Economy: Mayotte is paying the price for its fragility and its repeated crises

A year 2023 that started well and gradually ran out

The year 2023 began in the same way as 2022 with a fairly favorable economic situation for households and businesses in our territory. This was unfortunately without taking into account exogenous factors such as the increase in credit costs (ed. note: due to a tightening of monetary policy) or the various crises specific to Mayotte, such as the Wuambushu operation, the water crisis and also the increase in insecurity. “These successive shocks have gradually weakened both the confidence of business managers, but also the morale of households,” explains Patrick Croissandeau, director of IEDOM in Mayotte. Wuambushu has been a source of concern for trade, the water crisis has had a direct impact on businesses, and the uncertainty that increased at the end of last year has only highlighted the decline in household and business confidence.”

The business climate thus fell significantly during 2^now quarter 2023 according to IEDOM since the business climate indicator (ICA) fell to 94 points, “significantly above compared to 2022… Overall activity fell and corporate cash flow deteriorated rapidly,” continues the director of IEDOM. Although inflation fell significantly at the end of 2023 to 2.7% (compared to an average of 3.6% during the year), this did not enable the revival of household consumption. Also, imports of common products (food, clothing, etc.) increased slightly by 3.3% in 2023, but this is nothing compared to 2022 where there was an increase of 17.7%.

In addition, the import of household appliances is in sharp decline by -21.1%, while it had increased by 16.4% in 2022. “This is due to an increase in prices and a drop in confidence. People focused on important things… The water crisis and increasing uncertainty only fueled this spiral, thus leading to a drop in demand.” On the other hand, still according to IEDOM, households used the opportunity to save more, especially by paying cash into savings accounts since we note an increase of 14.5% in 2023 while it was not only 9.5% in 2022.

For companies, the situation is somewhat similar to households, although the order books have been well filled, especially in the construction sector, the cash flow is extremely fragile. “Payment deadlines are far too long, this often exceeds the legal limit of 45 days and sometimes even up to 180 days… This significantly weakens small businesses that cannot build up cash flow and increases uncertainty regarding future prospects, laments the director of PROPERTY.

2024, a transition year?

– The start of 2024 was characterized by six weeks of blocking which crippled the department’s finances. The effects of this new shock are further undermining business leaders’ confidence. They once again weaken an economic structure that already faces a number of handicaps (recruitment problem, lack of land, lack of infrastructure, etc.). In this context, the year 2024 promises to be difficult”, declares Patrick Croissandeau. To the pessimistic forecasts for these first months, an increase in inflation has actually been added (+3.1% on 1.^eh quarter) and an increase in shipping prices which does not indicate a favorable economic situation. Cash flow, already damaged, could again be severely affected. Not to mention that the lack of qualified labor is sorely lacking in our territory. “Approximately 2/3 of companies suffer from recruitment problems at all levels. The year 2024 will be a year of slow and difficult recovery.”

However, the director of IEDOM of Mayotte still wants to be optimistic for the coming months. “On 2^e quarter, the economy will calm down with an increase in value creation, which will necessarily have a positive impact on companies. Also, the major challenge facing the territory for 2024 and the years to come lies in its ability to create the conditions for sustainable and sustainable economic development. For IEDOM, this must mean developing the island’s attractiveness by focusing on offers of care, education, reducing insecurity, etc., but also by speeding up the implementation of structuring projects and through greater support for businesses, “we must help them grow, change dimension”. Patrick Croissandeau also insists on the need to develop industry throughout the Mahorais territory, especially in the agricultural industry, fishing, agriculture and even construction, and to continue to promote the tourism sector which at this time may be able to lead the way…

BJ