Geerish Bucktowonsing, Director of Industry of the Economic Development Board (EDB), talks to Investor’s Mag about the Textile & Apparel industry in Mauritius and how EDB is working with stakeholders to retain existing clients and consolidate the position of Mauritius as a Reliable Sourcing Destination. He argues that Mauritius’ Africa Strategy could spearhead the country’s development as a hub for business and investment in the region. In his opinion, Mauritius has a definite edge owing to that unique preferential market access.
Featured in Investor’s Mag, 19th Edition, Dec 21 – March 22
How has the Covid-19 impacted the manufacturing sector, dominated by the Textile & Apparel industry in Mauritius?
The Textile & Apparel (T&A) industry, like a number of sectors of our economy, went through difficult times with the advent of Covid-19 as from March 2020 with the lockdown. The manufacturing sector in general suffered from major disruptions in the logistics & supply chain, with reduction in orders, exorbitant freight costs, connectivity issues, labour shortage, amongst others, resulting in a drop of exports by 15 % as compared to the previous year.
However, the T&A sector has been resilient with the support from the Government through several schemes, amongst which the Wage Support Scheme, Trade Promotion & Marketing Scheme and the Freight Rebate Scheme. These incentives have enabled Manufacturers to sustain production & remain competitive to serve their existing clients and fulfill their commitments on orders. This is in line with the strategy of EDB, working with stakeholders, to retain existing clients and consolidate the position of Mauritius as a Reliable Sourcing Destination.
As a result, total exports of Textile & Apparel for the period from January to September 2021 recorded an increase of 13% as compared to the same period last year, totalling MUR 16.9Bn. South Africa has maintained its position as the number one export market for Textile & Apparel.
You recently participated in a webinar on consolidating trade relations between South Africa and Mauritius in the fashion/textile/apparel industry. Can you tell us more about the collaborative relationship between South Africa and Mauritius?
South Africa and Mauritius have been consolidating trade & business relationships for the last three decades. The trade & business relationship has been growing consistently, with exports from Mauritius escalating from MUR 500 M in 2005 to MUR 6 Bn in 2020. It is to be noted that, as from 2020, South Africa has emerged as the number one export market ahead of the UK, USA, and France, our traditional largest export buyers.
The major exports to South Africa are Textile & Apparel totalling to MUR 5.67 Bn in 2020 and consist mainly of Denim products (27%), T-Shirts (19%), Men’s knitted shirts (10%), Women suits (9%), Men’s shirts (6%), amongst others. Today, Mauritian exporters are consistently and credibly supplying major retailers like Edcons, Woolworth, The Foschini Group and to the major sports brands like Adidas and Puma. Major clients in South Africa find it competitive to source more from Mauritius, which is next door and also duty-free as we are part of SADC.
With the growing interest for Regional Trade, the partnership we are looking to develop & consolidate is a fully-fledged supply chain to reach out to clients in SACU Region and other neighbouring countries. EDB is putting lots of effort to attract investors from South Africa to consider Mauritius for the manufacturing of more complex products in new production units where there is more usage of technology. We are looking to have production of seamless garments, or companies that will manufacture sustainable fabric or medical textile with raw materials from Africa and the transformation being carried out in Mauritius.
EDB is also persuading SA stakeholders to see beyond their markets in South Africa in view to reach out to other markets in EU and USA where we are benefiting from duty-free access. We are therefore consolidating our relationships with chambers of commerce, Associations and other partners in South Africa to sell the merits of Mauritius as a strategic hub for Textile & Apparel. We are making full use of webinars, virtual fairs, online discussion meetings, and other digital tools to maintain collaboration and build partnerships.
What role does Mauritius want to play in this industry in Africa and what makes Mauritius attractive as a distribution base?
The aim of the Mauritius’ Africa Strategy is to transform the country into a regional platform for trade, business, and investment. Mauritius is among the few countries in the world which has preferential market access to over 70% of world’s market and has concluded Investment Promotion and Protection Agreements (IPPAs) with 22 countries. Mauritius plays a pivotal role as the connecting hub in Africa for EU and Asia, by attracting investment in transformation of goods and/or distribution through our freeport.
Over and above a secure business environment, Mauritius ranks 13th worldwide in the World Bank’s Ease of Doing Business report and an ideal place to work and live, making Mauritius the most business-friendly country in Africa. Mauritius is well-positioned to attract investment in Textile & Apparel and offers an attractive package for this sector, taking into consideration the Market potential, the fiscal incentives and other merits of Mauritius as summarised hereunder :
Over and above a secure business environment, Mauritius ranks 13th worldwide in World Bank’s Ease of Doing Business report and an ideal place to work and live, making Mauritius the most business-friendly country in Africa. Mauritius is well-positioned to attract investment in Textile & Apparel and offers an attractive package for this sector, taking into consideration the Market potential, the fiscal incentives and other merits of Mauritius as summarised hereunder :
- 3% Corporate tax – Export Oriented Enterprises (on export revenues)
- No import duties on plant, equipment, raw materials, and components
- No export duties in Mauritius
- No restriction on ownership: 100% foreign ownership allowed
- VAT exemption on 3D printing technologies
- Investment Tax Credit of 5% – 15% per year (i.e. 15% – 45% over three years) for investment in high-tech manufacturing equipment
- Accelerated depreciation of 50% on machinery, equipment, and construction of industrial premises dedicated to manufacturing activities
- No exchange controls: free repatriation of profits, dividends, and capital
The recent investment of Decathlon to use Mauritius as a platform to serve the growing African market confirms the attractiveness of Mauritius as an important distribution base in the region.
