IFC is boosting its investments and broadening its advisory services programs in Madagascar, an island nation that is embracing private sector led growth and emerging from years of economic stagnation.
Famed for its exquisite beaches, unique biodiversity and expansive vanilla plantations, Madagascar’s growth has been hampered by isolation, recent political unrest and inadequate investment in infrastructure and education.
To address the country’s pressing developmental problems, Madagascar's government last year launched the ‘Madagascar Action Plan’. The five-year plan comprises a package of economic and social strategies aimed at achieving poverty reduction and enhancing the quality of life for all Malagasy.
Among the government’s targets for 2012 are: increasing annual GDP from $5 billion to $12 billion; increasing the literacy rate from 63 percent to 80 percent; reducing the poverty rate from 85.1% to 50 percent; and climbing the IFC-World Bank Doing Business ranking from 131 to 80.
PRIVATE SECTOR LED GROWTH
IFC's work in Madagascar highlights its commitment to supporting poverty reduction through private sector led growth in some of the world's least developed countries.
IFC is supporting the efforts of the country's government and business leaders to reach the action plan's goals, grow the economy and reduce poverty. IFC's investments in Madagascar jumped from $7 million in 2003 to $57.6 million by the end of 2007. The goal is to nearly double that figure again – to $110 million – over the next two years.
IFC is working across a broad swathe of Madagascar’s economy, supporting the growth of smaller businesses, and the tourism, leasing, and export sectors. IFC is also helping to improve the country’s investment climate by supporting the introduction of regulatory reforms and by promoting domestic and foreign investment.
"IFC is working with Madagascar as it moves towards a more open economy, where smaller businesses can flourish and larger industries can compete in foreign markets," said IFC Africa director Thierry Tanoh. "IFC is providing investments and advisory services across a range of industries to make an immediate and long-term impact on people’s lives."
NEW PROSPECTS
Despite an abundance of natural resources and the claim to being the world’s largest producer of vanilla, Madagascar's per capita income tumbled from $473 in 1970 to only $290 in 2005.
But prospects for the future are beginning to overshadow the problems of the past. According to the International Monetary Fund, the economy is expected to grow at a healthy 7.3 percent in 2008, a number fuelled in part by an incipient mining boom.
Working with several partners on the island, including AccesBanque, Business Partners, BFV-Société Générale, BNI Crédit Agricole and Microcred, IFC is helping small businesses gain access to credit and the banking services they need to grow and take on more employees.
IFC has invested more than $7 million in microfinance institutions on the island. These lenders typically make loans from 200,000 to 50 million Malagasy ariary ($110 to $27,000) to businesses in the trade, service, transport, agricultural, construction, and other sectors – the backbone of the country’s economy.
Madagascar’s nascent leasing industry – critical for businesses that cannot afford to purchase expensive equipment -- is also benefiting from IFC’s expertise. IFC is helping improve a legal framework conducive for leasing activities, while working with Madagascar’s finance ministry to streamline the leasing process.
IFC is also working closely with Madagascar’s exporters. In collaboration with the Malagasy government and the French Development Agency, IFC helped develop and publish the ‘Madagascar Exporting Companies Directory’, a comprehensive overview of the country’s export sectors. The book is proving an invaluable tool for linking Madagascar’s exporters with foreign buyers and investors. It will soon be available online.
UNTAPPED TOURISM
Madagascar boasts one of the world’s truly unique ecosystems, yet its potential for eco-friendly development and job creation has hardly been tapped. Working with Madagascar’s government and conservation groups, IFC is helping to develop policy that will allow the establishment of a network of eco-lodges, which would create jobs in rural areas and return money to conservation efforts.
Although Madagascar faces many challenges, IFC is supporting the country’s efforts to overcome them and pull its people from poverty. Writing in the introduction to the Madagascar Action Plan, Madagascar’s president highlighted the critical role of free enterprise in bettering people’s lives:
"To the private sector, you are central to the achievement of the MAP goals," wrote President Marc Ravalomanana. "We must promote participation of local enterprises in all sectors of the economy to create rapid employment growth. We must attract more foreign investors to support our economy."
For More Information Contact:
Jason Hopps
Communications Officer
Johannesburg, South Africa
JHopps@ifc.org
