MADAGASCAR: Textile industry unravels
The economic aftermath of instability
Antananarivo, 24 February 2010 (IRIN) - Tensions between street traders and the city authorities in Madagascar's capital, Antananarivo, are mounting as hundreds of recently unemployed textile industry workers compete with established informal traders; textile factories have been closing since the country was suspended from a preferential trade agreement with the US.
"Before, there were just a few stalls here - now there is someone selling something, every step you take," Naina Ravaoarinirina, a cosmetics vendor, told IRIN, hiding her goods from sight as a municipal patrol passed by. "But there is not enough room now for everyone in the official street market."
Factories operating under the African Growth and Opportunities Act (AGOA) - an agreement permitting some African states to export duty free goods to the US - employed about 50,000 people and provided work to a further 100,000 indirectly, according to the government. Madagascar was suspended from AGOA on 31 December 2009.
Preferential access to US markets is determined by democratic practices and good governance, among other things. Madagascar was deemed ineligible after Andry Rajoelina assumed power in March 2009 with the backing of the army, a move widely condemned as a coup.
"The March 2009 undemocratic transfer of power and the inability to establish a return to democracy have violated one of the vital criteria for Madagascar's continued eligibility for these trade preferences," said a statement released by the US State Department in December 2009.
The collapse of a multi-million dollar industry
Madagascar's textile industry accounts for about US$600 million annually; more than half its income is derived from exports to the US, according to industry observers. Contracts placed in 2009 have kept the factories running in one of the world's poorest countries.
|As lead times [expire] on orders placed before the agreement [came to an end], factories are laying off workers and we are facing an explosion in the numbers of unemployed
"As lead times [expire] on orders placed before the agreement [came to an end], factories are laying off workers and we are facing an explosion in the numbers of unemployed," Jessie Andriamampianina, a director of the Antananarivo-based Association of Free Trade Businesses, told IRIN. "The impact of the loss of the AGOA agreement is very negative for Madagascar."
Robert Strauss, head of the American Chamber of Commerce in Madagascar, told IRIN that a quarter of the jobs in the formal economy were dependent on AGOA, and the reintroduction of US import duties of up to 34 percent had made keeping factories open unprofitable.
The rapid decline of the textile industry was also having a knock-on effect in other countries in the region, including Mauritius, Swaziland, Lesotho and South Africa, where many of the materials used in Madagascar's textile factories, such as zips, were produced, Strauss said.
Unemployed compete with informal traders
The flood of unemployed textile workers now operating as informal traders has forced the city's authorities to turn one of Antananarivo busiest thoroughfares into a pedestrian walkway and designate new areas for markets, but the demand for informal markets is outpacing supply.
"I used to be able to earn 20,000 ariary ($9.30) a day," said Soloniaina Rasoarimanana, who has been selling clothes from a pavement stall for 10 years. "Now, with the political crisis and more competition, I earn around 5,000 ariary ($2.30) a day."
Fabien Rakotonirina, a textile factory machinist who lost his job in December 2010, told IRIN: "Here on the street there is not enough profit. In the factory I earned 10,000 ariary ($4.65) a day, now I earn 6,000 ($2.80)."
The Minister of Economy and Industry, Richard Fienena, told IRIN: "There are projects for those who will be made redundant. There is a project for agribusiness, a project to create high-intensity labour forces for demolition work, a project for public works - all these options are waiting for when people are made redundant."
Andriamampianina dismissed this as "unrealistic". Few states recognize Rajoelina's government, including the Southern African Development Community, the regional body of which Madagascar and 13 other states are members.
Factory owners and workers have called on Rajoelina to reach an agreement with his political opponents so as to bring about a return to legitimate governance in Madagascar that would allow the AGOA suspension to be lifted, but many fear the textile industry may never recover from the effects of the coup-style change of government.