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Doing business in Madagascar : Promising sectors

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Doing business in Madagascar : Promising sectors

Entrepreneurship in Madagascar presents numerous opportunities for both local and foreign entrepreneurs. Several sectors, from NICTs to manufacturing, show significant growth potential. However, starting a business in Madagascar comes with its challenges. Learn the essential strategies for successfully navigating the Malagasy entrepreneurial landscape.

The most promising business sectors

Madagascar, rich in natural resources, presents numerous investment opportunities across various sectors. The mining industry is thriving due to the island’s abundance of precious minerals. Additionally, the textile sector is highly promising, with Madagascar being well-known for its high-quality cotton and silks.

  • Agro-industry is another promising sector, as the island is one of the world’s leading producers of vanilla, rice and seafood.
  • The energy sector, particularly renewable energies, also offers great opportunities, as the country has strong potential in terms of solar, wind and hydro power.

Finally, the government encourages investment in infrastructure industry to enhance essential services and drive the country’s economic development.

The ICT and digital sector

In today’s digital age, Madagascar offers promising opportunities in the NICT (Information and Communication Technology) and digital sectors. The country has seen substantial growth in this area, with over 400 new businesses emerging in recent years.

The appeal of NICTs is bolstered by the government’s initiative to train one million young Malagasy coders. Initiatives like the “Digital School” pilot projects underscore efforts to strengthen Madagascar’s digital ecosystem.

A cornerstone of this growth strategy is the Five-Year Strategic Digital Plan (PSN). It aims to liberalize telecommunications, expand Internet accessibility, and lower connection costs, thereby fostering a robust digital economy.

Madagascar’s local workforce, characterized by both skillfulness and affordability, is a significant advantage for ICT companies. Moreover, the country boasts modern infrastructure, particularly in data storage, enhancing its appeal as a preferred hub for digital activities.

By leveraging digital advancements, Madagascar aims to accelerate its socio-economic development, creating new avenues for entrepreneurial ventures in the sector.

Agriculture and livestock

Madagascar, renowned for its rich biodiversity and fertile soils, holds significant promise in agriculture and livestock farming. Key crops such as rice, coffee, vanilla, and cocoa thrive in the country, alongside diverse livestock production including cattle and tiger prawns.

Agriculture contributes about 30 % of Madagascar’s GDP and employs 80 % of its workforce. Despite its importance, the sector faces challenges such as climate change impacts, limited access to financing and modern technologies, and price volatility in global markets.

Opportunities in agribusiness are abundant, reflecting national priorities to bolster the agricultural sector into a dynamic primary industry capable of achieving food self-sufficiency.

In livestock farming, Madagascar aims to enhance economic efficiency and combat food insecurity through a comprehensive master plan supported by the World Bank and the FAO.

Overall, Madagascar’s agricultural and livestock sectors present fertile ground for investment and development, with initiatives aimed at transforming these industries for sustainable growth and national resilience.

Crafts and promoting local products

Handicrafts play a vital role for local communities, deeply rooted in traditional techniques and local natural resources. These crafts, spanning from everyday items to musical instruments and ornamental objects, are celebrated for their originality and craftsmanship. Malagasy artisans skillfully utilize diverse materials like raffia, precious woods, zebu horn, and various plants and minerals.

The Malagasy craft industry encompasses twelve sectors with 114 trades, impacting all facets of local life and the economy. This rich diversity offers numerous entrepreneurial opportunities, particularly in enhancing the value of local products.

However, promoting Madagascar’s craft industry involves preserving ancestral knowledge, creating sustainable employment, and fostering local economic growth. Initiatives such as national labeling and support for product processing aim to uphold the quality and reputation of Malagasy crafts while facilitating market access.

In essence, Madagascar’s handicrafts not only showcase cultural heritage but also represent a promising sector for sustainable development and entrepreneurship, underpinned by a commitment to preserving traditional skills and fostering economic prosperity at the community level.

Tourism and hospitality

Madagascar’s tourism and hospitality industry holds immense promise for entrepreneurs, capitalizing on the country’s unique biodiversity, stunning landscapes, and rich cultural heritage.

The government has implemented favorable policies aimed at stimulating this sector, including liberal policies and the establishment of tourist interest zones. Specialized training programs, such as those offered by the Excellence Institute, equip entrepreneurs to excel in this dynamic field.

