In Madagascar’s economic panorama, one individual emerges as a catalyst for transformation and advancement: Rindra Hasimbelo Rabarinirinarison. As the esteemed Minister of Economy and Finance of Madagascar, handpicked by President Andry Rajoelina in August 2021, Rabarinirinarison has pioneered remarkable accomplishments in the realms of economic growth, recovery, and progress. Her strategic foresight, resolute commitment, and extraordinary leadership have propelled Madagascar towards a bright future.
This led to her emergence as the African Minister of the Year 2023 in London. In this captivating and exclusive interview with the ALM team, she takes us on an expedition through the extraordinary achievements of her ministry and the profound influence she has had on the economic landscape of the nation, all under the guidance of President Andry Rajoelina.
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According to the International Monetary Fund (IMF), Madagascar’s economic Growth is expected to stabilise around 4.0 percent in 2023. What is your take on this data as of today, and what are some of your efforts to promote economic growth in Madagascar?
In 2023, many economic growth drivers are expected to play their roles and lift our economy. Among those drivers is the tourism sector. Madagascar will host the 11th Indian Ocean Islands Games in August. This will increase the tourists’ influx in the country and contribute to the development of activities in transport, hospitality, entertainment, etc. Moreover, most of the airlines serving the country have already announced that they will significantly increase the number of their weekly flights; for instance, Kenya Airways will have up to 14 flights a week starting this June.
Another important sector is mining. We just adopted in June of this year a new mining code, in parallel with other measures such as the progressive lift on the gold export ban and the issuance of mining permits, measures that will certainly boost a new dynamism in this sector. This mining sector is also benefiting from a global demand for necessary minerals for batteries’ manufacturing processes (graphite, nickel, cobalt, etc.), which is accompanying the energy transition currently underway in most countries. In the first quarter of 2023, the graphite mining sites of Sahamamy and Molo entered their production phase. Each of them has a capacity of around 17,000 TPA.
Agriculture and agroindustry are also engines of our economy. Our goal is to become food self-sufficient in the medium and long term. We have been intensively investing to develop our agriculture, livestock, and fisheries activities. We have also been working on strengthening the nexus between agriculture and industry as a way to fully exploit our potential in these sectors. Since 2022, we have seen a particular dynamism in this sector, providing substitutes for imports that have become more and more expensive because of global inflation.
Of course, there are downside risks, which, if materialised, would lead to an economic slowdown or contraction. However, we think that Madagascar’s economic growth may go over 4% in 2023.
Madagascar is prone to climate disasters, the frequency and intensity of which have continued to increase in recent years, with a negative impact on the nation’s agricultural sector and economy at large. What are some of the efforts of your Ministry to cushion the economic impact of climate disasters in Madagascar and build resilience in the economy?
Regarding climate disasters, our actions serve two objectives: improve disaster and risk management (DRM) and strengthen resilience. On the DRM side, we set up a contingency fund that will allow us to rapidly respond to disasters and complete emergency actions. Furthermore, the Ministry of Economy and Finance has an ongoing partnership with the World Bank through the FID (Development Fund for Actions) to implement the social safety nets programme in order to support the most vulnerable households impacted by climate disasters. In addition, thanks to our partners (the World Bank, AfDB, GIZ, etc.), our subscription to insurance mechanisms (such as the CAT DDO with the World Bank and the climate insurance with the African Risk Capacity) is not only a great addition to our DRM capability but also reduces the pressure on our public finances.
Talking about resilience and adaptation, the core of our strategy is to prioritise climate-resilient investments. To do so, we just updated our public investment management framework in March 2023. From now on, projects without a strong climate component will not be included in our budget laws. Otherwise, we are among the first five countries that have achieved their Climate Macroeconomics Assessment Programme, which has already been validated by the International Monetary Fund. The recommendations from this assessment are an indicative roadmap for us with regard to climate disaster management.
The World Bank Group has recently announced a Development Policy Operation (DPO) in Madagascar aimed at supporting reforms to unleash drivers of inclusive and resilient growth in Madagascar. Please tell us more about this Development Policy Operation and the expected impact on the Malagasy economy.
Madagascar just signed a Development Policy Operation (DPO) of 100 million US dollars from the World Bank on June 9 of this year. It is the first of three series and also the first budgetary support after the COVID-19 pandemic context. The DPO’s main objectives are to support reforms to unleash drivers of inclusive and resilient growth in Madagascar in order to (i) strengthen governance and macro-fiscal resilience, with a focus on climate-smart and decentralised fiscal management; and (ii) foster an enabling investment environment while deepening structural reforms for equitable growth in critical sectors, including energy, digital connectivity, and mining.
This will allow the country to maximise its economic recovery and accelerate Madagascar’s real GDP growth in the medium term. Madagascar has led many prior actions and reforms before the conclusion of this DPO, such as reforms on an open market for telecommunication, a new policy management for the water and electricity national company, the purchase of many renewable energy equipment, an open market for mining and gold exports, a new legal framework on digital infrastructure, and reforms on investment in general.
The Agricultural sector is the cornerstone of your national economy, responsible for more than 25 percent of the Gross Domestic Product (GDP) of the country and employing 80 percent of the population. Please tell us some of your policies towards enhancing the growth and development of the sector.
The development of agriculture is pivotal for the fight against poverty. Our main key to tackling poverty is to achieve food self-sufficiency. In June 2022, we had a national forum on agriculture development, which led to a pact that we presented during the Dakar Summit in January 2023. Within the Comprehensive Africa Agriculture Development Programme, the Government has committed to allocating 10% of its budget (around $350 million per year) for the agriculture, livestock, and fisheries sectors.
