Madagascar business welcomes trade bloc entry

ANTANANARIVO – Madagascar’s entry into the Southern African Development Community (SADC) is a welcome move that is expected to boost the Indian Ocean island’s economic prospects, businessmen said on Friday.

SADC heads of state approved Madagascar’s entry at a summit on Thursday in Gaborone, Botswana, bringing SADC membership back to 14 after tiny Seychelles had previously left the organisation due in part to the cost of membership. Businessmen said they hoped regional integration will encourage closer economic and political partnership, helping to give Madagascan products cheaper and easier access to markets on its doorstep.”South Africa is important since it is so close, and there is a very large market for all exports,” Odile Andriananisolotoandro, trade and information assistant at the South African Embassy in the Madagascan capital Antananarivo, told Reuters.”Now that the country is a member of SADC, it will be easier for South African businesses to come here and find opportunities for partnership with local businesses.”Since its creation in 1992, SADC has promoted economic integration amongst member nations, with South Africa driving much of the region’s economy.The bloc plans to create a regional monetary union by 2020, but critics say little action has followed the promises.Madagascar, with a population of 17 million, is one of Africa’s biggest textile exporters – along with neighbour Mauritius, Kenya and Lesotho – to America under a quota and tax-free preferential trade agreement.But the end of World Trade Organisation’s (WTO) Multifibre Agreement in January removing quotas on textile, has let a flood of cheap Chinese and Indian textile exports into Europe and America and undermining the domestic industry.Others said that SADC membership would bring further challenges to Madagascar in the short-term.”Although it will be difficult for local businesses at first, in the long term it will enable them to improve their competitiveness,” said John Hargreaves, vice president of Madagascar’s textile exporters association.With opposite seasons to the traditional northern hemisphere markets, the southern African market will be an important new outlet for winter clothing, he said.”Up until now, we have been unable to penetrate this market because of high import taxes,” Hargreaves told Reuters.”It is all to our advantage.”Since coming to power in 2002, President Marc Ravalomanana has worked hard to woo investors, with success in courting big mining prospectors in particular.”We will be able to take advantage of cheap energy in South Africa to process raw materials cheaply at the processing plants there,” Hendrik Graham, country manager for strategic development at Ticor, a South African mining company.Ticor is planning to establish a large ilmenite – iron titanium oxide – mine in the south of the island.Lower tariffs could mean cheaper products for consumers, vital for an island nation struggling to feed itself.”Reduced taxes on imports will bring quick benefits to people in terms of what they can afford to buy,” said Thabiso Gabanakgosi, divisional buyer for Shoprite, a South African-owned supermarket chain.- Nampa-ReutersBusinessmen said they hoped regional integration will encourage closer economic and political partnership, helping to give Madagascan products cheaper and easier access to markets on its doorstep.”South Africa is important since it is so close, and there is a very large market for all exports,” Odile Andriananisolotoandro, trade and information assistant at the South African Embassy in the Madagascan capital Antananarivo, told Reuters.”Now that the country is a member of SADC, it will be easier for South African businesses to come here and find opportunities for partnership with local businesses.”Since its creation in 1992, SADC has promoted economic integration amongst member nations, with South Africa driving much of the region’s economy.The bloc plans to create a regional monetary union by 2020, but critics say little action has followed the promises.Madagascar, with a population of 17 million, is one of Africa’s biggest textile exporters – along with neighbour Mauritius, Kenya and Lesotho – to America under a quota and tax-free preferential trade agreement.But the end of World Trade Organisation’s (WTO) Multifibre Agreement in January removing quotas on textile, has let a flood of cheap Chinese and Indian textile exports into Europe and America and undermining the domestic industry.Others said that SADC membership would bring further challenges to Madagascar in the short-term.”Although it will be difficult for local businesses at first, in the long term it will enable them to improve their competitiveness,” said John Hargreaves, vice president of Madagascar’s textile exporters association.With opposite seasons to the traditional northern hemisphere markets, the southern African market will be an important new outlet for winter clothing, he said.”Up until now, we have been unable to penetrate this market because of high import taxes,” Hargreaves told Reuters.”It is all to our advantage.”Since coming to power in 2002, President Marc Ravalomanana has worked hard to woo investors, with success in courting big mining prospectors in particular.”We will be able to take advantage of cheap energy in South Africa to process raw materials cheaply at the processing plants there,” Hendrik Graham, country manager for strategic development at Ticor, a South African mining company.Ticor is planning to establish a large ilmenite – iron titanium oxide – mine in the south of the island.Lower tariffs could mean cheaper products for consumers, vital for an island nation struggling to feed itself.”Reduced taxes on imports will bring quick benefits to people in terms of what they can afford to buy,” said Thabiso Gabanakgosi, divisional buyer for Shoprite, a South African-owned supermarket chain.- Nampa-Reuters