Madagascar: Debating the Worth of Foreign Direct Investment · Global Voices
While Madagascar attempts to find a way out of a prolonged political crisis, Malagasy bloggers are discussing the value of foreign direct investment (FDI). The worth of foreign investment came into sharp contrast when a land deal with Korean investor Daewoo came under criticism and partly triggered the current crisis.
Many Malagasy believe that Madagascar, like many other African countries is rich in natural resources but that the land has been plagued by poor governance and unfair trade deals. Ten years ago, The Economist labeled Africa “The Hopeless Continent”. Their most recent publication highlights the rapid growth of many African countries‘ GDP. Still, the growth is not equally felt throughout the continent. In fact, Madagascar is projected to have one of the lowest level of growth in all of Africa.
Additionally, the capital city Antananarivo and other cities are currently experiencing frequent running water and power outages that have provoked frustration and outrage [fr] among Malagasy citizens. 165
The current situation is one of the reasons Antananarivo has been ranked as one of the cities with the lowest quality of life in the world by the Mercer’s 2011 quality of living survey.
Having been marred in a lengthy political quagmire, the Malagasy blogosphere is trying to steer the debate away from a political solution to an overall debate on how to re-ignite an economy that has faltered over the past three years.
Evaratra in Madagascar. Photo credit to <PERSON> on the Madagoravox blog
Making FDI work for Malagasy people
Land deals have been discussed at length in Madagascar as a way to get out of poverty; the aborted Daewoo deal was the most publicized case but similar deals have been implemented without much hesitation or reaction.
The soundness of deals related to the mineral wealth of Madagascar has been recently debated by Malagasy experts.
<PERSON> is working at the International Chamber of Commerce and Industry of Madagascar. He voiced his frustration with the current status-quo in the Madagascar political system that according to him is the main roadblock preventing more bilateral cooperation with foreign investors [fr]:
Nous sommes actuellement en cours de création d'une relation commerciale sur le LONG TERME qui sera bénéfique pour les Entreprises de Madagascar entre notre pays Madagascar et le Koweït. L'objectif de cette coopération Étatique serait de mettre en place une ligne de trésorerie (emprunt) de 3 milliards de dollars (voire plus) sur 5 ans avec une mise a disposition immédiate de 1 millard de dollars (encaissement immédiat) que nous pourrions investir dans les activités a forte rentabilité de notre grand pays Madagascar (Activités d'INVESTISSEMENT et non de fonctionnement) [..] .La négociation concernant la mise en place de cette ligne de trésorerie serait la suivante : … 1) Un emprunt de notre État Madagascar a un taux de remboursement a 3,4 %…2) Pret aux Entreprises de Madagascar a un taux de 5,6% ce qui permet de casser le fonctionnement des banques de Madagascar qui prêtent a un taux de 18,20% sur des durées relativement courtes
We are currently in the process of building up a long term bilateral trading collaboration between Madagascar and Kuwait that would be beneficial for Malagasy companies. The goal is to set up a loan for three billion dollars over five years with one billion available right away that could be used for high return investment activities (investment and not operational funding). The negotiation is around the following line: 1) Madagascar will be borrowing at an interest rate of 3.4%… 2) the State could loan to Malagasy companies at 5.6% instead of the 18 or 20% rate currently proposed by the national banks on very short term periods.
In reaction to his post, <PERSON>, asks in the comment section [fr]:
Pourriez-vous m'expliquer pourquoi vous rêvez devant un emprunt à 3,4% alors que vous n'arrêtez pas de critiquer les institutions de Bretton Woods qui prêtent pourtant à des “taux concessionnels” de 0,5% ?
Why are you dreaming of an interest rate at 3,4% when you always criticize the Bretton Woods institutions who loan at 0.5% ? 165