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Construction Industry in Madagascar

The Construction Industry in Madagascar 2018

Carole Veitch | Madagascar | 11 May 2018

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Report Coverage

The detailed report on the Malagasy construction sector focuses on conditions in the domestic market, the opportunities for construction companies and the factors that influence the success of the industry. Profiles for 14 companies active in the sector are provided. Included are Vision Madagascar, a local company and its subsidiary Vima Construction, which employ almost 200 people, and Colas Madagascar SA, the leading construction company which is part of the Colas Group, which, in turn is a subsidiary of French group, Bouygues SA.

Introduction

This report covers the Malagasy construction sector, with a specific focus on infrastructure development on the Indian Ocean island of Madagascar. Despite being endowed with vast economic potential, the resource-rich nation is one of the most impoverished and also one of the least developed countries in the world. However, through its "Fisandratana 2030" growth and transformation plan, the Malagasy government has vowed to end this paradox. Presenting Madagascar’s new road map in January 2018, President Hery Rajaonarimampianina affirmed that the aim of the country’s strategic development plan was to set the nation on the path to rebirth and emergence. With US$6.4bn from international institutions earmarked for development projects during the period 2017-2020, as well as US$3.3bn in private sector investment, stakeholders predict that Madagascar’s construction sector is set to boom.

Strengths

• Barriers to entry are low and, as such, the construction sector promotes the development of small and micro-sized contracting firms.
• Several major multinational construction companies have established a presence in Madagascar.
• The Malagasy construction industry has been identified as a strategic sector and is regarded as the cornerstone of socio-economic development.
• The sector provides employment opportunities for unskilled and semi-skilled workers, as well as for tradesmen and skilled professionals.
• Through its “Fisandratana 2030” national development strategy, the Rajaonarimampianina administration has prioritised infrastructure development. Public-Private Partnerships are encouraged

Weaknesses

• It is frequently difficult to procure construction materials and equipment locally. Contractors are therefore highly reliant on imported goods.
• Productivity is undermined by complex bureaucracy.
• Quality control is generally inadequate. Although the industry is regulated, the enforcement of regulations is inconsistent.
• Technology transfer remains weak.
• The challenging operating environment in Madagascar makes it difficult for contractors to operate efficiently and cost-effectively. The inability to access electricity is a particular concern, particularly in smaller towns and rural areas.
• There is a shortage of skilled labour, workmanship is generally poor and productivity is low.

Opportunities

• Renewable energy projects.
• Rising urbanisation presents building and construction opportunities in the form of new satellite cities, including low-cost, energy-efficient housing.
• The development of integrated transport networks.
• The development of new tourist destinations.
• The establishment of economic development zones, with a specific focus on light industry.
• The roll-out of telecommunications infrastructure.

Threats

• Climatic shocks.
• Corruption and tender fraud.
• Domestic macroeconomic pressures.
• External geopolitical threats and global macroeconomic pressures, which could result in lower levels of investment and donor aid.
• Funding shortfalls and delays in the implementation of infrastructure projects.
• The resurgence of internal political turmoil.

Outlook

Although merely 8% of Madagascar’s national budget has been earmarked for building and public works projects, many stakeholders believe that the Malagasy construction industry is a sector with high growth potential. With US$6.4bn in international donor funding earmarked for an array of development projects, including US$2bn for transport infrastructure, construction activity is expected to increase substantially over the medium-term. However, analysts believe that the incumbent government will need to implement further progressive reforms if it wants to continue to derive financial support and investment from the international community. Going forward, the government is expected to use the Public-Private Partnership (PPP) model more extensively in tackling the nation’s substantial infrastructure backlog. As long as the political climate does not deteriorate, many analysts project that economic growth will breach the 5% threshold.

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The Construction Industry in Madagascar
The Construction Industry in Madagascar 2018

Full Report

R 1 900.00(ZAR) estimated $103.15 (USD)*

Industry Landscape

R 1 330.00(ZAR) estimated $ 72.20 (USD)*

Table of Contents

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PAGE
1. INTRODUCTION 1
2. COUNTRY INFORMATION 1
2.1. Geographic Position 3
3. DESCRIPTION OF THE INDUSTRY 4
3.1. Industry Value Chain 5
4. SIZE OF THE INDUSTRY 6
5. STATE OF THE INDUSTRY 10
5.1. Local 10
5.1.1. Corporate Actions 17
5.1.2. Regulations and Government Policies 17
5.2. Continental 19
5.3. International 22
6. INFLUENCING FACTORS 24
6.1. Economic Environment 24
6.2. Investment in Infrastructure 25
6.3. Urbanisation 27
6.4. Corruption 27
6.5. Input Costs 27
6.6. Cyclicality 28
6.7. Health and Safety Concerns 28
6.8. Technology, Research and Development (R&D) and Innovation 29
6.9. Labour 30
6.10. Environmental Concerns 30
7. COMPETITION 32
7.1. Barriers to Entry 32
8. SWOT ANALYSIS 33
9. OUTLOOK 34
10. INDUSTRY ASSOCIATIONS 35
11. REFERENCES 35
11.1. Publications 35
11.2. Websites 37
APPENDIX 1 39
The Global Competitiveness Index 2017-2018: Madagascar 39
COMPANY PROFILES 40
CHINA ROAD & BRIDGE CORPORATION 40
CIMELTA MADAGASCAR SA 42
COLAS MADAGASCAR SA 44
CONSTRUCT SARL 46
GENERAL ENTERPRISES 47
MADARAIL SA 49
OTI MADAGASCAR SA 51
PRO IMMO CONSTRUCTION 52
SARA ET CIE SARL 53
SINO MALAGASY DE TRAVAUX PUBLICS 54
SOCIETE DE BATIMENT ET TRAVAUX SA 55
SOCIETE DE CONSTRUCTIONS ET DE BATIMENTS 56
VINCI SA 58
VISION MADAGASCAR 71