** Madagascar: an economy awaiting a decisive turning point **
The recent cyclical note from the central bank of Madagascar reveals a dark picture of the island’s economy, which seems to be trapped in a descending spiral. For the second consecutive year, the country faces considerable economic challenges: an almost doubled trade deficit in one year, rampant inflation and difficult access to banking financing. However, behind this worrying painting, hides an opportunity for deeper analysis on the economic structures of Madagascar and the potential levers for a lasting recovery.
### Mirror growth and deficit
Most emerging savings display various growth rates, often coupled with deficits. The growth of 4.2 % expected for Madagascar in 2024, although it may seem positive at first sight, is in reality only a pretty varnish on a much more complex situation. It is crucial to recognize that this growth is mainly powered by private investments, and not by an increase in exports or an improvement in the living conditions of the Malagasy.
Experts, like Dr. Hery Ramiarison, highlight the insufficient economy credits, which represent only 17 % of GDP. This relatively low figure means that only a small number of companies can benefit from medium and long -term funding, thus nailing the wings of innovation and development.
### a sectoral export analysis
The exports of Madagascar, especially in the vanilla, cloves and nickel sectors, recently underwent intense pressure – which only makes the situation worse. By adopting a comparative perspective with other countries producing raw materials and spices, we see that Madagascar cannot align with world market trends. Countries like Vietnam, for example, have been able to diversify their economy to reduce their dependence on a limited number of foodstuffs. By diversifying their exports and investing in the local transformation of their resources, these nations generate a more robust commercial surplus.
## Indeed interest rates and private investment: a vicious circle
With an average interest rate of 15.6 % for the credits granted to businesses, many small and medium -sized enterprises (SMEs), which constitute the backbone of the Malagasy economy, find it difficult to access affordable funding. This phenomenon results in a stagnation of innovation and an inability to offer competitive products on the international market.
It is essential to parallel with other development economies that have managed to reduce funding costs. For example, Kenya has set up effective public-private partnerships that have reduced the cost of access to credit for SMEs. Madagascar could be inspired by such initiatives to revive its economy.
### The fight against corruption: an imperative
Corruption, often cited as a major obstacle to growth, seems to infiltrate all levels of the Malagasy economy. By blocking access to resources and increasing the cost of transactions, it stifles the entrepreneurial initiative. To counter this scourge, institutional strengthening and better regulation are essential. Countries such as the Philippines have adopted rigorous transparency systems, thus making it possible to strengthen the confidence of investors.
### Conclusion: Towards a new economy
The deterioration of the economic climate in Madagascar, as the Note of the Central Bank points out, could be seen as an opportunity for reflection on change. The prospects for 2025 are dark, but they are not irrevocable. To get out of this dead end, a strong political will, accompanied by daring measures in terms of public investment and tax strategy, is essential.
Encourage private investments by improving infrastructure and the establishment of an attractive tax framework, in parallel with a systematic fight against corruption, could restore hope to this island with invaluable natural riches.
The road is long, but with a collective vision and concerted actions, Madagascar may well get out of its economic tunnel to embrace a promising future.