Chow Kwan-Lo surveys his vast factory floor and admires the silence of his garment workers. "Look how quiet they are -- look at their concentration," he marvels. "They don't even turn their heads when we're talking."
With 6,000 employees here, Chow's textile company is among the biggest investors in Madagascar. His factories symbolize the business-friendly policies that made this Indian Ocean island one of Africa's fastest-growing economies for most of the past decade.
But he won't consider further investments in Madagascar. For the second time since 2002, months of political violence and turmoil have plunged the country's economy into a tailspin. Foreign investors such as Chow can't take it any more.
"We will not put more resources here," said the Hong Kong entrepreneur, whose company has factories in China, Thailand and Bangladesh.
Even as they grapple with the global economic crisis, many of Africa's countries are compounding their troubles with self-inflicted wounds. Some, including Zimbabwe and Somalia, have driven away most foreign investors with political turmoil and violence. Four others -- Madagascar, Mauritania, Guinea and Guinea-Bissau -- have suffered coups d'état in recent months, seriously damaging their economies.
The coups "are, in reality, tantamount to economic tsunamis, the costs of which are enormous," said Stephen Hayes, president of the Corporate Council on Africa, a U.S.-based business group.
Madagascar's growth had accelerated in the 1990s with economic liberalization policies and the creation of a duty-free export zone for manufacturers. But a protracted political crisis erupted in 2001, with two leaders locked in six months of sometimes-violent struggle. The economy plunged by almost 13 percent in 2002, and foreign investment dropped dramatically.
The crisis ended when the democratically elected leader, Marc Ravalomanana, was finally permitted to take office. His liberal reforms attracted investment, and the economy resumed its rapid growth (his policies also favored his own food and retail conglomerate). The economy grew nearly 10 percent in 2003 and continued to expand by about 5 to 7 percent annually for the next five years.
By 2008, foreign investment had reached $1.35-billion annually and was doubling every year. Tourism, textiles and mining led the national boom.
It all came crashing down after the latest protracted battle, this time between Ravalomanana and his opponent. Andry Rajoelina eventually won power in March, backed by the military after more than 130 people were killed. Protests and violent clashes have continued, and most international organizations have refused to recognize the new government.
Tourism has collapsed. With its wildlife and forests, Madagascar's eco-tourism industry was the country's third-biggest source of foreign revenue, employing 25,000 people and attracting 375,000 foreign tourists in 2008. But foreign embassies have warned their citizens to stay away because of the danger of political violence.
Lack of business has closed about 70 percent of Madagascar hotels, said Eric Koller, head of the country's hotel federation. He's trying to persuade foreign embassies to cancel their warnings. His federation is so desperate that it's launching a "special crisis offer" with cut-rate prices and free entry visas for tourists. His own hotel, the venerable Hotel Colbert here in the capital, saw its occupancy rate plunge to 15 percent last month, compared with 65 percent in April 2008.
Major mining companies have continued operations in Madagascar, but many other businesses have been hit by the political crisis. The dairy industry was badly hit when protesters torched and looted Ravalomanana's food-processing factories.
In another blow, foreign donors are scaling back their development assistance because of the coup. Foreign aid represents about 12 percent of the economy.
Madagascar's textile industry, which employs 50,000 people, depends heavily on export privileges from the United States under the African Growth and Opportunity Act. About 45 percent of Chow's revenue, for example, comes from the U.S. market. Because of the coup, Washington might cancel Madagascar's eligibility for duty-free exports.
(Distributed by Scripps Howard News Service, www.scrippsnews.com.)
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