Madagascar is a francophone island that is rich in natural resources – from sulphur, nickel and gold, to oil and gas. This wealth holds a lot of potential for the economy.
“I think mining will drive the economy for the next five years. Really the country is very rich in the soil, so I will say that will be the future of the country,” said DHL’s country manager for Madagascar, Mamy Rakotondraibe.
While the political uncertainty experienced in Madagascar might have limited business and economic growth, the country has blossoming textile and eco-tourism industries. “A lot of textile and mining companies are really still willing to come here, although there is political instability,” added Rakotondraibe.
The island also has fertile soil for agriculture, and Rakotondraibe described how there are rice fields in the middle of the capital, Antananarivo. “Out of 21 million inhabitants, I would say 80% are farmers.”
However, this is mostly subsistence farming and the island still has to import a lot of its food. Rakotondraibe, who has been working for DHL in Madagascar since 2001, believes that there might be an opportunity for multinational companies who provide agricultural equipment to farmers.
“The farmers here are still very manual, and the land is so big… so if you have equipment that increases productivity for them, that kind of thing could really help and at the same time, I would say, it would be a successful business here locally.”
He added that there is also room for business support services. “If you have a pioneer spirit – do business in Madagascar, because everything is still to be done. If you like challenges, like adventures, want to build something new, if you want to create new solutions… and if you have that spirit, you will do business well here because you will bring added-value because… if you have higher skills, then you will win everything.”
Drawing from his years of experience of working and living on the island, Rakotondraibe has provided How we made it in Africa with some tips to business success in Madagascar.
1. Regularly meet with your clients and customers
Rakotondraibe said that people in Madagascar like to welcome foreigners and enjoy face-to-face visits with the people they do business with. For this reason, he suggests that foreigners doing business in the country should take the time to meet with potential and existing clients to strengthen business relationships. “They will really like that. They have got time to do that… so it is really an added-value.”
He added that in January it is considered a good business practice to wish customers a happy new year. “People really like that you call them – or better, visit them – at the beginning of the year just to say ‘happy new year’.”
Rakotondraibe explained that this is part of the local culture. “So a lot of companies in January, what they’re doing, apart from sending cards, is calling and visiting [customers] and saying, ‘hello, happy new year, I hope your business is going well, etc’. And that generally is going to shape your activity for the year because people remember that you came and greeted them just for a ‘happy new year’. So that is a really good thing to do.”
2. Seal the deal over lunch
“When you want to seal a deal, have lunch. We do a lot of deals during lunch time,” explained Rakotondraibe.
He added that while this may be a similar practice in other countries, it’s particularly common in Madagascar. “Here, lunch time is a way to relax and at the same time talk about business. It’s the moment to really conclude a deal, so take your customer to lunch to conclude a deal. It works very often.”
3. Negotiating cost is a part of the culture
According to Rakotondraibe, it’s a common practice in Madagascar to negotiate a price before signing any deal, usually around 10-15% off.
“It makes us feel that the customer has made a good deal so you need to provide that discount, I would say, if you want to sign something with a customer. It’s a really common thing here and everywhere you go there is bargaining, so it’s the way to do things. You buy a car, you bargain. You buy a banana, you bargain. You buy clothes, you bargain. You bargain everything… and that’s fine. I mean, the fact that you just discount the price means you make the customer happy – it’s like that here.”
4. Managers should be accessible
Customers and clients like the people they do business with in Madagascar to be accessible so that they can easily communicate with them. Rakotondraibe said this is particularly important for those in top management positions.
“You need to remain very simple and accessible to people, even humble, I would say… Be yourself… and really people appreciate that,” he concluded.