Madagascar’s military takes power, says colonel

Madagascar's military has seized power after President Andry Rajoelina fled the country amidst escalating youth-led protests driven by grievances over corruption, poor governance, and basic service deficiencies. The military dissolved most government institutions, following a parliamentary vote to impeach Rajoelina, who had lost significant army support. This political upheaval occurs in a nation where 75% of the population lives in poverty and GDP per capita has significantly declined, signaling heightened geopolitical risk and potential instability for investors.

Analysis

Madagascar's military has seized power, with Colonel Michael Randrianirina announcing the dissolution of most government institutions after President Andry Rajoelina fled the country. This follows a parliamentary vote to impeach Rajoelina and widespread defections within the armed forces, including the elite CAPSAT unit. The political upheaval stems from escalating Gen Z protests over corruption, poor governance, and basic service deficiencies.

The unrest is rooted in deep-seated grievances, including water and power shortages, mirroring broader discontent against ruling elites in other emerging markets. Economically, Madagascar faces severe challenges, with 75% of its 30 million population living in poverty and GDP per capita having plunged 45% since 1960. This socio-economic fragility exacerbates the current political instability.

The military takeover introduces significant geopolitical risk and uncertainty, as highlighted by French President Emmanuel Macron's call for constitutional order. Rajoelina's refusal to step down despite fleeing suggests a prolonged power vacuum or potential for further conflict. The extremely negative sentiment and high market impact score reflect concerns over governance and rule of law in this emerging market.

Key Decisions for Investors

• Investors should immediately reassess any direct or indirect exposure to Madagascar, given the extremely negative sentiment and high market impact associated with the military takeover and political instability.
• Prudence dictates monitoring the evolving geopolitical landscape, including international reactions and the potential for prolonged power struggles or sanctions that could further destabilize the nation's fragile economy.
• Given the nation's severe poverty and historical GDP decline, this event underscores elevated sovereign and operational risks for any businesses with assets or supply chain dependencies in the region.