AGOA Benefits Denied

In all the controversy over the coup that toppled Madagascar President Marc Ravalomanana this week, it may have escaped notice that poverty was the fuel for the social fire that swept him out of office, even though his country is still considered one of the stars in the African Growth and Opportunity Act (AGOA) process.

According to the most recent AGOA report, Madagascar was hailed for achieving a single-digit inflation rate and six percent growth in gross domestic product. The country was the first to receive funds from the Millennium Challenge Account, and the Madagascar Action Plan is supported by the World Bank. This island nation is America’s 12th largest African trading partner – ahead of economic success stories such as Ghana, Botswana and Senegal. So why are economic conditions so unfavorable to the average citizen that they are willing to see their once-popular elected president thrown out of office?

Well, 70% of the citizens of Madagascar today are struggling to survive on less than $1 a day. The collapse of prices for the country’s primary products – coffee and vanilla – has been problematic. However, the standard economic indicators say this country’s economy is doing well, and the government has been praised for its economic reforms. Somehow, the promised AGOA benefits have not translated to a better life for Madagascar’s people. Out of 179 countries measured by the United Nations’ Human Development Index, Madagascar ranks 143rd. Despite its economic progress on paper, the country ranks 164th in terms of gross domestic product per capita. That means the share of economic benefits per citizen is lagging.

Madagascar is a prime example of how you can make statistics tell a positive story, when the reality on the ground is far different. When farmers can’t make a living in rural areas, they move their families to the cities, and when poverty is as stark as it is in Madagascar, the poor are more aware of their relative poverty and can be convinced to take action in the streets – as they have now in Madagascar.

Paper wealth is no substitute for the real thing. It doesn’t calm an empty belly. It can’t provide shelter. It will not pay for an education. If AGOA or any other process intended to increase economic success are to work, there must be a genuine spreading of the benefits of success. This is why the Leon H. Sullivan Foundation and the Trade, Aid and Security Coalition have joined together to measure the impact of trade. We need to know if trade is broadly benefiting African societies, and if it isn’t, we need to know why so that corrections can be made. Otherwise, citizens will continue to languish in poverty in the midst of some people’s success, and another leader praised by the developed world will find himself ousted despite apparent success.