Private Sector and Infrastructure 33171 250 May 2005 Findings reports on ongoing operational, economic, and sector work carried out by the World Bank and its member governments in the Africa Region. It is published periodically by the Knowledge and Learning Center on behalf of the Region. The views expressed in Findings are those of the author/s and should not be attributed to the World Bank Group. The Tourism Sector in Madagascar Iain Thornton Christie Madagascar has an impressive nizes the importance of tourism as array of biodiversity, natural a development tool and some gov- beauty and cultural resources to ernment policies have been de- support tourism. The world's fourth signed to address some of the seri- largest island, Madagascar is home ous constraints to its expansion. to many species found nowhere Most importantly, macro-economic else on the planet, among them 30 policies have helped to create sus- species of lemur ­ currently the tained economic growth recently main tourist attraction. and to provide an improved busi- Madagascar's nearly 5,000 km of ness environment. Decisions to coastline is coupled with a conti- streamline the national airline nental shelf equal to 20 percent of and introduce "Open Skies" policies the island's land area which pre- should reduce costs and make itin- sents numerous opportunities for eraries more flexible. developing resort-based tourism to Privatization of government-held complement eco-tourism. hotels should also lead to their At present, the scientific com- greater efficiency. The use of do- munity knows Madagascar better nor funding for improving the road than the traveling public. Nonethe- network will also benefit tourism. less, Madagascar has the potential Local tour operators note that com- to welcome more than the current munications have improved level of 170,000 tourists if growth greatly, compared with five years is well planned in a broad, multi- ago, with the widespread use of cell sectoral way, focusing on econom- phones and e-mail. The govern- ics, infrastructure constraints, ment has also announced plans to policy reforms, environmental and more than triple the size of its net- social concerns. work of areas under protection Madagascar is now focusing on from 1.7 million hectares (about 3 developing its tourism through a percent of the country's surface) to cluster approach to support growth. 6 million hectares over the next In parallel, it recently approved the five years not only to ensure wa- third environmental program with tershed protection and safeguard Findings ANGAP, (Association Nationale endangered species, but also to pour la Gestion des Aires Protégés) benefit tourism. supported by the donor community. Many "willingness to pay" stud- The Madagascar Poverty Reduc- ies indicate that tourists can be tion Strategy Paper (PRSP) recog- tapped to support environmental or cultural protection, either through pressures and over-fishing are the inability of the sector to accom- entrance fees, departure or other among the main threats to the modate and transport groups of taxes, and voluntary contributions. coastal zone. Nevertheless, some tourists, discerning tourists espe- In addition, the larger accommo- NGOs are assisting local commu- cially, constrains its growth. dation units and those in sensitive nities to introduce tourism as an There are too few good hotels, ecological areas should aim for ac- income-generating activity and lodges, and camps throughout the creditation that they have met these case studies provide models island and most are small. Group clear environmental standards. that could be replicated elsewhere travel is a characteristic of inter- This valuable marketing tool will in the country. national tourism today and most enhance the island's image as well Of course, the success of these hotels outside Antananarivo can- as help preserve the natural re- small-scale activities is dependent not accommodate groups of 16 source base. upon the growth of the tourism sec- people or more. The presence of By creating backward and for- tor as a whole. Any investor, for- an internationally recognized flag- ward linkages to other production eign or local, for tourism or any ship resort hotel or ecotourism and service sectors, the tourism other sector, looks first for a stable lodge in Madagascar would bring industry can make significant con- macro-economic framework foster- name recognition, raise standards tributions to poverty alleviation. ing stability, confidence and pre- through technology transfer, and First, because tourism assets are dictability. Social and political sta- bring with it international cam- found throughout the island, tour- bility have broadly been re-estab- paigns to promote the island. ism creates pockets of economic lished since the 2002 crisis. There The high cost of communications growth in regions that have no al- are positive signs that the economy is a cross-cutting issue for the pri- ternative sources of income and is recovering from the 2002 col- vate sector, including in tourism employment. Second, both eco- lapse in growth. Some measures where communications is the tourism and resort-based tourism, have also been taken by the gov- main lifeline. This issue received properly managed, can help to pre- ernment to improve the business the most criticism in a visitor sur- serve environmental assets. More environment (such as anti-corrup- vey completed in 2000. Commu- needs to be done to build a dynamic tion efforts and tax reform). How- nications, specifically reliable, rea- partnership between business and ever, several tourism-specific fac- sonably priced Internet connectiv- conservation, in recognition of the tors are currently impeding the ity is vital in terms of advertising, fact that a sound business plan for catalytic business environment reservations, and credit card pur- tourism, an effective environmen- required for tourism to thrive. The chasing. Small companies are par- tal plan, and a framework for so- cost of international airline access ticularly at a disadvantage, not be- cial