Revenue Watch Urges Caution as Turbulent Madagascar Looks Toward Mining Contracts Review
After statements by Madagascar's newly-installed leader regarding a suspension and review of all national mining contracts, Revenue Watch cautions the nation's leaders against undertaking major extractive reforms during the current period of crisis.
On March 30, Andry Rajoelina announced that his government was freezing all mining contracts and had hired auditors to review all agreements. Rajoelina, the former mayor of Antananarivo who assumed control after Marc Ravalomanana was forced from the presidential office under heavy military pressure, said the current contracts did not provide enough revenue to the state.
In recent years, Madagascar has been the site of increasing interest from the international mineral industry. Among the large companies that have signed contracts with the government are Rio Tinto, for the ilmenite mine at Fort-Dauphin, and Sherrit International, for the Ambatovy nickel-cobalt mine.
The constitutional uncertainty and polticial upheaval over Madagascar's future is ongoing. The Southern African Development Community and the African Union have suspended the country's membership and called for a return to democratic rule, and several bilateral donors have cut off non-humanitarian aid. At the same time, protestors have repeatedly taken to the streets by the thousands calling for Ravalomanana's return to power.
Given the continued disputes over the legitimacy of the regime and the uncertainty attached to Madagascar's political future, Revenue Watch urges leaders to consider the lasting consequences of halting or renegotiating international contracts in the midst of a national crisis. Any significant review of Madagascar's contracts should only be conducted with firm assurances of transparency and a thorough expert analysis of the impact of any revised provisions.
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