Madagascar Essential Oils Regulatory Portal

In Madagascar, businesses, especially small and medium-sized enterprises (SMEs), face a real challenge navigating the country’s regulatory maze. More than 20% of small businesses consider business licenses and permits to be a major obstacle – significantly higher than the regional average, according to the World Bank Enterprise Survey (WBES). This challenge is particularly visible in the value chains of agricultural enterprises, which remain by far the largest source of jobs in the country, significantly hampering the country’s development.

To help Madagascar address this challenge and make the most of the projected double-digit growth of the essential oils market over the next decade, the World Bank has partnered with the Government of Madagascar and the Essential Oils Exporters Association (GEHEM) to identify and address obstacles in the sector through an Enterprise Friendly Program ACP, financed by the European Union (EU) and the Organization of African, Caribbean and Pacific States (OACPS). After consulting with actors from the public and private sectors, this quickly became clear an overhaul of the regulatory system across the essential oils value chain had the greatest potential to strengthen the sector and impacted hundreds of thousands of Madagascar.

Essential oil producers identified the lack of regulatory clarity and consistency as their most important operational challenge. For example, companies such as Bionnex and Homeopharma reported that they spend over a third of their time complying with sector-specific regulations. Chief Symabio, who represents hundreds of bioagricultural companies, also reported frequent trips to regional capitals in Madagascar to obtain basic forms and unnecessary permits from various ministries. Many smallholder farmers further stated that it was difficult to “move up” to higher value-added areas of the value chain (e.g. extraction of essential oils from plants) because the regulations affecting these areas are unclear.

To address these challenges, our World Bank team has mapped all the regulations, authorizations, licenses, fees and forms required in Madagascar to operate across the essential oils value chain. The results revealed more than 30 required permits and licenses, which in turn required 230 separate forms, many of which had no legal basis and were not well understood even by the agencies themselves.

Using the findings from this regulatory review, we have created an information portal –Essential oils from A to Z— which provides companies with a clear and comprehensive view of the regulatory environment in 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 explains what steps entrepreneurs must take to comply with national and international regulations when conducting business in the field of essential oils and exporting them. During the launch of the portal, the President of GEHEM stated that “(T)its portal represents a significant advance for the private sector by facilitating access to regulatory information, increasing transparency and stimulating foreign investment, promoting the development of this key sector of Madagascar’s economy”