Abstract

This paper provides a comprehensive analysis of Madagascar’s contemporary economic and political status within the East African region and its broader Indian Ocean context. Drawing on sovereign credit ratings, official government data, SADC diplomatic engagements, and geopolitical analysis, it argues that Madagascar is navigating a profound dual transition: a military-led political transformation following the October 2025 coup, concurrent with a surprisingly resilient economic trajectory marked by fiscal stability and continued international partner engagement. Economically, Madagascar demonstrates structural paradoxes—among the world’s lowest GDP per capita yet maintaining “B-” sovereign credit ratings with stable outlooks, comfortable foreign exchange reserves, and a favorable debt profile dominated by concessional lending. Politically, the country has experienced its latest military intervention, with Colonel Michael Randrianirina’s transitional government pursuing an 18-to-24-month roadmap toward a new constitution and Fifth Republic elections. Regionally, Madagascar occupies a unique position—geographically part of East Africa yet institutionally anchored in the Southern African Development Community (SADC), where it has temporarily relinquished its chairmanship while seeking to maintain regional integration commitments. Geopolitically, the transitional authorities are navigating intensified great-power competition in the Indian Ocean, with China, Russia, the United States, and India all pursuing strategic interests in Madagascar’s critical minerals and maritime position, while French influence faces renewed contestation. Madagascar’s status is thus defined by the tension between chronic political instability and underlying economic resilience—a fragile equilibrium whose sustainability depends on the transitional government’s ability to deliver basic services, maintain donor confidence, and navigate an increasingly competitive geopolitical environment.

1. Introduction: Madagascar—Between Rupture and Resilience

Madagascar, the world’s fourth-largest island, occupies a distinctive position in the African landscape. Geographically proximate to East Africa’s coastline yet culturally shaped by Southeast Asian and Arab influences, politically volatile yet economically endowed with critical minerals essential for the global energy transition, institutionally a member of the Southern African Development Community (SADC) yet strategically positioned along Indian Ocean sea lanes—the country defies simple categorization.

Since October 2025, Madagascar has been navigating its latest political transition: a military-led coup that removed President Andry Rajoelina and installed Colonel Michael Randrianirina as President of the Refoundation of the Republic . This event, while dramatic, represents continuity as much as rupture—the Malagasy Armed Forces have been decisive in national politics since independence in 1960, with the elite CAPSAT unit playing pivotal roles in both the 2009 uprising that brought Rajoelina to power and the 2025 takeover that removed him .

Yet beneath the surface of political turbulence, a more complex picture emerges. Sovereign credit rating agency S&P Global Ratings confirmed Madagascar’s “B-” long-term and “B” short-term ratings in January 2026, removing the country from negative watch and assigning stable outlooks . The International Monetary Fund, World Bank, and bilateral donors have largely maintained engagement—”which is rare in such circumstances,” as S&P observes . The government continues servicing its commercial debt fully and on time .

This paper contends that Madagascar’s contemporary status is best understood through four interconnected lenses: its paradoxical economic position of deep structural poverty alongside resilient fiscal fundamentals; its political transformation under military-led transitional authorities pursuing a constitutional refoundation; its regional positioning as a SADC member state navigating integration commitments amid domestic crisis; and its geopolitical significance as an arena of intensifying great-power competition in the Indian Ocean. The interplay between these domains defines Madagascar’s status as a state whose chronic instability coexists with surprising resilience—a tension whose resolution will shape both its domestic trajectory and its regional role.

2. Economic Status: Paradoxes of Poverty and Stability

2.1 Macroeconomic Fundamentals and Sovereign Credit Ratings

Madagascar’s economic position presents a study in paradoxes. With GDP per capita of approximately $600 in 2025, the country ranks among the world’s poorest . Approximately 80 percent of the population lives below the poverty line according to World Bank data . The infrastructure deficit is massive: persistent power outages (délestage) force industrial users to invest in expensive generator capacity, undermining competitiveness and constraining fiscal revenues . Between 2012 and 2024, Transparency International’s Corruption Perceptions Index ranked Madagascar 22 places lower, from 118 to 140 .

