AMBASSDOR'S MEETINGS WITH MAHAJANGA BUSINESS LEADERS

UNCLAS ANTANANARIVO 000238

SIPDIS

SIPDIS

DEPT FOR AF/E
DEPT PLEASE PASS TO USAID

E.O. 12958: N/A
TAGS: ETRD ECON PGOV PHUM PREL KISL MA
SUBJECT: AMBASSDOR'S MEETINGS WITH MAHAJANGA BUSINESS LEADERS

REF: Antananarivo 0236


1. During American Week in Mahajanga (reftel),the Ambassador met
with business and Muslim leaders to discuss the overall business
climate and to listen to their concerns. Prevailing sentiment among
business leaders was generally negative. They voiced complaints
about the poor state of the Port of Mahajanga and its continuing
inability to accommodate large, ocean-going vessels due to silting
and poor maintenance; ineffective customs administration; unstable
electricity supply; the uncertain security status of their
investments; inadequacy of the human resource pool due to poor
schools; lack of proper medical services; and shortages of water.


2. A factory manager producing for Polo and exporting to the United
States under the African Growth and Opportunity Act (AGOA) said he
often ships his goods across Madagascar to export via Tamatave
because Mahajanga's facility is inadequate. He added that frequent
electricity cuts in Mahajanga in the middle of product runs impact
quality control and lead to waste.


3. A businesswoman from a prominent family expressed concern over
the security of her investments because she is part of the "karana'
(Indo-Pakistani origin Muslim) minority. She runs a soap factory in
Mahajanga and her family is in many businesses in Madagascar; and
yet they always fear they are at risk. Last year, she said her
brother had to leave Madagascar quickly under "questionable
circumstances," which hurt the family business. The long-running
failure of the Malagasy government to grant citizenship to people in
her family's situation is an impediment to them expanding their
business.


4. The USAID Director met separately with a businessman whose
company, Bio Energy Invest, aims to produce diesel from jatropha, a
local plant. Working with D1, a British firm that specializes in
bio-energy, Bio Energy Invest has already demonstrated the
feasibility of running a vehicle on diesel made from jatropha oil.
Its major hurdle is getting approval from the GOM to purchase the
land on which the Bio Energy Invest president wants to grow the
jatropha. He noted that his request has languished in the Ministry
of Energy for several months now without a reply.

Meeting Muslim Religious Leaders
--------------


5. Answering the Ambassador's question, the spokesman for the
Muslim leaders group said they had seen no changes of any kind
following the recent presidential elections. Their biggest
preoccupation was personal insecurity due to lack of citizenship and
the absence of safeguards or protections for their investments. The
spokesman confirmed that Muslims of Indian or Pakistani origin found
it difficult to get Malagasy citizenship despite family members
having lived in Madagascar for up to five generations. The group
asked the Ambassador to intervene with government on their behalf.
The Ambassador said that when he had raised the issue with the
President before the presidential election in December 2006, the
President had responded that he would take up this issue after the
election because it was too politically controversial. The group
added that some of them would be willing to invest more or could
interest other investors in coming to invest in Madagascar, were
this bar to citizenship removed.


6. Members of the group were particularly chagrined that the GOM's
policy of not granting citizenship to long-term residents included
those among them who were married to Malagasy citizens. The group
spokesman expressed strong interest in learning English and
requested the USG's help in finding a teacher. The Ambassador
promised to look into the possibility of getting two Peace Corps
volunteers to come to teach English but he informed the group that
they would have to provide the classrooms.


7. COMMENT: In spite of the difficulties of doing business in
Mahajanga, these business people continue to soldier on because they
can still make a profit. However, because of the enormous obstacles,
it is doubtful that these companies would invest in Madagascar if
they had to do it all over again. The added problems for Muslim
businesspeople, even those who have lived in Madagascar for
generations, hinder economic investment. The Muslim minority is a
special case, but if their substantial capital were unleashed, it
would have a major benefit on investment.


8. COMMENT CONTINUED: The Muslim leaders look to the GOM for
long-desired acceptance. Interestingly, Malagasy Muslims are openly
critical of these "foreign" Indo-Pakistani origin leaders for not
being inclusive, even at Islamic holidays. The Embassy will
continue to cast a wide net in its outreach activities, seeking to
bridge the divide within the Muslim community and between it and the
rest of Malagasy society. END COMMENT.

MCGEE