Endemic poverty and low purchasing power make Madagascar a challenging market for American imports, particularly for mass consumption products. The World Bank estimated Madagascar’s poverty rate at around 80.7 percent in 2023, based on the international poverty line of $2.15/day, in 2017 PPP. Natural disasters have contributed to food insecurity in many of the country’s regions, exacerbating poverty. More than 80 percent of the population depends on subsistence agriculture to meet basic needs. 

Limited, obsolete, and inadequate infrastructure poses significant obstacles to market access. Road infrastructure and rail transport cover only a tiny fraction of the country, but domestic flights are infrequent and rarely punctual, while regional and long-haul flights are only provided by foreign-based airline companies. Where transportation infrastructure does exist, it is poorly maintained and susceptible to damage from recurrent cyclones and floods. A lack of reliable electricity and water supply has hamstrung the expansion plan of major private sector firms. These infrastructure constraints limit production and job creation, impose additional costs on traded goods, and inhibit potential investors. 

Madagascar’s legal system is based on French jurisprudence. Significant backlogs in the judicial system, uneven enforcement of existing laws, and lack of transparency in regulatory decision-making make it difficult to do business in Madagascar. Widespread corruption, “elite capture,” influence peddling, and inside connections shut out fair competition, with the complicity of some government officials.