Madagascar Stays in Coface's Highest Risk Tier; D Rating Reflects Investor Concerns

Madagascar’s military-backed government transition has done little to reassure international investors or improve the country’s operational standing. Coface, the Compagnie française d’assurance pour le commerce extérieur, has held Madagascar at its highest-risk category in its 2026 investment outlook, assigning a D rating for overall risk and a C rating for business climate.

The sequence of events that triggered the reassessment was swift. On October 12, Madagascar’s military unified behind the Capsat (Corps d’Armée des Personnels et des Services Administratifs et Techniques), the same unit that had facilitated former president Andry Rajoelina’s own rise to power in 2009. This time, the military forced Rajoelina out, requiring France to organize his extraction from the country. By October 14, the armed forces had formally assumed control, an action Rajoelina characterized as a coup d’état. Coface’s analysts treated the transition as a material factor in their 2026 assessment, noting that institutional stability, policy predictability, and legal security for capital had all been directly undermined.

Madagascar’s structural assets remain substantial on paper. The country holds significant mineral reserves, agricultural potential, and developing tourism infrastructure. It has secured access to extended credit facilities and resilience and sustainability funding mechanisms. Trade agreements with the European Union, COMESA, SADC, and the Indian Ocean Commission theoretically position it for economic engagement and development finance.

The operational reality, by contrast, reveals severe constraints on growth and service delivery. Eighty percent of the population survives on less than 2.15 dollars per person per day. Roads, electricity networks, and potable water systems remain chronically underdeveloped. Population growth of 2.4 percent annually is outpacing job creation: the country has absorbed only 420,000 net new job entries per year over the past decade, well below demographic demand. Madagascar ranks 147th out of 169 countries on the Human Capital Index, scoring 0.39 in 2020, a figure that reflects the depth of the deficit in productive capacity.

Fiscal constraints compound the problem. Revenue collection sits below 11 percent of gross domestic product, leaving the government with limited capacity to invest in infrastructure or services. The economy’s dependence on agriculture, mining, and imported fuel creates recurring vulnerability to commodity price swings and supply disruptions. Climate shocks pose additional threats to agricultural output and food security.

Governance performance adds another layer of risk. Transparency International’s 2024 Corruption Perceptions Index ranked Madagascar 140th out of 180 countries, a standing that complicates contract enforcement and investor protection. Heavy reliance on foreign aid to finance both operations and development constrains policy autonomy and leaves the country exposed to shifts in donor priorities.

The new government inherits all of these structural conditions without having yet demonstrated the institutional durability that investors require. Whether it can establish a credible track record on fiscal performance and service delivery, fast enough to shift Coface’s assessment before the next review cycle, remains the central question.