THE 2009 CLIMATE OF INVESTMENTS IN MADAGASCAR

 

                For the last two years (2007 and 2008), Madagascar has made tremendous efforts to make its economy progress. The relevant aggregates pertaining to the period of 2007 and 2008 express this positive dynamism of the Malagasy economy. The main reason, revealed by international consultants, of such development is that the whole state policy has been purposely driven towards a real opening to International investments. For the sake of its economic development, Madagascar has always tried to attract foreign investors. In fact, since 2003, the Republic of Madagascar has made significant efforts to gain the interest of international investors: the new investment act (act 2007-036 dated January 14^th, 2008) has been promulgated; the EDBM (Economic Development Board of Madagascar) has been created, most of administrative procedures to incorporate companies and to obtain operative licenses have been eased, new incentive legal texts ruling “economic key sectors” have been created,…. The core of the State’s policy for a “fast and sustainable” development lies on the promotion of direct private investment. The act 2007 – 036 has been especially drafted for such purpose. How does this new investment act affect the climate of investment in Madagascar? What is the role of the EDBM in terms of attractive and transparent climate of investment? These three questions appear to be crucial to understand in order to analyse the effects of the current political turmoil on Malagasy climate of investments. Nevertheless, we already can admit that the current political crisis is a real and unexpected disaster for the Malagasy economy. It is obvious that most of Madagascar economic indicators were positive for the period of 2007 – 2008 until the crisis occurred in the beginning of this year. Most of economic analysts and, especially, Malagasy company leaders, agree to say that the surplus value collected for the said period (2007 and 2008) has been completely lost within the length of the crisis (from January 2009 till present day).

Climate of investments

The concept of climate of investment can be defined as all factors that can be analyzed as the environment in which investment is realized, namely political history, economic situation, the social climate and the legal system.
The investment climate is formed by a body of evidence of cumulative nature which shall include the following areas: equal treatment, the intangibility of rules on investment, rule of law, and respect for property.

The climate of investments is the main criterion which is used by the World Bank to rank a country in its annual review “Doing Business”.

According to many experts, the current climate of investments has come to a point in which Madagascar is not anymore an interesting prospect for International investors. All of the consequences triggered by the crisis, and especially the expression of the crisis itself, led to a growing disinterest for the “economic Madagascar destination”. Before the 2009 political turmoil, the Madagascar climate of investments was positively appreciated by most of our institutional supporters as improving, open and innovating. After the crisis (we mean here, after the violent upheaval of the crisis), Madagascar has tremendously regressed on the International ranking of countries with added investment values. The most important fact which has worsened the situation is that during the crisis, there was a huge spirit of rejection of all foreign interests, publicly expressed by the leaders of the movement. During the crisis, there were many foreign companies which were victim if the rioters. The most important element of the climate of investments is the political stability, Madagascar does not have it.

The new investment act: 2007- 036 of January 14^th, 2008

This act is among the most tangible sign of willingness from the former Malagasy leaders for opening Madagascar to the world economy. This act was not only drafted to be a simple legal text among so many others; this act is considered as the “constitution” of all the legal texts with economic trend.

The main purposes of an investment act (code) are the following:

- Attracting investors through legal guarantees and tax benefits;

- Defining conditions for admission and determining the legal status of approved companies.

The investment act should not operate discrimination between foreign and domestic investment. It must contain measures to attract investment, provide the procedure and the sanctions and dispute resolution.

The Malagasy new investment Act has been drafted in order to improve the climate of investments in Madagascar. In its articles 2; 3; 4; 5; 6 the new investment Act provides the main conditions of a good climate of investment:

                   – Freedom of investment (Article 2);

                   – Equality of treatment (Article 3);

                   – Protection of patent rights (Article 4);

                   – Freedom of transfers (Article 5);

                   – Stability (Article 6)  

1) The Freedom of investment:

The article 2 of the new Investment act states that any natural or legal entity, Malagasy or foreign, is free to invest in Madagascar, in accordance with the laws and regulations in force, subject to provisions applicable to some activity sectors which are themselves subject to specific rules. These concern mining, oil and gas, banking, insurance, telecommunications, medical activities. It means that any investors can operate in Madagascar as long as they respect the Malagasy legislation.