Yet against this bleak social backdrop, sovereign credit fundamentals tell a surprisingly positive story. In January 2026, S&P Global Ratings confirmed Madagascar’s “B-” long-term and “B” short-term sovereign credit ratings, removed the country from negative watch, and assigned stable outlooks . The agency’s justification explicitly balances fragility against resilience: “the fragility of the political and business environment, low GDP per capita, budgetary pressures from struggling public enterprises, and climate risks, on one hand, and the solidity of foreign exchange reserves, continued support from most international donors, and the favorable profile of public debt, on the other” .

Madagascar’s foreign exchange reserves stand at “comfortable levels” . Public debt is “relatively low” and characterized by a “favorable profile,” with external debt almost entirely concessional . The government has continued servicing commercial creditors fully and on time throughout the political transition . Most international donors—including the IMF, World Bank, and Agence Française de Développement—have maintained engagement, with IMF staff visiting Antananarivo in early January 2026 .

2.2 Growth Projections and the 2026 Budget Framework

The government’s 2026 Initial Finance Bill (Projet de Loi de Finances Initiale), presented to the National Assembly in November 2025, targets national growth of 4.8 percent . This projection aligns with—though slightly exceeds—independent forecasts: S&P projects 3.5 percent growth in 2026, 3.8 percent in 2027, and 4.0 percent in 2028-2029 . The International Monetary Fund and World Bank offer more cautious assessments, with the IMF projecting 3.9 percent for 2025 and the World Bank estimating average growth of 4.7 percent between 2025-2027, contingent on continued structural reforms .

The 2026 budget framework reflects the transitional government’s six national priorities: improved electricity access, potable water access, universal healthcare, quality education adapted to labor market needs, employment creation and entrepreneurship support, and balanced inclusive development . Tax and customs revenues are targeted at 11.7 percent of GDP, including adjustment of the personal income tax rate to 25 percent for salaried workers earning over 4 million ariary monthly .

A politically significant measure is the 14 percent salary increase for civil servants effective January 2026, along with revised allowances for teachers, health personnel, and armed forces, and the integration of 13,274 new public agents . These measures signal the transitional authorities’ attempt to secure loyalty from state employees while addressing protesters’ grievances about public service delivery failures that catalyzed the October uprising .

2.3 Sectoral Dynamics and Structural Constraints

Madagascar’s growth trajectory rests on several key sectors, each facing distinct opportunities and constraints.

Agriculture remains foundational, with government strategy focused on rice self-sufficiency, crop diversification, improved irrigation access, quality seeds, and mechanization . Success depends on sustained investment and reform implementation.

Mining holds substantial potential given Madagascar’s endowment with critical minerals. The country ranks among the world’s five largest graphite producers, and also produces cobalt and nickel—minerals essential for electric vehicle batteries and energy storage technologies . However, sector performance to date has been “mediocre” . The Toliara Mineral Sands megaproject, acquired by U.S.-based Energy Fuels, exemplifies both promise and uncertainty: suspended in 2019, the suspension was lifted in 2024, and an initial agreement has been reached on the $2 billion project, but a final investment decision remains pending . Low global prices for nickel and cobalt further constrain export revenues .

Tourism represents significant untapped potential. Madagascar welcomed a record 308,275 international visitors in 2024, recovering pre-COVID levels . However, the October 2025 political crisis triggered immediate reversals: nearly 80 percent of bookings were cancelled between October and December, affecting hotels, tour operators, guides, and restaurateurs . While the government launched an emergency communication campaign to counter instability perceptions, operators anticipate stagnation or slight decline in 2026, as tour operators avoid destinations with political uncertainty .

Infrastructure investment provides medium-term growth anchors. The extension of Toamasina port, scheduled for 2027, and rehabilitation of connecting roads will support trade and reduce costs . Energy production is expected to increase, albeit from a low base .

2.4 Inflation, Fiscal Pressures, and Risk Scenarios

Inflation has moderated but remains elevated, projected at 7-9 percent, declining gradually . Twin deficits—fiscal and current account—remain substantial .

