Madagascar Economic Structure

 Madagascar is one of the poorest economies in the African continent. More than 50% of the population lives below the international poverty line. Madagascar’s economic structure consists of a large agricultural sector and an emerging service sector.[br]

 Madagascar is one of the poorest economies in the African continent. More than 50% of the population lives below the international poverty line. Madagascar’s economic structure consists of a large agricultural sector and an emerging service sector.[br]

Madagascar Economic Structure: GDP Composition by Sectors

Agricultural production is the mainstay of Madagascar’s economic structure. The sector offers employment to the majority of the working population. Based on 2009 estimates, the agricultural sector contributed 26.6% to the country’s GDP. The country’s industrial sector is not completely developed. It accounts for only 15.6% of the GDP. Owing to developmental efforts, the service sector has assumed a larger share in the national production. It contributes approximately 57.8% of the GDP.

 

The emerging service sector is a positive sign for the country’s economic growth. However, the low GDP growth rate is largely attributed to an overdependence on the agricultural sector.

Madagascar Economic Structure: Business Climate

Massive corruption at the administrative levels and stringent land reforms are the biggest impediments for Madagascar’s economic growth. Since 2002, the government is seeking aggressive reforms to create a favorable climate for private and foreign investment.

 

The export processing zones developed during the economic reforms of 1989 are also bearing positive results, particularly in the garments sector. With a large workforce and many unexplored sectors, Madagascar offers a favorable environment for investments. Telecommunication, transport, health and education are the most attractive sectors for investments.

 

After the political debacle of 2002, foreign investors lost faith in the economy of Madagascar. Thus, the government initiated the ‘Friends of Madagascar’ program in collaboration with private investors to encourage foreign investment. Through the program, the government aimed at strengthening private-public partnerships to foster economic growth. Also, the government listed the roadmap for infrastructural development in the country, which began with the renovation of the road network.[br]

 

One of the major achievements of this program was the establishment of the Madagascar-US Business Council. The council was established in 2003 and aims at fostering business relations between the two nations. It also works to explore new areas of partnership. Madagascar also receives financial support from the US under the Africa Growth and Opportunity Act (AGOA).