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Overview

  • Madagascar, an island country located  in the Indian ocean off the coast from southern Africa, is the fifth largest island in the world, with a land mass of 587,000 km2 and 25.6 million inhabitants. Despite having considerable natural resources, Madagascar has among the highest poverty rates in the world.

    Political Context

    • Presidential elections were held peacefully in January 2019, marking the first political alternation of power in Madagascar. President Rajoelina won 55.6% of the votes and leads the country alongside his Prime Minister, Christian Ntsay and 24 ministers.

    • Some ministries were merged to improve the efficiency of public administration. The Malagasy government is finalizing its new 2019-2023 Emergency Plan aimed at stimulating the economy and reducing poverty. 

    • Legislative elections held on May 27, 2019 delivered a massive victory to President Andry Rajoelina’s support platform, with 84 of the National Assembly’s 151 seats. Commune-level elections, held on November 27, 2019, to elect 1,695 mayors followed suit and  President Andry Rajoelina’s platform gained seats in the majority of cities..

    Economic Situation

    • Prior to the COVID-19 (coronavirus) pandemic, Madagascar was on an upward growth trajectory. Following a prolonged period of political instability and economic stagnation, growth accelerated over the last five years to reach an estimated 4.8% in 2019, its fastest pace in over a decade. The return to constitutional order and peaceful political transition in  the last elections was instrumental to this economic revival, as it contributed to restore investor confidence, reopen access to key export markets, reinstate flows of concessional financing, and encourage structural reforms. These positive trends were also reflected in improved labor market conditions and declining poverty rates, although around 75% of the population was still estimated to live below the international poverty line of $1.90 in 2019, significantly higher than the regional average of 41%.

    • The adverse economic, social, and fiscal impact of the COVID-19 crisis will be very substantial in 2020. Global trade and travel disruptions as well as domestic containment measures are expected to result in a sharp deceleration in economic activity in 2020, with gross domestic product (GDP) growth predicted to slow to 1.2%, compared to an estimated growth rate of 5.2% just prior to the outbreak. Vulnerable populations in urban areas are particularly exposed to economic hardship and poverty traps in these  circumstances. Sharply declining tax revenues and COVID-19-related spending will widen the fiscal deficit and create a sudden increase in financing needs. 

    • These developments emphasize the importance of implementing robust emergency measures to save lives, protect vulnerable populations, and safeguard jobs in the short term as well as accelerate reforms to stimulate investment for long-term recovery, strengthen resilience to future shocks, and maintain public debt at a sustainable course. The World Bank is committed to working with the government to achieve those objectives with the fully array of its instruments. 

    Social Context and Development Challenges

    • The country’s human capital index ranking is among the lowest worldwide, and Madagascar has the world’s fourth highest rate of chronic malnutrition, with almost one child in two under five years of age suffering from stunting. An estimated 1.4 million children dropped out of primary school in 2012.

    • Living conditions remain difficult for the vast majority of the population, with a low rate of access to electricity (13%) in particular.

    Madagascar is one of the African countries most severely affected by climate change impacts and experiences an average of three cyclones per year.

    Last Updated: Jul 31, 2020

  • The World Bank Group’s engagement in Madagascar is guided by the Country Partnership Framework (CPF) for 2017-2021. Developed in consultation with the government, civil society, private sector, and others, the CPF aims to strengthen resilience and reduce the country's fragility while promoting inclusive economic growth. Recommendations drawn from the Systematic Country Diagnostic (SCD), published in 2015, served as a basis for formulating the CPF’s eight objectives:

    • Strengthen cognitive and physical development of children

    • Strengthen resilience and improvement of the livelihoods of vulnerable households

    • Enhanced and effective decentralization

    • Strengthen the transparency and accountability of public institutions

    • Boost the State’s capacity to finance social expenditure and priority infrastructure development

    • Improve business environment and access to finance

    • Strengthen local productivity

    • Improve access to energy and transport

    This engagement will support the Malagasy Government’s efforts to achieve a number of flagship outcomes: 

    • Reduce stunting in children under five years of age by 1 percentage point per annum in regions 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, at the Conference of Donors in late 2016, the World Bank Group pledged to invest $1.3 billion in Madagascar over a three-year period, including $1 billion from the International Development Association (IDA) and $300 million in financing for the private sector from the International Finance Corporation (IFC).

