Overview

  • Political context

    Madagascar, a country in southern Africa located in the Indian Ocean east of Mozambique, is the fifth largest island in the world, with a land mass of 587,000 km2 and 24.24 million inhabitants in 2016.

    The installation of the Senate in February 2016 completes the establishment of all the democratic institutions of the IVth Republic. The 82-year-old president of the Senate, Mr. Honoré Rakotomanana,  now holds the second highest office in the country. In accordance with the Constitution, he serves as acting president in the event of the resignation, dismissal, or death of the president of the Republic.

    President Hery Rajaonarimampianina and his prime minister have devised a national development plan with their Government, which revolves around three pillars: improving governance, fostering economic recovery, and broadening access to basic social services.

    Madagascar received a commitment of $6.4 billion in support of its development projects (2017-2020) during the Conference of Donors and Investors organized by the Malagasy Government in Paris in December 2016 with the support of the African Development Bank, the World Bank Group, and the United Nations Development Programme (UNDP). An envelope of $3.3 billion in investment was also announced by the private sector.

    Economic situation

    Madagascar is one of the countries that are most vulnerable to climate hazards. This weakens macroeconomic stability and hampers poverty reduction efforts. Measures to prevent and respond to climate shocks should be integrated into economic and fiscal policies. Moreover, strengthening the resilience of the productive sectors, and especially of agriculture, is crucial to ensuring sustainable economic growth, benefiting the poorest, who are the main victims of climate shocks. 

    The two natural disasters that affected Madagascar in early 2017 resulted in considerable human and material damage, estimated at $400 million (4% of GDP), including the destruction of one third of the national vanilla production from the cyclone Enawo alone. The late start of the rainy season reduced agricultural production by almost 20%, and the deficit in local rice production exerted inflationary pressures in the first half of 2017. Finally, hydropower production capacity was reduced, resulting in unforeseen charges for the State budget, which had to cover the expenses of the national water and electricity production and distribution company (JIRAMA).

    To cope with these shocks and support economic growth, the public authorities adjusted their fiscal and monetary policies. A budget of $50 million is allocated in the supplementary budget of June 2017 for post-hurricane reconstruction and to assist regions where drought persists, including to cover emergency expenses in health, education, social protection, agriculture, and public works. These additional expenses are mainly financed by exceptional aid obtained by the country to cope with these climatic shocks. Subsidies to JIRAMA have been increased to ensure the supply of electricity. In addition, the monetary policy was tightened in May 2017 to contain inflation.

    The economic outlook remains positive. GDP growth is expected to be 4.3% in 2017 and is projected to exceed 5% in the medium term. It should be supported by the buildings and public works sectors, as well as textiles. The value added in the agriculture sector is expected to decrease by 0.3% compared to 2016. 

    Social context

    While Madagascar has great potential, the country has lagged on several development indicators: almost 80% of the population lives on less than $1.90 per day, with one child in two under 5 years suffering from stunting, and Madagascar is the fifth largest country in the world with the highest number of unschooled children. Moreover, the rate of access to electricity is 13%, one of the lowest in the world.

    Madagascar is also one of the countries that are most exposed to extreme weather events and experiences, on average, three major natural disasters per year. In addition, repeated political crises, the last of which shook the country from 2009 to 2013, often threaten the development progress made.

    Last Updated: Oct 13, 2017

  • World Bank Group Strategy and Commitment

    The World Bank's Country Partnership Framework (CPF) with Madagascar for 2017–2021 was approved by the Board of Executive Directors on June 27, 2017. Developed in consultation with the Government and other stakeholders, and aligned with the National Development Plan, the CPF aims to strengthen resilience and reduce the country's fragility, while promoting inclusive economic growth. Recommendations from the analysis of the Systematic Country Diagnostic (SCD), published in 2015, served as a basis for formulating CPF priorities: (1) improve governance; (2) strengthen public finances, prior to improving public services and financing structural investments; (3) implement policies benefiting the private sector; (4) develop human capital; and (5) reduce poverty, in particular by improving the living conditions of the poor living in rural areas.

    On this basis, the World Bank and the Malagasy Government have set the following targets by 2021:

    • Reduce stunting in children under five years of age by 1 percentage point per annum in areas where chronic malnutrition rates are highest;
    • Increase the number of children completing the primary school cycle by 25%;
    • Increase the rate of access to electricity to 20%.

    To achieve these outcomes, IDA will allocate $1.3 billion to Madagascar over the next five years to finance interventions in the areas of early childhood, resilient agriculture, financial inclusion, and energy.

