WTO finalizes the forth trade policy review of Madagascar

The World Trade Organization (WTO) Secretariat has completed the review of the trade policies and practices of Madagascar. This is the fourth review since the country accessed to the WTO, on 17 November 1995. All members of the Organization have their trade policy periodically reviewed, the frequency of which varies depending on a country’s share of world trade. The trade policies review of Madagascar depicts a situation of a country whose potential is high, particularly in the agriculture, mining and tourism sectors, as well as in the textile industry. However, the challenges are equally important: high exposure to climate shocks (mainly droughts and cyclones) and an infrastructure which is in a very poor state -particularly roads and electrical grid - represent significant barriers to the economic growth and trade of the island.

The economy of Madagascar is quite diversified. The agricultural sector is quite small with a production that primarily serves subsistence purposes, being only 40% of gross agricultural production marketed. Notwithstanding this, agricultural exports have experienced in recent years a significant growth, mainly driven by vanilla and cloves. The mineral sector is also important, being the Madagascar subsoil particularly rich in precious and semi-precious stones, and with deposits of crude oil and gas, which however have not yet been exploited. The mining products account for almost 50% of exported goods and a variable share of foreign direct investment of up to 40%. Most industrial mines are operated by foreign companies, sometimes in association with the Malagasy Government. The main industrial sectors are the agri-food industry, followed distantly by textiles and timber, paper and printing. The agri-food industry is focused partly on the domestic market and partly on the processing of cash crops (vanilla, spices, essential oils, lychees, dried fruit, etc.), mainly for export.

The financial services sector is small, with very low levels of bank account penetration and even lower levels of insurance penetration. This situation is offset only in part by microfinance institutions and the growth of mobile money.

Like most of African States, Madagascar trades more with external partners (mainly the European Union) than with other African counterparts. In term of free trade agreements, the island is a member of the SADC, COMESA and the Tripartite Free Trade Area. Moreover, together with other four African States (Seychelles, Comoros, Mauritius and Zimbabwe), it has in place two interim Economic Partnership Agreement (EPA): one with the European Union and one with the United Kingdom. Lastly, Madagascar is beneficiary of a large series of unilateral preferences, including the African Growth and Opportunity Act (AGOA) of the United States.

All the recent trade policy reviews of African countries have a specific section dedicated to the African Continental Free Trade Area (AfCFTA). It is important to underscore that Madagascar was the latest African State to ratify the AfCFTA, which happened in November 2024 (as the WTO report confirms at page 8). However, this ratification still does not appear in most of the monitoring sources like the TRALAC AfCFTA ratification barometer. But this is probably due to the fact that the ratification law has not yet been published in the national gazette, due to the need to complete an assessment of the ratification law's conformity with the Constitution. This verification was completely by the Constitutional Court of Madagascar only recently, with a decision adopted on 19 December 2024.