Overview

  • 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 25.5 million inhabitants in 2017.

    Political Context

    Having relinquished power in September 2017, as required by the Constitution, to run in the presidential elections held in November 2018, President Hery Rajaonarimampianina was defeated in the first round by two former Heads of State, Marc Ravalomanana and Andry Rajoelina. The Electoral Commission will publish the final results of the second round in January 2019, but based on preliminary results, Andry is expected to come out on top with 55.6% of votes cast. In the interim, the President of the Senate, Rivo Raktovao has been acting as the President and will continue to do so until the new President of the Republic is installed.

    Economic Situation

    GDP growth increased between 2013 and 2017, rising from 2.3% to around 4.2%, and reached 5% in 2018. Small private sector industries and enterprises boosted the Malagasy economy. Exports of goods and services produced in economic free zones have also recorded a strong performance. The remarkable dynamism of public investment over the recent period has also been driving growth in the construction sector in urban areas. As a result, the main drivers of growth are concentrated in the industry and services sectors and are a boon mainly to the urban population, while the rural population continues to engage in agricultural activities that have not benefited from the economic recovery.

    In fact, between 2014 and 2017 the agricultural sector contracted on average by 0.8% per annum. In a country where almost 80% of the population is engaged in agriculture, this indicates that the economic growth of the past few years has not impacted positively on the living conditions of the rural population.

    It is projected that economic growth will remain dynamic, rising to an estimated 5.4% in 2019. Monetary policy is expected to continue focusing on controlling inflation, which was estimated at 6.4% in 2019 and is expected to average 4.4% to 6.0% between 2020 and 2022. In the medium term, public expenditure should stabilize, with a reduction in the percentage of recurrent expenditure and an increase in investment spending.

    Despite these fairly positive projections, priority will have to be assigned to more inclusive growth in order to reduce the sharp inequalities and combat poverty, particularly as current projections point to a reduction in the percentage of the Malagasy population living beneath the poverty line. Indeed, the poverty index, based on a threshold of $1.90 per day and by purchasing power parity, is targeted to decline from 75% to 73% between 2018 and 2020. It is vital, therefore, that this trend be sustained. Furthermore, the increase in tax revenue and the reduction in transfers to underperforming public enterprises should make it possible to release more resources for the provision of public services in the areas of education, health and rural infrastructure.

    Social context

    Madagascar is lagging in a number of development indicators. Every second child (under the age of five) suffers from stunting, and the country has the world’s fifth highest number of out-of-school children. Furthermore, at only 13%, the rate of access to electricity is one of the lowest on the planet.

    In 2018, Madagascar’s Human Development Index (HDI), as measured by the United Nations Development Program (UNDP), improved slightly from 0.512 to 0.519, but the country fell three places in the world ranking, from 158 to 161.

    Last Updated: Jan 11, 2019

  • World Bank Group Strategy and Commitment

    The Malagasy Government has prepared a National Development Plan that focuses on three priorities:

    • improving governance;
    • fostering economic recovery; and
    • broadening access to basic social services.

    At 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), Madagascar received a commitment of $6.4 billion in support of its development projects over the 2017-2020 period. This figure includes $2.1 billion in already committed but undisbursed funds and $4.3 billion in new commitments. An additional envelope of $3.3 billion in investment was also announced by the private sector.

    In June 2017, the World Bank approved its new Country Partnership Framework (CPF) with Madagascar for 2017–2021. Developed in consultation with the Government and all other stakeholders (civil society, private sector, etc.) 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 economic and social diagnostic analysis of the country (SCD), published in 2015, served as a basis for formulating the five CPF priorities:

    • improve governance;
    • strengthen public finances, improve public services, and finance key investments;
    • implement policies benefiting the private sector;
    • develop human capital; and
    • reduce poverty, particularly in rural areas.

    On this basis, the World Bank and the Malagasy Government have set three priority goals to be achieved 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, the International Development Association (IDA), the World Bank institution that helps the world’s poorest countries, 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.

    All told, the World Bank Group is financing the implementation of 17 operations representing a total commitment of $1.14 billion, of which $372 million has already been 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: Jan 11, 2019

  • 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

    • Since October 2016, a total of 5.1 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 103,368 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, over 50,000 teachers received training during the summer;
    • 266 classrooms were built under the Projet d’Appui d’Urgence à l’Education pour Tous (PAUET) (Emergency Support to Education for All Project).

     Health and social protection

    • 508,000 pregnant or breastfeeding women and more than 1.7 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 bimonthly cash allowances to encourage 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.
    • The rate of deforestation fell by 0.13% per year in protected areas between 2005 and 2013-- a significantly lower figure than that for unprotected areas, which is 1.71% per year over the same period.
    • 41,700 hectares of irrigated land were rehabilitated between 2013 and 2017. Rice production yield has increased from 2.5 metric tons to close to 5 metric tons per hectare, bringing direct benefits to more than 76,000 agricultural households.

    Last Updated: Jan 11, 2019

  • The development partners are continuing their intensive cooperation with the Malagasy authorities, which are 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: Jan 11, 2019

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LENDING

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

*Amounts include IBRD and IDA commitments


PHOTO GALLERY

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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
Communications Officer
+261320500127
dstyvanley@worldbank.org
For project-related issues and complaints
madagascaralert@worldbank.org