Startups in Madagascar.

Madagascar is a halve-a-million km2 island with the rich natural ecosystem, which supports unique species of flora and fauna. However, the geographical isolation has negatively affected its history and economy.
First human settlements in Madagascar are dated back to 350 BC. In 1500 AD first Europeans arrived to Madagascar. In early 17th century French colonists established a trading post there. Later, in mid-17th and late-18th centuries, Madagascar had been popular among pirates and slave traders. The small isle Nosy Boroha on the northeastern coast of Madagascar was the location of the legendary Libertalia — anarchists’ utopia state.
For more than three centuries (1540–1897) Madagascar was ruled by indigenous queens and kings. In 1810 famous warrior Andrianampoinimerina unified Madagascar and put it under the control of his family. In 1883 French troops crushed king’s army after bombardment of the Antananarivo Palace (September 1895).
Madagascar gained its independence in 1960. Fifteen years later, in a staged coup d’etat, the first Republic was replaced by Marxists-Leninist regime. In the following 20 years (1975–1993) admiral Didier Ratsiraka managed to run Madagascan economy into the ground. Still today, despite a series of economic reforms and political over-turns, Madagascar remains one of the poorest countries on Earth.
Madagascar’s rigid administrative, tax and legal systems, its predominantly rural, low-income population as well as subsistent agriculture based economy do not support startup ecosystem growth. However, local high-tech entrepreneurs may find plenty of profit opportunities on niche e-markets, where competition is negligible and administrative pressure — relatively low. Still, absence of financing, limited local markets size as well as shortage of qualified labor seriously undermine the future perspective of such enterprises.
Business Notes for Startups Founders:
- political climate: not friendly;
- economic climate: not friendly;
- regions to focus: locally;
- industries to focus: e-services (tourism), FinTech;
- major limitations: slow economic growth (under 3% a year), overwhelmingly poor population (over 70% living under the poverty line, per-capita under $500), small economy ($10 billion GDP) which primary depends on agriculture, high inflation (9%), high CB interest rate (9%), intensive administrative pressure on SME, high legal barriers, fixed Internet penetration rate is very low (under 4%), absence of VC and seed financing, lack of qualified personnel, geographical isolation;
- stimulus: large population (25 million), low costs, absence of competition;
- opportunities: to launch e-services business on local niche markets.