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PESA Editorial - Madagascar - 3Q2018/19

History of Conflict and its Impact on Madagascan Development

Since independence from France in 1960, Madagascar’s economy and development challenges have been compounded by periodic political unrests that have hampered economic growth and limited public investment. These often prolonged and recurring political crises have been characterised by numerous public protests, several disputed elections, an impeachment, two military coups and one assassination. One of the notable politically and economically periods in Madagascar is the eight-month standoff that ensued after the presidential election dispute between incumbent Ratsiraka and challenger Marc Ravalomanana in 2001[1]. The election dispute cost the country millions of dollars in tourism and trade revenue, and resulted in damage to infrastructure such as buildings and bridges caused by arson[2].

Another prolonged period of series of protests flared up during Ravalomanana’s second term in early 2009, led by the president’s strongest critic and Antananarivo Mayor Andry Rajoelina[3]. The protests turned violent resulting in the death of more than 170 people and destruction to property and the ceding of power by Ravalomanana to the militarily-backed Rajoelina. The unconstitutional change of power led to the suspension of the country from regional and international bodies and withdrawal of funding by international donor and finance institutions which deepened the political and economic crisis in the country. Currently, Madagascar is striving to recover from this extended political crisis and international isolation, which lasted until 2013, during which key social and developmental indicators deteriorated. In addition, modern politics in Madagascar are also influenced by the history of Merina tribe subjugation of coastal communities during the Madagascar kingdom in the 19th century. These historical tensions between the highland and coastal populations periodically flare up into isolated events of violence.

Under the first republic, economic planning and policy in Madagascar was heavily influenced by France, which led to widespread resentment over president Tsiranana’s tolerance for this neo-colonial arrangement. The resentment grew into a series of farmer and students protests that overturned his administration in 1972[4]. Thereafter Madagascar entered a period of military rule with Vice Admiral Didier Ratsiraka introducing constitutional changes in 1975, ushering in the second republic.

The socialist economic reforms introduced by President Didier Ratsiraka, from 1975, failed to stimulate economic growth and development resulting in Madagascar’s economy quickly deteriorating as exports fell, industrial production dropped by 75.0%, inflation spiked and government debt increased while the rural populace was reduced to subsistence living[5]. The government was spending 50.0% of the nation’s export on debt servicing by 1981[6]. By 1982, the government of Ratsiraka had become bankrupt and had to accept IMF’s structural adjustment policies and economic liberalisation as a condition to get financial assistance.

Started in 1989, a democratic transition characterised by considerable political unrest led to the approval of a new constitution and presidential elections in 1992 marking the beginning of the third republic. The new government of Zafy failed to meet the conditions for the resumption of financial aid from IMF and World Bank, which had been suspended during the political crisis of 1991. Neither did his administration succeeded in attracting other forms of revenue for the state. Zafy’s government made little progress, if any, in tackling the Malagasy’s extreme poverty and by 1996, it was faced with strikes, student unrest and numerous political problems resulting in the impeachment of the president.

 

PESA Editorial - Madagascar People’s Armed Forces - 3Q2018/19
Madagascar People’s Armed Forces

 

The return of the former military ruler Ratsiraka in 1996 under the banner of democracy, decentralisation and economic reform saw the resumption of financial assistance from IMF and the World Bank. During his second tenure, Ratsiraka maintained a public commitment to democracy while politically centralising control and backed constitutional reforms aimed at weakening legislature and giving himself appointing powers to a third of the Senate seats. He worked on destroying opposition parties which increased opposition to his rule under widespread accusations of corruption. In 2001, the Malagasy went to elections in which the incumbent president faced his bitter rival and critic Marc Ravalomanana. The election’s first round did not produce an outright winner leading to a tense half-year standoff pitting Ratsiraka and his followers against Ravalomanana and his supporters after the later refused to participate in a run-off citing electoral irregularities. Ravalomanana went on to declare himself winner in February 2002, which was sanctioned by the Malagasy High Constitutional Court after the court supervised recount, which gave him the victory with 51.6% of all votes[7]. However, Ratsiraka rejected the results with his supporters taking to the streets cutting off communications, roads and bridges linking the capital to the sea and to basic supplies. Nationwide disruptions ensued which led to job losses and sharp rises in malnutrition. Peace was only restored when Ratsiraka fled to exile in France and the Ravalomanana government attained international recognition.

