BBC NEWS Americas Africa Europe Middle East South Asia Asia Pacific Arabic Spanish Russian Chinese Welsh
BBCi CATEGORIES   TV   RADIO   COMMUNICATE   WHERE I LIVE   INDEX    SEARCH 

BBC NEWS
 You are in:  Business
Front Page 
World 
UK 
UK Politics 
Business 
Market Data 
Economy 
Companies 
E-Commerce 
Your Money 
Business Basics 
Sci/Tech 
Health 
Education 
Entertainment 
Talking Point 
In Depth 
AudioVideo 


Commonwealth Games 2002

BBC Sport

BBC Weather

SERVICES 
Friday, 15 February, 2002, 18:03 GMT
Election row sours Malagasy success
One of Floreal's textile factory in Antananarivo, Madagascar
Fuel is running out in Antananarivo as the blockade bites
By the BBC's Alastair Leithead in Antananarivo

The economy in Madagascar is in crisis as the political situation in the country is threatening to undo six years of development and foreign investment which has created more than 100,000 jobs.


This crisis needs to be sorted out as soon as possible... Investment is coming down, companies are moving away

Hafez Ghanam
World Bank regional operations director
A general strike has paralysed the capital, Antananarivo, for three weeks now, and a blockade on the road between the city and the main port has put a stranglehold on the importers and exports who drive the country's economy.

The problem is the recent presidential election. The challenger, businessman Marc Ravalomanana, won the first round in December - but the official line is that the winning margin was too narrow to avoid a runoff with incumbent Didier Ratsiraka.

Mr Ravalomanana and his supporters, who have called the general strike, say they won outright and allege vote-rigging - a charge backed up by independent monitors.

Meanwhile, Mr Ratsiraka's followers are responsible for the blockade, and say the second round is on for next week.

Trapped

And the island's fast-growing textile industry is caught in the middle.

As in many developing countries it's a fickle, branch-plant business which relies on stable politics and requires delivery to deadlines.

With the Malagasy infrastructure grinding to a halt, it's not only affecting the production line now, but putting off the clothing companies planning their next season lines and discouraging new investors from moving into what's otherwise seen as a market with huge potential.

Floreal is a fine example: with 10,000 staff, the largest employer on this Indian Ocean island of 16 million people.

John Hargreaves, its director general, has already had to lay off 1,000 people temporarily and is facing a real crisis.

One of Floreal's textile factory in Antananarivo, Madagascar
The island's largest employer has already laid off 1,000
"The situation is extremely serious," he told the BBC.

"We are not getting any of our imports of raw materials into the country whether it be by air or by sea - by air as the customs are on strike or by sea because there's a roadblock between the port and Antananarivo.

"We have 10 or 20 working days of production ahead of us and then we will have to start closing the factories.

"Our clients worldwide in the States and Europe are worried now Madagascar is getting on the news. People putting in long term orders don't want to place them in Madagascar at the moment and will not until things settle down."

In the Zone

At the heart of the development in Madagascar is the "Zone Franche": a duty free zone which has created more than 100,000 jobs, allowing raw materials to be imported and finished products to be exported without duty payments.

The US' African Growth and Opportunities Act (AGOA) has also helped attract investment, with clothing company Gap alone accounting for around half the island's textile business.

One of Floreal's textile factory in Antananarivo, Madagascar
Textile workers are suffering from the blockade and strike
All the importers and exporters are facing the same situation.

John Ffooks imports bottled gas to Madagascar, and he has thousands of canisters unable to reach Antananarivo because of the blockade.

"We were doing very well, but now we cannot get the gas to our customers," he said. "If this continues for another couple of weeks we may not be able to continue."

Facing off

The political stalemate has seen the currency, the Malagasy franc, lose around 7% of its value against the major currencies in a month.

The World Bank has warned that 50,000 jobs are at jeopardy and the country risks falling into recession.

Hafez Ghanam, the World Bank's regional operations director, estimates the cost at about US$12-14m a day.

"This crisis needs to be sorted out as soon as possible," he told the BBC.

"Investment is coming down, companies are moving away. And Madagascar is already the eighth poorest country in the world, with 70% of the population living below the poverty line."

Talking

Talks are going on between the two sides in this deadlock over the presidential election result, but so far stalemate continues.

Madagascar is at a vulnerable stage of its move towards becoming a manufacturing country - dependent on the multinational corporations and on a political stability and democracy which is currently in question.

It's a country at a turning point, and everyone in business at least, is holding their breath and hoping that not only can the political crisis be resolved, but that the economy can survive.

See also:

15 Feb 02 | Africa
Madagascar talks resume
14 Feb 02 | Africa
Madagascar's capital 'cut off'
12 Feb 02 | Africa
Call to postpone Madagascar poll
09 Feb 02 | Africa
Madagascar vote 'rigged'
Links to more Business stories are at the foot of the page.


E-mail this story to a friend

Links to more Business stories