The Mauritius Export Association (MEXA) has warned that revenues from the UK has decreased and the situation is alarming. According to a study on the consequences of the United Kingdom leaving the European Union on Mauritius that was published on Friday, this will directly affects the textile / clothing sector. 2500 jobs are in threat including enterprises which export mainly to Britain. In addition, fifteen companies employing 20 000 people will be affected on several levels.
These post-Brexit effects are related to the uncertainty of the UK market accessing Mauritian exports (textiles, sugar and tuna) which amounted to Rs 8.5 billion last year. This is the case for seven large units of textile, flowing between 20 to 60% of the total textile exports to the UK market and eight medium-sized units, 80% of their production is concentrated in the same market.
Based on the results of its study, MEXA also indicates that post-Brexit exports will drop by 10%. There would be a slowdown in consumer spending in Britain, in addition to the depreciation of pound sterling. Moreover, the association notes that orders are already short of 10% of the expected revenues for exporters before the referendum. The reason: these commands are negotiated six months in advance, based on the exchange rate of the period. However, the pound lost almost 10% of its worth against the value of the rupee.
This is based on the financial analysts of the City who predict further falls in the pound sterling for the next Bank of England communication that the MEXA stresses on the 10% drop in export revenues in 2016. It highlights that in 2015, the pound sterling was worth Rs 50 on average while it is currently worth between Rs 45 and Rs 46. He added that British buyers will bid lower prices for future orders since consumers in Britain are looking for cheap products.
This is why the association expects a decline in the volume of export revenues in Britain. The result: a fall of Rs 1.2 billion of textile export revenue in the UK, total exports of the textile / clothing sector fell by 4% and total exports in the country of 2%.
And what about the solutions? The MEXA considers that there is no magic formula to help Mauritius at this time. It will be wiser to come up with other measures whether monetary or otherwise to improve the country’s competitiveness in the British market. MEXA has also submitted its report to the Minister of Finance.
Rs 6.5 billion
Exports in the textile / clothing sector to the UK market now stand at Rs 6.5 billion, representing 13.5% of total exports and 1% of the country’s gross domestic product.