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ambasciata_pretoria

Madagascar

 

Madagascar

MADAGASCAR 



INSTITUTIONAL FRAMEWORK AND POPULATION    

Surface area: 587,040 sq.km.  
Capital: Antananarivo  
Other Main Cities: Administration is divided into 6 regions: in addition to the capital, Toamasina, Mahajanga, Fianarantsoa, Toliara, Antsiranana.  
Official Name: Republic of Madagascar
Form of Government: Republic Head of State: Marc Ravalomanana, President as of 6 May 2002. The latest presidential elections were held on 16 December 2001, candidates were Marc Ravalomanana, Didier Ratsiraka, incumbent President, Albert Zafy, Herzio Razafimahaleo, Patrick Rajaonary and Daniel Rajakoba. The next elections will be held in November 2006.  
Head of Government: Jacques Sylla, as of 27 May 2002.  
Minister for Foreign Affairs: General Marcel Ranjeva    
Legislative System: Bicameral: National Assembly (with 160 seats, mandates of 4 years). The Senate (100 seats, 2/3 of whose members are chosen by regional assemblies elected on a popular basis and 1/3 by presidential appointment, all with 4-year mandates).
The latest legislative elections were held on 15 December 2002. Electoral results: TIM 103 seats, FP 22, AREMA 3, Leader/Fanilo 2, RPSD 5, TTS 2, HBM 1, Independents 22.  
Legal System:   Based on French Civil Law and traditional Malagasy law; has not accepted compulsory ICJ jurisdiction
Suffrage: Universal, from the age of 18 years.    


Population and Social Indicators  

Population: 17,501,871 (2004 estimate)
Growth Rate: 3.03% (2004 estimate)
Life expectancy at birth: 56.54 anni
Ethnic Groups: Predominantly Malay–Indonesian 38% (Merina 26% and Betsileo 12%), “Cotiers” (mixed group of African, Arabic and Malay–Indonesian ancestral origins: Betsimisaraka (15%), Antaisaka (5%), Sakalava and Tsimihety); Creoles, Indians, Comorian (0,3%), French (0.2%) and Chinese (0.1%).   Religions: Animist 52%, Christian 41% (Catholics 22%, Protestants 19%), Muslim 7%.
Languages:French and Malagasy.
Main Political Parties: Action, Truth, Development, and Harmony or AFFA [Professor Albert ZAFY]; Association for the Rebirth of Madagascar or AREMA [Pierrot RAJAONARIVELO]; Congress Party for Malagasy Independence or AKFM/Fanavaozana [Pastor Richard ANDRIAMANJATO]; Economic Liberalism and Democratic Action for National Recovery or LEADER/Fanilo [Herizo RAZAFIMAHALEO]; Fihaonana Rally or Fihaonana [Guy RAZANAMASY]; Group of Reflection and Action for the Development of Madagascar or GRAD/Iloafo [Tovonanahary RABETSITONTA]; Judged by Your Work or AVI [Norbert RATSIRAHONANA]; Movement for the Progress of Madagascar or MFM [Manandafy RAKOTONIRINA]; National Union for Development and Democracy or UNDD; Renewal of the Social Democratic Party or RPSD [Evariste MARSON]  


HISTORICAL BACKGROUND

Once a French colony, Madagascar has a population of Afro-Malaysian origins, resulting from the small groups of people who began crossing the Indian Ocean from South-East Asia in the first century A.D. mixing with the African populations of the Malagasy coast. The French settled in 1643 and established a series of trading posts, thus ensuring their future control over the natural port of Antsiranana, which was used as a centre for transporting Malagasy slaves. Madagascar was officially recognised as a French protectorate in 1890, and thus obtained the status of French overseas nation.

The country gained its independence on 26 June 1960, and the first President of the Republic, Philibert Tsiranana, remained in office until 1972 when violent protests forced him to capitulate to General Gabriel Ramanantsoa. Former Minister for Foreign Affairs Admiral Ratsiraka  formed a parallel group in June 1975, introducing a new form of government that assured a key role to the Presidential party. President Ratsiraka was re-elected in 1989 but was defeated in the presidential elections of March 1993 by Albert Zafy, leader of the opposition coalition “Forces Vives”, who also won the legislative elections in June 1993.

