Foreign Direct Investment | Madagascar | Africa Competition Guide

Foreign Direct Investment

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Please indicate whether there is a foreign direct investment review regime in your jurisdiction in relation to mergers involving foreign buyers / acquirers and kindly indicate the relevant review/regulatory body? If there is, please indicate whether there have been any foreign direct investment notifications to date. If there is no foreign direct investment regime, kindly indicate whether there are any plans announced to introduce it.

There is no provision in current Malagasy regulations providing for a specific foreign direct investment review regime relating to mergers involving foreign buyers. That being said, there are certain sector-specific regulations that apply.

Foreigners are free to invest in Madagascar, subject to compliance with the regulations in force, pursuant to Article 2 of Law No. 2007-036 of 14 January 2008 on investment in Madagascar, which states:

“Any individual or legal entity, Malagasy or foreign, is free to invest and set up business on national territory, in compliance with the laws and regulations in force, subject to the provisions applicable to certain sectors of activity which are subject to specific regulations. These include banking, insurance, mining, oil, telecommunications, medical, paramedical and pharmaceutical activities.”

It should be noted, however, that pursuant to Article 35 of the Competition Act, any investor is required to notify the Competition Council, for prior control, of any proposed merger operation that is likely to affect competition, meeting the criteria set out in Article 56 of the Implementing Decree. As a reminder, Article 34 of the Competition Act defines economic concentration as “any situation resulting from any act, regardless of its form, which involves the transfer of ownership or use of all or part of the assets of an enterprise, the purpose or effect of which is to enable an enterprise or group of enterprises to exercise, directly or indirectly, a decisive influence over one or more other enterprises”.

If there is a foreign direct investment regime in your jurisdiction, please indicate whether it applies to all sectors or specific sectors (such as sectors considered to relate to ‘national security’).

As mentioned above, no specific regime for foreign direct investment is provided for in current Malagasy regulations. However, texts have been adopted to promote foreign investment in Madagascar, including:

Law No. 2015-039 of 9 December 2015 on Public and Private Partnerships;
Law No. 2017-023 of 21 August 2018 on Special Economic Zones;
Law No. 2007-036 of 14 January 2008 on Investments in Madagascar;
Law No. 2017-020 of 10 April 2018 on the Electricity Code in Madagascar; and
Law No. 2001-031 of 8 October 2002 establishing a special regime for major investments in the Malagasy mining sector.

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