IFC in Madagascar: Supporting Private Sector-led Growth

IFC is boosting investments and advisory programs in Madagascar, an island nation that is embracing private sector-led growth and emerging from years of economic stagnation. The country is famous for its beaches, unique biodiversity, and vanilla plantations, but its growth has been hampered by isolation, recent political unrest, and too little investment in infrastructure and education.

To address the pressing development challenges, last year the government launched economic and social strategies aimed at reducing poverty and enhancing the quality of life for all Malagasy people.

Madagascar Action Plan

Targets for 2012 include: Increasing annual GDP from $5 billion to $12 billion Reducing the poverty rate from about 85 percent to 50 percent Raising the literacy rate from 63 percent to 80 percent Moving up the IFC-World Bank Doing Business ranking from 131 to 80

Private Sector-led Growth

IFC is partnering with the government and local business leaders, supporting their goals of strengthening the economy and reducing poverty. IFC's investments in the country jumped from $7 million in 2003 to $57.6 million by the end of 2007. We aim to increase this amount to $110 million over the next two years.

IFC works across a broad range of sectors, supporting the growth of smaller businesses as well as the tourism, leasing, and export industries. We are also helping improve the country's investment climate by supporting regulatory reforms and promoting domestic and foreign investment.

"IFC is helping Madagascar move toward a more open economy, where smaller businesses can flourish and larger industries can compete in foreign markets." —Thierry Tanoh, IFC Director for Sub-Saharan Africa

New Prospects

Despite being the world's largest producer of vanilla and having an abundance of natural resources, Madagascar saw its per capita income tumble from $473 in 1970 to only $290 in 2005. But prospects for the future are improving. According to the International Monetary Fund, the economy is expected to grow at a healthy 7.3 percent in 2008.

IFC's activities in Madagascar highlight our commitment to helping reduce poverty through private sector-led growth. We are working with local partners, including AccèsBanque, Business Partners, BFV-Société Générale, BNI Crédit Agricole, and Microcred, to help small businesses gain access to credit and the banking services they need to grow and create jobs.

We have also invested more than $7 million in local microfinance institutions. These lenders typically make loans from $110 to $27,000 in local currency to businesses across a range of sectors.

Madagascar's nascent leasing industry—critical for businesses that cannot afford to purchase expensive equipment—is also benefiting from IFC's expertise. We are helping establish a legal framework that is conducive to leasing, while working with the country's finance ministry to streamline the leasing process.

IFC is also working closely with local exporters. In collaboration with the Malagasy government and the French Development Agency, IFC has helped develop and publish the Madagascar Exporting Companies Directory, a comprehensive overview of the country's export sectors. The book is proving to be a valuable tool for linking exporters with foreign buyers and investors.

Madagascar has one of the world's highest concentrations of biodiversity, yet its potential for ecotourism development and job creation has hardly been tapped. IFC is working with the government and conservation groups to help plan for a network of ecolodges, which will create jobs in rural areas and return money to conservation efforts.

Through these activities, IFC and the government aim to make an immediate and long-term impact on the economy and people's lives.

For more information contact:

Daniel Musiitwa
Communications Officer
Phone: +2711 731 3175
E-mail: dmusiitwa@ifc.org