Madagascar is the world’s fifth-largest island, situated in the Indian Ocean off the coast of southern Africa. The country is endowed with considerable natural resources and unparalleled biodiversity. However, its population, estimated at 30.3 million in 2023, faces the challenge of a persistently high poverty rate (80.7% in 2023, $2.15 per person per day).
With its young population, vast and unique biodiversity, dense forests, fertile agricultural land, unparalleled touristic assets, and one of the longest coastlines in Africa, Madagascar has excellent potential for growth. But Madagascar is also unfortunately among the poorest countries in the world. Between 1960 (its year of independence) and 2020, Madagascar’s per capita income declined by 45%. Remarkably, this occurred in an environment largely free of violent conflict, perhaps the only such instance in the world.
The meager progress recorded during periods of relative stability has been swept away by various crises, usually political but also climatic and, more recently, by the COVID-19 pandemic. Despite a modest economic recovery after the country’s most recent political crisis, from 2009 to 2013, the GDP per capita growth rate has averaged just above 0% per year. The share of the population living below the national poverty line rose from 72.5% in 2012 to 75.2% in 2022.
According to World Bank analyses, per capita income and the poverty rate are highly correlated in Madagascar. This means that the persistence of poverty is a result of the stagnation of growth. The World Bank’s Systematic Country Diagnostic indicates that elite capture and the lack of competition and transparency at the core of the state have hampered Madagascar’s growth performance.
Globally, the private sector has a leading role to play in improving growth and reducing poverty. However, Madagascar’s private sector is small, highly uncompetitive, and marked by low levels of investment, thus unable to create jobs, lift economic growth, and reduce poverty. Investment averaged 19.4% of GDP during 2013 to 2019, which is much lower than its level for peer countries.
Madagascar’s structural economic transformation has been limited: more than 90% of the working-age population remains engaged in subsistence agriculture and informal services. Job creation in industry and high value-added services remains low. Agricultural productivity is low, with limited technological adoption among smallholder farmers and weak market orientation. Low productivity coupled with deteriorating market accessibility are major contributors to high poverty rates in the rural areas.
Governance
failures have limited Madagascar’s ability to achieve the sustained, inclusive,
and high economic growth needed to reduce extreme poverty. High poverty is also
the result of the weak governance that has remained unresolved for decades:
weak institutions and elite control are eroding the rule of law, public sector
accountability and the fight against corruption. The COVID-19 pandemic
exacerbated an already-centralized power structure, weakened institutions, and
created new challenges for transparency and accountability.
Another major obstacle is the weakness of human capital: Madagascar’s Human Capital Index (0.39) is among the lowest worldwide, meaning that, unlike healthier and better-educated children elsewhere, Malagasy children will not grow into productive adults.
The answer is almost mechanical because it comes up too often. It is, however, inescapable: Madagascar urgently requires a sustained period of robust economic growth spanning multiple years, which would enable the country to accumulate assets and build a solid foundation for its economic transformation. Put simply, to reduce poverty in Madagascar, it is essential to increase growth. High growth is possible in Madagascar but a strong commitment to economic reforms is needed to ensure its sustainability.
https://blogs.worldbank.org/en/africacan/how-madagascar-can-break-vicious-cycle-poverty
Comments
Ecosystem fans like Madagascar’s stagnation and are likely to raise hell if any of their jungle is leveled to plant crops. Madagascar needs to discover what “in-demand” raw materials are available to private sector investors. Until private sector investment is secured, Madagascar will continue to be a country in search of an economy.
Norb Leahy, Dunwoody GA Tea Party Leader
No comments:
Post a Comment