Madagascar - Industry

Industry is a fledgling sector in Madagascar, providing only 13.6 percent of GDP (1998), but one showing definite potential. Mineral deposits are substantial and largely unexploited. Gold and chromite are both mined extensively, as are, on a smaller scale, graphite, mica nickel, ilmenite, and marble. Iron and bauxite, as well as semi-precious stones (especially sapphires) are being developed, and have a combined export potential of up to US$380 million. The industry is not without its problems, however. Many of Madagascar's deposits are inside national parks and hence off-limits to development. Low investment is also a hindrance, as is—in the case of gold and gemstones—chronic smuggling.

Manufacturing is an area of some success, greatly stimulated by the formation of the export processing zone (EPZ) in 1996, which offers tax exemptions for export-focused industries. The project has grown to include 150 companies and has generated 80,000 jobs, producing 37.4 percent of Madagascar's foreign trade revenue. Its main products are clothing (48 percent), handicrafts (13 percent), and agro-processing (9 percent). Textiles are another important export, supported by Madagascar's cotton industry and low wage rates, and accounts for 15 percent of manufacturing production. Other products include plastics, pharmaceuticals, leather goods, footwear, and tobacco.