The new president, Albert Zafy, rapidly found himself isolated, and in August 1996 underwent impeachment proceedings and was defeated by Ratsiraka in the December presidential elections of that same year. Regaining power without a parliamentary majority, Ratsiraka proposed several constitutional reforms aimed at boosting his powers at the expense of those of the parliament. When opposed by moderate political forces in his attempt to modify the constitution he opted for a reform focused on administrative decentralisation consisting of the creation of six independent provinces. This decentralisation was narrowly approved in a 1998 referendum.

The legislative elections held in May 1998 strengthened the position of the presidential party (AREMA–Avant-garde de la Révolution Malgashe), which, allied to the Leader/FANILO party, won 79 of the 150 National Assembly seats.   DOMESTIC POLITICS The latest presidential elections were held in December 2001. The High Constitutional Court announced the results of these elections in January 2002, allotting 46% of the votes to Marc Ravalomanana (Mayor of Antananarivo and leader of the TIM/I love Madagascar Party), and 40.8% to outgoing president Ratsiraka.

The High Court prepared to proceed with the foreseen second electoral round, which was challenged by Ravalomanana and his followers who complained about rigging during voting and asked the outgoing president to admit his defeat, leaving a clear path for the challenger. Following a period of tension, Ravalomanana became the self-proclaimed president of Madagascar and head of the armed forces, forming his own government — in opposition to the one in office — and appointing Jacques Sylla as Prime Minister. Ratsiraka, who declared a state of national emergency and instituted martial law in Antananarivo, continued to assert the need for the Head of State to be proclaimed only after the end of his second electoral mandate.

The Secretary General of the African Union (AU), Amara Essy denounced Ravalomanana’s initiatives stating that they were in contrast with the decision of the Algiers Agreements and the AU Declaration of Lomé, which reject any change in government in violation of the constitutional laws of a Member Country. The same denunciation was expressed by the European Union who also considered this infringement of the principles contained in the ACP–EU Cotonou Cooperation Agreement and insisted on the need to find a solution to the institutional crisis consistent with the principles of peacekeeping and respect for democratic rules. Ratsiraka and Ravalomanana reached a compromise in Dakar, thanks to the mediation of the Secretary General of the African Union and four Heads of State (Senegalese President Wade among others).

This compromise was fostered by the High Court’s decision to cancel the proclaimed results of the first elections. In this compromise both candidates committed themselves to the cessation of all hostilities immediately, formation of a national reconciliation government, and, above all, acceptance of the High Court’s new vote count following the first round of presidential elections in December 2001. The new count by the Constitutional Court awarded 51.46% of the votes to Ravalomanana and 35.90% to outgoing President Ratsiraka. However, this latter did not acknowledge it one of the Court’s prerogatives to take decisions on electoral matters and insisted on forming a national unity Government as foreseen by the Dakar Agreement.  The AU Secretary General’s first attempt to mediate, followed by those of former Cape Verde President Monteiro and Vice President of the Senegal National Assembly Bathily, did not succeed.

However, an attempt at mediation by Senegalese President Wade (8-9 June 2002) encouraged Ravalomanana — who had, in the meantime, taken office as President of the Republic — to accept several major proposals, such as forming a new national reconciliation government that would include four Ministers from the former government and the announcement of parliamentary elections by the end of 2002. The new Malagasy Government was formed and took power on 18 June 2002. 

President Ravalomanana was recognised on 26 June 2002 by the United States, followed by Germany and France. On 11 June 2002 the EU adopted a declaration on Madagascar, which indirectly acknowledged Ravalomanana as the legitimate President of Madagascar, and in which the support was expressed for the reconciliation process that the President had initiated. A subsequent meeting of “Friends of Madagascar” — essentially a meeting of international donors summoned by the World Bank in July 2002 — marked the revival of the international community’s commitment to Madagascar. European Commission President Romano Prodi made a brief visit to Madagascar in early September 2002 where he met with President Ravalomanana as well as Prime Minister Sylla in confirmation of the fact that the political crisis was well on its way to normalisation. Ravalomanana had promised during the mediation of Senegalese President Wade to hold legislative elections, which were scheduled for 15 December 2002 and held peacefully in the presence of international observers sent by the European Union, with an estimated voter turnout of 55-60%.

