The Africa Continental Free Trade Area: an Opportunity for the Mauritian Private Sector to Scale up Investment in Sustainable Development

May 13, 2021

As part of efforts to facilitate recovery, the UNDP is strengthening partnerships with development actors to fast-track private sector recovery. Photo@UNDP

While the Covid-19 pandemic has crippled businesses world-over, scaling up private sector investment in sustainable development remains a critical step towards enabling countries build back better amidst the pandemic. This is especially important at a time when countries are heavily laden with growing financing burdens for recovery.

On a positive note for Mauritius, the pandemic has not broken the resolve of the private sector to finance sustainable development. In 2020, Business Mauritius - an umbrella association of more than 1200 businesses - launched the results of a Business survey undertaken in partnership with the UNDP and Statistics Mauritius. One of the results, and perhaps the most appealing to the Financing for Development agenda, pertained to the commitment of about 41% of Small and Medium Enterprises (SMEs) to invest more in sustainable development programmes after the first lockdown that ended in May 2020, even when a majority anticipated recovery to take effect only after 6 months. The likelihood of investing in sustainable development was almost twice as high for businesses that planned to invest in new ways of working such as provision for remote working and adoption of digital solutions, and 1.7 times more likely for enterprises that planned to establish business continuity plans. This direction provides some insights into what businesses need to finance development efforts.

Looking West: The Africa Continental Free Trade Area

While businesses demonstrated commitment, harnessing this positive mindset will require support to build resilience and competitiveness, a vital step to overcoming vulnerabilities and capturing emerging opportunities. One entry point is sustained support to integrate businesses within the regional value chains. On January 1, 2021, free trading under the African Continental Free Trade Area (AfCFTA) commenced following ratification by 34 countries. Full implementation of the agreement has the potential to boost intra-African trade by more than 50%, exposing businesses to an expanded market of more than 1.2 billion people. Mauritius’ ratification of the AfCFTA must be swiftly accompanied by several interventions to boost market penetration. For instance, as the government looks to prioritize recovery measures within the 2021-2022 national budget, emphasis could, in part, be placed on re-engineering support to direct private sector investment in outward-looking opportunities to capture markets within the region. Recovery support could also target businesses that deliberately work towards backward and forward linkages for strengthened and resilient business ecosystems. 

Taking Centre-stage: Enhancing business capacities to boost investment in sustainable development

The public sector, working closely with umbrella private sector institutions can: strengthen the capacity of SMES to build efficient and well-coordinated operational systems for production and marketing; support the upgrading of skills and innovation; and facilitate transfer of affordable but appropriate technologies to yield flexible and efficient production. Enterprises must also be supported to benefit from the new opportunities in the digital economy. With the growing ecosystem of digital service providers, the private sector is surrounded by a wealth of pre-designed digital solutions that can be easily customised to specific business needs at an affordable cost. For example, the UNDP in Mauritius is supporting the Mauritius Chamber of Commerce and Industry to construct a Business Intelligence Dashboard for the COMESA region to better inform of busines opportunities and market integration for Mauritius businesses.

The above efforts can be completed by deliberate investment in commercial diplomacy. Expanded physical presence within the African continent must be strategically focused on enabling businesses to seize new opportunities in the region, but also attracting the right foreign direct investments with the potential to build an inclusive ecosystem for the domestic private sector.

As part of efforts to facilitate recovery, the UNDP is strengthening partnerships with development actors to fast-track private sector recovery. Some of the efforts include engagement with Business Mauritius to undertake regular business surveys to establish evidence critical for recovery planning and strengthening of SME business linkages. At the corporate level, the UNDP has entered into a partnership with the AfCFTA secretariat, which aims to leverage the presence of the UNDP in all countries to enhance readiness to integrate into the African market.