During Madagascar’s First Republic, France heavily influenced Madagascar’s economic planning and policy and served as its key trading partner. Key products were cultivated and distributed nationally through producers’ and consumers’ cooperatives.
Government initiatives such as a rural development program and state farms were established to boost production of commodities such as rice, coffee, cattle, silk and palm oil.
Popular dissatisfaction over these policies was a key factor in launching the socialist-Marxist Second Republic, in which the formerly private bank and insurance industries were nationalized; state monopolies were established for such industries as textiles, cotton and power; and import–export trade and shipping were brought under state control.
Madagascar’s economy quickly deteriorated as exports fell, industrial production dropped by 75 percent, inflation spiked and government debt increased; the rural population was soon reduced to living at subsistence levels. Over 50 percent of the nation’s export revenue was spent on debt servicing.
The IMF forced Madagascar’s government to accept structural adjustment policies and liberalization of the economy when the state became bankrupt in 1982 and state-controlled industries were gradually privatized over the course of the 1980s.
The political crisis of 1991 led to the suspension of IMF and World Bank assistance. Conditions for the resumption of aid were not met under Zafy, who tried unsuccessfully to attract other forms of revenue for the State before aid was once again resumed under the interim government established upon Zafy’s impeachment.
The IMF agreed to write off half Madagascar’s debt in 2004 under the Ravalomanana administration. Having met a set of stringent economic, governance and human rights criteria, Madagascar became the first country to benefit from the Millennium Challenge Account in 2005.
Madagascar’s GDP in 2015 was estimated at 9.98 billion USD, with a per capita GDP of $411.82.
Approximately 69 percent of the population lives below the national poverty line threshold of one dollar per day. Over the last five years, the average growth rate has been 2.6% but is expected to have reached 4.1% in 2016, due to public works programs and a growth of the service sector.
The agriculture sector constituted 29 percent of Malagasy GDP in 2011, while manufacturing formed 15 percent of GDP. Madagascar’s other sources of growth are tourism, agriculture and the extractive industries.
Tourism focuses on the niche eco-tourism market, capitalizing on Madagascar’s unique biodiversity, unspoiled natural habitats, national parks and lemur species.
An estimated 365,000 tourists visited Madagascar in 2008, but the sector declined during the political crisis with 180,000 tourists visiting in 2010.
However, the sector has been growing steadily for a few years; In 2016, 293,000 tourists landed in the African island with an increase of 20% compared to 2015 for 2017 the country has the goal of reaching 366,000 visitors, while for 2018 government estimates are expected to reach 500,000 annual tourists.
Natural resources and trade
Madagascar’s natural resources include a variety of unprocessed agricultural and mineral resources. Agriculture (including raffia), fishing and forestry are mainstays of the economy.
Madagascar is the world’s principal supplier of vanilla, cloves and ylang-ylang. Other key agricultural resources include coffee, lychees and shrimp.
Key mineral resources include various types of precious and semi-precious stones, and Madagascar currently provides half of the world’s supply of sapphires, which were discovered near Ilakaka in the late 1990s.
Madagascar has one of the world’s largest reserves of ilmenite (titanium ore), as well as important reserves of chromite, coal, iron, cobalt, copper and nickel.
Several major projects are underway in the mining, oil and gas sectors that are anticipated to give a significant boost to the Malagasy economy.
These include such projects as ilmenite and zircon mining from heavy mineral sands near Tolanaro by Rio Tinto, extraction of nickel near Moramanga and it’s processing near Toamasina by Sherritt International, and the development of the giant onshore heavy oil deposits at Tsimiroro and Bemolanga by Madagascar Oil.
Exports formed 28 percent of GDP in 2009. Most of the country’s export revenue is derived from the textiles industry, fish and shellfish, vanilla, cloves and other foodstuffs.
France is Madagascar’s main trading partner, although the United States, Japan and Germany also have strong economic ties to the country.
The Madagascar-U.S business Council was formed in May 2003 as a collaboration between USAID and Malagasy artisan producers to support the export of local handicrafts to foreign markets.
Imports of such items as foodstuffs, fuel, capital goods, vehicles, consumer goods and electronics consume an estimated 52 percent of GDP. The main sources of Madagascar’s imports include China, France, Iran, Mauritius and Hong Kong.
Infrastructure and media
In 2010, Madagascar had approximately 7,617 km (4,730 mi) of paved roads, 854 km (530 mi) of railways and 432 km (270 mi) of navigable waterways. The majority of roads in Madagascar are unpaved, with many becoming impassable in the rainy season.
Largely paved national routes connect the six largest regional towns to Antananarivo, with minor paved and unpaved routes providing access to other population centers in each district.
There are several rail lines. Antananarivo is connected to Toamasina, Ambatondrazaka and Antsirabe by rail, and another rail line connects Fianarantsoa to Manakara.
The most important seaport in Madagascar is located on the east coast at Toamasina. Ports at Mahajanga and Antsiranana are significantly less used due to their remoteness.
The island’s newest port at Ehoala, constructed in 2008 and privately managed by Rio Tinto, will come under state control upon completion of the company’s mining project near Tôlanaro around 2038.
Air Madagascar services the island’s many small regional airports, which offer the only practical means of access to many of the more remote regions during rainy season road washouts.
Running water and electricity are supplied at the national level by a government service provider, Jirama, which is unable to service the entire population.
As of 2009, only 6.8 percent of Madagascar’s fokontany had access to water provided by Jirama, while 9.5 percent had access to its electricity services. 56% of Madagascar’s power is provided by hydroelectric power plants with the remaining 44% provided by diesel engine generators.
Mobile telephone and internet access are widespread in urban areas but remain limited in rural parts of the island. Approximately 30 percent of the districts are able to access the nations’ several private telecommunications networks via mobile telephones or land lines.
Radio broadcasts remain the principal means by which the Malagasy population access international, national and local news. Only state radio broadcasts are transmitted across the entire island.
Hundreds of public and private stations with local or regional range provide alternatives to state broadcasting.
In addition to the state television channel, a variety of privately owned television stations broadcast local and international programming throughout Madagascar.
Several media outlets are owned by political partisans or politicians themselves, including the media groups MBS (owned by Ravalomanana) and Viva (owned by Rajoelina), contributing to political polarization in reporting.
The media has historically come under varying degrees of pressure over time to censor their criticism of the government. Reporters are occasionally threatened or harassed and media outlets are periodically forced to close.
Accusations of media censorship have increased since 2009 due to the alleged intensification of restrictions on political criticism.
Access to the internet has grown dramatically over the past decade, with an estimated 352,000 residents of Madagascar accessing the internet from home or in one of the nation’s many internet cafés in December 2011.