Madagascar businesses struggle under political crisis

Madagascar's economy is dominated by a few big businesses and an informal sector, but everyone in between has been squeezed since a 2009 coup dampened tourism and led donors to cut off aid.

"Small and medium-sized businesses are less stable. With less liquidity, they are less equipped for coping with the difficulties," said Noro Andriamamonjiarison, head of the Madagascar Business Group.

"The hardest-hit sector is without a doubt construction and public works. Highly dependent on donors, its total turnover fell from 700 to 200 billion ariary ($331 to $94 million, 260 to 74 million euros), and 7,000 jobs were lost," she said.

The UN Development Programme put the number of jobs lost at 200,000 across Madagascar since March 2009, when elected president Marc Ravalomanana was ousted by Andry Rajoelina with the military's backing.

Rajoelina now heads a transitional government meant to steer the vast Indian Ocean island state back toward constitutional order and new elections, a process moving in fits and starts.

Since the coup, most international aid has been suspended -- a crippling blow to a country where donors fund half of the national budget.

Dozens of textile companies shut their doors after Madagascar lost its preferential trade access to the United States, which requires a commitment to democracy in exchange for lifting tariffs.

Tourism also tanked after the coup, but has rebounded this year.

These troubles have rippled through the broader economy and weakened household consumption. Sales are down an average 25 percent.

Herijaona Randriamajanirina owns several chic clothing boutiques in the capital Antananarivo, including one that was looted during riots in January 2009.

It reopened five months later, but business remains 40 percent lower than in 2008, he said.

He has had to reschedule his loan payments at a micro-finance bank due to the mounting financial pressures.

Sales have not completely collapsed, however, because new customers have emerged.

"There's a lot of new money. I don't know where the money comes from, but they buy a lot," he said.

It turns out some businesses are benefitting from the crisis.

"In the city, you can see new buildings going up. This is investment financed by money coming from outside the system," said Andriamamonjiarison.

Africa: the new pot of gold for mobile telecoms

Africa's lag in land-based telecoms infrastructure has propelled the continent directly into the mobile age, opening up short-term growth prospects unparalleled in the world.

Sector players have seen growth especially in mobile Internet and banking services, as people use cellphone technology for lack of landlines or cable Internet.

"Africa is the last market to emerge. China's emerged, India's emerged. So where else outside Africa need emerging? The growth opportunity is right here," said Nicolas Regisford, co-founder of Mi-Fone, a South African company that specialises in producing low-cost handsets.

Mobile subscribers in Africa have increased by 20 percent annually over the past five years and will reach over 735 million by the end of 2012, a study by global mobile operators association GSMA found in November.

"Africa is now the world’s second largest mobile market by connections after Asia, and the fastest growing mobile market in the world," according to the GSMA Africa Mobile Observatory 2011 report.

Industry players are equally excited over the commercial prospects posed by the continent's one billion people.

"Samsung is expecting revenue within Africa to amount $15 billion, with the SADC region contributing about 25 percent of that figure, by 2015," said Gavin Clare, the company's representative in Zimbabwe, referring to the 15-country Southern African Development Community.

This philosophy also drives Mi-Fone, which eyes the immense market of consumers seeking entry-level phones.

"The African person wants a mobile device which will be doing mobile payments and accessing the world wide web. Right now, a lot of people cannot afford the smartphones that are flooding the market," said Regisford.

Ironically, this lack of traditional infrastructure, telecom and landline services, Internet penetration and broadband access, and banking services drives this growth in Africa, according to mobile systems expert Tomi Ahonen.

"As it happens the global Internet industry believes that the future of Internet is mobile. The global telecom industry believes that the future of the telecom industry is mobile, and the global money industry is starting to believe that the future of money is mobile."

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