Overseas SMEs have been facing difficulties for the past 2 years

Over the past 2 years, small and medium-sized businesses in the French overseas departments and territories have been weakened by a series of difficulties: disorganization of the global supply chain, rising prices for sea freight, raw materials and materials... Since the end of 2020, companies in the French overseas departments and territories have been suffering the logistical consequences of their remoteness.

Supply difficulties and rising sea freight rates

For SMEs in the 5 overseas departments (French Guiana, Guadeloupe, Martinique, Mayotte and La Réunion), the difficulties began at the end of 2020, when following the Covid-19 pandemic, the economic recovery in the USA and China led to a disruption of the global supply chain.

Soaring sea freight rates have had a particular impact on companies in the French overseas departments, who have also seen supply delays and difficulties lengthen. To compensate for these uncertainties, some companies have considerably increased their stocks, allowing for several months to several years of reserves. The situation has led to higher costs, particularly for storage and container immobilization.

Soaring materials prices

Payment times have also been extended, and the cash flow of SMEs in the French overseas departments and territories has been impacted by inflation and the repayment of state-guaranteed loans. The deterioration in the financial situation of businesses in the French overseas territories is therefore not attributable to any errors in expenditure management, but to a complex economic climate.

Although the tourism sector quickly regained its vitality after the various confinements, thanks in particular to the euro-dollar exchange rate, which was very attractive to North American tourists, the increase in costs reduced the margins of companies. They have revised their rates upwards, but this has not been enough to restore equilibrium. Moreover, the context remains particularly uncertain, as tourism companies have made major investments, drawing on their cash flow during the health crisis.

The situation in the building and civil engineering sector is equally complex. The cash flow of building and civil engineering professionals is impacted by the soaring cost of materials (+28% in one year), itself due to the rising cost of raw materials and sea freight. Although the latter has become more fluid since the end of last year, prices remain higher than before the pandemic. However, as a number of contracts had already been signed before the rise in material prices, they still had to be honored, reducing contractors' margins.

On the other hand, as announced on February 1 by Jean-François Carenco, Minister Delegate for Overseas France, SMEs in the French overseas territories will benefit from a 15% cap on electricity rate increases.