ECONOMY

Chinese Road and Belt initiative : what benefits for Madagascar ?

 

If China has veered from a farming country to become the world factory in a span of three decades,  Madagascar is still among the poorest  countries in the world after 56 years of independence, but most of all an happy aid recipient country. For the malagasy government, the chinese 13th five year plan « One Belt, One Road » (OBOR)  initiative is a not-to be missed opportunity to get « funding ».

 

The 1st world economy is suffering from industrial overcapacity since 2007 and OBOR is the highest implementation of China’s « Going Out » policy of the 21st century. Of the 890 billions $ whole investment, 60 Billions $ was promised to the African continent during the China - Africa Cooperation Forum (FOCAC) in Johannesburg in december 2015 ;  small portion but sufficiently great when considering  Africa’s rising debt issue. 

 

OBOR  a risk of debt  enmeshment for Madagascar … 

Thanks to it geostrategic position in the Indian Ocean, Madagascar could and wants to hold the bridge position along the Maritime Silk Road (MSR). The visit of Wang Yi, Minister of Chinese  Foreign Affairs last January ended with the country’s approval for joining the OBOR initiative. Therefore, 6 billions Usd should be added to the 10 billions Usd investment already acquired during the Donor’s Conference in Paris in December 2016.  Is Madagascar borrowing responsibly  or what  will OBOR really cost the country ?

 

Apart from Special Economic Zones and Build-Operate-Transfer systems, China’s other operating mode is often characterized with a secure access to natural - energy ressources in exchange of  investment or financial aid ; a contentious pattern of exchange that has always birthed internal resistance if only to mention the case of Soamahamanina, Madagascar is the den of untapped natural resources, akin to  Africa. Still, Madagascar Coface country risk was downgraded to « » in january 2017 and the country’s repayment capacity is at its weakest since decades. How will Madagascar cover the debts ? Why would China invest in risky countries and  lend to the already poor ?

 

 Will OBOR increase transparency in least accountable countries ?

Transparency is not at OBOR forefront. Although the initiative is more about investment but not aid, it seems appropriate to note that China came last in the Transparency Aid Index in 2016 with the United Arab Emirates. Moreover, China is not only investing in high risk countries but also in the most corrupted ones.

 

More than 64 countries are involved in the Road Economic Belt and the MSR  of which  28 % hold a Corruption Perception Index score under 30/100  in 2016,  Madagascar included. With  a score of 40/100, China itself doesn’t meet the average. In the ground, OBOR initiative will undeniably give free ride to frauds and schemes. From now, Egypt is the only african country that signed a Memorandum of Understanding with China regarding the initiative in January 2016.  In Madagascar,  the « how » and « what »  of the bilateral agreement are not yet clearly defined to enhance public awareness. Only the concerned sectors are known : agriculture,  tourism, regional aviation, processing and manufacturing industry and fisheries.

 

With OBOR, there will certainly be « signs » of development in Madagascar, more jobs and more infrastructures, certainly a part of the population will improve their standards of living but as an economic strategy, OBOR is for China first.  It’s the new sinocentric vision to reshape the world economic geography.  The biggest challenge is how Madagascar will turn China’s investment interest into its own …  

Published on Wednesday, 15 February 2017 17:05
Written by F. RAFIDIHARINIRINA