Madagascar: Encyclopedia II - Madagascar - Economy

Madagascar - Economy

Following the 2002 political crisis, the government attempted to set a new course and build confidence, in coordination with international financial institutions and the donor community. Madagascar developed a recovery plan in collaboration with the private sector and donors and presented it at a "Friends of Madagascar" conference organized by the World Bank in Paris in July 2002. Donor countries demonstrated their confidence in the new government by pledging $1 billion in assistance over five years. The Malagasy Government identified road infrastructure as its principle priority and underlined its commitment to public-private partnership by establishing a joint public-private sector steering committee.

In 2000, Madagascar embarked on the preparation of a Poverty Reduction Strategy Paper (PRSP) under the Heavily Indebted Poor Countries (HIPC) Initiative. The boards of the IMF and World Bank agreed in December 2000 that the country had reached the decision point for debt relief under the HIPC Initiative and defined a set of conditions for Madagascar to reach the completion point. In October 2004, the boards of the IMF and the World Bank determined that Madagascar had reached the completion point under the enhanced HIPC Initiative.

The Madagascar-U.S. Business Council was formed in Madagascar in 2002. The U.S.-Madagascar Business Council was formed in the United States in May 2003, and the two organizations continue to explore ways to work for the benefit of both groups.

The government of President Ravalomanana is aggressively seeking foreign investment and is tackling many of the obstacles to such investment, including combating corruption, reforming land-ownership laws, encouraging study of American and European business techniques, and active pursuit of foreign investors. President Ravalomanana rose to prominence through his agro-foods TIKO company, and is known for attempting to apply many of the lessons learned in the world of business to running the government. Some recent concerns have arisen about the confict of interest between the policies pursued by President and the activities his firms, most notably with preferential treatment for rice imports initiated by the government in late 2004 responding to a production shortfall in the country.

Madagascar's sources of growth are tourism; textile and light manufacturing exports (notably through the EPZs); agricultural products (the country is the world's leading producer of vanilla, accounting for about half the world's export market); and mining. Tourism targets the niche eco-tourism market, capitalizing on Madagascar's unique biodiversity, unspoiled natural habitats, and lemur species. Exports from the EPZs, located around Antananarivo and Antsirabe, consist the most part of garment manufacture, targeting the US market under AGOA and the European markets under the Everything But Arms (EBA) agreement. Agricultural exports consist of low volume high value products like vanilla, litchies and essential oils. Mining investment is beginning to take off following the introduction of a new law opening the country up to foreign mining companies. A large mining investment by Rio Tinto in the Fort Dauphin region, to exploit ilmenite (titanium dioxide), is expected by late 2005, and other projects in ilmenite (Ticor/Kumba in Tulear) and nickel (Dynatec/Implats near Tamatave) could also be launched in the coming months.

Adapted from the Wikipedia article "Economy", under the G.N U Free Docmentation License. Please also see http://en.wikipedia.org/wiki