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 25.6 million inhabitants. Despite having considerable natural resources, Madagascar has among the highest poverty rates in the world.

    Political Context

    • The presidential elections were held peacefully in January 2019 and marked 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 22 ministers.
    • Some ministries were merged to improve public administration efficiency. The Malagasy Government is preparing its new 2019-2023 Emergency Plan based on the 13 objectives aimed at stimulating the economy and reducing poverty. The 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 to elect 1,695 mayors are slated for November 27, 2019.

    Economic Situation

    • The economy remains dynamic, but showed signs of weakness in 2019. After having achieved growth of 5.1% in 2018, driven by the export, transportation, finance, and construction sectors, economic activity slowed in the first half of 2019 under the combined impact of weakening external demand and a slowdown in public expenditure when the new government took office. Nevertheless, growth is projected to reach approximately 4.7% in 2019, which should result in a 2% increase in per capita income this year, far surpassing the Sub-Saharan average of 0.3%.
    • Ambitious public investment plans and a resurgence of confidence following the elections are projected to trigger robust growth of up to 5.3% in 2020, before it stabilizes at around 5% in 2021. However, these investments are also expected to result in considerable widening of the budget deficit, while the proliferation of public-private partnership (PPP) projects within a sometimes opaque legal and institutional framework could generate significant contingent liabilities.
    • These trends highlight the importance of strengthening the PPP institutional framework and of creating the fiscal space needed to support priority government expenditure. This requires an increased focus on mobilizing tax and quasi-tax- revenue, which remains among the weakest in Sub-Saharan Africa.

    Social Context and Development Challenges

    • Despite the economy’s sustained growth in recent years, poverty appears to have only slightly decreased, from 77.6% in 2012 (last official statistic) to an estimated 74.1% in 2019, which far exceeds the regional average of 41%. The agricultural sector, the country’s leading employer, plays a key role in making progress with poverty in Madagascar. However, agricultural output growth has been too low and volatile in recent years, generally trending at less than demographic growth.
    • Madagascar is among the poorest countries in the world with 75% of the population living on less than $1.90 per day (in purchasing power parity). 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 3 cyclones per year.

    Last Updated: Oct 29, 2019

  • 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 and all the 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 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).

    The World Bank is currently financing 15 projects in Madagascar to the tune of $1.28 billion in the areas of education, nutrition, early childhood, social protection, resilient agriculture, energy, and support for private sector development.

    Last Updated: Oct 29, 2019

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

    Strengthening of human capital

    • 266 classrooms have been built through the Madagascar Emergency Support to Education for All Project (PAUET);
    • More than 98,000 children aged 6 to 10 years can go to school as a result of monthly cash transfers granted to their parents;
    • 65,000 vulnerable households (totaling over 783,000 people) in southern Madagascar are beneficiaries of the FIAVOTA project providing cash transfers combined with health and nutrition interventions to stabilize the incomes of households hit by drought, build their resilience, and improve their well-being. Fifteen months of project implementation have successfully rolled back food poverty for  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: 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 5 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: Oct 29, 2019

  • 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: Oct 29, 2019

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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