S&P identifies three risk scenarios for Madagascar’s economic trajectory . The most likely scenario envisions gradual normalization: political tensions have eased, administrative continuity has been preserved, donor engagement continues, and growth accelerates toward 4 percent by 2028-2029. The stable outlook reflects this baseline.

The intermediate risk scenario involves renewed instability if the political transition is substantially delayed, if elite entrenchment perceptions spread, or if authorities fail to deliver on key promises—improving access to basic services and infrastructure, combating corruption, enhancing governance and transparency .

The downside scenario envisions growth falling below 4 percent due to reform delays, climate disasters (cyclones are multiplying in Madagascar), terms-of-trade shocks given the narrow export base concentrated in few commodities, or export price declines .

3. Political Status: Military Transition and Constitutional Refoundation

3.1 The October 2025 Coup: Catalysts and Dynamics

Madagascar’s October 2025 coup followed a recognizable pattern in African military takeovers, while exhibiting distinct national characteristics. The immediate trigger was persistent power and water shortages in Antananarivo, failures in basic service provision that ignited spontaneous youth-led demonstrations on September 25 . The protests, driven largely by Generation Z activists wielding social media mobilization tools—exemplified by the online movement Gen Z Mada—quickly evolved from utility grievances into broader demands for political change .

The decisive moment came when CAPSAT, the elite administrative and technical corps of the army, aligned itself with demonstrators on October 11 . The unit declared it would “refuse orders to shoot,” criticized gendarmerie heavy-handed tactics that had caused several deaths, and announced that “all orders of the Malagasy army—whether land, air, or navy—will originate from CAPSAT headquarters” . Soldiers clashed with gendarmes outside a barracks and rode into the city on army vehicles to join jubilant demonstrators calling for President Rajoelina’s resignation .

President Rajoelina denounced “an attempt to seize power illegally and by force, contrary to the Constitution and to democratic principles” . He fled into exile, citing an alleged assassination plot, while insisting he remained the legitimate leader . Parliament impeached him on October 14, and Colonel Michael Randrianirina declared a military takeover with an 18-month transition, assuming the presidency .

The coup reflected broader regional trends—joining other former French colonies including Mali, Niger, Gabon, and Burkina Faso in experiencing military takeovers—while stemming from distinct national dynamics. Anti-French sentiment played a role, albeit less pronounced than in the Sahel: protesters accused Rajoelina of being overly aligned with French interests, and controversy surrounded his 2014 acquisition of French citizenship . However, the primary catalyst was widespread economic discontent among a predominantly young population (median age approximately 19) facing limited prospects .

3.2 The Transitional Framework: Refoundation and National Dialogue

Colonel Randrianirina’s transitional government has articulated a structured roadmap toward democratic restoration. In November 2025, the President announced a National Concertation (Concertation nationale) to lay foundations for a new governance system . The process, led by the Ministry of State for Refoundation, follows a participatory methodology: preliminary consultations in ten regions collecting citizen proposals and concerns, cascading from fokontany (basic administrative subdivisions) through communes, districts, and regions to the national level .

The timeline envisions the first half of 2026 dedicated to creating methodological frameworks and building capacity for debate facilitators, with the second half devoted to the concertation itself . Conclusions will inform a new constitution establishing the Fifth Republic, translating population aspirations expressed during consultations into institutional architecture .

The transitional government emphasizes continuity of administration alongside political transformation. Public administration remains operational, debt service continues uninterrupted, projects proceed (though delays are possible), and most donors remain engaged . The appointment of former businessman Herintsalama Rajaonarivelo as prime minister signals ongoing engagement with international allies and investors, though criticized by Gen Z protesters .

3.3 International Responses: SADC Engagement and AU Concerns

Regional and continental responses to Madagascar’s transition have balanced principled opposition to unconstitutional change with pragmatic engagement.

The Southern African Development Community, Madagascar’s primary regional organization, has maintained active dialogue. In January 2026, SADC Executive Secretary Elias Magosi undertook official engagements in Antananarivo, meeting with Acting Foreign Minister and National Defence Minister General Maminirina Eli Razafitombo and President Randrianirina . Discussions focused on the transitional governance process, inclusive national dialogue importance, and efforts to stabilize essential services including water and energy infrastructure .