President Ravalomanana’s party TIM (I love Madagascar), obtained the majority of the seats in the National Assembly. Following the favourable opinion expressed by the elections’ European observers regarding the manner in which they were conducted, the Malagasy government requested revival of the dialogue on granting economic recovery aid. The outcome of this request was the 24 January 2003 signing of a third funding convention with the European Union, which foresees grants amounting to approximately EUR 600m. Despite the United Nation’s de facto recognition of Ravalomanana’s government — confirmed by the invitation to the Summit for Sustainable Development held in Johannesburg in September 2002 — the Malagasy seat in the African Union remained empty for almost one year. It was not until July 2003 during the African Union Summit held in Maputo that its Assembly readmitted Madagascar to the AU.

The government underwent a major Ministerial reshuffling on 5 January 2004, in which twelve Ministers were replaced and some ministries were incorporated with others, reducing them in number from 22 to 17. Consistent with the commitments undertaken regarding national reconciliation, on the occasion of his inauguration in early January 2004 Ravalomanana declared amnesty for prisoners sentenced to less than three years for crimes committed during the violence that broke out following the December 2001 elections. Prisoners with lengthier sentences convicted for treason and armed rebellion could not benefit from this amnesty.


ECONOMIC PICTURE

1.  Economic trends

Madagascar is a very poor country with a per capita income of approximately USD 260 and a poverty level of nearly 70%. The country’s economy is predominantly based on agriculture: 70% of the population live in rural areas and four-fifths of the work force is employed in farming. This sector, however, contributes slightly less than one-third to the formation of GDP since only 5% of the land is actually cultivated and 16% adequately irrigated.

Moreover, the sector’s productivity is hindered by the desperately inadequate connections between rural areas and by its scarce ability to control the quality of its products. The most common crop is rice, followed by coffee, vanilla, sugarcane and, above all, cotton, which is destined mainly for the textile industry, which is a good source of exports. Industry contributes 14% to the formation of GDP and the services area 55%.

Madagascar has succeeded in developing several industrial activities that produce both exports and domestic use products (plastics, pharmaceuticals, textiles, leather goods, shoes and food products).

Mineral resources have significant potential but are poorly exploited since they are located in very hard to reach areas. Madagascar’s ability to attract foreign investments is really quite limited and the only way it will improve will be through the creation of adequate infrastructures and the offer of better guarantees of legal protection for foreign investors.

The creation of the Export Processing Zone (EPZ) in the city of Antananarivo has contributed substantially to Madagascar’s economic growth by creating jobs, and the new related services activities, and diversifying the country’s exports. The firms operating in the EPZs are specialised above all in the textile and apparel sectors located in mainly in and around Antananarivo.   Madagascar showed good economic growth in the period between 1994 and 2001: average GDP growth rate was 4.5%, with a peak in 2001, while inflation was contained and dropped in 2001 to 8.5%.

However, 2002 was a negative year given the heavy costs incurred by the political crisis of the first six months. The inflation rate of that year shot up to 15.9% and industrial production was hard hit, provoking a considerable drop in GDP (-11.9%). The poverty rate went from 69% in 2001 to 75% in 2002 and, at the same time, deterioration was recorded in balance of payments, with heavy reductions in both expenditures and revenues.   

In order to change this situation, the government adopted a package of fiscal measures in the context of the 2003 state budget (tax relief and customs exemptions) valued at over one billion U.S. dollars aimed at encouraging economic revival and both national and international investments. Further measures were introduced to reduce the budget deficit (in particular, incentives to increase foreign investments and measures to increase privatisation revenues). Having overcome the 2002 crisis, the economy began to show some encouraging signs of revival and a return to sustained growth (9.6% in 2003). The primary sector, which grew by 1.3% in 2003, should show a definite recovery in 2004 of 5%; growth in the industry (due mostly to the firms operating in the EPZs) and the services sector should level off respectively at 8.6% and 8.3%.