2) The equality of Treatment:

The article 3 of the new investment act states that foreign and Malagasy investors are equally treated. They are free to hold up to 100% of shares or stocks of the company in which they carry out their activities. It means that, a foreign investor can set up a wholly owned Malagasy company. Consequently, the foreign investor is not obliged to share with a Malagasy citizen for the setting-up of a Malagasy company.

3) The protection of patent rights:

The new investment act in its article 4 provides “The Malagasy state guarantees that the individual or collective patent rights are respected. The investors are guarded against any privatisation, expropriation or requisition measures with the exception of a public interest. Failing this, the investor will be granted a fair and preliminary compensation in accordance with the appropriate laws and regulations.” According to this provision, the protection of the investor’s patent right is guaranteed by the Malagasy authorities.

4) The freedom of transfers:  

The new investment act in its article 5 states that foreign or local investors are allowed to freely transfer abroad without prior authorisation all profits after full payment of taxes, dividends, miscellaneous payments and repayments including refunds of advances on the partners’ current account and their income.

5) The stability:

The article 6 of the new investment act provides that the Malagasy state commits to establish and maintain a favourable climate for investment by granting tax, customs, financial and social incentives to investors within the context of carrying out their investment projects.

II) The Economic Development Board of Madagascar (EDBM)

 

An organisation called Economic Development Board of Madagascar was created in order to introduce and maintain a favourable investment climate in Madagascar.

          According to the article 9 of the new investment act, the EDBM is in charge of promoting, facilitating and speeding up the approval of all investments projects. In fact, before the promulgation of the new investment act, the relationship between the Malagasy authorities and the private sector was complicated. In order to improve this relationship, the EDBM has been created. The main goal of the EDBM is to facilitate, and promote the approval of investment projects in Madagascar. For that purpose, according to the article 8 of the new investment act, the procedures related to the carrying out of investments in projects in Madagascar are gathered at the EDBM:

- Entrance visa application;

- Long stay visa application;

- Professional visa application;

- Approval for all companies which plan to operate in Madagascar as a “Free zone”;

- Issuing of “Authorisation of land acquisition”;

- Registration, amendment registration, and cancellation of company;

- Issuing of “build authorization”.

          Apart from these previous missions, the EDBM can help the Malagasy authorities for the drafting of any laws which may have an impact on the climate of investment in Madagascar.

 “Companies life”

It is widely known that the so called private sector is the main engine of the economic development of Madagascar; such assertion has been used as among the leading principles of the national economic plan: the M.A.P. (Madagascar Action Plan). In this road map, the private sector and the public sector (mainly the state) were scheduled to partner for the implementation of public works necessary for the “fast and sustainable” of Madagascar. Obviously, the private sector is wholly and exclusively composed by private companies (regardless of their legal form), all incorporated in Madagascar according to Malagasy law. With the occurrence of the political crisis, these companies faced a lot of difficulties which prevented them from investing, and from “normally” running their businesses.

This critical situation of Malagasy companies has triggered a tremendous economic and especially social crisis. The winding-up or the suspension of activities of most of competitive companies led to a general feeling of social instability which prevented people to consume. As a loop-hole, this global reluctance to consume and to invest, put many companies in a situation of bankruptcy and / or financial uncertainty.

The government of former President Marc Ravalomanana was aggressively seeking foreign investment and had planned to tackle 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. Prior to Ravalomanana’s resignation, concerns had arisen about the conflict of interest between his policies and the activities of his firms. Most notable among them the preferential treatment for rice imports initiated by the government in late 2004 when responding to a production shortfall in the country.

