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90% of Madagascar Lives On Less Than Two Dollars a Day. Why?

Less than two months from the country's planned election date, there are several questions being asked about the future of Madagascar. In the first installment of our examination of the Malagasy crisis, we discussed the political obstacles that stand in the way of a long-term solution to the crisis. In this chapter, we will discuss the socio-economic decline of the island; its causes (which are not exactly as clear-cut as some may think); and the solutions that ought to be considered.

Le marché de Toliara - via wikimédia CC-NC-BY 3.0

The Toliara market – from Wikimedia CC-NC-BY 3.0

Political impasse and economic decline

The political crisis and the abrupt economic decline of Madagascar are very closely linked. Nevertheless, the four years spent in a deadlock do not fully explain the chronic poverty in the country. The consequences of the political crisis on the population are undeniable. Madagascar is currently the poorest country in the world with 90 percent of its population living on less than two US dollars per day. This transition has already been drawn out over four years and continues on to the detriment of the Madagascan people who are eager for the debate to shift from “who will govern” to “how are we going to get out of this crisis,” as is illustrated in the video below [fr]:

The statistics are hard to argue with: the consequences of the political crisis on the people of Madagascar [fr] are tragic and have plunged the majority of the population into an indescribable poverty. The report from the World Bank breaks down [fr] the different areas that have been struck by this crisis:

Le nombre d'enfants non scolarisés a peut-être augmenté de plus de 600.000. La malnutrition aiguë des enfants reste un problème critique. Dans certaines zones, elle a augmenté de plus de 50%. De nombreux centres de soins de santé ont été fermés [..] les recettes fiscales sont en baisse, la fraude fiscale a augmenté, et la capacité à maintenir le niveau des dépenses globales est remise en cause [..] 60% de la récolte de riz est menacée. La crise politique représente un obstacle à la mise en place d'une réponse appropriée.

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 [...] Tax revenues are falling, tax evasion has increased, and the capacity to hold the line on overall spending is strained [...] 60 percent of the rice crop is endangered. Here too, the political crisis acts as an impediment to mounting an appropriate response.

The crisis (and those responsible for it) has certainly been damaging to the country, but the real underlying causes of the country's economic decline and poverty are not to be found in this debacle. After all, chronic poverty has haunted this country since well before 2009.

The causes of the crisis and the foreseeable solutions

A study led by Mireille Razafindrakoto, François Roubaud and Jean-Michel Waschberger revisits some 50 years of economic history of Madagascar and attempts to draw out the causes of an apparently persistent economic malaise. The article, which is entitled “L'enigme et le paradoxe” (The Enigma and the Paradox) [fr], states that there are no specifically identifiable causes that can explain the country's decline, but rather, that the cycle of social unrest is due to a fragmentation of classes and an inertia surrounding any idea of progressing to a more inclusive society (A PDF of the full study is available here) [fr].

Courbe de croissance du PIB de différents pays africains via la présentation publique de l'étude

The Malagasy Enigma: Graph of the GDP Growth of various African countries (courtesy the public presentation of the study)

In fact, the study focuses on the natural tendency towards centralization and the tendency of various authorities in Madagascan society to personalize power. This type of appropriation of power, along with the growing exclusivity of the elites in relation to the rest of the country has a tendency give rise to political instability and calls into question the legitimacy of institutions. As the study states [fr]:

Il résulte de ces éléments une coupure abyssale entre les élites et la population. Dans les grandes villes,
un tout petit groupe de privilégiés bénéficie de conditions de vie qui les rapprochent des citoyens des pays
développés (les “élites globalisées”) alors qu'une immense majorité de la population vit à un niveau de
subsistance et reste enfermée dans des trappes de pauvreté. [..]Les paysans malgaches et bien des travailleurs du secteur informel ne sont en effet véritablement « capturés » ni par le système politique – en dépit de la légitimité (ou du soutien de façade) qu’ils accordent a priori au détenteur du Fanjakana, ni par le système économique.[..] Parmi les pays où les mêmes questions ont été posées, Madagascar est celui où la légitimité des institutions (justice, police, administration fiscale) apparaît la plus faible. Cette situation, particulièrement inquiétante, témoigne de l’ampleur de la détérioration de la confiance dans l’Etat.