In June of 2003 the government of Antananarivo presented the IMF with a letter of intent in which it established the new macroeconomic objectives to be reached in the medium term. The strategy contained in this document hinges on development and support for the economic activities associated with exportation (in particular, by reducing the difficulties deriving from a lack of infrastructure and a dysfunctional public administration); the promotion of a greater diversification of the export sector, thus far dominated by raw materials and textiles; the introduction of incentives for improving the professional training of labourers for more qualified work; reform of the textile sector (cotton) with the goal of obtaining preferential access to the markets of the United States through the Africa Growth and Opportunity Act (AGOA).
 
Madagascar’s new currency, the Ariary replaces the Malagasy franc but remains, in any case, convertible at banks through 2008; it was introduced as of 3 January 2005 and is quoted at 1810.05 Ariary to USD 1.00, and 2417.00 Ariary to EUR 1.00. The 2003 conversion rate between the Ariary (which comprises 5 Iraimbilanja) and the Malagasy franc, is 1 to 5. President Ravalomanana’s decision to reintroduce Ariary was meant as a further sign of detachment from French colonial domination, and does not seem to have had any particular impact on the economy or the value of Malagasy currency, which appears sufficiently stable, especially after the IMF’s recent interventions on the country’s debt.  


2. Economic and trade relations with main partner countries


Madagascar’s principal economic–trade partners are France, Germany, the U.S.A. and China. There has been a temporary drop in trade with France, a traditionally important partner, owing to France’s position immediately following the elections. The People’s Republic of China has now joined France thanks to the production and exportation of the low-cost technology needed for Madagascar’s economic development.

Bilateral trade with the United States is on the upswing: Madagascar is one of the major beneficiaries of the U.S. initiative AGOA, which foresees preferential access to the American market by a certain amount of goods in exchange for privileged treatment for United States investments and a series of guarantees of good governance and respect for human rights.  


3. Relations with international financial institutions

In its relations with the Bretton Woods Institutions, Madagascar’s long-term priority is the reduction of poverty. on the occasion of the third examination of the Poverty Reduction and Growth Facility (PRGF) in mid-2003, the IMF made a substantially positive assessment of the government’s reform efforts despite the 2002 crisis’ negative repercussions on economic growth.

The IMF therefore approved the payment of a USD 15.9m instalment of a planned total of approximately USD 111m and extended the PRGF through 2004.   Current commitments by the World Bank amount to approximately USD 816m, 310 million of which has already been distributed. Approximately 36% of these funds are earmarked for the social sector, 15% for the private sector, 6% for energy and mining and 21% for various others. The International Finance Corporation (IFC) has a commitment portfolio of USD 7.5m for seven operations. Three new operations were approved in the 2001 fiscal year for a total of USD 26m, and consist of an aquaculture programme and two projects targeted for the export of textile products.  


4. Debt situation

Madagascar has known a very heavy debt situation. Major improvements were seen in the two-year period 2001-2002 when the foreign debt dropped from USD 4.7bn in 2000, to USD 4.1bn in 2001, to USD 3.9bn in 2002, thus allowing the country to benefit from strengthened HIPC initiatives.

Following the declaration by the IMF and the World Bank of the country’s having reached “completion point” as regards the HIPC initiative (October 2004), on 16 November 2004 a multilateral agreement on final cancellation of Madagascar’s debt was signed at the Paris Club. Madagascar’s total indebtedness to creditor members of the Paris Club was thus reduced from USD 1.57bn to USD 121m, owed almost exclusively to Russia, which, contrary to the other creditors, did not grant additional reductions. To date Madagascar has turned to the Paris Club eleven times. A multilateral “interim debt relief” agreement was signed on 7 March 2001 concerning arrears up to 1 December 2000 and due dates from 1 December 2000 to 29 February 2004 — a period covered by the Poverty Reduction and Growth Facility programme set up with the IMF. The renegotiated amount was approximately USD 246m, with an Italian quota of USD 40.7m.