Madagascar’s appeal to investors stems from its competitive, trainable work force. More than 200 investors, particularly garment manufacturers, were organized under the country’s export processing zone (EPZ) system since it was established in 1989. The absence of quota limits on textile imports to the European market under the Lome Convention helped stimulate this growth.

Since the mid-1980s, Madagascar has run sizeable balance-of-payment deficits. The current account deficit as a percentage of GDP averaged in excess of 6% during much of the 1990s and registered nearly 4 percent in 1999. Madagascar’s debt ratio, which had reached 46 percent in 1996, was estimated at 15.4% in 2000. Within an overall framework of poverty reduction, the HIPC Initiative was expected to enable the country to reduce its debt service ratio to 5.5% in 2003, and remain at around 5% throughout the projection period 2000-19.

From more than 60% in 1994, the inflation rate dropped to 6.4% in 1998, before rising again to 14.4% in 1999 and 8.7% in 2000.

During a period of solid growth from 1997 to 2001, poverty levels remained stubbornly high, especially in rural areas. A six-month political crisis triggered by a dispute over the outcome of the presidential elections held in December 2001 virtually halted economic activity in much of the country in the first half of 2002. Real GDP dropped 12.7 percent in 2002, inflows of foreign investment dropped sharply, and the crisis tarnished Madagascar’s budding reputation as an AGOA standout and a promising place to invest. After the crisis, the economy rebounded with GDP growth of over 10% in 2003. Currency depreciation and rising inflation in 2004 hampered economic performance, but growth for the year reached 5.3%, with inflation reaching around 25% at the end of the year. In 2005 inflation was brought under control by tight monetary policy of raising the Taux Directeur (central bank rate) to 16% and tightening reserve requirements for banks. Thus growth was expected to reach around 6.5% in 2005.

Following the 2002 political crisis, the government attempted to set a new course and build confidence, in coordination with international financial institutions and donors. 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.

The Madagascar-U.S. Business Council was formed as collaboration between the United States Agency for International Development (USAID) and Malagasy artisan producers 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.

Nowadays, the Ravalomanana’s administration has come to an end with the unconstitutional takeover of Andry Rajoelina. Ravalomanana has left a heavy legacy: the moral obligation for any of his successor to reach a better climate of investments than he did. Andry Rajoelina has to convince to have the investors’ confidence back. His greatest weakness is actually his global image which has been promoted throughout the world: an image of a young nationalist who came to power in an illegal way.

ANDRY RAJOELINA REFUSES TO MEET THE THREE FORMER PRESIDENTS ABROAD

yesterday afternoon at the palace of Ambohitsirohitra, the president Andry Nirina Rajoelina made a press conference ( some local journalists were not allowed to attend this press conference). During this press conference, Andry rajoelina made an announcement, he said that he will not attend the meeting( between him and the former presidents)wich will be led by Mr Chissano at the capital of Mozambique (Maputo). In fact, according to him, it will be a west of time and west of money. After this announcement, the questions which come to our mind are the following:

- will the international mediators and the other political leaders keep this meeting without the presence of Mr Andry Nirina Rajoelina?

-Did Mr Andry Nirina Rajoelina think about the consequences of his decision ( suspension of the financial support from the IMF, world bank, and the other international entities, cancellation of the AGOA)? 

- What will be the reaction of the international community? 

We will know the answersof these questions within few days. However, we should not forget that the more time our political leaders take to solve the current political problem, the more difficult our daily life will be.

CHILDREN`S RIGHTS IN MADAGASCAR

On November 23^rd, 20009; many countries including Madagascar celebrated the 20^th anniversary of the “Convention on the Rights of the child”. In fact, 20 years ago, world leaders decided that children needed a special convention just for them because people under 18 years old often need special care and protection that adults do not. The world leaders also wanted to make sure that the world recognized that children have human rights too.

In Madagascar, children are vulnerable. Consequently, they need special protection. In fact, like in many African countries, Malagasy children are suffering from poverty, neglect, homelessness, abuse, diseases. These problems affect many Malagasy children. When you go on the street or get on the bus, you can see many children who are selling food and news paper. We should know that these children have the right to go to school, to eat, to have fun, to wear cloths. Unfortunately, many parents do not care about their children’s rights. They oblige their children to work in order to contribute to the family expenses.

