Madagascar seeks economic lifeline from UAE to cushion blow from US tariff threat
Madagascar is looking to boost investments from the United Arab Emirates (UAE) to drive growth in its tourism and energy sectors, a move that has become more urgent as it faces steep tariffs from the US.
Madagascar seeks increased investment from the UAE to enhance its tourism and energy sectors, spurred by rising U.S. tariffs.
The U.S. decision impacts Madagascar's economy, pushing for diversified trade partners, with a focus on the UAE.
The broader trend shows Gulf states, including the UAE, ramping up investments across Africa in various key sectors.
Madagascar is looking to boost investments from the United Arab Emirates to drive growth in its tourism and energy sectors, a move that has become more urgent as it faces steep tariffs from the US.
The United States is Madagascar's third-largest trading partner, after China and France, with bilateral trade totalling $822 million in 2024, Bloomberg reported.
In April, U.S. President Donald Trump threatened to impose a 47% reciprocal tariff on the Indian Ocean island nation, one of the highest globally, before scaling it back to a 10% universal rate.
The tariff decision has accelerated Madagascar's efforts to attract alternative investment, particularly from the United Arab Emirates.
Trade Minister David Ralambofiringa noted that the sudden U.S. move has pushed the island nation to deepen ties with partners like the UAE in key sectors, including agro-processing, tourism, and energy.
'We have the land, we have the idea, we have the human capital, but we need partners for the investment,' Ralambofiringa said during a recent visit to the UAE, where he led a delegation of both public and private sector stakeholders exploring new investment opportunities.
As part of its broader strategy to boost connectivity and trade, Madagascar is also in negotiations with Emirates Airlines to launch daily direct flights between Dubai and Antananarivo, the capital. The new route would enhance tourism and facilitate cargo shipments, particularly of high-value goods like vanilla.
Earlier this year, Madagascar and the UAE signed an economic partnership agreement aimed at easing trade flows. The island nation also plans to open an embassy in Abu Dhabi in the coming weeks to deepen diplomatic and commercial ties.
Gulf states eye Africa as investment frontier beyond oil
The Gulf state is actively seeking to diversify its economy beyond oil and was the continent's top source of capital in 2023, investing $44 billion, according to a report by EY.
In May, Business Insider Africa reported that Middle Eastern nations have shown a growing interest in the continent, either expressing intent or closing deals worth at least $6 billion in African energy assets in a few weeks.
Alpha MBM Investments LLC, a Dubai-based private investment firm led by a member of the emirate's royal family, signed a deal with Uganda to build a 60,000-barrel-per-day refinery.
Saudi firms like ACWA Power and Red Sea Gateway Terminal, backed by the kingdom's $925 billion sovereign wealth fund, are actively investing in or bidding for assets in South Africa's renewable energy sector.
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