Madagascar: So close, yet so far away

The crisis came to a peaceful resolution January 25th 2014 with the inauguration of Hery Rajaonarimampianina as the new president. But there were tensions on both sides throughout the two-and-a-half-year process: SADC nearly threw in the towel; and many Malagasies would have preferred mediation from the Indian Ocean Commission, a grouping of islands with whom they feel more affinity. Madagascar is a member of this organisation with Comoros, France’s Réunion island, Seychelles and Mauritius.

Under the AU’s wing

Madagascar is now back in the AU’s fold. On January 27 the union became the first international organisation to recognise the elections and to lift its sanctions. Rajaonarimampianina even attended the AU’s heads of state summit held last January in Addis Ababa, Ethiopia’s capital. Although other international bodies also consider Rajaonarimampianina’s election legitimate, the European Union and other heavyweight economic partners have not fully resumed aid programmes. Most donors are waiting for the appointment of a prime minister and government as well as regional elections to be held later this year.

The AU’s embrace augurs well at a symbolic level but much depends on the willingness of both sides to forge deeper links, Pigou says. Without the appointment of a prime minister, the new president had still not revealed the country’s strategic direction. “I think there will be a period of exploration, of testing the waters,” Pigou says. “It’s a new relationship that needs to find its way.”

Madagascar’s banking, energy, oil and agriculture sectors are among the many opportunities for African companies. But as newcomers they will be handicapped against well-established European rivals and bullish Chinese interests. Mauritius is the only African country among Madagascar’s top 10 sources of foreign direct investment, at 940.7bn ariary ($464.2m) in 2011, according to the EDBM.

Similarly, Madagascar could make much better use of its membership in SADC and the Common Market for Eastern and Southern Africa (Comesa), which give it access to a huge free-trade area. Socota has used these links to its advantage, Auger says. But the company still had to invest much time and effort in developing a relationship with its South African clients.

Guanomad, a Malagasy company selling organic fertilisers made from bat guano, also worked hard to secure capital in July 2013 from the African Agricultural Fund, a private-equity fund based in South Africa. This $2.7m investment, 40% of the company’s capital, was not only a much-needed cash boost, it will help the company to expand its business on the continent too, says Erick Rajaonary, Guanomad’s founder.

“There are huge needs for fertilisers in Africa,” Rajaonary adds. “The continent, like Madagascar, needs to improve its food security. It is an important market for us because transport is shorter than to Europe, freight is cheaper and we would like to promote organic fertilisers.”

The time may be right for Madagascar to start a new chapter of regional cooperation. The world has changed tremendously since the global downturn in 2008 when the economies of the EU and the US, its traditional trading partners, withered while Africa experienced unprecedented levels of growth. Now is the moment for Madagascar to nurture new relationships with its continental neighbours and show its African colours.

This article was first published by Good Governance Africa.