WORLD POLITICS REVIEW
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Finance Minister’s Exit Highlights Power of Madagascar’s Economic Elites
In announcing
his resignation last month, Madagascar’s finance minister, Gervais Rakotoarimanana, said conditions were not in place for him to succeed in the role, though he did not elaborate. While respected by international donors, Rakotoarimanana was not as beloved
by other members of the government, and the private sector also viewed him warily. In an email interview, Richard R. Marcus, professor and director of the Global Studies Institute and the International Studies Program at California State University, Long Beach,
describes the politics behind Rakotoarimanana’s resignation and how it fits in with preparations for elections in 2018, which he says are shaping up to be a “race toward the bottom.”
WPR: What appear to be the reasons for Finance Minister Gervais Rakotoarimanana’s resignation, and what might be behind the dispute between him and the president?
Richard R. Marcus: The official reason Gervais Rakotoarimanana gave for his departure from the Finance Ministry is a “divergence in point of view with the state.” He went on to explain that the conditions for completing
his mission were not fulfilled. All of this is certainly true, but it masks the deeper issues.
As finance minister, Rakotoarimanana was seen as vocal—even brash, intransigent, rigorous and unwavering in the perfunctory way he managed the country’s spending. This was highly appreciated by international donors who felt confident in his ability to increase
transparency and protect against the vicissitudes of less hawkish processes that allow for softer fiscal accountability. Rakotoarimanana had some remarkable achievements as a result of his punctiliousness. He secured $304 million in International Monetary
Fund Extended Credit Facility funding and a new World Bank Country Partnership Framework that provided $1.3 billion in spending between 2017 and 2021.
This is no small feat. With the unconstitutional change of power in 2009 and subsequent years of transitional uncertainty, donors froze and even stopped funding to Madagascar. New funding levels are now above the pre-2009 levels for the first time, which is
a sign of newfound confidence in Madagascar’s fiscal capacity.
Rakotoarimanana’s successes came at a cost. There were ongoing tensions between the Finance Ministry and Prime Minister Olivier Mahafaly. And while Rakotoarimanana has a strong personal relationship with President Hery Rajaonarimampianina, he was nonetheless
left in the dark on key fiscal issues, even as the president sought outside financing in China. Rakotoarimanana was openly critical of the management of Air Madagascar and Jirama, the state-owned electricity and water company, and he was seen as a hindrance
by many leaders in the private sector.
The perception is that the less exacting approach under previous finance ministers left funds more fungible and financial oversight of business transactions less rigorous. This is a tremendous challenge in Madagascar, where the private sector plays an important
public sector role. While bribery and other overt forms of corruption do exist, the larger issues in Madagascar are challenges to regulatory and systemic norms such as the taxation of illicit goods, contracting and customs controls. Limiting activities disadvantages
critical interlocutors.
Finally, 2018 is an election year in Madagascar. It is clear Rakotoarimanana wanted to distance himself from institutional irregularities in advance of the balloting process. The new finance minister, Vonintsalama Andriambololona, is appropriately trained and
comes with a thick resume. However, she served as secretary-general of the Finance Ministry when President Rajaonarimampianina was finance minister during the transitional government of President Andry Rajoelina. With a few notable exceptions, international
donors were critical of financial decision-making under the Rajoelina administration, cast doubt on the credibility of fiscal policy because of the government’s illegitimacy, and saw financial oversight as at best lax and at worst complicit in extracting rents
from both legal and illegal sectors. As a result, the international community respects her training and work history—she sits on the board of the Central Bank of Madagascar—but questions her credibility.
WPR: Under President Rajaonarimampianina, has there been much progress on institutional reforms and revising flawed components of the constitution, and what have been the barriers to getting this done?
Marcus: With nine constitutional revisions and four republics since 1960, institutional reforms in Madagascar have been the victim of false starts for decades. The Constitution of the Fourth Republic, which came
into effect in 2010, is a deeply flawed document that is both self-contradictory and uninterpretable in key areas. There was a sharp drop in the quality of institutions in 2008 in such areas as public finance, public sector management, economic management,
social inclusion, structural policies and transparency. The overthrow of 2009 led to a further unraveling of both public capacity and public trust.
There has been some progress under Rajaonarimampianina, particularly in areas such as financial management and social inclusion. Rajaonarimampianina has built private sector confidence and successfully encouraged external investment. High vanilla prices and
surging investment in mining have buoyed GDP, offering new opportunities and a workable budget profile.
However, core institutional reforms still have not been sufficiently addressed. Social sector institutions are feeble and lack vertical accountability. High-rent sectors such as mining have strong legal codes but weak enforcement and accountability. The justice
system has continued to deteriorate and fails to serve the public interest or business. Police lack authority and are seen as corrupt. The National Assembly lacks public trust. Madagascar was once characterized by relatively high transparency but relatively
low accountability. Today both transparency and accountability are deeply lacking, holding the potential to undermine fiscal policy, investment and political processes.
Select civil society organizations remain strong but tend to be either outside the bulwark of power or coopted by it. The electoral code was markedly improved in 2010 and 2012, but there has not been the progress hoped for under the Rajaonarimampianina administration
in creating an open system for competition. Amnesty International has warned of escalating failures in protecting human rights, while BIANCO, the anti-corruption bureau, lacks resources and suffers from intimidation, threats and pressure. The newly formed
Independent National Commission for Elections is in negotiations with donors on an electoral timeline and the collection of electoral data, but the weakness of political parties and platform politics is a harbinger of challenges to come in the presidential
election scheduled for 2018.
In sum, Madagascar continues to face profound governance challenges whereby decisions are made through competition between narrow networks comprised of politicians and private sector elites. Net winners reap significant spoils in terms of political power, allowing
them to influence and change malleable institutions to suit the personal needs of network members, leading to private sector windfalls. Net losers are created by these same processes, creating conditions for cyclical instability at best and, at worst, renewed
violence in urban areas.
WPR: What are shaping up to be the main issues of the 2018 presidential campaign, and who are the likely candidates?
Marcus: Every election, every campaign, every candidate in Madagascar always focuses on development. Madagascar is one of the poorest countries in the world. Misery is high, and opportunities are scant. Former President
Marc Ravalomanana vowed to “Prepare the Way in Madagascar,” and Rajaonarimampianina was to be a “New Force for Madagascar.” Yet, poverty has risen in Madagascar since 2009, while access to employment, education and other social goods is limited to an elite
few.
Development, growth, poverty alleviation and economic opportunities will be populist, if empty, themes. The 2018 election will, at the same time, focus much attention on corruption. There is significant public consternation, particularly in the capital, that
the election of Rajaonarimampianina in 2013, while bringing about an end to the period of crisis, has if anything exacerbated the rule by economic elites housed within a democratic structure protecting the few.
There are two declared candidates, Rajaonarimampianina and Ravalomanana. While, undoubtedly, Ravalomanana was forced from office unconstitutionally in the overthrow of March 2009, that is not a defense for what the populace sees as a profoundly problematic
period in which he narrowed his base and intertwined his company, Tiko, with public institutions. He was convicted in abstentia for his role in the murder of dozens of demonstrators in February 2009, and civil society leaders are already voicing concerns about
the crisis his re-election would bring.
Rajoelina, former president of the High Transitional Authority, has hinted at a possible run but lacks credibility. There will no doubt be dozens of other candidates in the first round of the election, but to date it appears the race will boil down to a contest
between Rajaonarimampianina and Ravalomanana. If this indeed should come to pass then it will be viewed as a race toward the bottom, with one presidential winner and 24 million losers.