It is really good to celebrate the anniversary of this convention, but this celebration must be put into practice. In fact, by ratifying this convention on the rights of children, world leaders show their intention to protect and promote children’s rights. In this regards, we must protect and promote the children’s right. It means that the task engage not just the political leaders but all the Malagasy citizens. You can start by explaining to your children their rights. Do not wait for the government to do the mission.

 

Two weeks after Addis Abeba, the government is not yet implemented

Two weeks after the signature of the additonnal agreement at Addis Abeba, the three groups ( Ravalomanana group, Ratsiraka group, Zafy Albert group, and Andry Rajoelina grou) fail to reach an agreement about the new government. In fact, each group claims to obtain the ” Key- Ministries”. According to a non official report, the two groups ( Andry Rajoelina group and Ravalomanana group) are the origins of this problem.

The malagasy people trust on these malagasy political leaders to resolve immediately the problem. These political leaders should note that malagasy people are suffering due to their political dispute. In fact, many people have lost their job, many companies have been obliged to stop their activities,…

So, it is time for these political leaders to show their ” patriotism” by implementing this government as soon as possible. We should not forget that our futur depends on it. The foreign entities ( countries, Organization) are waiting for the implementation of the new government before providing any financial supports.

Is it the end of the current crisis?

The new Prime Minister (Mr Mangalaza Jean Eugène) legally and democratically taken the power at the Palace of Mahazoarivo. During the ceremony he provided all his programs during the transitional period , namely:

- The organization a free and fare presidential election;

- The drafting of a new Constitution which led Madagascar to the 4th republic.

All the personalities ( ambassadors, political leaders,  representative of the armed forces,…) said that a big step has been made by Madagascar. In fact, after nine months of crisis, the Malagasy political actors ( leaders) agreed on the fact that a neutral, consensual government is the solution of the current problems. But, it should be noticed that, apart from its political aspect, the current crisis concerns everything ( economy, finance, education,…). Consequently, the following questions come to my mind:

- Do these new leaders undertake to resolve our economical, the financial problems?

- Do these new leaders commit to help the people who lost their jobs during the current turmoil?

 

Wait and see!!!!!

HALLOWEEN

 

 

The story of Halloween

 

 

 

 

 

 

 

 

 

 

 

Hallowwen’s origins date back on the ancient Celtic festival of “Samhain”. The people named “Celts” who lived in the area that is now Ireland, the United kingdom, and northern France, celebrated their new year on November 1^st. This day (November, 1^st) marked the end of summer and the beginning of the dark, cold winter.  At that time, Celts believed that on the night before the New Year, the boundary between the worlds of the living and the dead became blurred. On the night of October 31^st, they (the Celts) celebrated Samhain, when it was believed that the ghosts of the dead returned to earth. In addition, to cause more trouble and damaging corps, Celts thought that the presence of the spirits made it easier for the Druids, or Celtic priests, to make predictions about the future.

To commemorate this event, Druids built huge scared bonfires, where the people gathered to burn corps and animals as sacrifices to the Celtic deities.

During the celebration, the Celts wore costumes (typically consisting of animal heads and skins).

 

By the 800s, the influence of Christianity had spread into Celtic lands. In the seventh century, Pope Boniface IV designated the “November 1^st “All Saints’ day, a time to honor martyrs and saints. Later, the church would make November 2^nd, a day to honor the dead. It was celebrated with bonfires, parades, and dressing up in costumes as devils, angels, saints. At that time, this celebration was called “Hallowmas”.

Hundreds of years later, as many immigrants (especially European) came to America, they brought their Halloween customs with them. These immigrants popularized the celebration of Halloween. Taking from Irish and English traditions, Americans began to dress up in costumes and go house to house asking for money or food. Young women believed that, on Halloween, they could divine the name or appearance of their future husband by doing tricks with yarn, mirrors, or apple parings.