inclusion are mutually rein- and restrictions on internal travel ing able to afford Internet sites, forcing and that the absence of any are among the major factors. In- which greatly facilitate reaching one may put the others in jeopardy. ternational airfares from the main foreign buyers. Tourism has a beneficial impact generating markets are among the Complex procedures for land ac- on the economic lives of local popu- highest in the world. Internal air quisition and difficulty in securing lations by creating jobs and provid- flights are costly and unreliable, financing continue to deter new ing additional sources of income with frequent cancellations or re- investors. The tourism industry and wealth creation. On the other scheduling. For internal travel, cli- complains about the number of hand, the quality of tourism assets mate and lack of road maintenance taxes that have to be passed on to is also affected by poverty. Defor- have been limiting factors. From the consumer resulting in higher estation, a continuing threat in January to March, the wet season tourist costs. Although there are Madagascar, reflects the desperate brings heavy rain and only 7,000 reformers in government, red tape attempt at survival by very poor km out of the 35,000 km in the road and rent-seeking behavior still rural populations, with few eco- network are weatherproof. Rough deter investors from investing in nomic alternatives to subsistence seas can delay inter-island travel the country. Madagascar is ad- agriculture and the use of trees as or make it dangerous, especially dressing some of these issues (with fuel wood. Similarly, population on the East coast. Simultaneously, French, German and US assis- tance) through a mechanism term frameworks for the growth of worldwide and by political upheav- called the "tourism land reserves" tourism. These participatory stud- als at home. The World Tourism (réserve foncière touristique), which ies examine tourism's potential Organization suggests that tour- gives clear access to special land externalities and integrate it into ism is resilient and will bounce reserves in tourist areas. Were the macro-economic framework to back ­ and indeed some countries these to carry the same benefits create linkages to other productive in Asia saw growth in tourism in as the EPZ regime, they would be a sectors. The study also identifies 2002. After three years of uncer- very attractive package for tourism poles for development, ways to tainty for the tourism sector, the investment. eliminate constraints and barriers World Travel and Tourism Council In spite of these constraints, to growth, encourages recently released a forecast of 8.8 tourism is currently one of the top sustainability through physical percent real growth in the mea- three sectors in terms of foreign planning and community partici- sure of Travel and Tourism De- exchange earnings but it lacks a pation, as well as analyzes demand mand for Sub-Saharan Africa in solid database to assist in deci- and proposals for appropriate tour- 2004, with real growth estimated sion-making. Currently, tourism ist accommodation and services. It at 6.0 percent between 2005-2014. is included in sectoral GDP as also addresses the policy frame- Indeed, since the beginning of the "Trade, Hotels and Restaurants". work, financing of tourism, the political hiatus in Madagascar in By lumping trade with tourism, the "greening" of the island, pro-poor 2002, occupancies in higher-in- contribution of neither can be well tourism, and the idea clusters of come hotels seem to have held up, understood. The Government of high-quality accommodation and (although smaller tourism opera- Madagascar is fully cognizant of the services to upgrade the product. tions have seen a decline). It is implications of this lack of infor- To take advantage of this, it is also a remarkable tribute to mation. In 1993, the United Na- clear to all stakeholders that there Madagascar's assets and its people, tions called on all countries to de- needs to be a more effective part- that despite lack of competitive- velop a Tourism Satellite Account nership between the public and ness in many facets of the sector, (TSA) to provide a credible measure private sectors. To make progress most tourists express high satis- of its true contribution to the na- on this front, the government set faction with their visit and many tional economy and Madagascar up the Maison du Tourisme as a pri- confirm this sentiment by booking wishes to adopt such a system. vate sector umbrella organization a return visit. The World Bank's current pro- with European Union support. In gram in Madagascar is helping to addition, a new agency, the Office This article was written by Iain remove overall constraints to de- du Tourisme was also established. Thornton Christie, consultant, Private velopment. Tourism is cross- However, the next step of stream- Sector and Infrastructure Depart- sectoral and with greater strategic lining these institutional arrange- ment, Africa Region, World Bank. For focus, many on-going sector pro- ments and improving coordination more information, e-mail grams could increase the outreach of their activities would go far to Ichristie@worldbank.org of tourism to rural areas and help achieving better public-private dia- alleviate poverty. An example is logue and facilitating agreement transport, where a focus on tour- on a framework for promoting "Des- ism as a priority sector led to tination Madagascar." Policy dis- changes in emphasis within the cussions with the government program in favor of tourism. should include the need to improve In parallel, the government in- the business environment for tour- tends to complete master plans for ism and, particularly, to adopt mea- its tourism zones. With the support sures that will enable new inves- of GATO AG (a German apex or tors to follow-through on their in- umbrella organization for tourism), vestment plans. it has prepared a "concept for tour- Tourism in Madagascar has ism", to provide short- and long- been affected by acts of terrorism