Madagascar reaffirmed its decision to “step aside from the SADC Chairmanship, citing the exceptional national context, while reiterating its dedication to the values and principles of the Community” . President Randrianirina confirmed that a report requested by the SADC Extraordinary Heads of State and Government Summit in December 2025 would be submitted by February 2026, and emphasized that electoral reform remains a priority .

At continental level, the African Union has highlighted Madagascar as a governance concern. Opening the AU’s 48th Executive Council meeting in Addis Ababa in February 2026, Commission Chairperson Mahamoud Ali Youssouf cautioned that “the continent is experiencing a worrying slide in political stability and security,” with Madagascar and Guinea-Bissau cited as reminders of ongoing governance challenges . Angolan analyst Faustino Henrique observed that the discussion “reflects deeper concerns about the AU’s ability to respond decisively to political crises,” noting that “when instability persists in countries like Guinea-Bissau and Madagascar, it raises questions about how effectively continental mechanisms are being applied” .

3.4 Domestic Political Landscape: Civil Society, Military, and Transition Trajectory

The domestic political environment remains fluid. While some civil society actors have criticized the transition process—particularly regarding the proposed timeline or choices for government functions—the country has effectively returned to “a form of status quo since November 2025” .

The military’s role warrants careful observation. Unlike transitions in Sahelian states where post-coup regimes depend heavily on external security providers, Madagascar’s insularity and military institutional capacity reduce such dependence . This increases the likelihood of geopolitical continuity, as transitional authorities are expected to focus more on trade and investment opportunities than on security realignments .

However, risks persist. The new government has announced it will address protester demands by improving basic service access, governance transparency, and anti-corruption efforts . The 24-month transition plan includes national stakeholder consultation, modernization of the electoral framework and constitution, and election organization . Renewed tensions remain possible if significant delays occur relative to the proposed timeline or if reforms prove insufficient to deliver meaningful progress on these difficult structural issues .

4. Regional Status: Between East Africa and Southern Africa

4.1 SADC Membership and Regional Integration

Madagascar’s regional status is institutionally defined by its membership in the Southern African Development Community, which it joined in 2005. This affiliation places Madagascar in a different regional architecture from its East African neighbors—Kenya, Ethiopia, Uganda, and Tanzania belong to the East African Community—while its geographic position off Africa’s southeastern coast, along the Mozambique Channel, gives it strategic significance for both regions .

SADC engagement with Madagascar’s transition reflects the organization’s institutionalized approach to political crises. Executive Secretary Magosi’s January 2026 visit emphasized “the importance of dialogue, inclusivity, and regional solidarity in realising the vision of a peaceful, prosperous, and resilient Southern Africa” . Discussions covered sustainable resource mobilization for regional development, with Magosi underscoring the SADC Regional Development Fund as “a pivotal instrument to support infrastructure development and regional programmes,” encouraging member states to accelerate ratification as part of a shift toward “African-led financing solutions, reducing reliance on external aid” .

Madagascar’s decision to temporarily relinquish the SADC chairmanship reflects recognition that domestic crisis precludes full regional leadership responsibilities . This posture of self-restraint may preserve goodwill with regional partners while the transition unfolds.

4.2 Economic Integration and Trade Relations

Madagascar’s economic integration with East Africa operates primarily through trade and investment channels rather than formal institutional membership. The country’s primary exports—vanilla, cloves, coffee, textiles, and mining products—find markets in both regions, though data on intra-regional trade flows remains limited.

The tourism sector illustrates regional interconnectedness and shared vulnerabilities. As allAfrica.com‘s survey of East African tourism notes, the Malagasy political crisis triggered immediate cancellations affecting the entire regional tourism ecosystem . Across East Africa, “the same words recur: fragility, dependence, a race for visibility” . The region remains “at the mercy of external—and internal—shocks. The Malagasy political crisis was a reminder: one overthrow, an internet shutdown, and everything collapses” .