By the 1930s, Halloween had really been celebrated. At that time, a new American tradition was born, and it has continued to grow. During the Halloween, people do the “trick or treat” tradition.

The tradition of dressing in costumes for Halloween has European roots. Many years ago, winter was a frightening time. Food supplies often ran low, and for many people afraid of the dark, the days of winter were full of worry. On Halloween, when it was believed that ghosts came back to the earthly world, people thought that they would encounter ghosts if they left their homes. In order to avoid being recognized by these ghosts, people would wear masks when they left their homes after dark so that the ghosts would mistake them for fellow spirits. On Halloween, to keep ghosts away from houses, people would put bowls of food outside their home to appease the ghosts and prevent them from attempting to enter.

 

 

 

 

 

special friday talk

Yesterday September 11th,2009; the American Press Center had two special guests during its weekly discussion session( Friday talk). In fact, two foreign journalists attended the Friday talk in order to share their experiences to the Malagasy journalists. Those two journalist are Mrs Rebecca ( an American journalist), and Mr Adrien ( from Burundi). They were invited by Nanou Fiankinana to attend the Friday talk. We started the meting by self introduction. Then, Rebecca and Adrien told us about their experiences  as journalist in Africa.  They started by  telling us about their project in Africa. In fact, these two journalist have been in many African countries. They use their “talent” as journalist to help people to solve their problems ( land issue, etc). After hearing their experiences, we started to ask questions to them. so, we discussed about the Malagasy journalism. We   explained to them the problem of the Malagasy journalism/ journalists. A journalist from a daily news paper said that the problem of the Malagasy journalism is the following: Most of the Malagasy news paper, radio station, TV station belong to  political  leaders. Consequently, the journalists  are obliged to follow their instructions  when they publish or provide the news. This journalist from a daily news paper added that sometimes, the journalists are guilty about what they provide to the people. But according to what she said, the Malagasy journalists do not have the choice. The two guests said that it is a common problem of journalism in many (African)  countries. As a solution to this problem, the two guests suggested  us  to set-up an association which gather all the Malagasy journalists. Then, if some problems affect the journalism, we can do some actions ( protests, march,…) through this association. Due to the problem of time, the discussion was limited. However, it was very interesting meeting. Thanks to Oelisoa and Nanou Fiankinana.

Negotiations at carlton failed in reaching agreement

The multilateral negotiations atcarlton failed in reaching agreement. In fact, all parties ( the Rajoelina group, the Ravalomanana group, the Ratsiraka group and the Zafy group) have not succeeded  to make concessions. The purpose of the negotiations  which are led by the international mediators is to establish a neutral, consensual, and peaceful transition in Madagascar. The  High Transitional Authority does not accept the general amnesty which is asked by the other groups.

Apart from the establishment of a neutral, consensual, and peaceful transition, the following points have to be discused  at the negotiating table:

- The participation of the former presidents  in the next presidential election,

- The organization of a credible presidential election at the earliest date possible.

- A general amnesty

The international mediators(the African Union, the Southern African Development Community, The United Nations) call all parties to reach agreement, and conclude the negotiations in order to resolve the current political crisis in Madagascar.

ravalomanana in direct at magro akorondrano

This morning, during the daily meeting of the “legalist”, Ravalomanana spoke to the crowd through a phone call. During his speech, he accused the french government of supporting Andry Rajoelina and The HAT.  In fact, he said that the french government is behind the “coup d’etat” made by Andry Rajoelina and some military forces on March. The legalist people were happy to hear “DADA” and promised to continue the demonstration until Andry Rajoelina steps down.

JOURNALITS SILENT PROTEST MARCH

Last Saturday, the journalists organized a”silent protest march following the arrest of their colleague, the journalist of “radio mada”. In fact, the journalist  claim the release of their colleague and the freedom of press. The journalists promised that they will continue their demonstration until their colleague will be released.