Soldiers from elite Capsat unit join protests against Madagascar’s president

Madagascar is experiencing heightened political instability as an elite military unit, Capsat, joined anti-government protests against President Andry Rajoelina, whom they helped install in a 2009 coup. This intervention significantly escalates pressure on Rajoelina, with protests, initially sparked by utility issues, now demanding a complete political overhaul. While the Prime Minister calls for dialogue, a Capsat leader has urged other military units to defy orders, signaling a potential for further military involvement and regime change, which could severely impact the country's investment climate.

Analysis

Madagascar faces escalating political instability as the elite Capsat military unit joined anti-government protests against President Andry Rajoelina, whom they previously installed in a 2009 coup. This intervention, marked by Capsat soldiers driving armored vehicles and a leader urging other military units to defy orders, significantly ratchets up pressure on the incumbent president and signals a potential shift in military allegiance. The protests, initially sparked by utility cuts, have broadened into demands for a complete political system overhaul.

The government's response, including Prime Minister Ruphin Fortunat Zafisambo's call for dialogue and the President's silence since Friday evening, underscores the deepening political crisis. The explicit call for military units to refuse orders to shoot protesters and prevent aircraft from taking off suggests a coordinated effort to challenge state authority, escalating the situation beyond civil unrest to a potential power struggle.

Such developments severely undermine political stability and create an extremely challenging environment for foreign direct investment and economic predictability. The heightened risk of regime change and prolonged political turmoil introduces significant uncertainty regarding future regulatory environments, property rights, and overall operational stability for businesses with exposure to Madagascar.

Key Decisions for Investors

• Investors should immediately reassess exposure to assets tied to Madagascar, given the severe political instability and heightened risk of regime change.
• Monitor developments closely, particularly any further military actions or official statements, as these will dictate short-term market reactions and long-term policy shifts.
• Consider hedging strategies or reducing positions in companies with significant operational or revenue exposure to Madagascar due to increased political risk and potential for supply chain disruptions.