The textile and clothing sector appeared in the Mauritian government’s agenda for the first time in the Meade’s report in the 1960s. James Meade conducted a study on the Mauritian economy to find a solution for diversifying the sugar-based mono-crop economy. Meade advocated for the setting up of labor-intensive industries. If Mauritius does not want to face the problem of ‘Malthusian Trap’. The setting up of the textile and clothing industry was successful in terms of income generation, employment creation and capacity building for local entrepreneurs.
The success of the textile and clothing industry of Mauritius lies on three fundamental aspects:
- Conducive environment for investment
- Exogenous factors
- Preferential trade arrangements
Conducive Environment for Investment
In 1970, the government began its export promotion strategy with the enactment of the Export Processing Zone (EPZ) Act. The first Export Processing Zone was launched in 1971. The Act provided incentives and concessions to enterprises exporting their products.
The government took further steps:
- Sustainable export growth through five successive stand-by arrangements and two structural adjustment programmes between 1980 and 1986.
- Establishment of key institutions like the Mauritius Export Development and Investment Authority for export promotion.
- Monetary measures such as the devaluation of the rupee to make Mauritian exports internationally competitive.
During the 1980s Mauritius had a pool of educated labor, which was available at a cheap rate. Although the majority of the available workers were unskilled, they were very versatile and adapted easily to working in the textile sector.
The success of the textile and clothing sector is partly attributed to factors besides the control of Mauritian authority. Some of the factors which have contributed positively to the Mauritian economy, in particular the textile and clothing sector are:
- The Multi-Fibre Agreement signed in 1982, which constrained several countries in their exports. It is in this context that investors from Hong Kong came to set up their firms in Mauritius.
- A combination of lower and falling oil prices together with a lower debt servicing arising due to the depreciation of the overvalued US dollar in 1984.
- An appreciation of the Taiwanese Dollar and thereby a fall in Taiwan’s competitiveness on the world market led to Taiwanese investment in Mauritius
- After 1984, the appreciation of the European currencies in relation to the Mauritian rupee resulted in Mauritian goods becoming more competitive.
- During the 1990s, political uncertainty over the future of Hong Kong’s reintegration into China encouraged investors to look for a safe haven and thus relocated to Mauritius bringing capital, marketing networks and technological know-how.
Preferential Trade Arrangements
Favorable terms of trade combined with ready markets attracted more foreign investors to set up their textile and garments firms in Mauritius. Investors, both domestic and foreign, successfully exploited all the preferential market access granted by the developed countries. The two main markets, which Mauritius could access through preferential trade agreements, were the European Union(EU) and the US under the Lomé Convention and the GeneralizedSystem of Preferences GSP (now Africa Growth and Opportunities Act -AGOA) respectively.
For the past 30 years, Mauritius has benefitted from a series of positive conditions, which have helped to create a solid textile and clothing industry with significant foreign and local investment. The Export Processing Zones (EPZ) sector and by extension the textile and clothing sector has always represented an important proportion of the manufacturing industry in Mauritius. The textile industry in Mauritius exists primarily as a provider of yarn and fabric to some local producers. The biggest garment factories are vertically integrated and produce their own fabrics
Last Updated on: 20-04-2010