Shunned by foreign investors, wracked by poverty, empty state coffers and economic decline, Madagascar has been caught in crisis since a coup in 2009. Presidential elections at the end of October might be a way out.
Erick Regis Rakotomalala rings the small bell on his rickshaw. He has a woolen blanket slung over his shoulders, because it is a cold morning in Madagascar's central highlands. For Rakotomalala and the other rickshaw drivers, it is a long wait for the day's first fare.
"Since the start of the crisis we haven't had many customers. People who live here can't afford our services," he said. "If it weren't for the tourists we wouldn't be earning anything at all. And even what we do earn often isn't enough to buy something to eat."
Whether in the city or in rural areas, whether rickshaw driver, tailor or housewife, all face poverty. It is a battle just to survive and the political crisis is affecting everbody.
Since a coup in 2009, Madagascar has been ruled by a transitional government, which many countries around the world, Germany included, have refused to recognize. Donors have frozen aid and the United States has suspended its preferential trade benefits hitting the Madagascan textile industry hard. 30,000 textile jobs were lost.
That is just one aspect of the crisis. Haleh Bridi, head of the World Bank in Madagascar, said the government is having to introduce draconian austerity measures in order to avoid default.
"Public expenditure on education, health, social security and food has been severely cut back. This, of course, has a profound impact on the life of the population and their everyday needs," she said.
Economy in long-term decline
Before 2009 the economy was starting to improve. President Marc Ravalomanana was pursuing liberal economic policies with which he was able to attract development aid and investment from abroad, and post annual economic growth of around five percent. But then allegations of corruption surfaced and he was ousted from power by his arch rival Andry Rajoelina in a coup. Since then economic growth has plummeted, according to the World Bank.
Madagascar has lurched from one crisis to the next since it gained independence from France in 1960. Bridi said its economic decline is nothing new and began many, many years ago. The country does go through phases of growth, but seen from a long-term perspective the economy has been in decline for decades. "Years of mismanagement become particularly visible in time of crisis, like the present," she said.
Many families do not have enough to eat. The state still subsidizes petrol and electricity but it won't be able to afford to do so for much longer. But once subsidies are lifted, inflation will start to rise.
Foreign investors have either left Madagascar or scaled back their involvement in the country. Heiko Schlittke is a German national and managing director of telecoms operator Airtel in Madagascar. He said his company is just keeping its mobile phone network in operation at the moment. Expanding it is not an option – at least not until a number of conditions have been met.
"Firstly we need decent elections with a credible outcome, which would lead in turn to the creation of a legitimate government, with whom foreign investors can negotiate with confidence, " he said.
Schlittke explained what the absence of such confidence means. "If I receive a document signed by one particular official today, there is no telling as to whether that signature or document will be valid tomorrow. That is an obstacle to sound investment planning," he said.
"Crisis has been with us for four long years"
Schlittke said he often gets phone calls from colleagues abroad who are interested in Madagascar and want his assessment of the country. He could say, for instance, Madagascar has great potential, plenty of natural resources and fertile land. Schlittke is confident that new investors will arrive, once the country has a newly-elected government which is recognized as legitimate internationally.
Madagascar can only hope to receive budget assistance from donor countries after free and fair elections have been held. Without that aid, it will not be able to resuscitate its moribund economy. Stephane Raveloson is the deputy head of the Madagascan employers association (GEM). He said his members regard the current economic climate as "alarming." They are worried about the lack of purchasing power and the specter of inflation. But nonetheless there is still hope.
"This crisis has been with us for four long years. I think we have all had more than enough of it. When we do find a solution and get the country back on its feet again, then I tell you it will be a different, better Madagascar, that will make huge progress, far more than the other countries in the region," Raveloson said.