Madagascar soldiers join protestors, refuse orders to shoot demonstrators

Madagascar is experiencing escalating political instability as soldiers have joined youth-led anti-government protests in Antananarivo, refusing orders to suppress demonstrators. This development, following initial protests over power and water shortages, marks a critical shift in the ongoing unrest, with some military units openly defying President Rajoelina's government. The situation, reminiscent of the 2009 military-backed uprising that brought Rajoelina to power, signals heightened country risk and potential for further political upheaval, warranting close monitoring by investors with exposure to the region.

Analysis

The political situation in Madagascar has significantly deteriorated, marked by soldiers joining youth-led anti-government protests in Antananarivo and openly refusing orders to suppress demonstrators. This defection, particularly from the Soanierana base which led the 2009 mutiny that brought President Rajoelina to power, represents a critical escalation and signals a potential shift in the balance of power. The Minister of Armed Forces' call for calm and dialogue contrasts sharply with the soldiers' direct defiance.

The unrest, initially fueled by anger over power and water shortages, has broadened into a wider anti-government movement, drawing large crowds since September 25. President Rajoelina's initial conciliatory stance, including sacking his government, has evolved into a more hardline approach, evidenced by his appointment of a military officer as Prime Minister and other armed forces personnel to his new cabinet. This militarization of leadership suggests a government preparing for confrontation rather than negotiation.

The "strongly negative" sentiment and "volatile" tone surrounding these events underscore heightened country risk, particularly for an emerging market with a history of frequent popular uprisings and contested elections. The UN's call for authorities to desist from unnecessary force, following reports of 22 protestor deaths, further highlights the severity of the crisis. This instability could have significant implications for any foreign direct investment or regional economic interests.

Key Decisions for Investors

• Investors should immediately assess their direct and indirect exposure to Madagascar, given the escalating political instability and heightened country risk
• Consider re-evaluating investment theses for assets tied to the region, factoring in the "strongly negative" sentiment and potential for further political upheaval
• Monitor key indicators such as military cohesion, government actions, and international responses for any shifts in the volatile situation