operates 4 shops where handicraft products of SMEs are sold at a profit.
In addition to the Airport, it has shops at Caudan, Mahebourg and Rodrigues. It
has made surpluses averaging to Rs 6 million during the last 3 years. Table 5
below shows the sales per shop for the period 2010-12, the airport shop being the
highest performing and practicing 100% mark up on its products.
Table 5: Turnover generated by the handicraft shops of the SMEDA

Airport
Caudan
Rodrigues
Other shops
Total

2010
Rs M
10.6
0.9
0.1
0.6
12.2

2011
Rs M
13.7
1.3
0.2
0.5
15.7

2012
Rs M
13.4
0.8
0.2
0.8
15.1

(Source: SMEDA)

4.3.2 SMEDA has just closed certain shops at Grand Bay, Astrolabe and Chamarel
which were found to be underperforming. It is now planning to open new shops in
shopping malls and major hotels. Given the large number of tourist visiting the
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country, SMEDA is expecting this measure will help to boost its sales in the years
to come.
4.3.3 SMEDA should ensure that the operation of each shop is profitable, that is a
minimum level of sales should be achieved to cover all its cost as a cost centre.

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5.0

OVERVIEW OF THE SME SECTOR

5.1

Contribution of SME Sector to the Economy

5.1.1 Small and Medium Enterprises remains an important segment of the Mauritian
economy as they contribute significantly to wealth creation, employment
generation and poverty alleviation. It is established that SMEs, being labour
intensive, require less investment for job creation than large firms.
5.1.2 It is estimated that SMEs in operation are around 140,000 and are contributing
around 37% of our GDP, some 120 billion rupees worth of output and are
employing around 250, 000 people. However, there were only some 18,978 such
enterprises registered with SMEDA as at December 2012.

The number of

enterprises in operation was 9, 632 and they were employing 25,942 people. It is
estimated that around 15% of SMEs are registered with the SMEDA.
5.1.3 SMEs are operating in wide ranging sectors from food and beverages; leather and
garments, wood and furniture; paper products and printing, chemical, rubber and
plastic, handicrafts, pottery and ceramic, jewellery and related items to trade and
commerce.
5.1.4 The sectors in which the SMEs are operating are already experiencing
unprecedented challenges as a result of trade liberalization in line with the
globalisation process, the WTO regulations and the dismantling of safety nets
(Multi-fibre Agreement, Sugar Protocol). This situation is further aggravated by
very tough competition from imported and imitated products from low cost
countries in particular China.

5.2

Problems facing the SMEs Sector

5.2.1 According to operators in this sector, SMES are faced with constraints relating to
finance, skilled labour, training facilities, marketing, business development
services, infrastructure, technology and institutional support framework.

The

schemes for SMES are dispersed among too many support institutions (SMEDA,
NICE, NWEC, DBM, EM and MBGS). This is creating confusion among SMEs and
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Report on the Restructuring of the Small And Medium Enterprises Development Authority

hence the low take up on schemes.

The participation of SMEs in public

procurement is also low despite preferential margins. Low productivity, product


and market concentration also constitute major weaknesses.
5.2.2 Bank lending against security is difficult to obtain and bureaucracy continues to
pose other impediments to their growth. The SME sector is also having problems
to survive, thrive and move into exports.
5.2.3 With the gradual rise in production cost, Mauritius is no longer a low-cost producer.
Rising production costs unmatched by productivity gains, inadequate multi-skills,
logistics constraints, lack of capabilities in ancillary services, design development,
a narrow base for technology diffusion and absorption, altogether constitute major
hurdles.
5.2.4 The SME sector continues to be constrained by lack of finance and financial
instruments, high rate of interest and high rentals, the short reimbursement period,
and a lack of commercial and industrial space.

