Madagascar

Politics:

• Analysis

  Madagascar politics: Quick View - President announces decision not to stand

  Event

  The current president, Andry Rajoelina, announced on January 15th that he will not stand in the country's upcoming election.

  Analysis

  The announcement is a crucial breakthrough in Madagascar's long-running political crisis. The presidential poll, the first round of which is scheduled for May 8th, can now be organised with full international endorsement and should lead to the election of a head of state whose legitimacy is unquestioned. This, in turn, opens the way for the much-needed restoration of aid and, eventually, the US trade privileges that are vital to the Malagasy garment export industry.

  For years neither Mr Rajoelina nor his predecessor, Marc Ravalomanana-ousted in a military coup in 2009-had shown any readiness to give ground on the fundamental issue of participation. Mr Rajoelina refused to accept that his status as "transitional" head of state should render him ineligible, while Mr Ravalomanana insisted that he should have the right to return from exile to stand in the election, unimpeded by (questionable) convictions relating to his alleged complicity in the shooting of protesters by his presidential guard.

  Paradoxically, the refusal of Mr Rajoelina and hardliners within the transitional government to contemplate allowing Mr Ravalomanana to return as a free man appears to have unlocked the situation. Mr Ravalomanana apparently concluded that he would never be allowed to stand and campaign effectively, and announced in December that he would not take part. This increased the pressure on Mr Rajoelina, because international partners felt that the government had acted undemocratically by preventing Mr Ravalomanana's participation.

  An insistence on standing by Mr Rajoelina would certainly have breached the African Union's principle that power gained by force cannot be legitimately retained. There was thus a substantial risk that Mr Rajoelina's probable victory would not be accepted internationally and would leave the country crippled by continuing aid and economic sanctions. Moreover, the economic impact on ordinary Malagasy could undermine his domestic political base in the longer term.

  It remains to be seen who will emerge as credible candidates for this year's election. However, with his high profile, media interests and new image as the man who sacrificed his ambitions for the sake of his country, Mr Rajoelina will look well-placed for a legitimate election bid, probably in 2018, and could act as king-maker this year.

  January 17, 2013

• Background

  Madagascar: Key figures

  Marc Ravalomanana

  President since 2002, Mr Ravalomanana draws his main backing from the capital, Antananarivo (where he was mayor) and the surrounding highlands, but he has worked to build up his support in provincial areas. He is the founder of a large food and retailing group, Tiko—whose former executives played a key role in the creation of his Tiako-I-Madagasikara (TIM) party—and has brought a decisive and businesslike style of leadership to government, with a strong commitment to liberal economic policies. However, his high-handed personal style and the increasing centralisation of power in the presidency have raised concerns that he is undermining Madagascar's democratic system and is, in effect, creating a one-party state.

  Charles Rabemananjara

  Appointed prime minister following the re-election in 2006 of Mr Ravalomanana, whose campaign he successfully managed, the former police chief and army general is a more technocratic and less partisan figure than his predecessor, Jacques Sylla. Mr Rabemananjara was given the additional portfolio of decentralisation in the May 2008 reshuffle.

  Norbert Ratsirahonana

  Founder of Ny asa vita no ifamipitsarana (AVI), Mr Ratsirahonana stood against Mr Ravalomanana in the 2006 presidential election, coming fifth with 4.2% of the national vote. He remains an important figure in the moderate opposition, although as an elder statesman his influence has waned following his withdrawal from the political frontline.

  Andry Rajoelina

  A young businessman and former disc jockey, Mr Rajoelina—known as "Andry TGV"—won an overwhelming victory in Antananarivo's mayoral election in December 2007, while his supporters wrested control of the city council from TIM. However, he remains untested in national polls, and it is unclear how far his support can extend beyond the capital.

  Roland Ratsiraka

  Nephew of a former president, Didier Ratsiraka, former mayor of Toamasina and founder of a party, Madagasikara Tongo Saina. He enjoys wide popularity on the east coast, but his political ambitions have been undermined by his conviction for corruption in 2007, for which he received an 18-month suspended sentence.

