Madagascar goes to the polls today for the first time since the coup of 2009. Though there were multiple reasons for Andry Rajoelina’s overthrow of the government of Marc Ravalomanana it must be noted that Ravalomanana’s plan to lease approximately half of Madagascar’s arable land to Daewoo Logistics for 99 years served as a major rallying point for Rajoelina’s supporters. In the aftermath of the coup foreign aid, which provided approximately 40% of Madagascar’s 2008 budget, plummeted while malnutrition, sex tourism and deforestation increased. Legitimate tourism, an important component of the Malagasy economy, also fell as did school enrollments. Clearly, the coup did a great deal of damage to Madagascar.
Given the state of the Malagasy economy it is not surprising that economic recovery is central to the platforms of the two main contenders Hery Martial Rakotoarimanana Rajaonarimampianina and Richard Jean-Louis Robinson. If economic recovery is to occur foreign investment is going to have to increase. As a result of the Daewoo deal, potential investors will presumably be paying close attention to land tenure in Madagascar. For this reason potential agricultural and mining deals should be monitored closely as their completion could indicate that some of the concerns about "Land Grabs" in Africa have been addressed. Companies are unlikely to make significant investments in Madagascar if they feel that a repeat of 2009 will occur. To ensure stability it is not impossible that greater transparency could play a role in future land negotiations. Commitments to ensuring the food security and access to potable water of the local populations could also be components of future agreements. I am not saying that a perfect model for land deals will result. I am merely stating that future investment in Madagascar will likely indicate that conditions have improved to the point that businesses do not fear losing profitability due to delays, sabotage or forced withdrawal. The terms of the sale or lease of land and the feedback of the local population will be key indicators as to how stable agricultural and mining investments will be in the future.
The United Nations defines Land Tenure as "…the relationship, whether legally or customarily defined, among people, as individuals or groups, with respect to land." It is important to note that "customarily defined" indicates that land rights that are not legally codified are still recognized as valid. This needs to be taken into account when looking at property rights in many emerging markets, as a lack of a written deed does not necessarily mean that a group of people does not have a right to the land in question. For this reason it is not impossible that a company could buy or lease land, invest heavily in it, and at some point down the line find that they have no legal right to be there. This is essential like receiving stolen property without knowing that it is stolen. On one hand the recipient might not have done anything wrong. On the other they will likely have to return the property. Another important factor to note is that many developing countries do not have adequate dispute resolution mechanisms thus people who feel that their land is under threat are more likely to take the law into their own hands. This breeds distrust and ultimately means that deals, which in theory could be mutually beneficial, will not become a reality.
Madagascar and the Daweoo Deal is an important example of what can go wrong for countries and businesses when deals are not arranged appropriately. The reality is that Antananarivo needs investors and that Madagascar does have resources that could attract them. Finding a way to balance the needs of the Malagasy people with the expectation of investors is not impossible. Given the events of 2009 such a balance could be an essential component of future land deals within the country. After all, every party has incentives to come to a mutually beneficial agreement. If they are successful such a model could be exported. The reality is that buying and leasing land in Subsaharan Africa is increasingly becoming a means for developed countries to ensure food security. This trend is likely to continue. In theory it could be an important source of revenue for developing countries which, provided their own agricultural needs are met, could promote social stability. In practice this trend has often had the opposite effect. Any precedents that could improve this process should be watched closely. Madagascar is one place where a positive precedent could occur.
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