Privatization in Madagascar
Country Fact Sheet

Produced by MIGA and the Africa Region of the World Bank – June 2001

More Info

	Basic Facts in IPAnet
	FDI: Business Guides in IPAnet

Relevant Web Sites

Support Fund to the Private Sector (FASP) website

Map of Madagascar

For Further Information Contact

Fons D'Appui au Secteur Prive (FASP)

Immeuble Marbour, Antsahavola

B.P. 8694

Antananarivo 101

MADAGASCAR

URLhttp://www.madagascar-contacts.com/fasp/US/index.htm

Source Documents

Privatization Background

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In 1993, despite the implementation of the 1988-1993 divestiture program of small-and medium-sized companies, public enterprises were still dominant in an environment characterized by unclear legal framework, arbitrary business regulations and lack of institutional support to local private businesses. In 1996, the Government of Madagascar (GOM) embarked on a program to encourage private sector development through significant changes in the business legal environment, liberalization, and privatization of key monopoly sectors. The privatization program included approximately 50 companies. The focus of the program on key sectors was to disengage the state, regain investors confidence, stimulate private activity and reduce the burdens of the public enterprises on Malagasy’s fiscal position.

From 1996 to present, the two state-controlled banks were privatized and the financial sector was restructured. As of today, the banking sector is sound, and adequately regulated. The air transport, railway, petroleum distribution and telecommunications sectors are liberalized creating real investment opportunities. Indeed, new private operators are entering the telecommunications (cellular and internet providers) and air transport sectors and have contributed to a doubling in the number of telecommunications subscribers and international tourists. Privatization transactions of roughly 20 small and medium sized companies in agro-industry were also recently completed.

Institutional Framework for Privatization

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In 1996, privatization law No. 96-011, which governs the withdrawal of the State from public enterprises and establishes a clear framework for privatization implementation, was adopted and then modified in 1998 by law 98-014. Application decrees No.96-782, No.96-783 and No. 97-823 were also introduced to strengthen the institutional and legal environment while decree No. 97-584 officialized the list of enterprises to be privatized.

The World Bank is supporting the privatization and private sector development in Madagascar through the Private Sector Development and Capacity Building project approved in May 1997 for an amount of US$ 23.8 million. The overall aim of the project is to support accelerate export-led growth, by increasing private investment and productivity through reforms in the policy and business environment, upgrading of private firms’ capabilities and global market knowledge and involvement, and attracting foreign direct investments (FDI). The project will closed in December 2002.

The Bank is also currently reviewing a second private sector development (PSD) project which will provide US$ 21 million to complete the divestiture of four major state-owned enterprises (SOEs) and 30 small and medium-sized enterprises and to accelerate the liberalization reforms in agro-industry, air transport and telecommunications sectors.

Privatization Program Status

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The privatization program targeted 136 companies for privatization over the period 1997-2002. Already 46 companies have been or are in the process of being privatized. Some of the companies included in that initial list, such as Air Madagascar, had not been divested as of the end of 2000. Recently, in June 2001, the state petroleum marketing company (SOLIMA) has been privatized.

Outlook

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The GOM has clearly showed his commitment to PSD and privatization as illustrated by the appointment of a Ministry in charge of this specific sector and by the creation of an interministerial Privatization Committee supported by a Secretariat Technique á la Privatisation. In this context, the building of a more conducive environment, improvement of the governance of key institutions, and execution of the divestiture program will send powerful signals to the national and international business communities and will thus help build confidence in the country and attract tangible investments. Below, arranged by sector, the list of companies to be divested.

Energy

1. JIRAMA (Water and power)

Telecommunication

2. Télécommunication Malgache (TELMA,Telecommunications)

Transport

3. Compagnie Aérienne Air Madagascar (AIR MAD, Air transport)

4. Compagnie Malgache de Navigation (CMN, Sea Transport)

5. Société Malgache de Transports Maritimes (SMTM, Sea Transport)

6. Air Route Service (ARS, Road Transport)

7. Réseau National de Chemin de Fer Malgache (RNCFM, railway transport)

8. Filaterana Malagasy (FIMA, Urban transport)

9. Aéroport de Madagascar (ADEMA)

10. Société Financière pour le Dévelopment des Transports et du Tourisme (SOFITRANS)

Commercial Sector

11. Société Industrielle et commerciale de l’Emyrne (SICE): Trade and distribution

12. Société Malgache de Collecte et de Distribution (SOMACODIS): Trade and distribution

13. Maxime Darrieux (DARRIEUX): trade and distribution

14. Groupe Comptoir de Commerce et de Représentation pour l’Ocean Indien (COROI): Trade and distribution

15. Société d’Intérêt National de Produits Agricoles (SINPA): trade and distribution

16. Tranombarotra Roso (ROSO): trade and distribution

Research/Consulting

17. Société d’Etude et de Réalisation pour le Development Industriel (SERDI)

18. Cabinet RINDRA

19. Société d’Etudes, de Construction et de Réparation Navale (SECREN)

Industry

20. TOLY (Mechanical engineering construction )

21. Société d’Etudes, de Construction et de Réparation Navale (SECREN)

22. Forage Essai Travaux (FORESTRAX)

23. Société Industrial du Bois (SIB)

24. Société de Construction Mécaniqe Industrielle (SOCOMI)

25. Société Torginol Madagascar

Extraction/ mining

26. Société Malgache d’Exploitation des Mines et Carriéres (SOMADEX)

27. Société d’Exploitation de Valorisation des Marbres (SEVMACAM)

28. Marbre et Granite de Madagascar (MAGRAMA)

Agriculture and Agro-industry

29. Abatoir Frigorifique de Majunga (AFM)

30. Abatoir National de Morondava (ANM)

31. Bureau Central Laitier (BCL, Dairy products)

32. Famokarana Mahabibo Malagasy (FAMAMA, Cashew nut)

33. Ferme d’Etat Vohimasina (FEV, Meat)

34. Ferme d’Etat Bree-Kay (Cotton)

35. Ferme d’Etat de la Sakay (FESA, Animal Breeding)

36. Fikambanana Fampandrosoana ny Lemak’i Betsiboka (FIFABE, Rice)

37. Hasy Malagasy (HASYMA, Cotton)

38. Kafe Malagasy (Coffee)

39. Langouste du Sud (LANSU, Fishing)

40. Projet Palmeraie d’Antalaha (Oil palm)

41. Projet Antok’Asa Ambanivohitra (AAA, Agricultural Equipment)

42. Société d’Exploitation de la Viande a Madagascar (SEVIMA, Meat)

43. Société Malagasy pour le Palmier á Huile (SOMAPALM, Oil palm)

44. Société Rizicole de Marovoay (SORIMA, Rice)

45. Société sambava Voanio (SOAVONIO, Coconut)

46. Société dÁndapa Mamokatra (SOAMA, Rice)

47. Siramamy Malagasy (SIRAMA, Sugar)

Pharmaceutical

48. Société Promotion pour les Produits Agricoles d’Exportation (SOPRAEX)

49. Société pour le Dévelopment Industrial des Plantes Madagascar (SODIP)

Sources

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- Project Appraisal Document on a proposed credit in the amount of SDR 16.6 million (US $21 million equivalent) to the Republic of Madagascar for the private sector development project. The World Bank, March 2001

- Technical annex to the memorandum and recommendation on a proposed credit of US$23.8 million to the Republic of Madagascar for a private sector development and capacity building project. The World Bank, May 1997.

- Madagascar Enhanced Structural Adjustment Facility Policy Framework Paper. (1999-2001)

- Madagascar Letter of Intent, Memorandum of Economic and Financial Policies, February 2001