World Bank supports Madagascar’s reforms towards inclusive and resilient growth with $45 Million

The World Bank approved a $45 million International Development Association (IDA) grant to support Madagascar’s efforts to strengthen the resilience of families against shocks and create an enabling environment for economic opportunities in rural communities. The Inclusive and Resilient Growth First Development Policy Operation (DPO) comes at an important juncture and aligns with the Country Partnership Framework’s priorities to increase the resilience of the most vulnerable people and promote inclusive growth.

Madagascar’s economy is projected to grow at 4.1 percent in 2017, a continuation of the positive trend from last year. The services sector continues to be the most important growth driver, supported by an increase in construction activities, trade, and transport. Export processing zones are also expected to continue growing. Yet, the main sector of employment for the bottom 80 percent of households is agriculture, which is characterized by its high vulnerability to climatic shocks.

“A key challenge for Madagascar is to ensure that the positive macroeconomic developments also offer greater opportunities for the poor,” said Coralie Gevers, World Bank Country Manager for Madagascar. “Reforms are needed to translate the current economic growth into better and lasting conditions for the poor. Rural communities need to be able to generate more employment opportunities through access to land, finance, and energy and through connections to markets.”

Lifting the Malagasy poor out of poverty requires building livelihoods that are more resilient in the face of the many shocks. In particular, the poor need greater access to social safety nets and financial services to mobilize the resources to improve their livelihoods and rebuild them after shocks. The DPO program, therefore, supports reforms related to civil registration, social protection and financial inclusion to build the foundations for resilience at the individual and household level. Promoting inclusive growth is also vital for enabling the poor to access economic opportunities – on- and off-farm, offering a way out of poverty. Thus, the DPO supports reforms on land, local government transfers, road maintenance and energy to increase the ability of rural communities to develop higher-value economic activities and additional employment opportunities.

The current DPO series on inclusive and resilient growth focuses on structural reforms that are complementary to those of the recently approved public finance sustainability and investment climate DPO by supporting reforms that channel the benefits from higher fiscal space and promoted growth to the poorest. The proposed operation is the first in a series of two programmatic operations.

Original source: World Bank
Published on 7 December 2017