    Last Updated: Jul 31, 2020

  • As of July 1, 2020, the World Bank is financing 17 projects in Madagascar to the tune of $1.4 billion in the areas of education, nutrition, early childhood development, social protection, resilient agriculture, energy, transport, and support for private sector development.

    Development policy operations in FY19-20, totaling $200 million, support critical reforms to strengthen the quality and transparency of fiscal decision-making, improve the governance of the electricity sector,  and improve human capital. A $50 million Catastrophe Deferred Drawdown Option operation also provides Madagascar with rapid access to financing in the event of a natural catastrophe while supporting key reforms that strengthen the country’s system for disaster risk management. At the end of August 2020, a $75 million COVID-19 Response Development Policy Financing was approved to mitigate the impact of the COVID-19 crisis (coronavirus) and lay the foundations for a sustainable recovery.

    The International Development Association (IDA) also provides analytics and advisory services to provide support for evidence-based decision-making and stronger implementation on a wide range of development issues. 

    The World Bank-financed projects have led to the following noteworthy outcomes:

    Strengthening of human capital

    • More than 800,000 vulnerable people  in southern Madagascar are beneficiaries of the FIAVOTA Program, which provides cash transfers combined with health and nutrition interventions, to stabilize the incomes of households hit by drought, building their resilience and improving their well-being. Fifteen months of project implementation have successfully diminished the  food poverty of program beneficiaries: average household income has risen and is 40% higher than the average income of non-beneficiaries. The cash transfers have also fostered the creation of small family businesses, and in 2018, nearly two-thirds of households had at least two small family-run income-generating activities. The program has resulted in a marked improvement in the human development and women’s empowerment indicators;

    • 32,000 households are receiving cash in return for community work

    • 347 health centers providing basic care have been renovated (installation of solar energy refrigerators to preserve vaccines, for example)

    Private sector development

    • Between 2015 and 2017, six reforms relating to improvement of the investment climate have been adopted and implemented, tangibly reducing barriers to entrepreneurship and to 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 between 2015 and end-2016 and an increase of 85% in the number of newly formalized enterprises in the 77 PIC2 intervention communes

    • Passenger traffic, including tourists traveling by air and sea, increased by 37% in the main PIC2 tourism centers.

    Agriculture

    • More than 58,000 hectares of irrigated land were rehabilitated. Rice production yields increased from 2.5 metric tons to close to five metric tons per hectare, bringing direct benefits to more than 76,000 agricultural households

    • Between 2017 and 2019, almost 100,000 farmers directly benefited from improved irrigation services and agricultural inputs

    • 300,250 land certificates have been registered since 2006

    Energy

    • Annual electricity losses by the national power company, JIRAMA, have dropped by 5%

    • The proportion of the population with access to electricity increased by 8% as a result of grid and off-grid solutions.

    • Total electricity sales per kWh covered by the revenue protection program increased by 23%.

    Last Updated: Jul 31, 2020

  • The development partners are continuing their intensive cooperation with the Malagasy authorities.

    The World Bank is working hand in hand with the Agence française de développement  (AFD) and the Global Environment Facility on the Sustainable Landscape Management Project (Projet Agriculture Durable par une Approche Paysage PADAP) to halt the degradation of natural resources in Madagascar and improve access to irrigation systems, agricultural inputs, and agricultural and forestry services.

    With the program to combat chronic malnutrition in children in Madagascar using the new multiphase programmatic approach, the World Bank is working in association with the United States Agency for International Development (USAID), the World Health Organization,  UNICEF, the GAVI Alliance, the Power of Nutrition, the German international cooperation agency (GIZ), and the Japan International Cooperation Agency (JICA) to round out the interventions designed to improve nutritional indicators.

    The World Bank, various UN agencies, the European Union, and USAID provided support to the Malagasy Government to complete the third General Population and Housing Census in 2018.

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

    Last Updated: Jul 31, 2020

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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
For general information and inquiries
Diana Styvanley
External Affairs Officer
+261320500127
dstyvanley@worldbank.org
For project-related issues and complaints
madagascaralert@worldbank.org