by
JEAN ARLET, MADELYNNE GRACE WAGER, CECILE KAPPEN
In Nosy Be, an alembic, the machinery that distills plants into essential oils. Photo: Jean Arlet / World Bank
Madagascar’s remarkable biodiversity allows for the production of over 30 different types of high-quality essential oils coveted by prestigious brands like Gucci and Chanel. These oils are sought after not only for luxury fashion but also for pharmaceuticals, alternative medicines, and food products. Yet, while essential oils are part of the country’s top three largest agricultural exports and a primary livelihood for over half a million families, Madagascar commands a marginal share of the global essential oil market share (figure 1).
Figure 1: Madagascar exports only a sliver of all essential oils in the global market
In Madagascar, businesses, especially small and medium-sized enterprises (SMEs), face a real challenge navigating the country’s regulatory maze. Over 20% of small firms find business licensing and permits to be a major hurdle—that's significantly higher than the regional average, according to World Bank Enterprise Surveys (WBES). This challenge is particularly pronounced in agri-business value chains, which remain by far the largest purveyor of jobs in the country, significantly impeding the country’s development.
To help Madagascar address this challenge and make the most of the anticipated double-digit growth in the essential oil market in the next decade, the World Bank partnered with the Government of Madagascar and the Association of Essential Oil Exporters (GEHEM) to identify and address obstacles in the sector under the ACP Business Friendly Program, funded by the European Union (EU) and the Organization of African Caribbean and Pacific States (OACPS). After consultations with actors in the public and private sectors, it quickly became clear that overhauling the regulatory regime across the essential oils value chain had the greatest potential to strengthen the sector and impact hundreds of thousands of Malagasies.
Essential oil producers reported the lack of regulatory transparency and coherence as the most significant operating challenge. Firms like Bionnex and Homeopharma, for example, reported spending over a third of their time working to comply with sector-specific regulations. The head of Symabio, which represents hundreds of firms in bio-agriculture, also reported extensive travel to regional capitals in Madagascar to retrieve basic forms and redundant authorizations across ministries. Many smallholder farmers further reported it was difficult to “move up” into higher value-added areas of the value chain (e.g., extraction of essential oils from plants) because the regulation that affects these areas is unclear.
To address these challenges, our World Bank team mapped all regulations, authorizations, licenses, fees, and forms required in Madagascar to operate across the essential oil value chain. The results uncovered over 30 required authorizations and licenses, requiring in turn 230 separate forms, many of which lacked regulatory basis and were not well understood, even by the agencies themselves.
By leveraging findings from this regulatory review, we created an information portal—Essential Oils from A to Z—that offers firms a transparent and comprehensive view of the regulatory landscape within the sector. The portal (figure 2) was launched on May 24, 2024, and can be found at https://www.huilesessentiellesmg.com/; a short informational video also describes the platform in more detail. The portal clarifies the steps for entrepreneurs to adhere to both national and international regulations when operating in and exporting essential oils. During the launch of the portal, the President of GEHEM recognized that “(T)his portal represents a major advancement for the private sector by facilitating access to regulatory information, enhancing transparency, and stimulating foreign investment, promoting the expansion of this key sector of the Malagasy economy.”
Figure 2: Essential Oils from A to Z portal
In addition to the portal’s benefits for the private sector, it provides the government with clarity on the regulatory framework for the essential oil sector and has fostered buy-in across agencies to facilitate the licensing regime. This new information has also persuaded the government to include the operationalization of the EO portal in the new Industrialization Pact, which was co-signed in July 2023 by private sector associations. Looking ahead, the World Bank will continue working with governing agencies to simplify the regulatory regime and ultimately digitize licensing requests.
Madagascar's revision of essential oil regulatory requirements provides a strong example for other countries looking to undertake the initial steps towards a regulatory overhaul of an agri-business value chain and, ultimately, create more opportunities for prosperity. By building robust partnerships with government entities and associations, like Madagascar, countries can begin removing barriers to growth and better grow with global markets.
The ACP-Business Friendly Program is an Intra-ACP action funded by the European Union and the Organisation of African, Caribbean and Pacific States (OACPS) and implemented by the World Bank, United Nations Development Organization, and the International Trade Center. The program supports value chains through inclusive policies, investment promotion, and alliances. For more information on the World Bank team’s work in Madagascar, see the project overview video: ACP Business-Friendly: World Bank Support in Madagascar.
Source: https://blogs.worldbank.org/en/nasikiliza/scented-success-story-madagascar-essential-oils-regulatory-portal-afe-0524
Titre | Catégorie | Created On |
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A scented success story: Madagascar’s essential oils regulatory portal | General | 2024-05-30 14:00:09 |
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