The plight of ordinary Malagasy people looks
increasingly bleak as the much needed presidential elections are postponed
again in Madagascar.
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| The political crisis choking Madagascar since 2009 has taken a heavy toll on the vulnerable population, with 92% of the population now living on less than $2 a day. |
Last week the World Bank gave the following
assessment of the impact of the political crisis on the economy and the people
of Madagascar.
Antananarivo, June
5, 2013
Madagascar is a
country with enormous potential. When it was not in crisis, Madagascar grew at
an average 5 percent a year. But overall economic growth has been flat over the
period 2009-13. Against a benchmark of 5 percent annual growth, GDP in 2013
would have been 20 percent above its current level. The gap between where the
economy could have been and where it is suggests that the cumulative costs of
the crisis now exceed US$8 billion.
Since January 2009, Madagascar has
been in the throes of a political crisis, generated by an unconstitutional
change of government, following the nomination of Andry Rajoelina who was, at
that time, the mayor of Antananarivo, the capital city, as head of state. This
was rejected by the international community. The political crisis and the
enormous uncertainty it created for private investment acted as a brake on
economic growth. Four and half years into the political crisis, the effects on
Madagascar’s economic and social outcomes have been very severe.
The lost years of
socio-economic development
The economy has
stalled, income per capita has fallen: With high population growth (2.9 percent), the population of
Madagascar has increased by over 3 million people from 2008 to 2013. As a
result of economic stagnation, income per capita in 2013 has fallen back to its
2001 level.
Poverty has sharply
increased: Preliminary
estimates suggest that, from 2008 to 2013, the proportion of the population
living under the poverty line (which was already high before the crisis), may
have increased by more than 10 percentage points. With more than 92 percent of
the population living under $2 a day, Madagascar is now one of the poorest
countries in the world.
Social outcomes
have worsened: despite
crisis-related aid, the number of out-of-school children has increased,
possibly by more than 600,000. Acute child malnutrition remains critical,
having increased in some areas by more than 50 percent. Numerous health care
centers have closed, and poor parents have had to shoulder a heavy proportion
of the cost of putting their children to school, due to a lack of government
funding. These developments put the welfare of future generations at risk. At
this point, Madagascar will not reach most of the UN Millennium Development
Goals (MDG) by 2015, even the ones which in 2007 were deemed potentially
achievable (e.g., reducing child mortality, increasing enrollment in primary
education, and eradicating extreme poverty).
Public finances are
increasingly under stress: Sustaining
macroeconomic stability has come under increasing pressure. Tax revenues are
falling, tax evasion has increased, and the capacity to hold the line on
overall spending is strained in the face of political pressures, strikes, and shocks
.While macroeconomic policy remains prudent, the risk of transferring the
mounting costs of cleaning up a weakened fiscal position to the next government
is real.
Foreign aid remains
muted: Aid dropped
sharply in 2009, and has remained subdued. Official aid over 2009-13 dropped by
about 30 percent, with a larger share shifted to humanitarian programs, raising
issues of sustainability.
Infrastructure has
deteriorated: In addition
to damages from cyclones, severe budget cuts in investment and maintenance have
resulted in increasingly deteriorated roads, power and water infrastructure,
impairing the medium- and long-term development of the Malagasy economy.
The ability to deal
with exogenous shocks is severely curtailed: Current risks to the global economy, especially in Europe, make
Madagascar’s economy even more vulnerable, given its dependency on exports and
tourism. The country is also highly vulnerable to natural disasters (cyclones
of 2008 and 2012).The political crisis is a major impediment to confronting and
mitigating these shocks.
The resilience of
agriculture had helped avoid a food crisis so far, but new risks have emerged: The ongoing locust
infestation threatens agricultural production and food security. The Food and
Agriculture Organization (FAO) estimates that up to 60 percent of the rice crop
is endangered. Here too, the political crisis acts as an impediment to mounting
an appropriate response.
Madagascar’s
longstanding governance problems have only been exacerbated: the weakening rule of law, increasing insecurity,
poor governance in natural resource exploitation (rosewood, gold, precious
stones), limited progress on the anti-corruption front, and the lack of
transparency in the management of public resources have only become more pressing.
The resilience of
the private sector is increasingly being tested: There has been little new investment, domestic or
foreign, in the highly uncertain environment of the past few years. The lack of
overall economic momentum, the mounting infrastructure problems, especially in
roads and electricity, and the deteriorating governance environment are hurting
the short-term prospects of the private sector and its long-term plans. No
significant number of jobs has been created, or can be created, in this environment.
Madagascar was already among the
poorest countries in the world and the crisis has only made matters worse. The
crisis is diverting attention from the crucial challenges the country needs to
face and mortgaging the future of Malagasy citizens. From a strictly
developmental point of view, a political resolution of the crisis is urgently
needed. While the first round of presidential elections was scheduled for
July 24, 2013, the elections have been postponed to August 24.
In response to this sharp increase in
need coupled with a reduction in international aid, Money for Madagascar has
remained steadfast in our commitment to helping Madagascar’s most needy people.
Our charity is a-political. Thanks to our partnerships with trusted Malagasy
NGOs our work has been unshaken by the political turmoil. In the face of
worsening poverty MfM has strengthened our core activities with the urban and
rural poor as well as extending our work to provide durable benefits. We remain
profoundly grateful to our kind donors for sticking with the Malagasy people in
their hour of deepest need.
