Madagascar’s economic trajectory has faced significant headwinds since its independence. Recurrent political crises, susceptibility to extreme weather events like cyclones, and a severe deficit in physical infrastructure have constrained the island nation's development. Despite vast natural resources, over 70% of Madagascar's population lives below the national poverty line.
The industrial sector remains highly fragmented. The textile and apparel industry, which holds potential for export-led growth, is dominated (85%) by small-scale, informal workshops. While micro-credit schemes have assisted micro-entrepreneurs in starting these workshops, scaling them up remains extremely difficult. In addition to a lack of formal bank finance, firms struggle with administrator erratic power supplies, with many experiencing frequent blackouts that halt production. Furthermore, the transportation network is severely dilapidated, doubling the time and cost required to transport raw materials from ports to inland workshops. Bureaucratic hurdles are also immense, requiring complex registrations that deter small workshops from formalizing. Combined with a lack of skilled managerial expertise due to domestic brain drain, small-scale enterprises struggle to compete internationally or expand, keeping the vast majority localized and informal.
Examine two reasons, apart from access to formal bank finance, why 85% of the textile and apparel sector in Madagascar consists of small-scale, informal workshops.