    Thirteen investment operations are currently being implemented for a total commitment of $800 million, of which $400 million remains to be disbursed. The agricultural sector accounts for the majority of commitments (35%), followed by infrastructure, energy, private sector support (30%), education and social protection (21%), and public administration (14%).

    Last Updated: Oct 13, 2017

  • World Bank support for Madagascar is aimed at promoting investment and fostering inclusive growth while improving social indicators. The projects implemented have led to the following outcomes:

    Education

    • A total of 3.3 million students started the year with a new school kit. Through the production and distribution of textbooks, the number of textbooks per child has risen from 1 per 25 children to 1 per 2 children. For the past three years, 12,074 schools have received grants to purchase school equipment, finance maintenance and repair work, and cover their operating costs. Parent associations monitor the use of these grants and receive training to familiarize themselves with the use of service report cards.
    • Since 2015, nearly 600 schools have been distributing meals to over 100,000 children. This strategy has proven to be very effective in ensuring that children continue to attend school, particularly in the southern part of the country, which was affected by severe droughts.
    • In 2015 and 2016, 47,684 teachers attended training during the summer.

     Health and social protection

    • More than 500,000 pregnant or breastfeeding women and 1.8 million children under the age of five have received free health care by means of a voucher and exemption system.
    • Approximately 1.8 million school-age children received preventive treatment against neglected tropical diseases, particularly helminth infections. Teachers have noted a decline in absenteeism since this treatment was established.
    • A total of 286,194 children under 1 year have been vaccinated against diphtheria, tetanus, and polio (DTP3). By the end of 2017, approximately 100,000 households will receive cash benefits every two months, encouraging them to send their children to primary school through cash transfer programs, and 32,000 other households will participate in cash-for-work activities.
    • In the nine project intervention areas, 347 health centers providing basic care have been renovated (installation of solar energy refrigerators to preserve vaccines, for example).

    Private sector development

    • Since 2006, 142,500 property titles have been issued.
    • Between 2015 and 2017, six reforms relating to improvement of the investment climate have been adopted and implemented, tangibly reducing barriers to entrepreneurship and business growth. The total number of direct beneficiaries of the Second Integrated Growth Poles and Corridors Project (PIC2) is estimated at nearly 400,000. In the 77 PIC2 intervention communes, there was an increase of 51% in commune-level revenues, recorded between 2015 and end-2016, and an increase of 85% in the number of newly formalized enterprises in the 77 PIC2 intervention communes. Eight kilometers of urban roads were rehabilitated in the PIC2 intervention urban communes and passenger traffic, including tourists traveling by air and sea, increased by 37% in the main PIC2 tourism centers.

    Agriculture

    • Since the end of 2015, all Malagasy cocoa production has obtained the designation of "fine cocoa." Support from PIC2 resulted in Madagascar becoming a member of the International Cocoa Organization in 2016. In order to preserve this level of quality and designation, a National Cocoa Council was established in August 2016 to regulate the sector in order to increase its productivity and competitiveness on an international scale.
    • In 2016, PIC2 support facilitated the establishment of an Interprofessional Cotton Council, a sectoral platform for public-private dialogue aimed at regulating the sector and, in particular, reducing anti-competitive practices.
    • There was a reduction in the rate of deforestation of 0.13% per year between 2005 and 2013 in protected areas-- a significantly lower figure than that for unprotected areas, which is 1.71% per year over the same period.

    Last Updated: Oct 13, 2017

  • Throughout the crisis (2009-2014), development partners have endeavored to harmonize their strategic advice and operations as part of the resolution process led by the Southern African Development Community (SADC) and the African Union.

    They have been particularly active in the areas of economic management, rural development, education, health, and transport. This intensive cooperation is continuing today and, since the end of the crisis, the Malagasy authorities have been encouraged to ensure sectoral coordination.

     Furthermore, the African Development Bank and the World Bank are working together to assess and strengthen the Malagasy public procurement system so that it can be used in projects financed by international aid.

    Last Updated: Oct 13, 2017

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LENDING

Madagascar: Commitments by Fiscal Year (in millions of dollars)*

*Amounts include IBRD and IDA commitments


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Additional Resources

Country Office Contacts

Main Office Contact
1 Rue Andriamifidy
BP 4140
Antananarivo 101, Madagascar
+261-20-22-560-00
Antananarivo
Diana Styvanley
Communications Officer
+261320500127
dstyvanley@worldbank.org
Washington
Thomas Buckley
Country Program Coordinator
1818 H Street NW
Washington, DC 20433
+1-202-473-0075
tbuckley@worldbank.org