Impact of COVID-19 and the Russia-Ukraine crisis on micro small and medium-size enterprises(MSMEs)in Mauritius

Abstract

MSMEs play a vital role in the development pathway of the Mauritian economy. The MSME sector contributes to both increased output and productivity as well as job creation. They also act as a catalyst in restructuring and diversifying further the productive base of the economy and help in the industrialization process of the country. The COVID-19 pandemic and the Russia-Ukraine crisis have had important effects on Micro, Small and Medium sized Enterprises (MSMEs). Being a category that remains highly vulnerable to shocks, MSMEs have been, and sometimes irreversibly, affected by both shocks. In fact, as MSMEs were starting to recover gradually and slowly from the pandemic in 2022, they were faced with additional shocks namely the Russia-Ukraine crisis with ripple effects. While COVID-19 primarily disrupted global supply chains and had a direct impact on sectors like tourism and manufacturing, the Russia-Ukraine crisis had more indirect effects on the cost structure of Mauritian MSMEs due to rising oil and transportation costs. To mitigate these challenges, MSMEs in Mauritius had to adapt to the changing global economic landscape, explore alternative sourcing options, and diversify their product offerings. Government support, including financial aid and policy adjustments, played a crucial role in helping these businesses navigate the complex challenges posed by both the pandemic and the war. In essence both crises have impacted the Mauritian economy in different ways, thus the objective of this study is to assess the impact of both COVID-19 and the current Russia-Ukraine crisis on MSMEs in Mauritius. The study specifically assesses the impacts on MSMEs’ ease to produce, trade and to do business and identify new opportunities to enhance their resilience and competitiveness as they move forward especially opportunities through trade (e.g., AfCFTA, etc.) and technology and innovation.