What is it like doing business in Madagascar?

The goal of the Enterprise Surveys (ES) is to evaluate the quality of the business environment in the economy by asking a set of questions that capture both the experiences and perceptions of firms. This provides much needed information given how little is known about what businesses experience in developing economies. Below we provide highlights of the recently released data for Madagascar.

The Madagascar Enterprise survey consists of 532 firms across eight regions and six sectors. Firms interviewed for the ES are formal private firms operating in non-agricultural, non-extractive private sector with 5 employees or more. In this post we will only focus on a couple of highlights for the standard ES firms. For a more detailed survey highlights please see the following Country Highlights document.

One out of every three firms in Madagascar experienced a bribe payment request in at least one of six regulatory and utility transactions (Bribery Incidence rate). A gift or informal payment was requested for more than 30 percent of public transaction in Madagascar compared to an average of 18 percent in Africa. 46 percent of businesses were expected to give a gift or informal payment when requesting an operating license compared to 21 percent elsewhere in Africa (see figure 1 below).

Figure 1: Firms in Madagascar are more likely to experience bribe requests compared to other African countries

In Madagascar, women’s participation in the private sector is high especially in comparison to that of other developing economies. One out of three workers employed in the private sector is a woman. The proportion of women in the private sector workforce holding top managerial positions, also very high at 28 percent, is nearly twice as high as the rate in Africa and in low income comparator countries, which are at less than 16 percent. There is a remarkable variation across firms though. Only 9 percent of the managers among large firms are women compared with 28 percent among medium firms and 33 percent in small firms (see figure 2 below).

Figure 2: Madagascar performs well in female participation at the upper levels of decision making

Another key highlight of the survey is that out of 15 areas of the business environment, firms in Madagascar tend to rate political instability as the biggest obstacle to daily operations. This reflects the fact that Madagascar is only now emerging from economic stagnation following five years of political turbulence and that this survey was conducted during this transitional period. Moreover, only a small percentage of firms in Madagascar see corruption as the biggest obstacle they face despite the relatively large number of instances of petty corruption. Corruption appears to be a routine cost of doing business for the private sector.

Figure 3: Businesses overwhelmingly cite political instability as the biggest obstacle for their daily operations

For a full range of indicators please visit the Madagascar survey webpage in the Enterprise Surveys website. The raw survey data can also be obtained here after registration. Please feel free to provide comments, specifically for our survey highlights. Any feedback is much appreciated and may assist us in improving the product.

This article was first published by the World Bank’s Let’s Talk Development blog. Publication does not imply endorsement of views by the World Economic Forum.

To keep up with the Agenda subscribe to our weekly newsletter.

Authors: Joshua Wimpey is a Private Sector Development Analyst for The World Bank. Asif Islam is a Consultant with the Enterprise Analysis Unit at the World Bank Group

Image: A general view shows the cityscape in Madagascar’s capital Antananarivo December 19, 2013. REUTERS.