5.3

SMEs Supporting Institutions

5.3.1 There are a number of institutions which have been set up by Government over
the years to provide support to SMEs under different ministries. These institutions
even if they have attracted large amount of resources have not necessarily
delivered as expected. These institutions are illustrated below and a matrix
showing the services provided by SMEs by the various agencies is at Annex I.
5.3.2 SMEDA has been set up to provide better support to SMEs. It receives some Rs
34 M subsidies a year and its services have limited impact due to the fact that it
does not possess the right skills to deliver according to its mandate.
5.3.3 Enterprise Mauritius which operates under the Ministry of Commerce and Industry
is promoting mainly export oriented industries. It does have a SMEs desk and
provide technical assistance to SMEs contemplating the export market.

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5.3.4 National Women Entrepreneur Council operates under the Ministry of Gender
Equality and has a Division working with women entrepreneurs. It also does
counseling and refer SMEs to SMEDA for further technical support.
5.3.5 Development Bank of Mauritius operating also as an SMEs bank providing
financing to SMEs through a number of SMEs schemes. Its procedures are
reportedly too cumbersome for small entrepreneurs. As a result, subsidies
channeled to SMEs remain grossly unutilized.
5.3.6 Mauritius Business Growth Scheme has just been set up under MOBECC to
finance new businesses including SMEs with good business plan. It has been
structured and staffed with people with skills in business analysis.
5.3.7 There is a pressing need to coordinate the activities of the various SMEs
supporting agencies. Initially, there was an ambitious project to merge together all
the major SMEs supporting institutions (DBM, SMEDA, NWEC) under one roof
and under MOBECC. This could not be achieved. Then the setting up of a Board
to coordinate the activities of all of them were proposed under the UBEB ( Unified
Business Enterprise Board) where they will all be represented. This also could not
be achieved. Now an Inter Agency Committee (IAC) has been set up under
MOBECC to streamline the services offered to SMEs by the different agencies.
This committee is expected to propose a coordinated action plan for SMEs support
by September 2013.

5.4

Multitude of Schemes for SMEs Funding

5.4.1 Over the years, Government conscious of the difficulties of small enterprises to
find funding for their projects, has developed a number of schemes for SMEs.
Commercial banks find such projects too risky for them. As a result, many
programmes have been proposed and administered across a range of public
sector institutions.

These include Small and Medium Enterprise Development

Authority (SMEDA), Enterprise Mauritius (EM), National Women Entrepreneur


Council (NWEC), National Productivity and Competitiveness Council (NPCC), and
National Institute for Cooperative Entrepreneurship.
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The objective of these

Report on the Restructuring of the Small And Medium Enterprises Development Authority

institutions is also to promote enterprise growth promote competitiveness,


generate new employment opportunities and help export-oriented companies to
remain competitive. The various schemes are shown at Annex II.
5.4.2 The National Resilience Fund was set up in January 2012 under the Finance and
Audit (National Resilience Fund) Regulations to further support enterprise
development.

The NRF operates two types of schemes i.e. financing and

business development. The NRF, funds specific projects while the operating costs
(salaries, rent, utilities) of the various implementing agencies are paid through the
annual budget. The NRF is currently supporting 22 different schemes, the majority
of which are schemes of financial support (loan guarantees, equity participation,
debt restructuring).
5.4.3 These funds meant for SMEs financing remain largely unknown to them. SMEDA,
here, has a role to play. It should counsel all its SMEs on the various financing
opportunities and help them to tap these resources.

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Report on the Restructuring of the Small And Medium Enterprises Development Authority

6.0

PROPOSED ORGANISATION STRUCTURE FOR SMEDA

6.1

SMEDA in the future should have 4 divisions, each one headed by a Manager and
organised as shown in the Chart below. The 5 posts of Assistant Managers should
be phased out over the years.

BOARD
GENERAL
MANAGER

GANAGING
DIREGENE
RALCTOR

BUSINESS
DEVELOPM
ENT
SERVICES

RESEARCH &
DEVELOPME
NT

BFCT

Admin/IT

Research

Handicraft

BDS - on
contract

Finance

Training

Shops

Procuremen
t

Statistics

Promotion

Regional
Offices

6.2

ADMIN &
FINANCE

HAHNRDRA
FH
HANDICRAF
T
NDICRAFTH
HH

HR

Fairs

SMEDA should have a dedicated division for Handicraft which will also be
responsible for the shops and marketing activities.

