Specific policies, targeted sectoral strategies and effective institutions to implement them are instrumental to meeting Madagascar’s development objectives, 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.
The event brought together high-level representatives from the Government of Madagascar, the international community and local and foreign investors.
“Madagascar has promising opportunities for foreign direct investment (FDI), but to transform this potential we need investors and infrastructure. The positive results of FDI are far from automatic, especially with regards to achieving sustainable development goals and improving quality of life,” said Madagascar’s Minister of Industry and Private Sector Development Narison Rafidimanana, who led his country's delegation to Geneva. He highlighted the role of the IPR in helping to achieve the country’s investment objectives, and reiterated his commitment to implementing its recommendations, saying “we are taking the IPR recommendations [to] heart and we ask UNCTAD for support in the next phase of technical cooperation”.
“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,” UNCTAD Secretary-General Mukhisa Kituyi said. Such potential, however, contrasts with its disappointing performance in attracting FDI, with inflows below the regional average and declining in the last 10 years. Dr. Kituyi said that UNCTAD’s IPR aims to provide guidance on investment policies for development and to support the country’s full economic recovery.
Focused on the need to restore investor confidence, the review recommends greater clarity and security in Madagascar’s regulatory framework, including with regard to the definition of FDI across legal texts, land security, the possibility of foreigners acquiring land, taxation, as well as criteria for adhesion to special economic zones and regimes by enterprises. The IPR also features creative and pragmatic approaches to attracting and benefitting from FDI, which include how to better leverage Madagascar’s natural resources through targeted sectoral strategies in line with its development objectives.
The Director of UNCTAD’s Division on Investment and Enterprise, James Zhan, said that Madagascar needed targeted policies that can have an impact on increasing FDI inflows and on maximizing its impact in boosting fiscal revenues, reducing poverty, creating jobs, and building its entrepreneurial capabilities which together determine the capacity of Madagascar to produce goods and services.
Presenting the role of FDI in the Government of Madagascar's investment policy, Harison Randriarimanana, Economic Counsellor of the President of the Republic of Madagascar and Chairman of the Economic Development Board of Madagascar said that “attracting FDI and building the appropriate legal framework are priorities for the Government. We are in the process of amending legislation to improve predictability, including in such areas as mining, access to land and public administration among others. The recommendations of the IPR will be instrumental to successfully implementing these amendments in a context of political stability”.
The meeting was well attended and featured lively discussions on the investment challenges and opportunities of Madagascar. Representatives of member States and international organizations commended Madagascar for undergoing the review. Private sector representatives established in the country highlighted the validity of the IPR’s findings and recommendations. They also underlined the timeliness of the IPR in light of the need to improve infrastructure to increase national competitiveness.
UNCTAD IPRs are conducted at request and provide concrete and action-driven recommendations aimed at attracting higher levels of FDI to foster economic and social development in recipient countries. The programme spans several phases, commencing with the preparation of the report, followed by the implementation of the recommendations contained therein through technical assistance and follow up, and ultimately the conduct of an implementation review. The IPR of Madagascar, presented in draft version in Antananarivo on 10 September 2015, is the 40th IPR published by UNCTAD.