Infrastructure constraints similarly transcend borders. In Madagascar as in neighboring states, “potholed roads, limited air access, outdated or undersized hotels” create “the same paradox: dream landscapes, but nightmare logistics” . Major projects suffer from “lack of coherent territorial strategy” .

Climate vulnerability compounds regional integration challenges. Madagascar, like Tanzania and Mozambique, faces multiplying cyclones, droughts affecting ecosystems, and erosion threatening coastlines—existential threats to nature-based tourism models .

4.3 The Indian Ocean Dimension: Islands, Sea Lanes, and Strategic Competition

Beyond continental regional frameworks, Madagascar’s status is shaped by its Indian Ocean geography. The island’s position along critical sea lanes connecting the Horn of Africa to Southeast Asia has made it an arena of intensifying great-power competition .

China maintains significant economic presence as Madagascar’s top trade partner and a Belt and Road Initiative cooperator (Madagascar signed a BRI MOU in 2017). While Chinese investments within the BRI framework have decreased, Beijing’s interest in Small Island Developing States persists as part of its geopolitical and geoeconomic ambitions .

Russia has moved to expand influence. Moscow sent weapons to the National Guard under “lawful international cooperation” . The Russian ambassador was the first diplomat to meet President Randrianirina after he assumed office, and the newly appointed president’s first foreign trip was to Moscow .

The United States has expressed interest in enhancing Madagascar’s maritime security capabilities, with bilateral cooperation increasing as great-power competition accelerates in the Indian Ocean . Madagascar’s critical minerals—graphite, cobalt, nickel—feature in U.S. strategy to reduce dependence on China for energy transition inputs .

India also maintains strategic interest, viewing Madagascar as part of its network of allegiances along critical sea lanes intended to counter Beijing’s “String of Pearls” .

France faces diminishing influence amid this competitive landscape. The transitional government’s first actions included revoking former President Rajoelina’s Malagasy citizenship—a gesture targeting a leader perceived as overly aligned with French interests . Madagascar is expected to become more vocal over the Scattered Islands dispute, claiming sovereignty over uninhabited coral islands (Glorioso, Juan de Nova, Europa, Bassas da India) that France administratively controls—a claim presented to the United Nations and supported by China .

4.4 Comparative Regional Positioning

Madagascar’s regional status contrasts notably with East Africa’s economic anchors. While Ethiopia projects 10.2 percent growth and Kenya 4.9-5.2 percent, Madagascar’s 3.5-4.8 percent trajectory places it in the regional middle tier . Its sovereign credit ratings (“B-“) compare with Kenya’s upgraded ratings following fiscal consolidation, though Kenya’s economy is substantially larger and more diversified .

Politically, Madagascar’s military transition places it alongside Sahelian states (Mali, Niger, Burkina Faso, Gabon) experiencing similar takeovers, distinguishing it from East Africa’s more stable (if challenged) democracies . The AU’s explicit linkage of Madagascar with Guinea-Bissau as governance concerns underscores this categorization .

Yet Madagascar’s insularity and institutional resilience may produce different outcomes than landlocked Sahelian states facing active insurgencies. As geopolitical analysis suggests, “Unlike what happens in countries like Mali, for example, the post-coup regime in Madagascar is less dependent on external security providers and is expected to focus more on trade and investment opportunities” .

5. Geopolitical Status: Critical Minerals and Great-Power Competition

5.1 Strategic Resources and the Energy Transition

Madagascar’s geopolitical significance derives substantially from its endowment with minerals critical to the global energy transition. As a top-five global graphite producer, and significant producer of cobalt and nickel, Madagascar holds resources essential for electric vehicle batteries and energy storage technologies . This resource endowment has drawn intensified great-power attention as the United States, European Union, China, and others seek to secure supply chains for strategic minerals.

The Toliara Mineral Sands megaproject exemplifies the intersection of resource politics and geopolitical competition. Acquired by U.S.-based Energy Fuels, the $2 billion project suspended in 2019 and lifted in 2024 now awaits final investment decision . Its progression will signal investor confidence in Madagascar’s post-transition investment climate and test the new authorities’ approach to foreign investment.