Marc Ravalomanana’s government faced significant economic challenges after the prolonged post-election crisis and related economic disruptions, ranging from extreme poverty to the economy performing below the population growth rate. Throughout his first and second tenure his government received substantial support from western donors and his government was able to pursue an agenda on market liberalisation, economic growth, poverty reduction and improve governance.

Ravalomanana’s policies stimulated economic growth which reached an average annual real growth rate of 5.7% between 2003 and 2007. On average poverty was reduced from a high of 80.0% when he took office in 2002 to 65.0% in 2008, though in some rural communities it remained as high as 80.0%[8]. There was also a marked improvement in some social indicators such infant mortality which halved to 48 per 1000 live births by 2008[9].

PESA Editorial - Madagascar People’s Armed Forces - 3Q2018/19
Madagascar People’s Armed Forces Emblem

The efforts to push the development agenda and strengthen economic and public sector management was undermined by a conflict of interest between political and economic circles. These shortcomings of the Ravalomanana government were to be exposed to development partners when a political crisis unfolded in early 2009. In December 2008, the Antananarivo mayor Andry Rajoelina began a series of protests against the presidency of Ravalomanana. These protests were spurred mostly by dissatisfaction over economic conditions, allegations of government corruption, lack of freedom of expression and the political dominance of the president and his party. These protests which were eventually supported by the army led to the ouster of the elected President Marc Ravalomanana by the former mayor of Antananarivo Andry Rajoelina in March 2009.

The international community did not acknowledge the power transfer as legitimate with the US and EU declaring it a coup d’état. The US suspended all humanitarian assistance to Madagascar with other international donors and IMF following suite in suspending aid programs in May 2009. By December 2009, the country had been suspended from the African Growth and Opportunity Act as it no longer met the criteria regarding political pluralism and rule of law. During this period of political crisis, economic activities declined, unemployment increased, and government revenue dropped, inducing a sharp fall in public investment. The annual growth rate shrank from 7.1% in 2008 to 2.0% by the end of the crisis in 2013.

Madagascar emerged from this political crisis with weakened socioeconomic conditions with more than 92.0% of the population surviving on under USD 2.0 per day by the end of 2013, an increase of a 10.0% point from the 2008 levels[10]. Access to education barely improved, with a net primary school enrolment and survival to the last primary grade of 39.5% between 2008 and 2012[11]. Public health access improved slightly, with an increase in the rate of outpatient care provided at basic health centres: 24.0% and 35.0% in 2013 and 2017, respectively[12].   The economy had suffered a continuous decline under the Rajoelina administration, with real GDP growth falling from 7.0% in 2008 to an average of 2.7% between 2009 and 2013[13].

The tourism industry, one of the major contributors to GDP shrank by 50.0% from 2009 to 2013 due to European Union ban on flights by Air Madagascar, whose planes were deemed not compliant to EU safety Standards[14]. The same period saw unemployment food insecurity, corruption and general criminality rising.

The political impasse and international isolation came to an end in 2014 when Hery Rajaonarimampianina was sworn in as president after elections. Madagascar has been striving to recover from this extended political crisis and international isolation of 2009 – 2013. The recovery that began in 2014 has so far failed to gain much momentum due to fragile institutions, falling prices of key commodities and weather-related shocks. Current economic data reveal that the country has enjoyed a sustained economic growth over the last four years. The economy has maintained an average growth of 3.2% between 2013 and 2017[15].

The most important driver of this growth has been the service sector particularly trade which has seen the sector growing at an average of 4.0% from 2013 to 2018[16]. The macroeconomic stability currently enjoyed by the country has led to a steady increase in foreign direct investment to an average of USD 400 million since 2014[17]. In 2016, Madagascar was ranked as Africa’s second-best destination for oil and gas investments with 66 Greenfield investments being announced the same year[18]. Since the restoration of democracy and political stability in 2014, there has been an expansionary fiscal position through increased public expenditure and attempts to clear debts accumulated during the crisis period.

