African Development Bank Grants $67 Million to Boost Madagascar’s Economy and Energy Governance

On September 20, 2024, the Board of Directors of the African Development Bank Group approved a loan of $67.3 million to Madagascar, aimed at kickstarting the country’s economy and enhancing governance in its energy sector. This funding will facilitate the first phase of the Financial Management and Resilience Support Programme for 2024-2025, designed to induce economic growth and resilience in the nation.

The loan, sourced from the African Development Fund— the Bank Group’s concessional financing arm—includes resources from the Transition Support Facility. Adam Amoumoun, manager of the African Development Bank’s Country Office in Madagascar, emphasized the programme’s goal to foster conditions for robust and inclusive economic growth by strengthening economic governance and enhancing resilience.

“This programme aims to contribute to the creation of favourable conditions for strong and inclusive economic growth by strengthening economic and financial governance, and improving economic resilience,” Amoumoun stated. He further explained that the initiative will aid Malagasy authorities in executing priority reforms outlined in Madagascar’s General State Policy (PGE) for 2024-2028 and its New Energy Policy for 2015-2030. The programme seeks to address the investment shortfall by boosting the budget, thereby freeing up additional resources for economic recovery while simultaneously improving governance within the energy sector.

Key components of the programme include the implementation of the Integrated Tax Administration System (SAFI), which aims to modernize tax management by computerizing tax operations, enhancing local revenue collection, and combating tax fraud. Additionally, it will support the establishment of a national register of beneficial owners, which is expected to identify individuals controlling businesses and facilitate investigations into corruption.

The programme also targets governance enhancements in the energy sector, with plans to back the action plan set forth by JIRAMA, Madagascar’s public corporation for electricity and water services. This support aims to boost JIRAMA’s technical and financial performance, thereby reducing its reliance on state support.

A significant focus of the initiative is to benefit the Malagasy populace by creating a regulatory framework conducive to attracting investments and developing public-private partnership (PPP) projects. Such efforts are anticipated to improve the business environment and attract investments in sectors that are crucial for job creation.

Through this strategic funding, the African Development Bank aims not only to stimulate economic growth in Madagascar but also to establish a framework that fosters governance and accountability in critical sectors, especially energy.