5.2 The Scattered Islands Dispute and Sovereignty Politics

Madagascar’s claim to the Scattered Islands (Îles Éparses)—uninhabited coral islands administered by France—has emerged as a sovereignty issue with geopolitical dimensions. While France maintains administrative control, Madagascar claims historical rights and has presented its case to the United Nations, with China’s support .

The transitional government is expected to press this claim more vocally than its predecessor, reflecting broader trends across former French colonies where anti-French sentiment and sovereignty assertions have intensified . The dispute’s resolution—or continued stalemate—will shape Madagascar’s relations with both France and the wider international community.

5.3 Navigating Multipolar Competition

Madagascar’s transitional authorities face the challenge of navigating intensified great-power competition while preserving policy space and maximizing development benefits. The most likely scenario, according to geopolitical analysis, is continuity: “the post-coup regime in Madagascar is less dependent on external security providers and is expected to focus more on trade and investment opportunities” . This focus on economic engagement rather than security realignment distinguishes Madagascar from Sahelian transitions and may facilitate continued engagement with diverse partners.

However, a less likely but plausible scenario involves rupture: should the military-led government pair its pro-sovereigntist rhetoric with more confrontational stances toward foreign investors, the business environment could be unsettled and existing commitments cast into doubt . Under this scenario, Russia could extend its sphere of influence beyond the Sahel, and mining projects could face delays, renegotiations, or suspension, with broader repercussions for investor confidence and revenue projections .

The transitional government’s early signals—continued debt service, maintained donor engagement, appointment of a business-oriented prime minister—suggest preference for the continuity scenario . Yet the path ahead requires sustained navigation of competing pressures: China’s infrastructure and resource interests, Russia’s diplomatic courtship, U.S. critical minerals strategy, India’s maritime security concerns, and France’s diminishing but still significant presence.

6. Conclusion: The Fragile Equilibrium

Madagascar’s economic and political status in early 2026 is defined by a fundamental tension between chronic instability and underlying resilience—a fragile equilibrium whose sustainability depends on multiple intersecting factors.

Economically, the country presents a paradox: among the world’s lowest GDP per capita and highest poverty rates, yet maintaining “B-” sovereign credit ratings with stable outlooks, comfortable foreign exchange reserves, a favorable debt profile dominated by concessional lending, and continued engagement from international financial institutions . The 2026 budget targets 4.8 percent growth while increasing civil servant salaries and public agent numbers—politically necessary measures that signal commitment to addressing protester grievances while testing fiscal discipline .

Politically, Madagascar navigates its latest military transition, with Colonel Randrianirina’s government pursuing an 18-to-24-month roadmap toward a new constitution and Fifth Republic elections . The National Concertation process, designed to gather citizen input and build consensus, faces the challenge of delivering meaningful participation without raising expectations beyond what a transitional government can achieve . Renewed instability remains possible if timelines slip or reforms prove insufficient .

Regionally, Madagascar occupies a distinctive position: a SADC member state geographically proximate to East Africa, temporarily relinquishing its chairmanship while maintaining integration commitments . Its tourism sector, essential for growth and employment, remains vulnerable to political shocks, as the 80 percent cancellation rate following October’s events demonstrates . Climate vulnerability compounds these challenges, with multiplying cyclones threatening ecosystems and infrastructure .

Geopolitically, Madagascar navigates intensified great-power competition in the Indian Ocean, with China, Russia, the United States, and India pursuing strategic interests in critical minerals and maritime position, while French influence faces renewed contestation . The transitional government’s ability to balance these competing pressures while maximizing development benefits will shape both its domestic legitimacy and its international standing.

The fundamental question for 2026 and beyond is whether Madagascar’s underlying economic resilience can withstand recurrent political shocks—whether the favorable debt profile, comfortable reserves, and continued donor engagement can survive transition delays or renewed instability. The answer depends on the transitional government’s capacity to deliver on its promises: improved basic services, governance transparency, anti-corruption progress, and a credible path back to constitutional democracy. The fragile equilibrium holds—for now. Its maintenance requires sustained attention from both domestic actors and international partners committed to Madagascar’s long-term stability and development.

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