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 24.8 million inhabitants in 2016.

    The installation of the Senate in February 2016 completes the establishment of all the democratic institutions of the Fourth 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.

    The next presidential elections will be held in late 2018.

    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.

    Economic situation

    The Malagasy economy has been steadily improving since the return to constitutional order in 2014. The upturn in public investments, resumption of external aid, and the opportunities presented by access to external markets have boosted local activities, especially the public works, construction and manufacturing industry sectors. An economic growth rate that has exceeded 4% since 2016 reflects this trend (compared to an average annual growth rate of 2.7% during the political crisis of 2009-2013).

    However, efforts to combat poverty are hobbled by the country’s extreme vulnerability to climate hazards. In 2017, the agricultural sector, the main source of income for over 80% of the Malagasy population, was particularly hard hit by natural disasters. Rice production is estimated to have fallen by 20% relative to 2016. The reality is that most Malagasy people have not benefited from the improved economic situation: the extreme poverty rate of $1.90 (in purchasing power parity [PPP] terms) remained high at 76.2% in 2017.

    Madagascar must therefore strengthen the resilience of the productive sectors, especially agriculture, in order to achieve sustainable economic growth benefiting the poorest.

    Inflation rose sharply in 2017, reaching 9% in December, the highest price increase in seven years. This trend is due to the commodity price hike linked to the decline in rice production.

    Yet, as one of the world’s leading producers of vanilla, Madagascar has continued to reap the benefits of soaring vanilla prices on the international market. Vanilla export earnings helped curb the external current account deficit, maintain the value of the local currency, and build up adequate foreign currency reserves.

    The medium-term outlook is broadly positive, with a GDP growth rate projected to exceed 5%.  However, the uncertainties surrounding the presidential elections slated to be held in late 2018 could have an adverse effect on growth. These elections also provide an opportunity to break the cycle of political crises and ensure reforms remain in place to promote inclusive and sustainable growth.

    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 is 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: Apr 19, 2018

  • 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, improve public services, and the financing of key 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 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, 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.

    All told, the World Bank Group is financing the implementation of 16 operations representing a total commitment of $838 million, 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: Apr 19, 2018

  • 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 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 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, 47,684 teachers attended training during the summer.

     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: Apr 19, 2018

  • 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: Apr 19, 2018

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