  Albert Zafy

  Central figure in the 3FN alliance of radical opposition groups and head of state from 1993 to 1996, the veteran populist remains at the centre of political debate as the founder and leader of an opposition grouping, Comite pour la reconciliation nationale (CRN). He enjoys strong personal support in Antsiranana.

  November 20, 2008

• Structure

  Madagascar: Political structure

  Official name

  Republic of Madagascar

  Form of state

  Unitary republic

  Legal system

  Based on the Napoleonic Code, the 1992 constitution and traditional local additions

  National legislature

  In October 2010 a bicameral transitional legislature was appointed as part of the political accord signed in August in Ivato; its lower house is a 256-member congress and its upper chamber a 90-member higher council; the major signatories to the accord, including the transitional authority, Haute autorité pour la transition (HAT), were each given the right to nominate members; a new, permanent parliament is due to be established under the new constitution approved by referendum in November 2010; legislative elections are due to be held in July 2013

  National elections

  December 2006 (presidential), September 2007 (legislative); presidential and legislative elections have been repeatedly delayed and are now scheduled to take place in July 2013

  Head of state

  Marc Ravalomanana was re-elected as president in December 2006 but was forced to resign in March 2009; the de facto head of state is Andry Rajoelina

  National government

  Following the ousting of Mr Ravalomanana in March 2009, the HAT was created, with the former mayor of Antananarivo, Mr Rajoelina, as its president; an agreement on the formation of a new transitional government was drawn up in Maputo, Mozambique, in August 2009 and in Addis Ababa, Ethiopia, in November 2009; however, Mr Rajoelina subsequently reneged on these deals; in November 2011 a "government of national unity" was finally named, although several opposition nominees refused to take their seats

  Main political parties

  The former ruling party, Tiako i Madagasikara (TIM), which had 105 seats in the National Assembly, appears to be disintegrating after its leader, Mr Ravalomanana, was forced into exile; Mr Rajoelina's supporters have yet to develop into a national party; five other opposition parties-Tanora malaGasy vonona (TGV), the Union of Democratic Republicans for Change (UDR Fanovana), Fanjava Velogno, Leader-Fanilo and Liaraike-are of national importance and have given their support to the HAT

  Key ministers

  President of the HAT: Andry Nirina Rajoelina

  Prime minister: Jean Omer Beriziky

  Agriculture: Rolland Ravatomanga

  Armed forces: Lucien Rakotoarimasy

  Development & territory (vice-prime minister): Hajo Randrianainarivelo

  Economy & industry (vice-prime minister): Pierrot Botozaza

  Education: Régis Manoro

  Energy: Nestor Razafindrorika

  Environment & forestry: Joseph Randriamiharisoa

  Finance & budget: Hery Rajaonarimampianina

  Foreign affairs: Pierrot Rajaonarivelo

  Health: Johanita Ndahimananjara

  Interior: Florent Rakotoarisoa

  Justice: Christine Ranazamahasoa

  Mines: Tolotrandry Rajo Randriafeno

  Telecommunications, post & new technology: Ny Hasina Andriamanjato

  Transport: Benjamina Ramarcel Ramanantsoa

  Central Bank governor

  Guy Richard Ratovondrahona (interim)

  March 01, 2013

Economy:

• Background

  Madagascar: Economic background

  Real gross domestic product by sector
  (% share of GDP)
  	2003	2004	2005	2006	2007
  Agriculture	29.2	28.7	27.9	27.1	26.8
  Industry	15.4	15.9	15.8	15.8	15.8
  Services	55.4	55.3	56.4	57.0	57.4
  Source: Economist Intelligence Unit.

