COVID-19 Crisis

Over Rs 4.4 Billion in Loans to SMEs and Micro-Entrepreneurs

Through a series of targeted loan schemes, the Development Bank of Mauritius (DBM) has helped more than 15,000 small and medium enterprises (SMEs) and micro-entrepreneurs stay afloat during one of the most challenging economic periods in recent history. From the initial outbreak in 2020 to June 2024, DBM sanctioned over Rs 4.4 billion in loans to assist those most affected.

Prior to the crisis, the country had been experiencing steady economic growth, with a 3% GDP increase in 2019, largely driven by the construction and services sectors. However, the effects of the pandemic became apparent in early 2020, as GDP fell by 2.6% in the first quarter, followed by a drastic year-on-year decline of over 30% in the second quarter.

Sectors such as tourism, which directly contributed 8.2% to Mauritius’ GDP, and indirectly supported nearly 25%, were especially hard-hit. With borders closed and tourist arrivals at a standstill, the cascading effects spread to other industries, including accommodation, transportation, and food and beverages. The collapse of tourism alone put around 51,000 direct and indirect jobs at risk.

In response to this economic fallout, the DBM introduced a range of loan schemes to provide financial relief to businesses and individuals affected by the pandemic. These schemes, offered at concessionary rates between 0% and 1.5%, proved to be a lifeline for many enterprises, particularly those reliant on global trade and tourism.

Among the first schemes introduced was the COVID-19 Special Loan Scheme, launched in April 2020, which provided up to Rs 1 million to businesses in need of working capital and liquidity. A total of 14,000 employees benefited from this initiative, with Rs 1.7 billion approved.

Another important measure was the Income Subsistence Loan Scheme, which provided financial support to taxi, minibus, van, and pleasure craft operators based at hotels – sectors heavily dependent on tourism. Over 450 operators benefited from this scheme, which disbursed Rs 44.8 million in loans.

DBM’s support extended beyond large businesses to include SMEs and micro-entrepreneurs. The bank introduced several SME-targeted loan schemes. The SME Interest-Free Loan Scheme, for instance, provided immediate cash flow support of Rs 100,000 to qualifying businesses, while the SME COVID Support Loan Scheme offered up to Rs 1 million at a concessional rate of 0.5%. Crucially, no collateral was required for these loans, making them accessible to a broader range of operators, including those in agriculture, fishing, and women-led enterprises.

The bank’s commitment to helping these sectors recover was evident in the Rs 4.4 billion total loan approvals, with Rs 4.3 billion disbursed as of June 2024. This financial assistance helped in preserving jobs, sustaining businesses, and maintaining economic stability during the crisis.