6.3

SMEDA appears to be a bulky organisation. This is mainly due to the result of the
merger with the National Handicraft Promotion Authority some seven years back. It
has now too many grades with complex reporting lines. It should aim at a leaner
and more flexible structure and becomes a performing organisation. Its size should
drastically be reduced to attain an optimum structure.

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Report on the Restructuring of the Small And Medium Enterprises Development Authority

6.4

The IDP Report, at page 38, has already identified 35 posts that are no longer
required and this is still valid. SMEDA should use this as a basis to redefine its
staffing structure.

6.5

Staff reduction may be achieved by not replacing those going on retirement or


redeploying those surplus to requirement to other public bodies or by offering an
attractive retirement through an early retirement scheme. Certain grades like
General Workers, Office Attendants and Drivers are in oversupply. The IDP report
in 2006 already identified 35 employees that needed to be made redundant and is
still valid.

6.6

Certain minor grades can be merged together to promote multiskilling and at the
same time provides more flexibility to management. There is an urgent need to
recruit a Human Resource Officer who should, as a priority, streamline the grades
and update all the scheme of services.

6.7

SMEDA needs staff with the required skills for it to deliver according to its mandate
as provided by Section 5 of the Act. These skills may either be recruited or
outsourced or combination of both. There is an urgent need to recruit more
Business Development Officers. Thus, it is recommended that 12 Business
Development Officers be recruited on contract.

6.8

SMEDA has made a request to recruit a number of position. However, only a


Human Resource Officer, an Accounts Officer and an Internal Control Officer
appear to be justified and are being supported.

6.9

The Human Resource Officer, once recruited, should as a priority address the
issues mentioned above.

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Report on the Restructuring of the Small And Medium Enterprises Development Authority

7.0

TEN NEW PROPOSALS FOR A MORE EFFECTIVE SMEDA

7.1
Enhance Board Composition too many Ministries representatives
7.1.1 The present Board appears weak in terms of entrepreneurial skills and knowledge.
There are too many Ministries representatives (5 out of 13) who contribute little in
furthering SMEDAs objectives. More people with entrepreneurial/ business
background need to be present on the Board.
7.2
Strategic Plan and Action plan
7.2.1 The Act 2009 provides at Section 21 that the Board once set up should prepare a
year strategic plan and an action plan for the new SMEDA. This has never been
done. SMEDA should consider this as a priority if it wants to have a real impact on
the SMEs sector. Many of the measures proposed in this Report can find their
way in the new strategic plan of SMEDA.
7.3
Introduce Annual Performance Agreement with Parent Ministry
7.3.1 SMEDA should be more performance oriented. It should, henceforth, agree with its
parent ministry in advance on its performance targets for each year. OPSG can
provide guidance on this exercise which is also provided for by the Codes of
Corporate Governance for state owned enterprises.
7.4
Rightsizing of SMEDA
7.4.1 SMEDA is a heavy organisation with more than 100 employees. The previous
SMIDO was operating with only 45 staff. SMEDA should aim at reducing its
staffing strength to 70 after taking into account recruitment of additional technical
staff.
7.5
Reduction in non-technical Staff
7.5.1 SMEDA should aim at reducing gradually its workforce. The 35 employees
identified by the IDP Report as surplus to requirement should be removed.
Employees going on retirement should not be replaced, it can consider
redeployment of unrequired employees to other Government Bodies as recently
done for the setting up of the MCIA at the Ministry of Agro-Industry and finally
propose an early retirement scheme for those who may instead opt for leaving
their jobs.
7.6

Recruitment of more Technical Staff

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Report on the Restructuring of the Small And Medium Enterprises Development Authority

