Seeds of growth

Q What was the rationale behind the Madagascar Action Plan?

A In one sentence, the objective of the plan is poverty reduction through economic growth based on the private sector.

It is different from other plans that target the social sectors and try to subsidise them. We believe that is not sustainable in the long run. To make, and approach, the stated goal in terms of poverty reduction, our policy should be based on economic growth. That economic growth should be led by the private sector. So that is why we are trying to promote the private sector as much as we can in Madagascar. We are trying to attract more FDI into Madagascar.

Q What are the country’s levels of FDI?

A In 2005, we had about $84m of FDI inflows. That is a quite a small, limited amount. Our objective is to reach a level of $500m on a yearly basis by 2012.

Q That is quite ambitious.

A Yes, very ambitious. But we are getting there. This year [2007], the inflow of FDI to Madagascar is forecast to be $200m.

Rio Tinto is investing about $600m in mining in Madagascar. There is a consortium of three companies that are investing about $3bn in Madagascar: Sherritt International Corporation from Canada, Sumitumo Corporation from Japan, and Korea Resources Corporation. Behind the consortium of companies, there is a consortium of lenders. The lenders include the African Development Bank, the European Investment Bank, the Japan Bank for International Co-operation, the Canadian Development Bank, as well as Korean financial institutions.

So there is big interest among the international community towards Madagascar regarding private investment.

Q Is the bulk of the investment currently in mining and resources?

A The bulk of the investment is in mining, tourism and agro-industry. These are the main areas. We also have huge investment in light manufacturing, mainly in textiles.

Q As you are new into office, what are your top priorities?

A My immediate priority is the investment law, defending it in front of the senate and the national assembly. That is the first thing.

The second thing is setting up what we call ‘regional centres for development of commerce and industry’. We believe that we also have to incubate small and medium-sized industries in Madagascar for them to be able to work with the big companies and the big industries. We have to develop together foreign direct investments and look at all local investments.

The idea for these regional centres is to have a building and facilities where the first-time companies can base themselves. For a small business, for instance, that business can rent the building, pay for electricity, be connected to the internet and so on. They will stay there for perhaps two or three years. Once they have ‘grown up’, moved out of the place and become independent, others will move in, in their turn.

We are going to set this up in 22 regions in Madagascar. For this year, our goal is to set up such a centre in 10 regions. That is my contract with the private sector.

CURRICULUM VITAE

IVOHASINA RAZAFIMAHEFA

2007 Madagascar Government, Minister of economy, commerce and industry

2005 Office of the President of Madagascar, Director of economic affairs

2005 Institute of Developing Economies, Jetro Visiting research fellow

UN Industrial Development Organization, Consultant