  Download text file (csv format)

  November 20, 2008

• Structure

  Madagascar: Economic structure

  Economic structure: Annual indicators

  	2008a	2009a	2010a	2011b	2012b
  GDP at market prices (AR bn)	16,080.8	16,728.9	18,264.8	20,004.0	21,696.9
  GDP (US$ m)	9,413	8,552	8,739	9,878	9,885
  Real GDP growth (%)	7.1	-4.6	1.6	1.0a	2.5
  Consumer price inflation (av; %)	9.2	9.0	9.2	9.5a	6.7
  Population (m)	19.5	20.1	20.7	21.3a	21.9
  Exports of goods fob (US$ m)	1,247.4	881.4b	1,173.3b	1,393.7	1,523.4
  Imports of goods fob (US$ m)	3,376.9	3,265.6b	3,533.9b	3,758.6	3,852.0
  Current-account balance (US$ m)	-2,142.3	-2,495.3b	-2,477.4b	-2,519.6	-2,325.0
  Foreign-exchange reserves excl gold (US$ m)	982.3	1,135.5	1,171.6	1,279.1a	1,190.9a
  Exchange rate (av) AR:US$	1,708.4	1,956.2	2,090.0	2,025.1a	2,195.0a
  a Actual. b Economist Intelligence Unit estimates.

  Download the numbers in Excel

  Origins of gross domestic product 2009	% of total	Components of gross domestic product 2009	% of total
  Agriculture	29.1	Private consumption	79.4
  Industry	16.0	Government consumption	11.6
  Services	54.9	Gross domestic investment	33.0
  		Exports of goods & services	28.8
  		Imports of goods & services	52.8
  Principal exports 2008a	US$ m	Principal imports 2008a	US$ m
  EPZ exports	824	Capital goods & raw materials	1,824
  Vanilla	42	Fuel	547
  Shellfish/fish	28	Consumer goods	391
  Coffee	14	Food	156
  Main destinations of exports 2011b	% of total	Main origins of imports 2011b	% of total
  France	25.4	China	14.1
  Indonesia	17.2	France	10.8
  Singapore	7.4	South Africa	5.5
  China	6.4	Singapore	4.0
  Germany	6.2	Bahrain	3.9
  a Data from Central Bank. b Derived from partners' trade returns.

  Download the numbers in Excel

  Download text file (csv format)

  March 01, 2013

• Outlook

  Madagascar: Country outlook

  Madagascar: Country outlook

  FROM THE ECONOMIST INTELLIGENCE UNIT

  OVERVIEW: The political agenda will continue to be dominated by the issue of whether Madagascar's former president, Marc Ravalomanana, will be allowed to return and contest presidential polls, now scheduled for May 2013. The lack of coherent military leadership could present a threat to political stability, as the army-like Malagasy society as a whole-is deeply split on the issue of Mr Ravalomanana's return. The administration remains committed to a tight fiscal stance, but the temptation to increase government spending will rise in the run-up to the election. GDP is expected to exceed 4% annually in the 2013-14 forecast period, helped by a further expansion in mining and improved agricultural performance; this assumes, however, that elections prove acceptable to donors, who resume funding. After averaging an estimated 9.2% in 2012, inflation will moderate to 7.5% in 2013 and 6.8% in 2014, helped by a decline in key global commodity prices (especially for rice and oil). The current-account deficit will narrow to 14% of GDP in 2014, reflecting stronger growth in exports and tourism receipts.

