Madagascar is one of the poorest countries in the world, with over 75 percent living below national poverty lines. Hopes of a better future hinged on investments into its biological and cultural richness seems bleak when the country’s ranking on the World Bank’s ease of doing business list is considered (164). However, this is set to change.
According to the Investment Policy Review (IPR) of the country which was discussed at an intergovernmental meeting at the United Nations in Geneva on 3 December, specific policies, targeted sectoral strategies and effective institutions to implement them are instrumental to meeting Madagascar’s development objectives.
The event which brought together high-level representatives from the Government of Madagascar, the international community and local and foreign investors focused on the need to restore investor confidence.
“Madagascar has promising opportunities for foreign direct investment (FDI), but to transform this potential we need investors and infrastructure,” said Madagascar’s Minister of Industry and Private Sector Development Narison Rafidimanana, who led his country’s delegation to Geneva.
Infrastructure is poor in the island country where majority of roads are unpaved. State-owned electric utility and water services company, Jirama which is unable to service the entire population. There is also great opportunity for investment in its agricultural sector, the mainstay of the economy. Madagascar is the world’s principal supplier of vanilla, whose uniquely scented flavour is second only to chocolate in popularity on the world’s palate and also second most expensive spice after saffron.
Rafidimanana noted, however, that “positive results of FDI are far from automatic, especially with regards to achieving sustainable development goals and improving quality of life.” He highlighted the role of the IPR in helping to achieve the country’s investment objectives, and reiterated his commitment to implementing its recommendations.
UNCTAD Secretary-General Mukhisa Kituyi commented: “Madagascar has extraordinary potential to attract and benefit from FDI as it is endowed with rich natural resources, a young population and vast tracts of fertile land.”
However, Madagascar’s impressive potential contrasts with its disappointing performance in attracting FDI, with inflows below the regional average and declining in the last 10 years. UNCTAD’s IPR aims to provide guidance on investment policies for development and to support the country’s full economic recovery, Dr Kituyi notes.