Madagascar seeks tourism renaissance to boost economy

Madagascar seeks tourism renaissance to boost economy

After five years of political crisis, Madagascar’s economy remains sluggish. The government is hoping to restart the economy by boosting tourism and private investments.

With important natural resources and rich biodiversity, Madagascar is a country with great potential. Before the 2009 political crisis, its economy grew at an of average 5.7%. But since 2009 – when Madagascar’s then-opposition leader Andry Rajoelina seized power after ousting President Marc Ravalomanana – growth has been weak.

Though the island has always been among the poorest countries in the world, the crisis has further hampered socio-economic development. Currently, Madagascar is ranked 155th out of 187 countries on the 2013 Human Development Index, 163rd by Doing Business 2015, and 133rd by Transparency International.

As the political situation continues to stabilize, growth has increased from -3.7% in 2009 to 2.6% to a projected 5.4% in 2015, according to the African Economic Outlook. Tourism and private investment, however, remain below desired levels. The government has been trying to revive them to stimulate economic development.

Rich in beautiful beaches, fauna and flora, Madagascar used to be a very popular tourist destination, with about 375,000 tourists in 2008. But political instability and insecurity have tarnished its reputation, thus decreasing the number of tourists to 220,000 in 2014.

Authorities and tour operators have been particularly worried about Nosy Be, the country’s main tourist destination, where hotel occupancy rates stagnate between 15 and 25%. In October 2013, the lynching of two Westerners, wrongly accused of killing a child in Nosy Be has scared away tourists.

As a result of this incident and of other attacks against tourists, the French Ministry of Foreign Affairs recommended visitors avoid the island. This travel warning, along with bad publicity abroad, have severely hampered tourism, although authorities have worked to increase police presence and to reassure visitors.

Three days after the country held the third edition of its international tourism fair, in May 2014, the French Ministry finally lifted their travel advisory. This was in response to Madagascar’s security efforts and increased complaints about the travel warning. Tourism, however, has still not fully recovered.

Malagasy tourism suffers from infrequent, costly, and unreliable air service. Air Madagascar is known for its unreliability (delays, cancellations, and breakdowns), which has discouraged tourists and tour operators from using the national company.

The airline even figures in Annex B of the EU’s “black list” — covering air carriers restricted to operating only certain types of aircraft within the EU — which represents a huge cost for the country. Because of these restrictions and the political crisis, many carriers have suspended their service to the country. There are also few flight charters as the guarantee demanded by air companies to come to Nosy Be is too high for tour operators (€100 000).

Consequently, measures have been taken to increase air traffic, as it is key to revive the travel sector. Air Madagascar has launched an ambitious modernisation programme in order to extricate itself from the EU’s Annex B. After the withdrawal of two Boeing 737-300s in December, the airline recently renewed its regional fleet with two ATR 72-600s, and a Boeing 737-700, expected for delivery before the beginning of the peak tourist season.

The company is also planning training for technical personnel on the new ATRs, as well as the training of 20 flight crews on its long-haul Airbus A340s. Moreover the carrier is increasing flight frequencies on its domestic and international network, with the introduction of a Marseille-Nosy Be line, three to five weekly flights between Paris and Antananarivo (including two from Marseille), three to four weekly frequencies to Asia, and a code-sharing agreement with Air Seychelles.

Furthermore, the government selected the consortium Aéroports de Paris-Bouygues-Colas Madagascar to renovate, extend, and manage the Antananarivo-Ivato and Nosy Be airports. The parties entered into negotiations at the beginning of this month to define the project’s terms and conditions.

Besides increasing tourism, the goal is to welcome the 80 delegations of the 16th Francophonie Summit scheduled in 2016 in Antananarivo. The consortium has promised €150 million to finance the project. Yet, employees of Adema, the national company currently managing Madagascar’s airports, fear for their jobs and threaten to strike. They see this partnership as merely a privatization, which could lead to downsizing.

In any case, all these measures are very promising. The expected influx of tourists could facilitate the return of investors. The private sector invested only $850 million last year, noticeably lower than the $1.3 billion invested before the crisis. Political instability and growing corruption still push investors to perceive Madagascar’s business climate as negative.

While the government has promised new measures, none have yet been introduced. Despite this, Madagascar’s economic potential, plan to modernize infrastructures and travel have already attracted new investors.

Italian investors signed a partnership with Nosy Be’s Chamber of Commerce last April, and are planning a rural electrification project in the island. The Corporate Council on Africa also recently sent a trade mission to Madagascar to “explore opportunities in energy, infrastructure, agribusiness and technology.”

Given the government’s strong efforts, tourism and private investment are likely to increase in the short-term. If these trends continue, Madagascar could return to its pre-crisis levels in the medium term. However, there seems to be a lack of political will for implementing structural development reforms, especially anti-corruption measures.

The country’s efforts to revive its economy by boosting tourism and investment will be pointless if the government does not seriously tackle its corruption issues in the long-term.

About Author

Djenabou Cisse

Djenabou Cisse is a political analyst. She holds a Master's in International Security and a Bachelor in Political Science from Sciences Po Paris. She currently works for the think tank G-NOVA where her research focuses on digital diplomacy, defence, MENA/Subsaharan Africa and transatlalantic issues.