7.6.1 SMEDA even if it is oversized lacks the necessary skills in house to allow it to
deliver according to its mandate. There is a need with the proposed reduction in its
workforce to increase in parallel the number of Business Development Officers
within the same budget level. 12 BDOs may thus be recruited to provide more
support to SMEs.
7.7
20 Business Consultants funded by National Resilience Fund or MBGS
7.7.1 SMEDA should start with the registration of Business Consultants to counsel and
support SMEs. Professionals and degree holders with knowledge on business
and experience should be invited to register themselves with the SMEDA. Thus,
20 Business Consultants to be funded by NRF can immediately be recruited on
contract. Each one will have a SMEs portfolio which will be monitored by SMEDA
staff. The object should be to take on charge 500 SMEs especially smaller ones
and help them to grow in the next three years and this can easily be measured in
terms of business turnover and job creation. This will cost Rs 10 million a year. A
project proposal form is at Annex III.
7.8
Setting up of Research Unit
7.8.1 The Research Unit being set up should be able to identify new business
opportunities

sector

wise

and

advise

entrepreneurs

on

new

business

opportunities. Existing staff should be redeployed to this new Unit.


7.9
Decentralisation for more proximity with SMEs
7.9.1 SMEDA should gradually decentralise its activities to its regional offices and move
closer to the SMEs. For SMEDA to be successful its services should be known
and easily accessible, such is not the case presently.
7.10 Club des Entrepreneurs across the island and Rodrigues
7.10.1 Club des Entrepreneurs or Entrepreneur Caf to be set up on regional basis
across the island to promote experience sharing and mentoring among
entrepreneurs. 40 such clubs should be set up by SMEDA during the next two
years across the island and Rodrigues. SMEDA should arrange, via its Ministry, for
them to have access to government owned buildings in their localities for their
meetings on weekly or fortnightly basis. Buildings presently used as Community
Welfare Centre, Social Welfare Centre, Social Hall, Youth Centre, Women Centre

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Report on the Restructuring of the Small And Medium Enterprises Development Authority

and other local authorities halls can be used for this project. This project if,
successfully implemented, may have a tremendous impact in the development of
the SMEs sector and at little cost.

7.10.2 The financial projection of SMEDA for the next 4 years, taking these reforms into
consideration, is shown at Annex IV. It shows that SMEDA, in addition to
improving significantly its services to SMEs, will move from a loss making position
to generate a 5% return on its Equity as from 2015.

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Report on the Restructuring of the Small And Medium Enterprises Development Authority

8.0

Conclusion

8.1

SMEDA should focus on start- ups, micro and small enterprises which have a
huge potential for growth and work with them to expand and become strong
businesses and be prepared to explore the export market if necessary. Thus, it will
have more success stories to show and use them to promote entrepreneurship in
the country. It should also start rewarding the highest performing entrepreneurs in
each sector. The end result should be a stronger and thriving SME sector in
Mauritius.

8.2

Once the SMEDA has been successfully restructured, Government can consider,
as a second phase, bringing all the SMEs supporting institutions under a single
roof to achieve maximum efficiency.

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Report on the Restructuring of the Small And Medium Enterprises Development Authority

Annex I
Matrix of Services
Provided by the
SERVICES

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23

Major
SMEDA

Business Counselling
Business plan elaboration
Provision of management training
Provision of technical training
Registration, leading to preferential
treatment
Entrepreneurship development
Business fora
Development of sub-sector strategies
Marketing advice, market intelligence
Participation in trade fairs
Access to finance
Research & Development support
Research and future projects
Common facilities
Advocacy, lobbying
Joint venture promotion
Export promotion
Access to Business Development
Services
Financial support to start-up
entrepreneurs
Mentoring/Coaching/Handholding
services
Networking / Clustering
Company Diagnostic / Capability
Assessment
Innovation / Creativity

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Instituti
ons
MBGS
Unit

EM

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NWEC

DBM

Report on the Restructuring of the Small And Medium Enterprises Development Authority

Annex II
Schemes for SME Support

1.

2.

3.

4.