What arises from these factors is a deep fission between the elite and the rest of the population. In large towns, a very small group of privileged people enjoy living conditions that mirror those of the developed world (the global elite). Meanwhile the vast majority of the the population lives at a bare subsistence level and remain trapped in the cycle of poverty. The people of Madagascar and many of those who work under-the-table are not in fact truly “captives” of the political system – in spite of the (semblance of) legitimacy that is given preemptively to whoever is the keeper of the fanjakana (traditional order and values); nor are they captives of the economic system [...]. Among all of the countries where similar questions have been asked, Madagascar is the one where the legitimacy of institutions (justice, police, fiscal government) seems to be weakest. This situation which is particularly worrisome bears witness to the extent of the waning confidence in the state.

A study by American researcher Charlotte McDonald supports the notion that separation between the elite and the majority of the people continues to grow. The study of the Madagascan census figures suggests that a significant part of the population is not even counted in the population reports. This situation can only have a negative impact on any attempts to drive development [fr]:

un vaste nombre de Malgaches est inconnu par l’Etat et ces gens sont forcément desservis. Ce n’est pas une exagération de dire que sans un recensement régulier, Madagascar ne pourrait jamais atteindre son potentiel

The state is unaware of the existence of a large number of Madagascans and these people are inevitably under-served. It is not an exaggeration to say that without a regular census Madagascar will never be able to reach its potential.

One symptom of the elite's takeover, and the disregard for the larger population can be seen in the way mining projects have been managed in recent years. Jean-Luc Hariniaina and Serge Zafimahova provide some context to how Mainland Mining Company Ltd has managed its exploits of ilmenite [fr] in the region of Manakara:

La société MAINLAND a commis d’énormes irrégularités suite aux manquements constatés quant à l’application des Cahiers de Charges Environnementales (CCE) du projet et certainement à certains dispositifs des lois et textes réglementaires malagasy en matière d’environnement et d’exploitation minière [..] Suite à l’implantation de la société MAINLAND, la population de Manakara a tiré la sonnette d’alarme. Il existe une mobilisation du peuple Antemoro dont les pouvoirs traditionnels ou coutumiers et des entités et personnes de bonne volonté à lutter contre les fraudes à l’endroit des richesses du peuple malagasy et de la région de Vatovavy Fito Vinagny. Cette opposition a été déjà adressée aux dirigeants du régime actuel de transition en forme de résolutions écrites. Cependant, elle n’est pas reçu favorablement par les tenants du pouvoir actuel.

The MAINLAND company has been responsible for significant irregularities even after the negligence that had been noted regarding the Environmental Specifications and Requirements for the project, and certainly regarding some measures in the laws and regulatory texts of Madagascar that concern the environment and mining. After MAINLAND's establishment in the area, the Manakara population raised the alarm. There is a call to action among the Antemoro people who hold the traditional power, the organizations and people who truly wish to fight against environmental fraud. They are fighting in the interests of the Malagasy people and the region of Vatovavy Fito Vinagny. This opposition was already expressed to the leaders of the present provisional regime through written resolutions. Nevertheless it hasn't been favorably received by those who are currently in power.

There is urgent need for implementing a better means of accounting for regional interests. In a study on the connection between work and poverty in Madagascar, Epstein et al. argue that access to a stable job (meaning, one that is outside of the black market) is one of the keys to sustainable development:

The study stresses the impacts on employment and incomes of improved access to credit by households, and by infrastructure investments in key sectors that can improve domestic linkages in the Madagascar economy. The study outlines policies that can be undertaken by the government and central banks, including loan guarantees, direct lending, and asset backed reserve requirements that can make financial assets more directly available to small producers and businesses.

Another study, done by Mireille Razafindrakoto et al. also emphasizes that ties need to be strengthened between the state and the grassroots population in order for solutions to be created. They wrap up their research by arguing [fr]:

L'usage de la violence par les factions d'élites assurerait la stabilité de leur pouvoir. Un tel schéma permettrait l'instauration progressive d'un ordre social stable, mais signifierait un abandon du processus démocratique. La seconde voie consiste en revanche à consolider les institutions citoyenne et stimuler la formation de corps intermédiaires pour (r)établir le chaînon manquant entre le sommet de l'Etat et la base [..] Cette seconde voie est selon nous possible, évidemment plus désirable, mais aussi plus difficile à emprunter et surtout nécessite du temps. Elle exige l'instauration d'un nouveau contrat social entre les acteurs en présence sur la scène malgache.

The use of violence by elite factions would cement their power. One such plan would allow the gradual establishment of a stable social order, but it would also bring the abandonment of the democratic process. On the other hand, the other option would be to consolidate the citizen institutions and stimulate the formation of intermediary bodies in order to (re)establish the missing link between the head of the state and the base [..] This second option is, in our view feasible, and clearly more desirable, however it would be more difficult to implement and, above all would require time. It would need the establishment of a new social contract between the governing elite and the general population of Madagascar

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