Madagascar: disconnected
The island has closer ties with Europe than Africa
Shirts, dresses and trousers are piled on tables at the end of several rows of sewing machines in the Groupe Socota factory in Antsirabe, Madagascar’s third- largest city. Many bear the labels of well-known European brands: Decathlon, Zara and Camaïeu.
Socota, Madagascar’s largest textile manufacturer, employs more than 5,000 people in this factory in the highlands, about 180km south of the capital, Antananarivo. The company produces more than 5m pieces of clothing a year, says Véronique Auger, Socota’s managing director. Half of these garments end up in European stores. The other half, and this proportion is increasing, is made for leading South African brands such as Woolworths, Truworths and Cape Union Mart, a turnover worth nearly $2m.
“Thanks to a duty-free agreement, South Africa is a big market for us,” Ms Auger boasts. “It has good distributors and increasing purchasing power. And it’s only a few hours from here.”
For all its appeal however, South Africa—and the African continent in general—remains a marginal trade partner of Madagascar. No African country made it into Madagascar’s top ten export destinations in 2011, according to the Economic Development Board of Madagascar (EDBM), a government agency. Mauritius and South Africa accounted for just 12% of imports that year. “It’s amazing how much business is not done with South Africa,” Ms Auger says.
The reasons for this isolation are multiple and complex. Madagascar is an Indian Ocean island that has evolved distinctively from the rest of the continent. It has a unique natural environment: half its birds and most of its plants exist nowhere else. The island was one of the last places on earth to be settled. Although the African mainland is only 400km away at its closest point, Madagascar’s first settlers arrived from south-east Asia about 2,000 years ago. Africans crossed the Mozambique Channel about 1,000 years later.
More recently, in the 19th century the French formally colonised Madagascar and the tiny three-island nation of Comoros to the north. France and then Britain oc- cupied the Seychelles archipelago and neighbouring Mauritius. On the continent, the Portuguese settled in Mozambique, Madagascar’s closest continental neighbour; while the British ruled much of adjacent southern Africa: South Africa, Tanzania, and Kenya.
As a result, many Malagasies feel more connected and can communicate more easily with their former colonial ruler than with Mozambique, South Africa or Tanzania. The Malagasy identity is distinctly un-African and the feeling of otherness is mutual: many Africans refer to each other as “my brother”, but they will call a Malagasy “my cousin”, explains Jean-Pierre Domenichini, a historian and member of the Académie Malgache, a public institution dedicated to the study of Malagasy history, linguistics and culture.
Madagascar has a “profound ignorance about Africa”, says Piers Pigou, southern Africa project director for the International Crisis Group, a think-tank based in Brussels. “There is virtually no relationship or tangible understanding that they are part of this continent,” he adds. This isolation, however, is not unique to Madagascar. The Somalis have long been known for their haughtiness towards their neighbours and many North Africans do not feel much kinship with the continent south of the Sahara, according to Mr Pigou.
Madagascar’s recent political and economic predicament, brought about by the 2009 coup, further soured the relationship with the continent and devastated its already-weak economy. (More than 92% of the island’s 22m people live on less than $2 a day, making it one of the world’s poorest countries, according to the World Bank.) Like many international organisations, the African Union (AU) suspended Madagascar’s membership following the coup and imposed sanctions against its perpetrators. After two years of political deadlock, the international community and the AU appointed the Southern African Development Community (SADC) in 2011 to mediate the impasse.
The crisis came to a peaceful resolution January 25th 2014 with the inauguration of Hery Rajaonarimampianina as the new president. But there were tensions on both sides throughout the two-and-a-half-year process: SADC nearly threw in the towel; and many Malagasies would have preferred mediation from the Indian Ocean Com- mission, a grouping of islands with whom they feel more affinity. Madagascar is a member of this organisation with Comoros, France’s Réunion island, Seychelles and Mauritius.
Madagascar is now back in the AU’s fold. On January 27th the union became the first international organisation to recognise the elections and to lift its sanctions. Mr Rajaonarimampianina even attended the AU’s heads of state summit held last January in Addis Ababa, Ethiopia’s capital. Although other international bodies also consider Mr Rajaonarimampianina’s election legitimate, the European Union and other heavyweight economic partners have not fully resumed aid programmes. Most donors are waiting for the appointment of a prime minister and government (which had not taken place at the time of going to print) as well as regional elections to be held later this year.
The AU’s embrace augurs well at a symbolic level but much depends on the willingness of both sides to forge deeper links, Mr Pigou says. Without the appointment of a prime minister, the new president had still not revealed the country’s strategic direction. “I think there will be a period of exploration, of testing the waters,” Mr Pigou says. “It’s a new relationship that needs to find its way.”
Madagascar’s banking, energy, oil and agriculture sectors are among the many opportunities for African companies. But as newcomers they will be handicapped against well-established European rivals and bullish Chinese interests. Mauritius is the only African country among Madagascar’s top ten sources of foreign direct investment (FDI), at 940.7 billion ariary ($464.2m) in 2011, according to the EDBM.
Similarly, Madagascar could make much better use of its membership in SADC and the Common Market for Eastern and Southern Africa (COMESA), which give it access to a huge free-trade area. Socota has used these links to its advantage, Ms Auger says. But the company still had to invest much time and effort in developing a relationship with its South African clients.
Guanomad, a Malagasy company selling organic fertilisers made from bat guano, also worked hard to secure capital in July 2013 from the African Agricultural Fund, a private-equity fund based in South Africa. This $2.7m investment, 40% of the company’s capital, was not only a much-needed cash boost, it will help the company to expand its business on the continent too, says Erick Rajaonary, Guanomad’s founder. “There are huge needs for fertilisers in Africa,” Mr Rajaonary adds. “The continent, like Madagascar, needs to improve its food security. It is an important market for us because transport is shorter than to Europe, freight is cheaper and we would like to promote organic fertilisers.”
The time may be right for Madagascar to start a new chapter of regional cooperation. The world has changed tremendously since the global downturn in 2008 when the economies of the EU and the US, its traditional trading partners, withered while Africa experienced unprecedented levels of growth. Now is the moment for Madagascar to nurture new relationships with its continental neighbours and show its African colours.