The previous and current periods of political stability in Madagascar have resulted in economic growth that has enabled the country to gain some quick recoveries after periodic instabilities. However, the country has failed to sustain these economic gains as the political environment remains uncertain and the business environment remains weak. This has been the challenge faced by the current administration, which has failed to attract adequate investment towards other key sectors of the economy such as manufacturing and to diversify the economy. With elections scheduled for the end of 2018 and the conflict that usually accompany these elections, investors are still reluctant to make long-term investments due to the uncertainties of these domestic politics[19].

From the lessons learnt from previous political crises, the government has implemented the National Development Plan (NDP). A number of strategic areas are earmarked in the NDP, including governance and rule of law, preservation of macroeconomic stability and support for development, inclusive growth, human capital and enhancement of natural capital. Despite these efforts from the Rajaonarimampianina government, the short-term and long-term outlook still remain uncertain. In the absence of smooth election and transition of power, the political instability may ensue, which tend to have ripple effects on the economy.

 


[1] EISA 2010a. Madagascar: 2001 Presidential Election Dispute, on the Electoral Institute for Sustainable Democracy in Africa Website, viewed on 15 November 2018, from https://www.eisa.org.za/.
[2] Ploch, L. and Cook, N. 2012. Madagascar’s Political Crisis, Congressional Research Service: Washington D. C. Available At: www.fas.org/  [Last accessed on 15 November 2018].
[3] Ploch, L. and Cook, N. 2012. Madagascar’s Political Crisis, ibid.
[4] EISA 2010b. Madagascar: Tsiranana Government (1960 -1972), on the Electoral Institute for Sustainable Democracy in Africa Website, viewed on 24 November 2018, from https://www.eisa.org.za/.
[5] IMF 2003. External Debt, Public Investment, and Growth in Low-Income Countries, International Monetary Fund: Washington D. C. Available At: http://www.imf.org/ [Last Accessed: 20 November 2018].
[6] Ploch, L. and Cook, N. 2012. Madagascar’s Political Crisis, ibid.
[7] Ploch, L. and Cook, N. 2012. Madagascar’s Political Crisis, ibid.
[8] IMF 2017. Republic of Madagascar: Economic Development Document, International Monetary Fund: Washington D. C. Available At: www.imf.org/ [Last Accessed: 20 November 2018].
[9] WB 2016. Madagascar Economic Update: December 2016, World Bank: Washington D.C. Available At: https://openknowledge.worldbank.org/ [Last Accessed: 16 November 2018].
[10] WB 2013. Madagascar: Measuring the Impact of the Political Crisis, on the World Bank Website, viewed on 5 February 2019, from http://www.worldbank.org/.
[11] UNICEF 2018. Madagascar, on the United Nations International Children’s Emergency Fund Website, viewed on 5 December 2018, from https://www.unicef.org/.
[12] IMF 2017. Republic of Madagascar: Economic Development Document, ibid.
[13] WB 2016. Madagascar Economic Update: December 2016, ibid.
[14] Ploch, L. and Cook, N. 2012. Madagascar’s Political Crisis, ibid.
[15] IMF 2017. Republic of Madagascar: Economic Development Document, ibid.
[16] WB 2018. Economic Outlook for Madagascar: Sustained Growth Needs to be More Inclusive to Benefit the Poorest, on the World Bank Website, viewed on 6 December 2018, from https://www.worldbank.org/.
[17] UNCTAD 2017. World Investment Report 2017: Investment and the Digital Economy, United Nations Conference on Trade and Development: Geneva. Available At: www.unctad.org/ [Last Accessed: 20 November 2018].
[18] IMF 2017. Republic of Madagascar: Economic Development Document, ibid.
[19] EISA 2018. 2018 African Election Calendar, on the Electoral Institute for Sustainable Democracy in Africa Website, viewed on 25 November 2018, from https://www.eisa.org.za/calendar.php.

 

 

 


Ephraim Hasani Mbeletshie

Role: Regional Analyst
Contact: ephraim@politicaleconomy.org.za
Ephraim is a Developmental Economist specialising in human development and sustainable economic development focusing on Africa...

Thabo Thandokuhle Sacolo

Role: Editing and Research Specialist
Contact: thabo@politicaleconomy.org.za
Thabo is an Economist specialising in applied economics, environmental economics and agricultural economist...

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Ephraim Hasani Mbeletshie

Thabo Thandokuhle Sacolo

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