Rebuilding SME Competitiveness in Mauritius: Why Productivity Must Become the Core Metric of the Next Decade

For many years, Mauritius has viewed small and medium enterprises as key drivers of jobs, income and inclusion. If the country wants SMEs to contribute meaningfully to long-term growth and structural transformation, productivity must become the single most important measure of success.

Productivity should sit at the center of SME strategy at both the firm and system levels. It is the clearest indicator of whether enterprises are moving from low-value survival to high-value contribution.

Where Mauritius Stands

SMEs account for a large share of employment and national output, with more than 120,000 enterprises operating across the country. Earlier estimates placed their contribution near 40 percent of GDP and more than half of total employment. Despite this footprint, recent studies show that many SMEs remain small, low-value and constrained in terms of technology, capital investment and innovation.

Firm-level analyses reveal a wider national slowdown in productivity growth. Smaller firms struggle the most. Many adopt limited innovation, maintain manual or low-tech processes, and invest too little in capital equipment. Only a minority demonstrate process innovation, R&D activity, or export orientation. This makes it hard for SMEs to close the gap with larger domestic or international competitors.

Why Productivity Matters Now

Productivity has become a strategic necessity for several reasons.

Higher output per worker is essential for sustained GDP growth as demographic expansion slows. Competing globally requires efficient processes, digital tools and stronger production capabilities. Sustainable scaling becomes difficult when firms operate on thin margins and manual workflows. High-productivity SMEs are more resilient, more competitive and better able to support long-term structural change. Public funds also generate stronger returns when tied to measurable productivity outcomes rather than broad, activity-based support.

What Holds SMEs Back

The main constraints repeatedly identified across studies include limited adoption of technology, digital tools and capital-intensive upgrades. Many enterprises lack managerial depth, structured processes, or strategic planning capacity. Export orientation remains low, although exporting firms tend to show stronger productivity indicators. Support schemes exist but are fragmented and uncoordinated, reducing their impact. National R&D intensity is also low, which limits innovation-led growth.

These combined factors keep many SMEs in a low-value trap, where firms survive but struggle to increase value added per worker or compete beyond local markets.

What a Productivity-Centric SME Strategy Should Look Like

To reposition SMEs as engines of competitiveness, Mauritius should anchor its strategy around productivity outcomes. Key elements include:

A national SME productivity scorecard that measures value added per worker, innovation, capital intensity, digital readiness, and export share. This aligns incentives, support and evaluation with real performance improvements. Targeted support for SMEs with clear growth potential. Firms willing to invest in capital, innovation, or exports already demonstrate stronger productivity. Support should reward commitment to improvement and be structured in stages that encourage sustained upgrading.

Stronger capacity building and managerial training. Many SMEs need better foundations in operations, planning, financial discipline, and digital literacy. A national push for management upskilling and process improvement can raise productivity across sectors. Incentives for export-oriented and high-value activities. Exporting firms and those in more advanced sectors show higher productivity. Industrial policy already calls for technology upgrading and diversification. Connecting SME support more directly to these priorities can accelerate progress.

More coordinated institutions and support pathways. Grants, loans, training, and export support should reinforce one another rather than operate in isolation. SMEs should have a clear journey from stabilisation to growth, supported by measures that reflect productivity outcomes.

Why This Shift Matters for Mauritius

Mauritius today operates in a competitive global environment where low-cost strategies provide little advantage. To build an SME sector that can withstand shocks, scale meaningfully, and contribute to national competitiveness, the focus must shift from basic survival to value creation.

A productivity-centered approach would align SME development with the country’s broader goals: export growth, innovation, industrial upgrading, digital transformation, and economic resilience. With the right strategy, Mauritius can build not only more SMEs but also stronger ones that create lasting value.

About the Author

Faaleh M. Sookye writes about AI, digital transformation, digital marketing, and modern SME growth. A doctoral scholar on AI readiness in SMEs, focusing on how organizations adapt to emerging technologies, his work blends psychology, organizational behavior, and more than ten years of hands-on experience working directly with entrepreneurs and small businesses in Mauritius and abroad. He is currently conducting doctoral research

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