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Madagascar: the next apparel manufacturing destination

Madagascar ranks first amongst Sub-Saharan African countries in textile exports to the EU and third to the United States. Many fashion brands labeled “Country of Origin: Madagascar” are well-known in the United States as well as in Europe. Zara, Express, JCPenney, CK, One Jeanswear Group, Puma, Dockers, M&S, Petit Bateau, and many more fashion brands’ products are manufactured in Madagascar.

Madagascar is strategically located on the Africa-Asia axis and an ideal destination for any project in the textile garment industry, offering one of the most attractive locations in the world for the production of low-cost garments.

sourcing-distribution-networks-production-Madagascar
Figure: Complex sourcing and distribution networks pivot around production in Madagascar.

As a result, Madagascar Industries has positioned itself as the preferred supplier in the fiercely competitive apparel sourcing networks and has built a diversified customer base, primarily owned by European, South African and US brands and retailers such as Camaïeu, Woolworths and Zara.

Reason why Madagascar is preferred for the next apparel manufacturing destination

Low-cost labor

Bangladesh’s garment industry has been able to survive in this competitive market based on cheap labor for years. If cheap labor is the determinant, then Madagascar is the winner. Madagascar’s population is growing rapidly estimated at 28.40 million. According to the Madagascar Economic Development Board, the national unemployment rate is no more than 3.6 percent.

This is a very low percentage, which is even lower than in Bangladesh (5.3 percent) which hides a huge problem of underemployment. Several manufacturers in Origin Africa have praised the high-pressure skills of Malagasy workers, who achieve a level of efficiency and quality after relatively short-factory training (1-3 months), such as in South Africa or Bangladesh.

About 78% of Madagascar’s active population is still working on the land which means a huge pool of cheap labor is available for the industry. The minimum wage in Madagascar is USD 35 per month. Asian garments manufacturers are likely to resume talks to move some of their products to Madagascar to avoid product-source restrictions and take advantage of Madagascar’s low-cost, skilled labor.

Business-friendly investment facilities

The most added benefits for Madagascar are free to trade agreements with most major international economies and unlimited duty-free access to the European Union under the EPA and the US under AGOA (African Growth and Opportunities Act).

Malagasy garments factories are increasing their capacity and foreign investors have set up new factories in Madagascar. Currently, about 120,000 people, 60 percent of whom are women, work in Madagascar’s textile and clothing industry.

And Madagascar expects the country’s textile and garments industry to create 200,000 complementary jobs by 2022. Foreign investment firms were driven to Madagascar for attractive investment facilities.

Madagascar-apparel-export-industry

Leading sub-sectors

Although COVID-19 supply disruptions, production delays, and demand drop-offs have reduced Madagascar’s exports, the country’s garment industry has consistently shown an upward trend in terms of revenue each year. Last year Madacasgar exported Clothing, accessories (not knit or crochet) worth $205.9 million, 10.6% of total export and knit or crochet clothing, accessories worth $183.9 million, 9.5% of total export.

Madagascar is also preparing potential sub-sectors to support the garments industry. Existing sub-sectors already have the potential to produce high-quality exportable yarn and fabric. However, it has not the ability to meet domestic demand. Still, Madagascar needs to import yarn and fabric.

Yarn

(Figures in thousands of USD)

 YARN 2017 2018 2019 2020 (Jan – June)
Total export 35 27 50 22
Total import 22,755 21,392 16,276 6,397
Fabric

(Figures in thousands of USD) 

 FABRIC 2017 2018 2019 2020 (Jan – June)
Total export 1,154 986 820 227
Total import 77,738 89,783 87,830 40,851
Import from US  9 25 182 0

Data sources: Madagascar custom

Due to Covid-19, 40-50 percent of the sector was employed within five months of the start of the epidemic shut down in March 2020. The retailers have canceled orders and canceled frozen contracts in response to reduced consumer demand due to coronavirus lockdown.

Purchases of manufactured items and even shipments have been canceled; contracts under negotiation for 2021 collection have been broken. Yet the industry has shown great resilience in the past. Madagascar is trying its best to attract the attention of foreign brands.

Madagascar has created a project with an ethical and sustainable ambition to preserve and increase the production of natural silk. During the 7th edition of the annual event Origin Africa in Antananarivo, most Malagasy and foreign garment manufacturers testified that they were expanding or setting up new manufacturing capacity in Madagascar in response to the rapidly growing demand. Madagascar is not yet ready to compete with the top exporters, but it could be soon.

If anyone has any feedback or input regarding the published news, please contact: info@textiletoday.com.bd

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