Efforts like the PIC3 Project are enhancing the skills of tourism workers, crucial for maintaining high service standards that attract and retain tourists. Despite recent setbacks due to the global health crisis, this underscores the importance of robust risk management and strategic adaptability for businesses in the sector.

Overall, Madagascar’s tourism and hospitality industry presents abundant opportunities for entrepreneurial growth, supported by proactive government policies and ongoing efforts to enhance service quality and resilience.

Why invest in Madagascar?

The country’s economic strengths

Madagascar offers a number of economic advantages for entrepreneurs:

  • A fast-growing economy: Madagascar is enjoying steady economic growth, driven by key sectors such as agriculture, tourism and NICTs.
  • An expanding consumer market: With a population of over 25 million, the country offers a fast-growing consumer market, particularly in urban areas.
  • A young, dynamic workforce: More than half of Madagascar’s population is under 25 years of age, offering a huge potential workforce for entrepreneurs.
  • Abundant natural resources: The country is rich in natural resources, particularly in the mining sector with strategic minerals such as nickel, cobalt and rare earths.
  • Strategic positioning: Located in the Indian Ocean, Madagascar is close to Asian and African markets, giving it an advantage for trade and exports.
  • An environment conducive to innovation: The government encourages innovation and entrepreneurship, particularly in the NICT sector, through incentives and support programs.
  • A booming outsourcing sector: The country has become a preferred destination for outsourcing services, particularly in the fields of call centers and IT.

Tax incentives for investors

Madagascar offers a number of tax incentives to attract investors. These include tax exemptions and reductions, particularly for priority sectors such as green energy, tourism and industry.

  • Tax exemptions: These measures enable investors to benefit from exemptions on certain taxes. They are generally granted for a specific period and under certain conditions.
  • Tax breaks: Certain sectors benefit from tax breaks to encourage investment. For example, a 50% tax reduction is granted for investments in green energy production, tourism or industry.

The importance of a local professional network

Creating and maintaining a local business network is a key element for any entrepreneur in Madagascar. Such a network can facilitate access to essential information, offer opportunities for collaboration and provide valuable support in resolving challenges.

Connecting with local support organizations can be beneficial. Organizations such as the SEEED project or Madagascar Firms Development (MED) offer coaching and training services to entrepreneurs.

Participating in networking events organized by entities such as the Antananarivo Chamber of Commerce and Industry can also prove useful. These meetings provide an opportunity to exchange, share and strengthen personal and professional skills.

Taking advantage of matchmaking platforms such as Business Linkage Platform (MBL) can also help expand your professional network. These platforms make it easy to match entrepreneurs with locally-validated professionals.

Joining entrepreneurial networks such as Business Network can be another effective way to develop your network. These networks offer personalized support, mentoring and ongoing monitoring to ensure optimal progress for entrepreneurs.

Support for entrepreneurs : Existing assistance structures

Supporting the development of small businesses

Supporting small businesses in Madagascar is of major importance to the country’s economic growth. Several aid structures exist to support their development. The European Institute for Cooperation and Development (IECD), for example, has been running a support program for entrepreneurs and small businesses since 1998.

Initiatives such as Madagascar Firms Development(MED) offer business management training to help small entrepreneurs develop their businesses and ensure their sustainability. Other organizations, such as Miarakap, focus on financing SMEs and start-ups, helping them to evolve.

In addition, international institutions such as the World Bank and the International Fund for Agricultural Development (IFAD) allocate credit to stimulate SME growth in targeted regions of Madagascar.

Training programs for entrepreneurs

There are a variety of training programs dedicated to entrepreneurs in Madagascar. These are provided by organizations such as the Center of Excellence in Entrepreneurship and Altitude Business School Madagascar. They aim to strengthen entrepreneurial skills and support project leaders in their strategic and operational development.

  • Stanford University also offers a training program for entrepreneurs in Madagascar. These courses cover essential topics such as financial management, marketing and strategic planning.
  • Programs such as Women in Africa (WIA) focus on promoting female entrepreneurship in Africa, including Madagascar.
  • The NGO Jade offers training to support the creation of startups, micro-businesses and SMEs in order to reduce youth unemployment and formalize the informal sector.
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