Scheme

Objective

Implementing
Agency

Eligibility Criteria

Funds
earmarked

Mauritius Business
Growth Scheme
(MBGS). Start up
Entrepreneurship
Scheme
Mauritius Business
Growth Scheme
(MBGS) Technical
Assistance 90-10
Payback Scheme
Market Development
Support

Monthly support of up to
Rs 20, 000

Mauritius
Business Growth
scheme unit
(MBGS)

Enterprise with less


than one year of
operation and
registered as a
company, firm, SME

Rs 700m (for
both MBGS
and Start Up
Entrepreneurship
Scheme)

To facilitate growth in
private sector economic
activity

MBGS Unit

Support participation in
international trade fairs
by manufacturers (both
SMEs and non-SMEs)
To provide financial
assistance to SMEs
which are:

Enterprise
Mauritius

Enterprises already
exporting and those
which are export
ready
1. SMEs with
turnover less than
Rs 50m

Rs 400m

Participation in
International Fairs
SME Refund Scheme
for SMEs only

5.

Fair Trade
Development

6
.

Lease Financing
Scheme

7.

SME Financing
Scheme

8.

SME Refund Scheme


(Tourism Sector)

9.

SME Refund Scheme


(Services Sector)

1. Already exporting or
export-ready meet part
of expenses
2. Attending or visiting
fairs
3. Linked to technology,
sourcing of raw materials
or other specialized fairs
Support to co-operatives
in obtaining Fair Trade
certification
To assist SMEs to
acquire equipment to
modernize their
operations
To assist SMEs in
raising finance from
commercial banks to
meet their working
capital needs and their
expansion as well as
create new jobs
To provide assistance to
financial assistance to
SMEs

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Enterprise
Mauritius

2. SMEs in
Manufacturing and
Agricultural sector

Maximum Refund
at
Rs 200,000 per
year
irrespective
of the number of
trade fairs
participated

EM & MOBEC
SMEs having one
years operation
Restructuring
working groups

SMEs with turnover


of less than Rs 10m
and those with a
turnover of above Rs
10m but less than Rs
50m

Mauritius Tourism All enterprises


Promotion Agency categorized as SMEs
(MTPA)
(turnover less then
Rs 50m) in the
tourism sector as
well as Export ready
enterprises
Board of
Investment

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29

Maximum leasing
amount
of Rs 10m

SME in the service


category
incorporated in
Mauritius and
registered with
SMEDA with turnover
less than Rs 50m

Maximum of Rs
200,000
per year
irrespective of
number of trade
fairs
the enterprise
participates in.
Maximum of Rs
200,000
per year,
irrespective of the
number of trade
fairs
the enterprise

Report on the Restructuring of the Small And Medium Enterprises Development Authority
participation
in. A grant of up
to
Rs 20,000 for
freight expenses
incurred.
10 Freight Refund
.
Scheme

To meet 50% of freight


costs for SMEs
participating in regional
fairs that consists of
business to consumer
sales in meeting 50% of
their freight costs
associated with regional
exhibitions
To assist Mauritian
Enterprises (SMEs) to
participate in
International Public
Biddings by the cost of
bidding

Enterprise
Mauritius

Companies with an
annual turnover of
less than Rs 50m
which are already
exporting - ready

Enterprise
Mauritius

Only for International


Bidding dealing with
international public
procurements
considered

12 Access to industrial
.
space

To provide industrial
space to SMEs at
affordable rates across
the island

The State Land


Development
Company (SLDC)

13 Booster Micro Credit


.
Loan Scheme

To finance projects of
small enterprises

Development
Bank of Mauritius

14 Business
.
Development
Schemes

To finance projects

Development
Bank of Mauritius

SMEs which require


small industrial space
e.g mechanics,
carpenters, metal
workers,
manufacturers and
furniture makers
Entrepreneurs
registered with NEF,
SMEDA, AREU,
IVTB, Tourism
Authority, NCB
Any individual
company of SMEs
duly registered.
Projects
recommended by
EM, BOI, SMEDA,
MTPA, NWEC

11
.

