ANTANANARIVO, April 7, 2023 — The World Bank approved a $400 million credit for the Digital and Energy Connectivity for Inclusion in Madagascar Project (DECIM) that will contribute to doubling energy access from 33.7% to 67% in Madagascar and add an additional 3.4 million internet users to promote socio-economic inclusion.
This will be achieved by targeted investments exploring synergies between the two sectors, enabled by critical reforms. At least 10 million people including 2,000,000 households and more than 150 villages from underserved communities will gain access to electricity. The project will also enable 3,400,000 new internet users and connect some 2,000 health centers and schools to renewable energy and digital services.
“Access to energy and telecommunications are top priorities for our government. This project is fully aligned with our vision for the development of Madagascar. It will allow a significant increase in our access to energy and digital services,” said Andry Rajoelina, President of Madagascar. “We are grateful that the World Bank has demonstrated once again its willingness to support us in order to meet our numerous challenges.”
Access to infrastructure in Madagascar, including electricity and digital, is among the lowest in Sub-Saharan Africa and in the world. An estimated 33.7% of the population has access to electricity, compared to an average of 48.4% for Sub-Saharan Africa in 2020. Over 18 million people currently lack electricity access, placing Madagascar 13th in the list of countries with the largest unelectrified population worldwide. In terms of connectivity and accessibility of broadband services, despite progress in recent years, Madagascar ranks relatively low. Internet usage is increasing, reaching some 22%of the population in 2021, up from just 5.1% in 2016. However, this penetration rate remains one of the lowest in the world and is notably well below the 33% regional average for Sub-Saharan Africa.
“This is a project that stands at the forefront of our objective to deliver energy and digital services to all, well beyond the grid and urban settings. DECIM will provide comprehensive support to make this possible, financing isolated and remote areas’ infrastructure developments in partnership with the International Finance Corporation (IFC). This support will be transformational for small business as well as for the individual households and citizens and will put Madagascar on the path to double its electricity access,” said Marie-Chantal Uwanyiligira, World Bank Country Manager for Madagascar.
The DECIM project will focus on the deployment of infrastructure and mobilizing private capital to improve and expand access to energy and digital services in underserved areas, leveraging synergies in joint planning and roll out to reduce deployment costs. With the exception of the national electricity company JIRAMA, energy and digital services in Madagascar are provided by the private sector. Low population densities and high poverty levels in most of the underserved areas make it impossible for the private sector to deliver these services on a purely commercial basis. Public sector funding, in the form of viability gap financing and performance-based grants will be provided to close the gap between costs of service provision and affordability levels of target population.
Special incentives and end-user subsidies will be available for the inclusion of the poorest and vulnerable groups, as well as for the provision of transformative digital devices and productive appliances to deliver economic opportunities. Furthermore, the project will address barriers to service provision on both the supply side (subsidizing provision of infrastructure in areas that are not commercially viable) and the demand side (closing affordability gap and promoting awareness and digital literacy), and in parallel support critical sector reforms in both sectors to drive transparency, efficiency and sustainability. In addition, the project can close gender gaps by lowering the upfront cost of electricity provision and electric appliances, and digital devices, to make them affordable to female-headed households and women-led businesses.