Plan B: Madagascar vs. South America

At least once a week, we have enquiries from clients looking to establish residency in a plan B jurisdiction.  We have discussed plan B’s before .

A plan B is by definition subjective because it depends on which outcome you imagine may arise.  However, the unfortunate event is usually either geopolitical or weather related.

Today I want to talk about a personal favourite  jurisdiction for plan B – Madagascar.

Advantages of Madagascar

• • Southern Hemisphere which is relatively far from the geopolitical uncertainty facing much of the Northern Hemisphere
  • Relative food and water sufficiency compared to other Indian Ocean islands and Caribbean islands (except perhaps Dominica) which are highly dependent on food imports.  Observers of Latin America do point to food and water security in the Southern Cone in particular.  However, once we have relative institutional failure like we now have in Venezuela, parts of the Caribbean or parts of Mexico, local crime gangs or rogue elements of the military take over farms and the supply chain.  The supply chain is critical for getting goods from rural to urban areas.  Are you sure your chosen areas will be immune to these forces as law and order deteriorates?  Don’t be naïve.
  • No known conflict with neighbouring countries. No enemies and geopolitical tension.
  • Relatively low violent crime compared to mainland Africa, the Caribbean and South America. Even Paraguay is facing increasing challenges dealing with the incursion of Brazilian gangs as explained in the Global Organized Crime Index .  I am a Spanish speaker who is a Permanent Resident of Paraguay and is familiar with the situation in Venezuela.  Venezuela serves as a useful reference point.  If there is severe geopolitical disruption, it would be naive to expect “business as usual” in Latin America.  Relatively weak central governments mean that power vacuums are quickly filled by rogue elements of the military and criminal organisations. So unless you find yourself in an armed compound (which do exist), think of how Venezuela has had to deal with tren de aragua and cartel de los soles.  Study the history of Latin America where military dictatorships were the norm for long periods of history.  Study carefully whether the central government in your Latin American country of choice can defy the odds.
  • The Southern Cone is a South American subregion generally comprising Argentina, Chile, and Uruguay, often including Paraguay and the southernmost states of Brazil (Rio Grande do Sul, Santa Catarina, Paraná, São Paulo) due to shared geography and culture, forming the inverted triangle shape at the continent’s tip south of the Tropic of Capricorn. We have already commented on the crime situation in Brazil which spills over into Paraguay and Uruguay. Rural Chile and Argentina are, however, interesting.
    Chile’s suitability, with it’s coastal exposure and 92 active volcanoes, is driven by your views on climate change which we discuss here – Argentina’s food security is legendary. Argentina has vast fertile land, making it a top exporter of soybeans, corn, and wheat, and a significant producer of beef and other agricultural products. However, this is modern industrial agriculture. An economic collapse with concomitant supply chain disruptions could severely disrupt modern industrial agriculture due to its heavy reliance on a complex network of inputs. Modern industrial agriculture is particularly vulnerable because it is not a self-contained system. Key dependencies that would be impacted include: Energy and Fuel (especially fertilizers), Financial Systems and Credit, Infrastructure (especially electrical irrigation pumps).
    Conversely, much of Madagascar’s agriculture is relatively small-scale, sustainable agriculture (in the key fertile regions) and therefore relatively more immune to supply chain disruptions. Less dependence on external inputs means greater resilience.
  • Weatherwise in Madagascar, damage from annual storms (i.e. cyclones) tends to be relatively minimal compared to South East Asia’s typhoons or the Caribbean’s hurricanes. This may be due to much of the population being concentrated inland (e.g. Antananarivo and Antsirabe) rather than on the coast. Rural Argentina is super attractive for many given its distance from the rising criminal activity in Brazil which threatens Paraguay and Uruguay but in the scenario where the power grid is down (for whatever reason), winters may be harsh and of course, for those familiar with the “Future Life Progression” Literature, it is expected that average temperatures may fall further.

• • No active volcanic activity like in parts of the Caribbean or the Ring of Fire which stretches from Asia to the western seaboard of the Americas (North and South).
  • Relatively weak central government alleviating concerns over central government overreach as is often argued to be the case in Australia. In terms of taxes? It is certainly not a tax haven but with pre migration tax planning, it can be tax neutral.

Interested in a Plan B jurisdiction?  Let’s talk some more.