Country FilesSouthCountry Profile 2014: MADAGASCAR

Sat,21Jul2018

Posted on Tuesday, 04 February 2014 20:40

Country Profile 2014: MADAGASCAR

Flag MadagascarMake or break elections

Madagascar may bebetter set for recovery in 2014, after a calm poll poured oil on troubled waters. The first round of presidential elections on 25 October saw Jean-Louis Robinson win the first round (with 21.1% of the vote) followed by Hery Rajaonarimampianina (15.9%). The two should face off on 20 December.

 

 

Top of contents :

Top Malagasy Companies

Top Malagasy Banks

 

theafricareport-madagascar-72dpiMake or break elections

If the country manages to pull off free and peaceful elections, the future looks bright

Oil and mining companies, lured by potential riches, are poised to return

Madagascar may bebetter set for recovery in 2014, after a calm poll poured oil on troubled waters. The first round of presidential elections on 25 October saw Jean-Louis Robinson win the first round (with 21.1% of the vote) followed by Hery Rajaonarimampianina (15.9%). The two should face off on 20 December.

The country has been in severe crisis ever since Andry Rajoelina ousted the elected President Marc Ravalomanana in February 2009. Aftermuch wrangling and sustained pressure from the internationalcommunity, ledby the SouthernAfrican Development Community (SADC), the dates for the polls were finally wrenched from the leadership.

The elections won’t be perfect: many of the candidates were rumoured to be funding their campaign with the proceeds of illicit rosewood trafficking; and the integrity of the electoral register was questionable, with a new voting system using a single ballot paper
being introduced in a haphazard fashion. But making the vote happen is a step in the right direction.

 


DIRE NEED OF AID

Following the coup, international aid, which made up 75% of Madagascar’s budget, virtually stopped. A handful of donors have since re-engaged but their aid is restricted to emergency poverty-reduction initiatives. Now 92% of the population live on less than $2 per day.

Foreign direct investment used to account for 40% of GDP; it now languishes at 14% of GDP, most of it attributable to a single project, the $5.5bn Ambatovy nickel and cobalt mine, which is ledby Canada’s Sherritt International. Thanks to prudent fiscal and monetary policies, the government has managed to contain the deficit at around 3% of GDP in 2013 (3.1% in 2012). Soaring costs of fuel and foodstuffs have pushed inflation up from 6.4% in 2012 to 10.4% in 2013. Current account deficit remains high at 7.6% of GDP but this is an improvement on 2012 (8.3%), thanks to the scaling up of mining activities and the gradual recovery of exports from free zones (up 4.8% in 2013).

If Madagascar manages to pull off free and peaceful elections, growth looks set to pick up from 3% in 2013 to 4% in 2014. International donors say they are ready to resume, and any fresh aid will boost construction, with a number of sectors poised to expand rapidly, chief amongst them oil and mining. With the government unable to grant new licences during the transition, companies have been queuing up to bid for oil blocks (222 offshore and three onshore) and for exploration licences for uranium, coal, bauxite and other metals. After a return to legitimacy, the public mining body Omnis plans to launch tenders over the second half of 2014.


RETURN TO NORMALITY


The textile industry too is in the startingblocks. Madagascar was suspended from the African Growth and Opportunity Act (AGOA) following the coup, which led to the loss of 100,000 jobs, direct and indirect. The United States has indicated that Madagascar would be welcomed back to AGOA following
elections, although this could be delayed until 2015 because polls will not be complete by the time AGOA holds its annual review in December.

Tourism, the country’s leading cash earner, would also benefit from a return to normality. With 255,000 visitors, 2012 was the best year since the coup, but still below the 2008 record of 375,000 (and 2013 looks to be worse than 2012 because of the clash of the electoral calendar with the peak tourist season). Finally agriculture, which makesup 26% of GDP but employs 90% of the working population, desperately needs a modernisation boost.

Whoever wins the election will have the unenviable job of trying to address structural issues neglected for the past five years. The fiscal base is just 11% of GDP (compared with 30% across sub-Saharan Africa) and the informal sector now accounts for 40% of GDP. Corruption has become endemic in every sector and at every level of society. The state of infrastructure is disastrous: power cuts occur daily outside the capital and Madagascar has just 9.7km of roads per 1,000km2, less than a third of the African average.

 

Madagascar's Top Companies

 

No companies from Madagascar featured in The Africa's Report's Top 500 Companies in Africa 2013.

Madagascar's Top Banks

 

Rank 2012Rank 2011Bank nameCountryTotal assetsNet interest incomeLoansDeposits
176161BANK OF AFRICA - MADAGASCARMADAGASCAR595,07744,653225,240491,945
 


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