Thiruthiraj A.Pather

From a sugar economy in the early 1970s, Mauritius has gradually evolved to an upper middle-income economy. The country’s economic structure now rests on a relatively diversified base, comprising notably sugar production, seafood, textile, ICT-BPO, financial services, tourism and real estate. This economic miracle was made possible, despite the doomy prediction of the Nobel Prize winner James Meade, thanks to an effective mix of trade and economic preferences, foreign investment and expertise and smart moves from policy makers and indigenous entrepreneurs.

Yet, in this day and age, Mauritius is facing acute difficulties to adapt to the fast-changing world environment and to grasp arising economic and business opportunities to propel itself to the next development phase. Initiatives to tap into new economic sectors and export markets have been identified by policy makers but these efforts are not bearing much fruit.

Mauritius is stuck in its traditional business ecosystem with a clear bias towards vertically-integrated and diversified conglomerates.

Whilst economies worldwide are being radically transformed by exponential technological advances, and mighty business players are being disrupted by start-ups run by young innovators, Mauritius is stuck in its traditional business ecosystem with a clear bias towards vertically-integrated and diversified conglomerates. Instead of being acclaimed, youth entrepreneurship is widely viewed by Mauritians as a mere alternative to unemployment.

However, if Mauritius wishes to play a major role in the future of the African region and to remain a reference for its economic development model in the international arena, its business ecosystem, and more precisely its entrepreneurship one, must be reinvented with a focus on innovation, high-growth potential ventures and youth.

The entrepreneurship ecosystem in a given geographical area not only encompasses business laws and regulations or entrepreneurship-related institutions but all players, forces, and systems which enable and stimulate the creation, emergence and long-term development of entrepreneurship initiatives.

It should be borne in mind that the entrepreneurship ecosystem in a given geographical area not only encompasses business laws and regulations or entrepreneurship-related institutions but all players, forces, and systems which enable and stimulate the creation, emergence and long-term development of entrepreneurship initiatives.

Daniel Isenberg, an internationally-recognised expert in entrepreneurship practice, advocates that an entrepreneurship ecosystem hinges on six core pillars, namely culture, policy, finance, human capital, markets and supports. Although each ecosystem has its unique characteristics and success factors, Isenberg identifies some key elements to be taken into consideration when devising and implementing an entrepreneurship ecosystem:

• Entrepreneurship v/s Self-Employment v/s Job Creation: According to Isenberg, entrepreneurship should not be confounded with self-employment or business ownership. Entrepreneurship and self-employment are clearly distinct and do not require the same “motivation, attitude and mindset”. Although, it may seem more politically correct for policy makers to adopt an inclusive approach that supports the many instead of the few, the focus should be on high-potential entrepreneurship projects for impactful results. In addition, an entrepreneurship ecosystem consists of various types of players, each one having its own motivations.  The motivations of entrepreneurs differ from those of investors, support institutions and bankers for example. Policy makers should consequently avoid an ecosystem that aims primarily at job creation. A “self-sustaining” entrepreneurship ecosystem should respond to the diverse motivations of all stakeholders, whether they are entrepreneurs, connectors or influencers.

In Mauritius, following the ludicrous “one tertiary graduate per household” objective, policy makers are now luring each and every unemployed young Mauritian to entrepreneurship, ignoring the perverse effects of our bookish national education system and the fact that not everyone has the required abilities and mindset to become an entrepreneur. Moreover, entrepreneurship support schemes and programmes are devised and implemented through a non-targeted approach instead of focusing on innovative and high-growth potential ventures.

• Geographical Focus: Be it in the Silicon Valley, Tel Aviv or Cambridge (England), hot entrepreneurship ecosystems tend to be geographically specific to certain “regions, cities, neighbourhoods, and even buildings”. Isenberg advocates that the more an entrepreneurship ecosystem concentrates resources (human capital, information, markets…) in a given geographical area, the more it delivers interactive networks, synergies, strong spill overs and potent results.

 

• Large Corporations: Although large corporations may appear as a threat for new business ventures, they have a key role to play in a vibrant entrepreneurship ecosystem. They represent potential “important customers and market channels” for entrepreneurs. Furthermore, their pool of “talented executives” may convert themselves into successful entrepreneurs. It is important that linkages between large corporations and smaller ones be nurtured and strengthened. Apart from their usual corporate social responsibility actions, large Mauritian corporations should therefore actively collaborate with start-ups and SMEs to benefit from their unique business agility and innovation-driven culture. A robust and dynamic start-up and SME segment can only boost the competitiveness and performance of large corporations.

 

• Holistic Approach: Piece-meal initiatives do not work. A holistic approach should, in effect, be adopted to address simultaneously all the levers of the entrepreneurship ecosystem. Any initiative to promote the establishment of venture capital funds, for instance, will deliver no result, if there are no proper measures to boost investment opportunities and create more exit options. Unfortunately in Mauritius, the entrepreneurship development strategy is elaborated and steered in silos, thus rendering a holistic approach impossible. Several institutions are involved without any proper coordination and communication channels to move collectively towards the same objectives. The recently-launched SME Mauritius must address this issue. People steering this new institution must fully grasp the complexities, the challenges and the opportunities of the start-up and SME segment in an ever-evolving and globalised business environment.

 

• A Non-Government Dedicated Team: Although Government “has the mandate to intervene holistically” to enable the establishment of the most appropriate entrepreneurship ecosystem, it does not have the competencies. Government officials and officers from the public service are generally not selected on the basis of their understanding of entrepreneurship nor their entrepreneurship capabilities. As pointed out by Isenberg, any public official with entrepreneurship skills and aspirations will anyhow tend to leave out his comfort zone to start his own venture. He therefore recommends that an Elite Team be recruited and trained to act as “entrepreneurship enablers”. Such a team “should not be controlled by the government nor by any one sector” but it should be managed by experts representing all. The team should be given all the needed resources to succeed and be properly monitored on their results.

 

• Act, Learn and Scale: Isenberg advises to test pilot programmes in order to learn from experimentation and then scale up the initiatives, making gradually the necessary adjustments. Institutional agility is consequently a prerequisite for the effective development of an entrepreneurship ecosystem in the medium/long-run.

 

• Quantifiable Objectives: Specific, quantifiable and measurable objectives must be set. It is important to define the type of entrepreneurship to be supported and set clear and properly-defined objectives in order to be able to monitor and assess the effectiveness of the ecosystem. Therefore, simple objectives such as the number of start-ups or new SMEs should be avoided as they do not allow the assessment of the quality and “value-creation capabilities” of those new enterprises. In Mauritius, an input-based approach is generally used with the allocation of funds to support institutions and programmes. No proper deliverables and objectives are initially set. In addition, no reliable monitoring and assessment mechanism is in place to enable the validation and correction of elaborated strategies and actions. For instance, no accurate statistics on the number of start-ups and SMEs are currently available. In the first place, it is essential that an intelligence system be established to gather critical performance data on the country’s entrepreneurship ecosystem.

The ability of a country to harness the latest technological advances, to innovate and to disrupt with a view to creating enhanced economic value will be the principal determinant of its development route over the next decades. In this respect, Mauritius can wait no further. Its entrepreneurship ecosystem must be reinvented now. It is a complex and time-consuming process that will only yield results in the long run. However, there is no other alternative if we want our country to continue to shine.