Furthermore, the Freight Rebate Scheme, which is managed by EDB, enabled exporters to get a refund on basic sea freight costs to around 25% for exports to around 47 eligible ports of Africa.
The recent investment of Decathlon to use Mauritius as a platform to serve the growing African market confirms the attractiveness of Mauritius…Geerish Bucktowonsing | Director of Industry | EDB
Can you talk more about the regional warehouse facilities offered by the country to foreign companies?
Mauritius doesn’t offer warehousing facilities to foreign companies, but rather to companies that manufacture in Mauritius. The Government introduced the Africa Warehousing Scheme (AWS) in 2020 with the rationale to bring Mauritian products closer to countries like Tanzania. The Scheme is designed to support such companies to reach out to wholesalers and retailers in this region by having their products already parked in. Government is refunding 60% of the storage costs for the first two years & merchandising costs for the first year. It aims to incite buyers there to consider the purchase of Mauritian products as and when required.
Many businesses have come under criticism for their approach on environmental issues, with some consumers even switching their most loyal brands to competitors as a result. How is the fashion/textile industry here achieving sustainability?
The Fashion Industry is reorganizing itself for the new normal. Consumers want fashion players to uphold their social & environmental responsibilities amid the crisis. In the last survey carried out by McKinsey in 2020, 67% of surveyed customers considered the use of sustainable materials to be an important purchasing factor and practically all leading brands have now their line of sustainable products.
In that regard, several companies in Mauritius are engaging in product development, developing zero carbon footprint T-shirts and adopting eco-friendly processes in apparel production.
EDB Mauritius has taken the initiative to rope in the services of International Trend Forecaster, Carlin International, to develop sustainable collections with 10 local manufacturers.
The success of our T&A industry lies in its capacity to innovate and satisfy the exigencies of international clients. Mauritius Operators have also adhered to several international standards like WRAP, GOTS, REACH, Fairtrade, SMETA etc. It is a long journey to fully develop a sustainable supply chain but very relevant to Mauritius as a Small Island Development State (SIDS) that is concerned with Climate Change.
How is Mauritius tapping the opportunities offered by the Africa Continental Free Trade Area?
Mauritius is signatory of the African Continental Free Trade Area (AfCFTA) which came into operation as from 1 January 2021. As you are aware, the AfCFTA aims to create a free trade area over 54 African countries for the trading of goods and services through the reduction or progressive elimination of tariffs and elimination of non-tariff barriers to trade and investment. As at today, 31 countries have ratified the agreement.
Mauritius is also part of many regional blocks like COMESA, SADC, IOC and has always been in favour of developing regional supply chains in the spirit to give a boost to the principle of ‘Made Through Africa’ and increase intra- Africa trade which is relatively low as compared to other trading blocs in EU, Northern America, or Asia.
Mauritius is positioning itself as a manufacturing base for the transformation of raw materials from the region into finished products for exports in the Region and elsewhere. In that regard, we want to develop a dynamic regional supply chain for textile and apparel. EDB is collaborating with UNECA (United Nations Economic Commission for Africa) where the latter is sponsoring a study on ’How to develop an inclusive and sustainable regional supply chain for the Textile & Apparel Industry of Mauritius’.
The agreement also gives an opportunity to identify new markets for trade, investment, and partnership. EDB Mauritius is considering to carry out market research in selected countries in Africa to better understand how to position products made with care from Mauritius. Africa has a big potential with the emergence of its middle class of around 170 million people with a growing purchasing power.
What are the main hurdles to expanding intra-Africa trade in the fashion/ textile industry?
The challenge to increase intra-Africa Trade from 13 % to 25% as stated by the African Union goes beyond Textile & Apparel. Although Africa is low in industrialisation, there are still a number of lines of products that can be manufactured and marketed in the African Region. One should not forget that Africa has got rich & fertile land, natural resources like diamonds, precious metals, etc.
As for Textile & Apparel, Africa is already supplying Asia and even Europe with Cotton for processing into yarns & fabrics. The most popular saying remains that Africa plants Cocoa, but Chocolate is Switzerland made. However, there is a need to industrialise, increase manufacturing, develop distribution channels and brands.
There is a real issue of connectivity as many of the countries are landlocked and even transport of containers by road is not smooth. Road freight moves incredibly slowly while major ports are choked with lack of capacity. On top, cross border clearances are quite tedious with lengthy procedures.
With AfCFTA, we are hoping for the reduction of tariffs between member countries to progress rapidly so that distribution channels can be developed for more trade & business.