afrol News, 1 July - A new report reveals the social and economic costs of the long political crisis in Madagascar. The country's poverty rate is expected to have increased from 65 to 73 percent as a result of the turmoil. GDP is set to decrease by around 10 percent in 2002.
The Madagascar office of the UN Development Programme (UNDP) recently released a working paper titled 'Recent economic developments and Consequences of the ongoing political crisis for the economy and living conditions'. The study concludes that - even if there is found a quick solution - the crisis will lead to a severe setback in the efforts to reduce poverty. "This does not bode well for a country ranked 135th among 162 in the latest UNDP Human Development Report (2001)," UNDP reports.
Turmoil has followed the rigged December 2001, which turned out to have been won by Marc Ravalomanana. Ravalomanana's followers organised a long general strike to oust ex-President Didier Ratsiraka power in February/March. Ratsiraka from his stronghold in the eastern port city Tamatave (Toamasina) has denied acknowledging defeat and his followers paralysed Malagasy economy for months by placing roadblocks and blowing up bridges. Although most roadblocks now have been lifted, military activities are still going on.
The turmoil has disrupted activities by both government and business. Trade, transport, fuel imports and medical care was cut off by the roadblocks. "The impact is particularly unfortunate given Madagascar's economic stability and strong growth during the past five years, with a nearly seven per cent growth rate last year," UNDP notes. "This report is a UN contribution to the situation assessment and will serve as a guideline for an eventual economic recovery plan," said UNDP Resident Representative Adama Guindo.
Even if the crisis had been resolved in June, economic output would drop by nearly 10 percent this year, according to the report. As it is, the most optimistic forecast, requiring early resolution of the crisis and quick implementation of an economic recovery package, is for an economic decline of six percent this year.
- If difficulties continue, the country faces a deeper decline, UNDP says. "Before the crisis, the projected poverty rate this year was 65 percent. Instead, it is expected to climb back to the 1997 rate of 73 percent."
In addition to increased poverty, those already poor have been the principal victims of the turmoil. Shortages, lack of medicine, care and food and vaccination campaigns made impossible due to lack of fuel has taken its toll on the weakest. Antananarivo government sources estimate that over 10,000 children already have died of malnutrition and lack of health care.
Also the national economy is victimised. Disrupted by roadblocks, the service sector has suffered the most, with a projected contraction of 16 percent this year. One calculates that Antananarivo, the capital, produces between 70 and 75 percent of the country's riches due to the concentration of services, trade and government offices here. Antananarivo, under President Ravalomanana's control, has been the city most affected by the roadblocks.
One roadblock now remains, between Antananarivo and Tamatave, the main port and capital of one of the two remaining provinces under Ratsiraka's control. Even if Antananarivo now has regained its access to several ports, imports and exports are still hampered by blown-up bridges. Fuel is still short and people have to buy gasoline on the black market at five times the market price. Tourism is another victim of the crisis, with many countries advising against non-business travel to Madagascar.
Industrial output had fallen by 13 percent since March, the report says, with production for export by companies in the duty free zone falling 22 percent. Many companies have laid off employees or left them unpaid. In the duty free zone alone, 70,000 jobs are at stake.
The agricultural sector remains largely unscathed, though roadblocks slowed the movement of goods and farm revenues are down because families have less money to buy goods. The northern province of Antsiranana - where the bulk of Madagascar's main cash crop, vanilla, is produced - is further the region most affected by the ongoing military operations. Still, the primary sector may expect a growth of 4.5 percent. However, "if the crisis continues, already difficult living conditions in rural areas will deteriorate," the report concludes.
The study also shows that the new government faces an economic squeeze, with revenues down by US$ 66 million between January and April, mainly because customs checkpoints are not working and businesses are unable to pay taxes.
The report also makes recommendations for reconstruction. A recovery package when the crisis is resolved should include "a delay in tax payments, cancellation of certain debts and loans to help cash-strapped companies stay in business," says the report. "Steps to restore tourism, support the duty free zone, and bolster the Malagasy franc will be vital," it also notes.