Economy & Industry

A poor economy

Madagascar has one of the poorest-performing economies in the world and a population growing faster than the economy.

Textile disaster

Tablecloths for sale in Madagascar, by By Lebelot (Own work) [GFDL ( or CC-BY-SA-3.0-2.5-2.0-1.0 (], via Wikimedia Commons

Madagascar’s textile industry relied on its exports. But after the coup, the US was required by law to drop Madagascar from its preferential import program designed to encourage African economies (the African Growth and Opportunity Act). This devastated the island’s textile industry.

After independence, Madagascar was relatively prosperous and produced enough rice to export. But decades of political mismanagement and economic decline followed. Roads fell into disrepair and farmers could no longer get their harvests of rice or coffee to market.

Political instability over the last few years has not helped. International donors were funding around half the government’s budget. However, this funding was suspended in 2009 following a coup – see History & Politics. This left the government without money to invest in important sectors for the economy such as education.

Investment needed

A nickel earner

Private companies have been investing in the mining sector in recent years. So for example, a large nickel mine has gone into production. With the capacity to produce around 60,000 tonnes of refined nickel each year, it is expected to be one of the largest nickel mines in the world.

The country’s infrastructure is badly in need of investment. Around four-fifths of the population relies on agriculture for their living. But with inadequate roads, it’s difficult for farmers to transport their produce. Railways and ports are also not well-developed.

The lack of infrastructure holds back other sectors which are important to Madagascar’s economy, such as mining. The island has a number of natural resources including chromite (for chrome) nickel, platinum, gold and precious gems such as sapphire, topaz, garnets and amethysts. But many of these deposits are in remote locations which are hard to reach.

Reserves of oil and gas also lie off the coast and with high global prices, there is interest from energy companies in extracting these.

Agriculture and tourism

Agriculture, fishing and forestry are the mainstay of the economy. Vanilla is one Women sorting vanilla pods, by WRI Staff [CC-BY-2.0 (], via Wikimedia Commonsof the island’s best-known products and Madagascar is the leading producer of vanilla in the world. (In the photo, Malagasy workers sort and grade vanilla pods.)

However, deforestation and soil erosion are a major threat, reducing the ability of farmers to produce enough food from traditional methods. New farming practices and different crops therefore need to be more widely introduced – see Climate & Agriculture.

Tourism is also extremely important to the island and a sharp drop in visitor numbers after the coup of 2009 was a serious blow to the economy. The worldwide recession is also affecting tourist numbers. However, Madagascar’s unique plants and animals – see Geography & Wildlife – remain an important attraction. And the country is placing more importance on conservation and extending reserves and national parks to support ecotourism.

With fresh elections, the Malagasy people are hoping for a more stable political situation and a better economic climate.