Madagascar is intensifying efforts to attract investment from the United Arab Emirates (UAE), aiming to spur growth in its tourism and energy sectors. This strategic move comes at a critical juncture as the island nation faces increasing economic pressure from steep tariffs imposed by the United States, its third-largest trading partner. The push for closer ties with the UAE underscores Madagascar’s broader ambition to diversify its economy and mitigate external shocks.
The Context: US Tariffs and Madagascar’s Trade Landscape
In 2024, bilateral trade between Madagascar and the US totalled approximately $822 million, positioning the US as a key economic partner after China and France, according to Bloomberg. However, recent developments have threatened to destabilise this relationship. In April, then-U.S. President Donald Trump threatened to impose a 47% reciprocal tariff on Madagascar—a move that would have been among the highest globally—before scaling it back to a 10% uniform rate.
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While the scaled-back tariff provides some relief, it has nonetheless accelerated Madagascar’s urgency to diversify its trade relationships and investment sources. The country recognises that relying heavily on US markets could leave it vulnerable to future policy shifts, prompting a strategic pivot toward alternative partners such as the UAE.
The UAE: A Strategic Partner for Madagascar’s Growth
Trade Minister David Ralambofiringa highlighted the importance of forging stronger ties with the UAE during a recent visit to Abu Dhabi. He emphasised that Madagascar possesses abundant land, innovative ideas, and a skilled human capital pool, but requires foreign investment to unlock its full potential.
“We have the land, we have the idea, we have the human capital, but we need partners for the investment,” Ralambofiringa stated. His delegation, comprising both public officials and private sector leaders, explored new avenues for cooperation—particularly in agro-processing, tourism, and energy.
The UAE’s interest in Madagascar aligns with its broader regional strategy to diversify beyond oil and expand its influence across Africa. The Gulf state is actively seeking to deepen economic ties through investments and infrastructure projects, recognising Africa’s potential as a frontier for sustainable growth.
Strengthening Trade and Connectivity
Madagascar’s efforts include negotiations with Emirates Airlines to establish daily direct flights between Dubai and Antananarivo. Such a route would facilitate tourism, making it easier for visitors to explore Madagascar’s rich biodiversity and unique landscapes. Additionally, it would streamline cargo shipments, especially of high-value Malagasy exports like vanilla, spices, and precious stones.
Earlier this year, Madagascar and the UAE signed an economic partnership agreement aimed at easing trade flows and enhancing investment cooperation. The island nation also plans to open an embassy in Abu Dhabi soon, further cementing its diplomatic and economic ties with the Gulf state.
Gulf States’ Growing Footprint in Africa
Madagascar’s strategic pivot to the UAE is part of a broader trend of Gulf states increasing their footprint in Africa. In 2023, Gulf investors committed roughly $44 billion to the continent, making Africa a top priority for diversification efforts beyond oil.
Recent deals exemplify this trend. Dubai-based Alpha MBM Investments LLC, led by a member of the emirate’s royal family, signed a deal with Uganda to develop a 60,000-barrel-per-day oil refinery. Saudi firms such as ACWA Power and Red Sea Gateway Terminal, backed by Saudi Arabia’s $925 billion sovereign wealth fund, are actively investing in renewable energy and infrastructure projects across South Africa.
Moreover, Abu Dhabi’s sovereign wealth fund ADQ pledged $35 billion in 2022 to develop high-value real estate along Egypt’s Mediterranean coast, illustrating the scale of Gulf countries’ ambitions in Africa.
Implications for Madagascar and Africa’s Investment Landscape
Madagascar’s focus on attracting UAE investment signals a shift toward more diversified, resilient economic partnerships. By strengthening its tourism and energy sectors, the island aims to unlock sustainable growth, create jobs, and reduce dependence on traditional markets.
For the Gulf states, Africa offers a promising frontier for investment, resource access, and regional influence. As Middle Eastern nations continue to close deals worth billions across the continent, they are positioning themselves as key drivers of Africa’s economic transformation.
A Strategic Pivot with Long-Term Implications
Madagascar’s pivot toward the UAE is more than just a reaction to U.S. tariffs—it represents a strategic recalibration toward new investment ecosystems that offer both funding and market access.
By aligning with the UAE, Madagascar not only shields itself from overreliance on traditional Western partners but also positions itself within new South-South cooperation frameworks that are shaping global trade and investment flows.
As Gulf states increasingly view Africa as a strategic frontier, Madagascar’s proactive diplomacy and investment-friendly policies could make it one of the continent’s rising investment destinations—with tourism and energy as the first pillars of a broader transformation.