For agriculture in particular, the programmes aim to enhance production of rice, corn, cassava, and oilseeds. To do so, I can say that the Government is working on three strategic priorities:
First, increase and secure access to productive lands by developing irrigated areas and by distributing “Green Title Deeds,” which are certificates given to land owners.
Second, improve access to materials and agricultural inputs by launching a fertiliser distribution programme that will cover 11 regions across the country. A fertiliser plan will also be constructed in partnership with the private sector in the eastern part of the country.
Third, promote innovation by developing a climate-resistant variety of corn seed in partnership with a Zimbabwe-based company. This hybrid seed could triple our productivity up to 8 tonnes per hectare. Likewise, our national centre for agricultural research (FOFIFA) has developed a technique that would improve rice productivity by at least 35%.
Madagascar’s economic policies are designed around four strategic policies, which include industrialization to advance the structural transformation of the economy. Please tell us some of your policies and successes in promoting industrialization in the country.
Madagascar has set up a programme called “One District, One Factory,” or ODOF. The programme name is pretty self-explanatory: our goal is to create at least one factory in each of the 119 districts across the country. In partnership with the « Fihariana Fund, the Government provides funding, equipment, and technical assistance to project developers. The vision is to produce locally and reduce our dependence on importation. In the last two years, we have constructed 37 industries producing sugar, pasta, oil, soap, etc.
The Government is committed to nurturing an investment-conducive ecosystem. As such, a new investment law was adopted in June 2023. This new law provides measures that align Madagascar with international standards in terms of investment security, access to land, etc. This is a major step since the last law was adopted in 2007, and we think it will drive more transformative investments in Madagascar.
Furthermore, there can be no structural transformation without a reliable source of energy. Madagascar has a huge potential of 7.399 MW for hydroelectricity, but only 2% is exploited. For solar, the potential is about 2.000 Kwh/m2. These are investment opportunities, and we are calling out interested companies to develop this kind of project with us.
Madagascar has extensive deposits of natural resources, including precious metals, minerals, and gemstones, making it an attractive destination for mining companies and investors. Please tell us about the investment and business opportunities in the mining sector of Madagascar.
There are indeed many investment and business opportunities in the mining sector of Madagascar. I would like to invite interested investors to come to our country and do a deep dive into them. Today, I would like to focus on two of them. First, Madagascar has important reserves of necessary minerals for the energy transition, mainly graphite, nickel, and cobalt. Numerous studies have pointed out that the global demand for those products will skyrocket in the coming years. Signals are already visible and confirm this statement after the conflict in Ukraine.
Another area of investment is in what we call « rare earth » or « terres rares » in my country, which is a critical input for electronic devices. The numeric transition, with the development of artificial intelligence, is fueling the demand for microchips that will power laptops, servers, etc. Elements of « rare earth » are therefore globally strategic.
According to the findings by the World Bank, industrial mining in Madagascar could account for between 4 and 14 percent of GDP and dominate Madagascar’s exports by 2025. What are some of the policies in the country that support investments in the sector as well as promote the growth and development of the sector?
The new mining code and investment law are definitely game changers in our efforts to promote the growth and development of the mining sector. The new investment ecosystem is geared towards competitiveness, attractivity, and transparency. Furthermore, Madagascar joined the Extractive Industries Transparency Initiative (EITI) in February 2008, and we just updated the statute of the EITI one month ago.
Available influential data shows that the government debt-to-GDP ratio in Africa was 64.5 percent, which is significantly higher than the pre-pandemic figure for 2019, which was 57.1 percent. What is your take on Africa’s debt profile and pathways to addressing the debt levels in Africa?
Indeed, Africa’s debt burden has increased significantly due to the impact of the COVID-19 pandemic and the Ukrainian crisis. These shocks have affected economies and increased government needs and the cost of debt.
To bring debt levels back to pre-pandemic levels, solutions must come from African governments first, such as pursuing structural reforms and adopting a sound fiscal policy framework, in order to eliminate inefficient spending, increase domestic resources, and generate growth.
Multilateral Development Banks are highly praised for supporting such programmes via grants or highly concessional loans, such as the World Bank DPO.
For countries facing debt distress, debt restructuring must be implemented covering debt contracted with both official (Club of Paris and MDBs) creditors and non-official creditors, since loans from non-official creditors have increased considerably for some countries.
But despite the debt levels, Africa must pursue its development goals. As repeatedly requested, concessional funding and SDR allocations have to be increased to meet countries’ needs. Guarantees and other innovative instruments should be available for the government and the public sectors as well.
You recently emerged as the winner of the African Minister of the Year Award for Economic Growth, Recovery, and Development. How does this make you feel?
Emerging as the African Minister of the Year is a recognition that makes me particularly proud and pushes me to move forward to take the pledge to serve for the development not only of my country but also of all of the African continent. It will certainly allow me to raise Africa’s voice and make it count more and more as we also emerge as the future continent in front of all other continents that start to struggle.
Naturally dynamic, passionate, and determined, I am the one who gives a thousand percent of my energy to my job and to my country, with or without recognition. I have been educated with a volunteer spirit, which gave and still pushes me to serve and to deliver the best of me. And being recognised for my work as it is done by the ALM on the ABLA 2023 is just God’s grace and an added bonus that will help me do even better.
Finally, allow me to take this opportunity to share how ready and open my mind is to any kind of collaboration and partnership that can lead to the path of development for my country and for the African continent. Together, we can make the difference. What unites us is way more important than what divides us. Let’s act together and make it happen for Africa.
