The World Bank is helping the Madagascar government to fight poverty and improve the living standards.
Madagascar is the world’s fifth-largest island, situated in the Indian Ocean off the coast of southern Africa. The country is endowed with considerable natural resources and unparalleled biodiversity. However, its population, estimated at 30.3 million in 2023, faces the challenge of a persistently high poverty rate (80.7% in 2023, $2.15 per person per day).
Political Context
Andry Rajoelina was re-elected President of the Republic of Madagascar in December 2023 following the first round of presidential elections on November 16, 2023. He reappointed Christian Ntsay as Prime Minister. The new government was officially presented on January 14, 2024, and comprises 27 ministries. Legislative elections are scheduled on May 29, 2024.
Economic Situation
Economic growth is estimated at 3.8% in 2023, driven by tourism, with arrivals nearly doubling from 2022 and high demand for telecommunications and the food industry. Economic growth has been mainly driven by domestic expenditure, while the contribution to growth from net exports has been marginal compared to previous years. Although mineral export volumes (nickel, cobalt) have been moderately strong and gold export has resumed after suspension in 2020, lower demand and prices for key Malagasy exports such as textiles, vanilla, and spices have dampened overall export performance in 2023.
Following a peak of 12.3% in March 2023, inflation has been declining since the second quarter of 2023 due to high base effects related to the fuel price hike in July 2022 and a tighter monetary policy stance. The central bank increased its deposit and marginal lending facility rates twice since early 2023 for a cumulative increase of 90 basis points. The fiscal deficit is estimated to have declined from 6.4% of GDP in 2022 to 4.9% in 2023, thanks to an estimated increase in the tax-to-GDP ratio following a one-off impact related to the recovery of petroleum tax arrears accumulated in 2022. Nonetheless, the tax-to-GDP ratio remained below the 12.9% budget target. Government expenditure has increased and included a large transfer to the public water and electricity utility, JIRAMA. The budget deficit was mainly financed by concessional external financing. External and overall public debt distress risks remain moderate.
Growth is expected to accelerate to an average of 4.6% over 2024-26, driven by favorable base effects, enhanced trade and tourism opportunities, and a new impetus for private investment following impactful structural reforms in pivotal sectors such as mining, telecommunications and digital technologies, and the investment climate. Nevertheless, the poverty rate is projected to stay elevated, as job creation is expected to remain limited compared to population growth. Hence, about 24.8 million people are projected to remain poor in Madagascar, a number larger than the total population of Burundi and South Soudan altogether, where the poverty rates also are very high.
Last Updated: Apr 01, 2024
The Country Partnership Framework (CPF) for Madagascar for 2023 to 2027, approved by the World Bank in April 2023, sets out the strategy to support Madagascar’s efforts towards inclusive and resilient growth. The new five-year CPF is centered around three high-level outcomes: (i) improving job opportunities through transformative action, (ii) making growth more inclusive by addressing weaknesses and inequities in public service delivery; and (iii) creating resilience to shocks that can reverse improvements in growth or worsen socioeconomic inequalities. Underpinned by the Systematic Country Diagnostic (SCD) and the Country Private Sector Diagnostic (CPSD), this CPF also reflects broad consultations with the government, development partners, the private sector, civil society, and academia.
As of March 2024, the World Bank portfolio in Madagascar stood at $4.1 billion and includes 26 national projects and 4 regional operations. Infrastructure takes the largest share of financing at 34% ($1,390 million), followed by sustainable development at 29% ($1,215 million), human development at 26% ($1,092.8 million), and equitable growth, finance, and institutions at 11% ($435 million). The World Bank also provides analytics and advisory services to support evidence-based decision-making and the stronger implementation of development.
Last Updated: Apr 01, 2024
Human Capital
The Social Safety Net Project in Madagascar has supported 5.2 million people since the project began, with women accounting for 75% of direct beneficiaries. Among Human Development Cash Transfer households, 94% of school-age children attend school regularly, and almost 500,000 children under age five have benefitted from nutrition services. In 2023, Madagascar launched its Social Registry, which will improve beneficiary targeting, program coordination, and response to climatic shocks. The new Safety Nets and Resilience Project, which became effective in August 2023, will scale up coverage of extremely poor households and promote improved livelihoods of social assistance beneficiaries to reduce over time the need for support.
To combat malnutrition, more than two million people have benefited from health and nutrition services, and 4,500 community health and nutrition sites are operational. As well, 1,081 primary health care facilities were strengthened with necessary nutrition and health commodities and equipment. Based on a 2021 Demographic and Health Survey, stunting decreased from 42% to 39.8% nationally between 2018 and 2021, and specifically from 51% to 48% in the eight regions targeted by the Improving Nutrition Outcomes using the Multiphase Programmatic Approach (MPA) Project. This improvement is even more significant in the five regions that were enrolled in the program in 2019 and 2020, from 55% to 49%.
