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Madagascar |
ECONOMY
Madagascar is among the first batch of countries which can profit by the
USA‘s African Growth and Opportunity Act (AGOA), brought into American
law
under the name of the Africa Bill. But much remains to be done
if Madagascar
is to profit from this law
The USA government recently published a list of 34 African countries (1) which can benefit from the AGOA. Madagascar is one of these countries. The law aims at creating new economic opportunities between the 48 countries of sub-Saharan Africa, the countries of the Caribbean, and the United States.
For the moment, those involved in the textile industry, especially companies which are exempt from government-imposed tax (in view of encouraging exports), are the most interested. Bruno de Foucault is chairman of the Association of Tax Exempted Companies of Madagascar (GEFP).
On the occasion of the official announcement of Madagascar’s qualifying for the new opportunities, he said: «Because of the advantages outlined in the AGOA, Madagascar intends, within five years, to export textiles into the American market to the value of 1 billion FF».
He thinks this objective is realistic. But for several months, textile companies have had to refuse orders because they were unable to meet production demands. It’s because of such situations that the USA‘s ambassador to Madagascar,
Shirley Barnes, notes that qualifying for the AGOA is but the beginning of a very difficult road, because it will be necessary to set up the means of benefitting from what the AGOA has to offer. Some key pointers for achieving success are: Improving the Customs’ services; fighting anti-corruption; cleaning up the judiciary; improving investment strategy, especially as these form part of the criteria of eligibility.
Regarding investment possibilities, the GEFP has revealed that already major international groups are interested in Madagascar. One of these could create 10,000 jobs over a five-year period. Encouraging investment is part of the second stage for qualification, and Madagascar’s Industry Minister reckons it is necessary to attract both local and foreign investors. He also says that improvements must be introduced regarding workers’ rights and market economy — these forming part of the criteria of eligibility and in which countries have to make an effort.
The fact that Madagascar has qualified for entry into the US market, provides a great deal of hope for the country’s fight against poverty. Tax-exempted firms within the textile industry, plan to double the number of jobs generated within the sector during the next five years. This will mean 70,000 new jobs (50,000 immediately and 20,000 at a later stage). Bruno de Foucault says: «American textile imports into Madagascar amount to 1 billion French francs, so it’s necessary that Madagascar’s tax-exempted companies aim high when exporting their goods into the USA».
Coordinating efforts
Since 1 October 2000, when President Clinton announced that 34 African countries will benefit from a liberalisation of US import regulations and will now have duty-free access to the American market, two thousand products from sub-Saharan Africa are eligible for AGOA benefits. But the GEFP‘s president notes that Madagascar’s only hope of reaching the American market, is to get its act in order. Because of this, both the public and private sectors of industry have worked out a marketing strategy for goods produced within Madagascar’s Free Trade Zone which have made a good showing these last six years.
Recently, Madagascar was able to provide essential products for such clients as Monoprix, Auchan, Kiabo. Now it has business relations with prestigious European and American customers such as GAP (European) and MUST. Senior representatives from GAP recently visited Madagascar and met with their Malagasy Free-Trade Zone partners at a seminar. Bruno de Foucault said: «Our members have made a positive effort to improve the quality of their products. European clients are looking for quality products from Madagascar; and Madagascar is even taking over part of Morocco’s export market».
The AGOA programme is planned to last 8 years. Eligible countries which have a Gross Domestic Product lower or equal to US $1,500 dollars per person per year, can import raw materials from any country during the first four years.
For the remaining four years, they must import these materials from the United States or from other eligible countries. In other words, the United States encourages those countries covered by the AGOA to invest in production and industrialization, so that their export markets for raw materials can be developed and they will no longer be dependent on other countries. Bruno de Foucault adds: «We’ve got four years to get our textile industry up to scratch. We’ll do this by calling in investors to set up industrial units, because Madagascar already produces cotton». Already, in the first year of doing business under the AGOA programme, the volume of textiles produced by AGOA-approved countries for entry into US markets, is fifteen times what Madagascar can produce in its Free-Trade Zones.
Modern slavery?
But there are problems, mainly because human resources are lacking. The GEFP has a training centre and is encouraging young professionals to make a career in the Free Trade Zone area of industry.
Tax-exempted companies are also trying to get rid of their bad public image, because, especially in the textile industry, they have been accused of «modern slavery». Most of their employees are women and conditions of employment are very hard.
The women are obliged to work supplementary hours, so this means many of them work anything from 14-16 hours a day. In spite of the non-stop rhythm of work and the enormous workload, salaries are extremely low. The minimum wage in Madagascar is fixed at 170 FF a month; the average wage paid is around 250-300 FF, which isn’t much. Workers accuse their employers as follows: «They’re nothing better than slave-owners who take advantage of our people’s poverty. But as it’s our own government which is attracting such firms to set themselves up in business, by beguiling them with the prospect of cheap labour, there’s nothing we can do about it».
The employers defend themselves: «We’ve got no choice in the matter. Our customers are pushing us to deliver and we’ve got to deliver on time. As for salaries, we pay better than in the informal sector of industry. Don’t forget, we’ve created 70,000 jobs within the last ten years, and most of the tax-exempted companies respect current labour legislation. Accusations in the Press about the bad working conditions of our employees have fatal consequences on our business activities. Customers are very demanding, not just for quality but also as regards conditions of employment in the relevant factories. Inhuman conditions of work will not find buyers. The product will be boycotted. Top-class firms are very conscious of their brand image and Americans are among the most demanding in this domain».
(1) Countries eligible for the AGOA are: Benin, Botswana, Cape Verde, Cameroon, Central African Republic, Chad, Congo-Brazzaville, Djibouti, Eritrea, Ethiopia, Gabon, Ghana, Guinea, Guinea-Bissau, Kenya, Lesotho, Madagascar, Malawi, Mali, Mauritania, Mauritius, Mozambique, Namibia, Niger, Nigeria, Rwanda, Sao Tome e Principle, Senegal, Seychelles, Sierra Leone, South Africa, Tanzania, Uganda, Zambia.
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