Economic situation Hope for stabilisation

When Madagascar gained independence from the colonial power of France in 1960, the island state was one of the middle-income countries. From 1972 onwards, the country was oriented towards socialism and large companies were nationalised. Madagascar closed itself off from the Western world and the country's economic and social decline began.

An intercity bus in Madagascar

An intercity bus in Madagascar

An intercity bus in Madagascar

Increasing economic growth rates over the last five years are giving rise to hope that the situation is going to stabilise. In 2016, economic growth in Madagascar was about 4.2 per cent. According to figures from the International Monetary Fund (IMF), the growth rate in 2018 is expected to reach 5.3 per cent.

Madagascar's economy is dominated by agriculture. The sector provides a living for three quarters of the population but accounts for only around one quarter of gross domestic product. Most agricultural land is used for subsistence farming.

Major challenges include soil erosion and extremely low agricultural productivity, which are being exacerbated by climate change. In the 1970s, Madagascar was an exporter of rice, but now rice production is so low that it is not even sufficient to meet domestic demand.

There is also an urgent need to expand power supplies. Nationwide, only some 17 per cent of the people are connected to the power grid. In rural areas, that rate is even lower, just under 11 per cent. The government has launched the first steps towards reforming the energy sector.

Development potential

Madagascar's natural beauty and diversity are among its greatest assets.

Tourism is already an important economic factor and can be further developed – on a sustainable basis. Eco-tourism in particular is a potential new source of income for the people.

Research into and the use of medicinal and healing plants also offer opportunities. However, this is only an option if the remaining rain forest remains intact and is protected on a sustainable basis.

Mining is another engine for growth. Madagascar has rich deposits of titanium, nickel, bauxite and graphite. However, this development potential can only be tapped if the political situation is stable.