Madagascar, despite being an island, is geologically attached to the African continent and holds a trove of natural resources.
Agriculture is the main sector of the economy, contributing to over 25 per cent of the Gross Domestic Product (GDP), but operations remain mostly manual. The world’s 10th largest producer of chromite, Madagascar has considerable mining riches such as precious stones and industrial minerals, including Nickel, Cobalt, Ilmenite, Uranium.
The textile industry, formerly a strong component of the Malagasy economy has attracted a large number of overseas investors. With the reinstatement of Madagascar’s eligibility for African Growth and Opportunity Act (AGOA) by the US Government in June 2014, it is now expected that the textiles sector will be back on track. The island produces high quality cotton, raffia and silk textiles, the labour is highly skilled and available at competitive rates.
Expansion of the Malagasy economy is naturally expected to be fuelled by the following sectors:
- building and construction
- banking and insurance.
The establishment of a duly elected government in 2014 marked the end of a protracted “transitional period”, bringing back international donors, a large number of investors and foreign companies. Tourist numbers have been increasing, as Madagascar boasts a unique biodiversity and rich history which attracts nature enthusiasts, anthropologists and others.
Given the position Madagascar occupies within the Indian Ocean Commission (IORA)and the Indian Ocean Rim Association (IOC), achieving stability on the island is expected to ensure a formidable asset, with a strategic role to play in ensuring food security, enhancing the flow of trade and powering growth in the region.
Madagascar is a member of a number of international organisations, including the Common Market for Eastern and Southern Africa (COMESA), World Trade Organization (WTO), Southern African Development Community (SADC), IORA and the IOC. The island has strong ties with France, West Africa; well-positioned to supply Asian markets.
Malagasy and French are the most prominent languages within business circles. Discussions flow more easily if conducted in French, while English is understood by most professionals.
Lightweight suits are usual, but it is also acceptable for professionals to wear business casual clothing. Men do not have to wear full suits, but pants and shirt with a collar are recommended and women should dress conservatively, avoiding sleeveless tops and short skirts. Avoid expensive or flashy jewellery.
The most common form of greeting in the central region (other regions may differ) is a handshake with the right hand, while the left hand holds the right arm below the elbow.
Not many people have business cards, so in some meetings an exchange of cards may not take place and it is acceptable to offer one business card for a group of people to share. It is not proper etiquette to write on business cards with red ink, as this colour is viewed negatively. Gifts are generally not expected in business situations.
Addressing people by Monsieur (Mr), Madame (Mrs), Mademoiselle (Ms), Dokotera (Dr) etc., is the recommended way, avoid using first names unless invited to do so. When pronouncing Malagasy names, which tend to be long, the last vowel at the end is silent and the "o" inside the name is pronounced as “ou”, eg Mr Rakotomanava would be pronounced “Monsieur Rakoutoumanav” and Antananarivo is in fact pronounced “Antananariv”, Tana for short.
In the capital, Antananarivo, people use watches/clocks to keep track of time and appointments and are typically on time. Elsewhere, Malagasy time prevails; people go by the sun and will very likely never be on time.
As a rule of thumb, as an "outsider" you should show up on time even though you will most likely be kept waiting, whether you are in a village or in the capital.
Negotiating and Bargaining
If professionals or vendors at the market can tell that a business person is not from Madagascar, the vendor might double or triple the price of an item. The price will often be lowered if the foreign professional attempts to speak in the native language of the country. Even in business deals, it is customary to act with disapproval or disgust when the first price is offered so that the bargaining can begin.
Setting up in market
Connecting with local distributors, agents or representatives experienced in an international trade environment would be the best way to approach business in Madagascar.
The political instability has impacted upon the sovereignty, operations and decision making of key institutions overseeing the business and economic sector. It is very important to seek local advice and updates before taking up projects or making any commitments.
Initial source of advice could be the Economic and Development Board of Madagascar, set up to act as a one-stop-shop for investment and business development. They are able to assist with procedures linked to company registration in Madagascar.
Banking and finance
Ten commercial banks are in operation in Madagascar, a mix of European, Asian and Mauritian establishments. For more information visit the Banking Association.
Links and resources
Government, business and trade
Main Government Page – www.madagascar.gov.mg
Chamber of Commerce – www.cci.mg/
Chamber of Mines – www.chambredesminesdemadagascar.com/
Commerce Ministry – www.commerce.gov.mg
Statistics Office – www.instat.mg
Central Banks – www.banque-centrale.mg
Investment Promotion Agency – www.edbm.gov.mg
Office of Mining and Strategic Industries – www.omnis.mg/en/
World Bank – www.doingbusiness.org/data/exploreeconomies/madagascar/starting-a-business
Indian Ocean Commission - www.coi-ioc.org/
Indian Ocean Rim Association – <a href="http://www.iora.net/>www.iora.net</a><br />
Common Market for Eastern and Southern Africa – <a href=">www.comesa.int/index.php
Southern African Development Community – www.sadc.int
News and media
No English Language newspapers are available in Madagascar.
Portal for Madagascar: www.moov.mg/
Main dailies (all French) are:
La Gazette de la Grande Ile: www.lagazette-dgi.com/
Madagascar Tribune: www.madagascar-tribune.com/-Economie-.html
Mada.Pro (online newspaper): www.mada.pro/
L’Express de Madagascar: www.lexpressmada.com/
Midi Madagasikara: www.midi-madagasikara.mg/
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