The Duality of the Malagasy Economy

The duality of the Malagasy economy

Julius Herman Boeke who created the concept of dual economy describes it as the coexistence of a modern and a traditional economic sector in a colonial economy. A dual economy is apparent when there are two separate economic sectors within a country. The sectors are distinguished by different levels of development and a large disequilibrium in terms of technology and demand.

This duality is very present in the Malagasy economy, within and across sectors. The main characteristic of the Malagasy dual economy is the formal vs. the informal sector. The World Bank has done a thorough analysis of the informal sector in Madagascar  Informal Sector Dynamics in Times of Fragile Growth : The Case of Madagascar (worldbank.org) but it is important to note that in Madagascar, the informal sector accounts for 80% of jobs.

One example of a duality across sectors in Madagascar the Information and Communication Technology (ICT) vs. the agriculture. Madagascar is very up to date in terms of ICT, keeping up with all the new generations of technology (3G, 4G, 5G till ARTEC suspended Telma’s 5G network in July 2020) and all the computers, phones, tablets...though in the agriculture, farmers are still using spades on the rice fields.

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The duality exists also within the agriculture sector. Large companies like Tozzi Green use heavy machinery with advanced technologies, while farmers are still working with traditional means. The main dealership of tractors in Madagascar sold only 70 of them in 2016, though the island has 1.8 million hectares of arable land. That undermines the fact that technology is not accessible to the common farmers.

This difference is also seen in the education sector. According to the United Nations, in the Sub Saharan Africa region, 50% of primary and secondary schools do not have access to electricity and Madagascar is no exception. The contrast is blatant between private schools in the capital city and the public schools in rural areas.

While it is not directly related to economic activities , the disequilibrium is most striking when it happens within the administration. Some ministries are very well equipped (vehicles, computers, internet connections…) while some still use typewriters.