To improve access to and quality of education for all children, the World Bank has focused on supporting primary education reform by redesigning the curriculum and setting up classroom practices known as “structured pedagogy approach” to ensure that every child learns. Along with the training of over 50,000 teachers and 5,000 school principals across Madagascar and distribution of textbooks to over 2.7 million children in the first two years of basic education, over 17,000 teachers, school principals, and technicians have been equipped with tablets to support distance learning. Eight hundred classrooms are being built in extremely remote areas, with water points and improved sanitation facilities. The Basic Education Support Project set up 1,000 community early learning centers in rural areas and school canteens, particularly in the south of the country, benefiting over 50,000 schoolchildren.
Jobs
The series of Madagascar Integrated Growth Poles Projects have supported the development of private sector in Madagascar in the targeted regions and in the tourism, agribusiness and digital sectors. More than $27 million of private investments were leveraged, and more than 20,000 formal jobs were created. In terms of direct support to firms, more than 800 startups and small and medium-sized enterprises (SMEs) benefited from technical assistance as well as financial resources to support their growth and expansion. During the COVID-19 pandemic, about 280 of these businesses that were operating in the tourism sector received specific training to maintain their competitiveness as well as financial support to “keep the light on” during a period of high uncertainty. In addition, more than 23,000 employees in the tourism sector received dedicated and tailored training on several subjects to help maintain their skills during the pandemic. More than 28,000 agricultural producers working in selected cash crops or aquaculture have been supported by the projects to improve their productivity and market access. The projects also contributed to an increase in the value of exports from the main agribusiness value chains supported (including cocoa, pink pepper, sea cucumber, seaweed, (cape) peas, pink pepper, vanilla, and honey) by more than 35% and to more than $13 million in additional income for smallholders. The fourth iteration of the series is currently implemented under the Madagascar Economic Transformation for Inclusive Growth project.
Sustainable Development
Since a more conducive land law has been enacted in August 2023, the Agriculture Rural Growth and Land Management Project (CASEF) managed to cross the ambitious milestone of a million certificate, giving around 500,000 farmers in rural households more security in their production. By June 2024, the project expects to reach out to its final target of 1,400,000 land certificates, thanks to massive operations implemented using low-cost, inclusive and relatively rapid methods. In total, more than 700,000 households will benefit by the end of the project in June 2024. By then, CASEF will have achieved 69.5% of the government's land tenure security objectives and now, seven land certificates out of ten have been issued as a result of the project in 456 municipalities (out of 1,695). Since 2018, CASEF is the main vehicle of the land reform implementation. This momentum is inspiring other African countries, with delegations from as far as Burundi and Senegal coming to learn from Madagascar’s experience.
The Support to Resilient Livelihoods in Southern Madagascar Project aims for multi-sectoral development activities to build resilience, while supporting local government institutions and decentralization processes and building state presence and leadership for sustainable development. Having delivered a drought emergency response with 50,000 households supported in re-starting agricultural production, those same households are now being facilitated to form small-scale agricultural associations and to access promising new value chains. Commune infrastructure – offices and equipment – has been completed in 29 target communes. 134 commune local development committees are now running and have identified and completed 29 small-sale infrastructure investments to support local development – including clinics, schools, and marketplaces – with a further 206 on course. With regards to larger resilient infrastructure, work has begun on the rehabilitation of a water distribution pipeline, on a 2000 ha reforestation program and on the stabilization of 800ha of sand dunes, where coastal erosion if encroaching onto agricultural land.
Infrastructure
On roads: The Connectivity for Rural Livelihood Improvement Project (PACT) recently completed the upgrade and paving of a 113-km section of the Route Nationale 44. About 110,000 people living in the vicinity of this road section now benefit directly from a much better access to transport infrastructure and services. The travel time has been divided by four, from 8 hours to 2 hours from Marovoay à Vohidiala, and the road is now easily passable during the rainy season thanks to its new pavement, drainage system, and bridges. The road is strategic for Madagascar because it serves the Alaotra-Mangoro region, considered the country's rice granary; rice is an essential product for the Malagasy population as it is the staple of their diet. Farmers are satisfied to see an increase in their revenues now that they can easily reach Ambatondrazaka, the region's capital, where they can set better prices for their products, up to three times more than before the project. The local population now also enjoy a better physical access to basic services like healthcare and education since the road serves 65 schools and 14 health centers.
On energy, with the ongoing Electricity Sec Operations & Governance Improvement Project (ESOGIP), the "Matselaka" electricity customer management system is now operational in 100% of the country, and 8,500 smart meters were deployed. The project also financed the construction and rehabilitation of 320km of distribution and transmission lines, improving network quality. Total network losses were reduced from 35% to 28% between 2016 and 2022. Under the Least-Cost Electricity Access Development Project (LEAD), the first phase of health center electrification has been achieved, and 500 basic health centers will have access to electricity by 2024. With the development of the off-grid market, 150,027 kits that benefit from the system have been distributed, and around 200,000 new customers are expected to be connected via JIRAMA grids by the end of 2024.
Last Updated: Apr 01, 2024