  DOMESTIC POLITICS: The political agenda will be dominated by preparations for and the conduct of presidential and legislative elections to be held in May and July 2013, respectively. There are deep splits within Malagasy society and the army over the issue of whether or not Mr Ravalomanana should be allowed to return to Madagascar to participate in the polls. Mr Ravalomanana was deposed in 2009 in a de facto military coup, the leaders of which subsequently installed the current head of state, Andry Rajoelina, who leads the incumbent transitional administration, Haute autorité pour la transition (HAT). Mr Ravalomanana was subsequently convicted in absentia for complicity in the presidential guard's shooting of protesters in 2009. However, while the international community regards the conviction as politically motivated and questionable, public opinion in Madagascar itself seems to be largely supportive of Mr Rajoelina's hardline stance. This presents clear risks: should the ousted president be cleared to return by the current administration, there may be elements within the military that could seek to foment instability (perhaps encouraged by members of the HAT, who could use the unrest as a pretext for cracking down on supporters of Mr Ravalomanana). Alternatively, should the former president be prevented from participating, there could be clashes between his supporters and security forces, while a decision by the opposition more broadly to boycott the elections could lead to unrest. The conduct of the polls will also have a significant impact on longer-term stability. Elections that are seen to be free and fair, and broadly accepted by the domestic and international constituencies, should lead to renewed international assistance, more rapid economic growth and an improvement in income per head. Elections that are rejected by either the opposition or donors will see a continuation of the political crisis, with a knock-on impact on poverty levels and, in all likelihood, civil unrest and crime levels. The transitional electoral commission has announced that the initial round of the presidential election will be held on May 8th 2013, with legislative polls-and a second round of the presidential election, if required-to follow on July 3rd. Municipal elections are due to be held in October 2013. However, while progress is being made with the organisation of the polls-with the government announcing in November 2012 a US$71m electoral budget fund to be supervised by the UN-there has been little progress on the key question of whether or not Mr Ravalomanana will be allowed to return to Madagascar to participate in the polls. The Economist Intelligence Unit expects that Mr Ravalomanana will eventually be persuaded to agree to a compromise solution under which he will accept an amnesty for his conviction in absentia in exchange for not standing in the presidential election. Mr Rajoelina would then be the clear favourite to win the ensuing presidential poll. It is also feasible, however, that no polls will be held or that Mr Ravalomanana will be involuntarily excluded and the elections are boycotted altogether by the opposition. In either of these two cases, the political impasse would persist. The protracted postponement of the municipal elections that were due to be held by the end of 2010 indicates that the HAT is prepared to abandon electoral timetables if it believes its interests are best served by doing so.

  INTERNATIONAL RELATIONS: If Mr Ravalomanana is prevented from returning to the country, the international community will be faced with a difficult choice. The Southern African Development Community (SADC), the African Union, the UN and donors will have to decide whether to accept the election process as legitimate (if flawed in certain respects) or to keep Madagascar in a state of limbo in which it is denied access to the normal full range of aid and co-operation. The case for recognising the transition/electoral process as legitimate would be based on concerns that by keeping sanctions in place, ordinary citizens will continue to suffer. However, SADC is taking the diplomatic lead and it appears unwilling to take a flexible line. In some previous crises, such as the one in Zimbabwe, SADC has been criticised for not adopting a strong-enough stance. Perhaps because of this, the group is even more conscious of the need to take the moral high ground with respect to Madagascar.

  POLICY TRENDS: The administration remains committed to a tight fiscal stance as a means of ensuring that an essential minimum of resources is available for public-sector salaries and other priorities. The government is also aware that by managing the public finances prudently, it stands a reasonable chance of maintaining the stability of the ariary; in contrast, if the currency were to suffer a sharp depreciation, it would drive up the cost of imports and risk the loss of popular support. However, the dismissal in 2012 of the governor of Banque centrale de Madagascar (BCM, the central bank), Frédéric Rasamoely, and his replacement with the BCM director-general-who is close to the president-sends a worrying signal about the independence of this key institution. A substantial loosening of monetary policy, were this to occur, could quickly undo the benefits that have been gained from the maintenance of a conservative fiscal stance under the current finance and budget minister, Hery Rajaonarimampianina. Donors are unlikely to restore normal budget support until elections are held on terms that produce a president and legislature that the international community regards as constitutionally legitimate. This implies no return of large-scale assistance until the second half of 2013, at best. The government itself will not be in a position to boost domestic capital spending, which has been squeezed by the loss of general budget support from abroad. However, smaller capital projects that are directly financed by donors will probably go ahead, particularly those that have a strong social or grassroots economic impact. In the longer term, the country needs to undertake reforms to improve aspects of the business environment, notably enforcing contracts and obtaining credit and electricity. However, this is not likely to be assigned a high priority until 2014 at the earliest. Given the lack of financial depth in Madagascar, monetary policy has only limited ability to slow inflation, which is largely determined by fluctuations in local agricultural output and world commodity prices. We, therefore, consider it unlikely that the BCM will announce any significant changes over 2013-14 to its policy interest rate, which has remained at 9.5% since August 2009.

