This information is derived from the State Department's Office of Investment Affairs' Investment Climate Statement. Any questions on the ICS can be directed to EB-ICS-DL@state.gov
Last Published: 11/7/2016

There is no stock exchange in Madagascar, and plans to create one were scuttled while they were still in the analysis and study phase by the 2009 political crisis. Malagasy citizens and/or companies based in Madagascar, whether foreign or locally owned, are allowed to purchase government bonds. Foreign investors are also allowed to purchase corporate stocks and bonds, but these are only infrequently advertised for sale.

Banks are free to support the flow of resources in the product and factors markets, and credit is allocated on market terms. However, the banking sector is relatively small, making access to credit expensive, particularly for small and medium enterprises. Although the banking sector comprises 80 percent of the financial system, it only offers basic savings and credit products to a select clientele. At the end of 2013, the top fifteen borrowers represented 65 percent of the total credit exposure. Additionally, credit tends to be short to medium term in nature, and there is no corporate or municipal debt market in the country, aside from the irregular and infrequent sales of corporate stocks and bonds.

Money and Banking System, Hostile Takeovers

Madagascar's financial sector is comprised of 10 commercial banks, all of which are subsidiaries of foreign banks, mostly based in Mauritius, France and mainland Africa. The total assets of the banking sector as a whole were approximately $2.2 billion in 2015, and the top four banks accounted for approximately 87 percent of the overall assets. Only 6 percent of the population has a bank account, so the vast majority of the banking clientele is represented by corporate or professional entities. The banking sector enjoys relatively high liquidity, with an approximately 60 percent ratio of liquid assets to short term liabilities at the end of December 2013.

The sector is stable. The non-performing loans ratio decreased to 10.6 percent of total loans in 2015, down from 13.8 percent in 2014. Nevertheless, the sector remains profitable, with a return on equity of approximately 30 percent.

Madagascar has had an autonomous Central Bank since 1973, though the level of executive influence over the bank increased during the period of coup governance. Currently, a draft revision to the Central Bank legislation is awaiting approval by the cabinet before submission to the parliament in the May-July 2016 session. The revision will guarantee increased autonomy for the Central Bank and will gradually reduce the maximum limit of statutory advances extendable to the government from the current 15 percent of the prior year’s fiscal revenues to nearly zero percent.

In order to establish a bank account, foreigners must have established residency status.

There is currently no regulatory framework governing hostile take-overs.

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