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Broken Madagascar economy a huge task for new leader

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(Globalpost/GlobalPost)

Madagascar's new president has the mammoth task of fixing the island's moribund economy, shattered after four years of international sanctions and political uncertainty which plunged millions of people in poverty.

The Indian Ocean island votes for a new president Friday, hoping to end a political deadlock that sent growth, employment and foreign aid plummeting.

Nine out of ten people now live under the poverty line of $2 a day, compared to seven out of ten in 2005, according to the World Bank.

The economy has stagnated, and buyers and sellers alike feel the pinch.

"Companies have lost between 30 and 50 percent of their turnover on average, while the informal sector has skyrocketed with all the layoffs," said Alain Razafindrabe, a businessman and former head of the country's young employers' association.

Jimmy Rarivoson, a butcher in the capital Antananarivo, said business had evaporated.

"Before the crisis people bought a pound (0.5 kilogrammes) of meat. Now they only buy half a pound. I read the newspaper all day to kill the time," he said.

Elsewhere in the city, tin roof shacks hug a filthy river in the La Reunion Kely shantytown, where most residents survive by recycling rubbish.

"The number of people who come here keeps climbing. There isn't enough space for everyone," said district head Amedee Avalson, who sells rice dishes at 100 ariary ($0.05) from a fly-infested eatery.

"People share it," he says of the rice bowl, as richer folks cross a nearby bridge in expensive all-terrain vehicles.

Throughout the city, pedestrians cross the road and make detours to avoid pickpockets and street urchins.

In the countryside things are even worse, where capricious weather and swarms of locusts threaten already meagre crops. Chronic malnutrition has caused stunted growth in over half the island nation's children, according to UNICEF.

Robbers meanwhile keep tourists from reaching the Toliara resort on the southwestern coast.

Madagascar has been on a downward spiral since strongman Andry Rajoelina ousted president Marc Ravalomanana in a 2009 coup that was widely denounced by the international community.

The island's economy stagnated between 2009 and 2013, while it grew five percent a year on average before the crisis, according to the World Bank.

And while the per capita income has dropped to 2001-levels, the population has kept growing.

"Even before the crisis Madagascar was no Norway," said World Bank country representative Haleh Bridi.

"The country already was very, very poor, very vulnerable at an economic level. The crisis has significantly worsened the situation."

Most donor countries have cut direct aid to the state budget, bypassing the government and channelling funds to programmes run by charities.

Angered by the coup, the United States suspended tax exemptions which benefited the Malagasy textile industry under the Africa Growth and Opportunity Act (Agoa). More than 30,000 jobs disappeared overnight.

During the crisis public finances have eroded, while fraud and corruption have increased. Roads are deteriorating, prostitution -- of both adults and children -- is on the rise.

But many hope a stable government will set the island towards recovery.

"Madagascar is in the starting blocks to develop," said businessman Razafindrabe.

The World Bank's Bridi also feels cautiously optimistic.

"This country doesn't really have a problem to grow if it wants," she said.

"It has enormous resources: human and natural, mines, tourism..."

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http://www.globalpost.com/dispatch/news/afp/131024/broken-madagascar-economy-huge-task-new-leader