Madagascar was also able to take advantage of what are known as the “terms of Cologne”: repayment of the assistance loans within 40 years, with a 16-year grace and progressive repayment; application of an interest rate no less favourable than the original one; cancellation of 90% of eligible commercial loans (“pre-cut-off-date”) and reprogramming of the remaining 10% over 23 years — with 6-year grace — at the market interest rate. On 20 October 2003 the Paris Club approved an extension of the debt consolidation period from 29 February 2004 to 30 November 2004.  



BILATERAL RELATIONS

1. Political relations


Despite the closing, for reasons associated with the reorganisation of the foreign network, of our Embassy in Antananarivo — established following the country’s independence in the 1960s — and the transfer of authority regarding this country to our Embassy in South Africa, relations between Italy and Madagascar continue to be very positive and are based on a constant and fruitful collaboration in many sectors. In early 2001 an Honorary Consulate General of Italy was established in Antananarivo, which, in addition to fostering bilateral relations between the two countries, is also a major point of reference for the approximately one thousand Italian nationals residing on the island. Madagascar maintains an Embassy in Rome.  


2. Economic, financial and commercial relations

Commercial trade between Italy and Madagascar has steadily increased over recent years, going from EUR 48.1m in 1998 to EUR 64m in 2001, only to drop back in 2002 to EUR 41m as a consequence of the political crisis the country underwent in the first half of that year. Our country has always had a negative trade balance (EUR -13.2m in 2002) with the exception of 2001, when there was a surplus of EUR 2.2m in Italy’s favour. For the most part, Italy imports coffee, bulk cotton and knitwear. We mainly export non-electrical machinery, woollen yarns, metal products and non-electrical machine parts.

The Italian firms located there are generally small, and include: MARAZZI (ceramics, marble, granite), BU.DE.RE.MI (relations development), SMIE (foodstuffs imports), CA.MA (working and exportation of worked stones), E.M.I. (Electronique Madagascar Italie), A-ZETA Italia (foodstuffs importing), MADITAL (lumber processing), Topgomme Soanarana, Madagascar explorer (tour operator), MSC (navigation). Italy’s largest investment is the tourist village of “Il Ventaglio”, which opened in late 2002 on the island of Nosy-Be.

On the level of bilateral agreements, negotiations are under way for an Investment Promotion and Protection Agreement and for an Air Navigation Agreement; on this latter a simplified Technical Memorandum was signed in Rome in May 2004.  On 8 January 2004 Italy signed the first bilateral debt cancellation agreement with Madagascar for a total of EUR 37.68m, entirely in commercial credits, equal to 100% of the payments due in the interim between the “decision” and “completion” points foreseen by the strengthened HIPC Initiative. Upon reaching “completion point”, Madagascar signed the Multilateral Understanding at the Paris Club on 16 November 2004.

In application of this Understanding Italy will assist in lightening Madagascar’s debt by USD 180m, which is equal of 12% of the total, placing third behind France and Japan.  


4. Italian community, Malagasy community in Italy and migration issues

The Italian community in Madagascar is made up of 955 Italian nationals most of whom work with religious orders or missionaries (approximately 600 belonging to various orders), who are greatly appreciated for the work they are doing in the areas of health and education. There are not many bilateral migration issues, nor does there seem to be any clandestine immigration into Italy. In fact, the true final destination of those seeking to leave Madagascar is not Italy but France.   



5. Development cooperation

The activity of the Italian Development Cooperation has essentially concerned the creation of a healthcare programme focused on malaria, which terminated in 2002, and of several projects promoted by Italian NGOs (Reggio Terzo Mondo and Gruppi Laici Terzo Mondo) in the sectors of healthcare and integrated rural development. 

Emergency food aid valued at approximately one million euro was distributed in the two-year period 1999-2001, and Italy sent EUR 400,000 worth of rice in 2004. Italy has contributed to the humanitarian aid operations made necessary by the floods of 2000 with a contribution to the World Health Organisation of approximately USD 160,000. Within the framework of the WHO initiative on behalf of sub-Saharan Africa, known as Roll Back Malaria, Italy allotted EUR 1.3m in 2002 for the implementation of a strategic anti-malaria plan; and a project funded by the Italian Development Cooperation concerning rural development and training in the area of Tsiroanomandidy is currently under way.


 


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