Mauritius apparel export earnings likely to get hit by about a 10 percent, in line with the rupeeâ€™s appreciation against the pound with the UKâ€™s decision to exit Europeâ€™s common market. Britain remains the largest buyer of Mauritian goods within the EU, accounting for 18 percent of total exports to the bloc. Textiles are Mauritiusâ€™ top export to the UK.
About 90 percent of Mauritiusâ€™ revenue from export of textile and apparel to the UK comes in pounds while imports are in U.S. dollars.
According to Yogesh Singh, chairman of the Mauritius Exports Association, the textile and clothing sector will be the most hit by the Brexit. It will definitely have a significant impact on the Mauritian economy as it is the largest export sector of the country. Moreover, medium-sized companies will be hardest-hit.
The Mauritian currency has strengthened to 46.6 rupees per pound from 51.92 rupees when the electorate voted to leave the EU. The bloc takes up more than half of Mauritiusâ€™ exports, providing 25.6 billion rupees worth of sales. Meanwhile, the dollarâ€™s appreciation since the referendum has inflated manufacturersâ€™ import costs, causing a â€œdouble whammy.â€
For future orders, prices may be readjusted upwards, by how much is uncertain.
Mauritian companies started diversifying their export markets after the global financial crisis in 2008, shifting away from traditional destinations including France and toward new markets such as South Africa, Germany and Italy. While it is still the largest destination, the UKâ€™s share of the total exports is down to 18 percent.
Possible substitute markets could be additional sales to the US and South Africa. There is potential to grow shipments to other African nations, but that market will take longer to develop.
Itâ€™s only South Africa thatâ€™s a real potential market in Africa for Mauritian textiles and garments operators, Singh said.
As per Mauritius Exports Association data, Mauritius made shipments to the UK worth 10.9 billion rupees ($305.6 million) in 2015, 58 percent of which were clothing such as T-shirts and trousers. The nation also supplies seafood and sugar.
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