Small and medium enterprises: the solution to combat unemployment
Our country urgently needs a particular strategy of proliferating Small and Medium-scale Enterprises (SMEs) not only to enable the resolution of the problem of unemployment and underemployment of people living in rural areas but also to boost their purchasing power, so that the additional demand created could push the country’s entire economy to grow at a faster pace.
SMEs can be enterprises in the agriculture, industry or service sectors with a possible investment of less than a billion rupees on fixed assets and employing less than 500 persons.
The authorities are rightly worried about the backlog of the unemployed of nearly 54,000 and the few thousands or so entering the labour force every year who are underemployed. There is also the case of 5,000 unemployed university graduates who are used as cats-paws in the hands of scheming politicians.
One of the present approaches of solving this gravest problem is to offer incentives for setting up of enterprises for the production of goods and services and the removal of disincentives faced by existing ones. A new legislation may be required for SMEs.
The rural/peasant farming areas of this country are often neglected areas, where high unemployment and underemployment are endemic. It is about time that the government finds a way that new enterprise developments whether small or medium are brought to these deprived areas as part of our industrial revolution. It would give incentives to people of rural areas to show their hidden talents by creating their own designs and inventions.
On the other hand, most of the farms in Mauritius are uneconomic units as fragmentation has been acute. The farmer is compelled to sell whatever he produces to the local trader, as the inputs may have been obtained from him on credit, usually granted on usurious terms. Since the farmer is just one among numerous similar price takers, as there is very little secondary processing/ differentiation and the quantum produced is invariably low, the return is rarely sufficient for the upkeep of his family.
As returns are low, the farmer has to resort to off farm work, available, if a few medium or large- scale enterprises happen to be located in the area or depend on the natural environment for survival. The village craftsmen also eke out a miserable existence, as the demand for their goods and services is quite low due to the low purchasing power of the farmers.
The frightening thing about this is the fact, that nearly 40% the labour force and 70% of the people of the country or is locked into it. It is no wonder then that most of Mauritius’ poor, amounting to some 42% of the total population, earning around Rs 3,000 per person per month, live in rural areas. Hence the exodus of young people to town, especially to Port-Louis, ( and to affluent countries) in search of jobs, creates serious social problems.
What this brief analysis reveals is that a different approach is required to tackle the challenge of creating job opportunities in rural areas. There should be the foundation of small villages of SMEs in both rural and coastal areas of this country.