International Bids
Refund Scheme

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Refund the cost


of
buying bidding
documents
up to a maximum
of Rs 75,000 per
bidding document
50% of discount
to SMEs in the
first three years

Rs 150,000
maximum loan
amount
75% of project
cost
up to a ceiling of
Rs 5m

Report on the Restructuring of the Small And Medium Enterprises Development Authority

Annex III
Small and Medium Enterprises Development Authority - SMEDA
Project Recruitment of 20 Business Consultants
Recruitment of 20 Business consultants to help a portfolio of 500 small enterprises grow
into medium and financed by NRF.
The project duration is 3 years and will be financed by the National Resilience Fund. A
sum of Rs 10 M will be required yearly for consultants fees. A consultant fees is expected
not to exceed Rs 50,000 a month.
Consultants will be recruited by SMEDA after registration of potential professionals with
knowledge and experience in enterprise management.
The Business Consultant will be responsible for a portfolio of 25 small enterprises in a
particular region and help them to double their turnover over a period of 3 years.
They will be responsible for the following duties KEY DUTIES:
1.

To monitor the performance of a portfolio of 25 SMES.

2.

To carry out site visits to provide assistance, guidance and support SMES through regular
follow-up, coaching and mentoring so as to enable the SMEs to expand their business.

3.

To advise SMEs on new business opportunities, emerging customer needs and new
marketing strategy

4.

To advise SMEs on efficiency gain throughout the value chain activities to improve the
competitiveness of their product/service

5.

To examine operational problems faced by SMEs and advise them on how to overcome
these constraints.

6.

To advise entrepreneurs who want to expand their business on the funds/schemes


available to this effect.

7.

To carry out surveys, collect data and prepare reports on the performance of the SMES.

8.

To report to the Manager, Business Development Services at SMEDA.

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Report on the Restructuring of the Small And Medium Enterprises Development Authority

ANNEX IV

SMEDA - Financial Projection


2013-16
2012

2013

2014

2015

2016

Rs M

Rs M

Rs M

Rs M

Rs M

Revenue
Shops sales
Govt. Grant
Other Income
Grant from NRF

15.1
35.7
1.0
-

16.0
35.0
1.1
-

18.0
40.0
1.2
10.0

20.0
40.0
1.3
10.0

22.0
40.0
1.4
10.0

Total Revenue

51.8

52.1

69.2

71.3

73.4

8.5
36.0
10.7

9.0
40.5
10.0

10.0
31.0
10.0

11.5
32.0
11.0

13.0
32.0
11.0

10.0

10.0

10.0

4.5

4.5

4.8

3.0

Total Expenditure

(55.2)

(59.5)

(68.5)

(69.0)

(70.8)

Surplus/(Losses)

(3.4)

(7.4)

0.7

2.3

2.6

4%

12%

13.6%

Expenditure
SMEs products purchased
Salaries & Wages
Other operational Cost
20 Business Analyst
(contract)
Recruitment of 12 BDOs &
others
Redundancy Cost

Return on Equity (Rs 19


M)

1. It is assumed that Govt. Grant will have to be increased to Rs 40 M with the


implementation of PRB 2013.
2. 20 Business Consultants will be recruited on fee basis and paid through National
Resilience Fund or MBGS. They will be responsible to provide all round support to
a portfolio of 500 small enterprises and help them to grow during the next three

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Report on the Restructuring of the Small And Medium Enterprises Development Authority

years. At the end of this period, enterprises with Turnover below Rs 5 M should be
doubled and those above Rs 5 M should show at least a 50% increase.
3. 35 employees will be removed from the payroll as from 2014 through either
redeployment or early retirement. A provision of Rs 3 M has been made as
incentives for the employees above 55 who may opt for early retirement.
4. 12 Business Development Officers, one Accounts Officer, one Internal Control
Officer and one Human Resource Officer will be recruited (after early retirement or
redeployment of the above mentioned 35 employee) to provide the SMEDA with
the right structure.
5. Under new arrangement, SMEDA can register more enterprises in priority sectors
by using more effectively its access to the Companies Division Register for new
businesses, prepare some 100 business plans a year and monitoring visits should
be increased tenfold given that proximity with the entrepreneurs is the key.
6. The SMEDA with the reforms proposed will be able, in addition to perform at a
higher level, shows surplus from its operation as from 2014 and a 5% return on its
Equity as from 2015.

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