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Trade impacts of the AfCFTA in Madagascar: an analysis of trade in goods and services

Research report

Written by Linda Calabrese, Derrick Abudu, Yohannes Ayele, Alberto Lemma, Maximiliano Mendez-Parra

Hero image description: Antsiranana, Madagascar - December 20, 2015: Wide-angle view of containers in the port of Antsiranana (Diego Suarez), north of Madagascar, Africa. Image credit:The port of Antsiranana (Diego Suarez), north of Madagascar | byvalet / Shutterstock

This report assesses the potential impact of the African Continental Free Trade Area (AfCFTA) on Madagascar's economy, trade patterns, and social development. It finds that while the immediate effects on trade in goods may be modest, there are significant opportunities for growth in services, particularly tourism, and digital trade.

Joining the AfCFTA could increase Madagascar's total imports by 0.1%, accompanied by a reduction in tariff revenues. However, this is offset by potential export increases to countries such as Morocco and Nigeria, particularly in sectors like fisheries, textiles and garment, leather, and wood products. These export gains could positively impact employment and poverty reduction.

The report also highlights the importance of digital trade under the AfCFTA, emphasising the need for infrastructure improvements and digital skills development in Madagascar. Moreover, it identifies potential social and environmental impacts, such as food security improvements, increased employment opportunities, and potential challenges related to fisheries, deforestation, and transport emissions.

Based on these findings, the report recommends several policy actions for Madagascar, including accessing the AfCFTA Adjustment Fund, improving trade facilitation, boosting the tourism offer to the African market, attracting strategic investments, and enhancing digital trade capabilities. It also suggests measures to mitigate adverse social and environmental impacts, such as supporting agricultural diversification, providing services for women, and developing sector-specific policies to address climate challenges.