Madagascar

Madagascar, the world’s fifth-largest island, lies in the Indian Ocean off the coast of southern Africa. Its population, estimated at 31.9 million in 2024, faces persistently high poverty.

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Economic activity is recovering after a difficult first quarter of 2026 marked by the political transition, two cyclones, and tensions in the Middle East. Headline inflation eased to 6.8% in March (year-on-year), before accelerating to 8.6%% in June, driven by non-rice food and energy prices, prompting the central bank to raise its policy rate by 50 points basis to 12.5% in August. Higher oil prices and increased thermal power generation boosted fuel imports, while exports of key commodities—including nickel, vanilla, and apparel—remained subdued, keeping the current account deficit large. Economic growth has averaged about 3% annually since the 2010s - insufficient to generate jobs or significantly reduce poverty in a context of rapid population growth of 2.4% annually. Looking ahead, growth is expected to be supported by post-cyclone reconstruction and increased infrastructure investment. However, subdued job creation, high poverty (estimated at 66.5% in 2025), and vulnerability to climate and global economic shocks, highlight the urgency of sustained reforms.

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Madagascar continues to face deep structural challenges that hinder its development. Growth remains limited by the predominance of low-productivity sectors such as subsistence agriculture, along with weak infrastructure, recurrent natural disasters (cyclones, droughts), limited access to basic services, and rising climate vulnerability, leaving it insufficient to generate the jobs needed for a rapidly growing population. Human capital accumulation is also low, with a Human Capital Index of 0.39, among the lowest globally.

Extreme poverty continues to affect a large share of the population, placing Madagascar among the world’s most vulnerable economies. Rural poverty remains a serious challenge, and urban areas have experienced a significant deterioration in living standards over the past decade. While inequality declined slightly, from a Gini coefficient of 38.2 in 2012 to 36.8 in 2022, this was driven largely by rising urban poverty rather than broad-based welfare gains.

Boosting resilient growth will require bold reforms to improve governance, build resilience to shocks including climate risks, expand access to basic infrastructure, notably energy, transport, and digital infrastructure. Breaking the cycle of poverty further calls for urgent reforms to create better-paying jobs by raising agricultural productivity, strengthening market linkages, and enhancing competition in key export value chains while simultaneously investing in human capital.

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The Country Partnership Framework (CPF) for Madagascar for 2023 to 2027 sets out the World Bank Group’s strategy to support inclusive and resilient growth, focuses on expanding job opportunities, improving equity in public services, and strengthening resilience to shocks. Following recent political change, the WBG has developed a two-year Engagement Note to support the new government's priorities: improving basic services, strengthening governance, and preparing for elections. During this period, support will focus on enhancing infrastructure, strengthening the business and regulatory environment, and mobilizing the private sector to create jobs in key sectors. This renewed partnership is anchored in a mutual accountability compact with the authorities, aiming to help Madagascar move away from a low-growth, high-poverty trap toward more and better jobs and a more resilient economy.

As of September 2026, the World Bank portfolio totaled $4.5 billion, comprising 16 national projects and 5 regional operations. The infrastructure sector accounts for the largest share at 44% ($2 billion), followed by human development at 25% ($1.1 billion), sustainable development at 21% ($956 million), and equitable growth, finance, and institutions at 10% ($446 million).

Partners

The World Bank works closely with the following partners in Madagascar: the African Development Bank, Agence Française de Développement (AFD), the Food and Agriculture Organization (FAO), UNICEF, UNOPS, UNDP, World Food Programme, the International Potato Centre, AfricaRice, International Livestock Research Institute, International Crops Research Institute for the Semi-Arid Tropics, the World Health Organization, the GAVI Alliance, , the German International Cooperation Agency (GIZ), Japan’s International Cooperation Agency (JICA), Catholic Relief Services (CRS), Fondation Tany Meva and the European Union.

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760,000 households and companies have gained access to electricity through grid and off-grid solutions. Investments extended 1,500 km of power lines, electrified 610 health centers, and accelerated off-grid access to remote areas.

In Antananarivo, new facilities are increasing daily water supply by 43,200 m3 and providing household connections to 59,000 people. In Southern Madagascar, a rehabilitated pipeline provides clean drinking water to 50,000 people, while 320 upgraded community water points and three small desalination plants serve an additional 340,000.

Since 2022, $80 million in private investment has been mobilized in the tourism, agribusiness, and digital sectors, creating 16,000 jobs. Support reached over 200 SMEs and 22,000 producers, raising smallholder incomes by 35%. In tourism, 10 sites were upgraded, 124 km of access roads rehabilitated and 20,000 workers trained.

Following cyclones Gezani and Fytia in February 2026, $60 million was mobilized for emergency response and recovery. 150,000 households received cash assistance, 100,000 people participated in cash‑for‑work programs, 35,000 households received seeds, and 50,000 children benefited from nutrition support. Essential services were maintained, while reconstruction continues, including rehabilitation of schools, health centers, and the University of Barikadimy.

National identity systems have been strengthened and social protection programs have been scaled up. This project also supports the development of a national social registry which currently includes 2.6 million households.

Food security and rural livelihoods have been strengthened through cash transfers reaching 2.5 million vulnerable households, protection of 600,000 hectares from locust infestations, rehabilitation of 3,550 hectares of irrigation infrastructure (expected to generate 10,650 tons of rice), support to 96,000 drought-affected farmers, and nutritious daily meals for 240,000 students across 9 regions and 23 districts.

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