  ECONOMIC GROWTH: Growth is estimated to have accelerated to 2.7% in 2012, thanks to a modest recovery in tourism and an improved performance by the agricultural sector. However, it has remained constricted by the political crisis resulting from the overthrow of Mr Ravalomanana in 2009; the World Bank estimated in late 2012 that the crisis had cost Madagascar the equivalent of US$6.3bn in "lost" growth over the 2009-12 period. Economic performance in 2013-14 will also depend to a significant degree on the uncertain political scene. If elections are boycotted by the opposition, or not accepted by the international community, growth would be likely to remain around 2-2.5% at best (and possibly lower, should the election process prove violent). On the tentative assumption of a return to democratic government in mid-2013, we forecast real GDP growth of 4.1% for that year, driven by mining and tourism, as well as higher capital spending by the government, funded by foreign aid. Political progress could also lead to the restoration, from 2013, of US market access privileges under the Africa Growth and Opportunity Act, which would aid the revival of the textile and garment industry. Growth in 2014 could accelerate slightly, to around 4.7%, reflecting a slight economic recovery in Europe, which remains a major source of tourists and investment, and a rise in international prices for Malagasy exports such as nickel. We estimate that the currency will have an average annual exchange rate of AR2,195:US$1 in 2012. The outlook for 2013-14 is heavily contingent on the political situation and consequent decisions by donors; the restoration of a normal partnership with the IMF and donors (our central scenario) would reinforce confidence and the inflow of foreign-exchange financing into the country.

  EXTERNAL ACCOUNT: We expect minerals to drive growth in goods exports, led by the ilmenite mine and the belated start-up of the Ambatovy mine project, which will be one of the world's largest lateritic nickel mines when fully operational. (Madagascar has issued a six-month permit allowing Canada's Sherritt International and its partners to start production.) The main capital equipment imports for Ambatovy have been completed, while import requirements for Madagascar Oil's Tsimiroro heavy crude project are unlikely to ramp up until mid-2014 at least, meaning that import levels will largely be determined by the performance of the farm sector: good harvests will reduce the need to purchase rice from abroad. A restoration of full aid co-operation would lead to increased import flows in the second half of 2013 and into 2014, with donors funding increased procurement of basic essentials and capital goods for quick-impact projects designed to boost employment and incomes. Increased aid flows would also fund equipment imports for large new capital projects, although these might not be reflected in import flows until 2014 because of planning and contract tender processes. Overall, we now expect the trade deficit to average US$2.4bn (equivalent to 19% of GDP) in 2013-14. We forecast that the services balance will move from a narrow deficit of 0.6% of GDP in 2012 to annual surpluses averaging 0.6% of GDP in 2013-14, assuming that the political situation improves and Europe's economy does not slip into a protracted recession. The income deficit will widen slightly to an annual average of around US$150m, in line with increased profit repatriation by foreign-owned mining firms, but it will remain broadly steady at an average of 1.2% of GDP. The current transfers surplus is expected to widen to an average of around US$480m (3.7% of GDP) in 2013-14, assuming that aid flows are restored in 2013. Overall, the current-account deficit is expected to shrink from an estimated US$2.3bn (23% of GDP) in 2012 to US$1.9bn (14% of GDP) in 2014.

  November 30, 2012

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Country Briefing

Land area

592,000 sq km

Population

20.5m (World Gazetteer 2012 estimate)

Main towns

Population, 2012 (World Gazetteer estimates)

Antananarivo (conurbation): 1.8m

Toamasina: 236,748

Antsirabé: 205,841

Fianarantsoa: 194,287

Mahajanga: 174,023

Toliara: 128,629

Antsiranana: 91,671

Climate

Tropical; cooler in the highlands

Weather in Antananarivo (altitude 1,370 metres): hottest month, December, 16-27°C; coldest month, July, 9-20°C; driest month, June, 8 mm average rainfall; wettest month, January, 300 mm average rainfall

Languages

Malagasy, French

Measures

Metric system

Currency

Ariary (AR)—the ariary officially replaced the Malagasy franc in August 2004

Fiscal year

April-March

Time

Three hours ahead of GMT

Public holidays

January 1st; March 29th (commemoration of the 1947 rebellion); April 9th (Easter Monday); May 1st (Labour Day); May 17th (Ascension Day); May 28th (Whitsun); June 26th (Independence Day); August 15th (Assumption); November 1st (All Saints' Day); December 25th (Christmas Day)

March 20, 2012