The Board of Directors of the African Development Bank Group approved a $67.3 million loan to Madagascar. This funding will support the first phase of the Financial Management and Resilience Support Programme for 2024-2025, which is designed to foster economic growth and improve governance in the country’s energy sector.
Funding from the African Development Fund and Transition Support Facility
The loan, provided through the African Development Fund, the Bank’s concessional financing window, includes additional support from the Transition Support Facility. These funds are aimed at addressing Madagascar’s critical economic needs while laying the foundation for sustainable and inclusive growth.
“The 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,” said Adam Amoumoun, Manager of the African Development Bank’s Country Office in Madagascar.
Supporting Key Reforms and Economic Recovery
The programme is aligned with Madagascar’s General State Policy (PGE) for 2024-2028 and its New Energy Policy for 2015-2030. By providing much-needed financial support, the initiative will increase the national budget and unlock additional resources for economic recovery, helping to remedy the country’s investment deficit.
In particular, the programme will support the roll-out of the Integrated Tax Administration System (SAFI), modernizing tax management and operations. This system will facilitate local revenue collection, improve taxpayer management, and combat tax fraud, ultimately boosting the government’s capacity to fund public services.
Additionally, the programme will help create a national register of beneficial owners of legal entities, enabling authorities to identify people controlling businesses and investigate potential cases of corruption.
Strengthening Energy Sector Governance and Attracting Investment
A key component of the programme is improving governance in Madagascar’s energy sector. The initiative will support JIRAMA, the public corporation responsible for electricity and water services, in implementing an action plan to improve its short-term technical and financial performance, reducing the need for state subsidies.
By creating a better regulatory framework, the programme aims to attract investment through public-private partnerships (PPP) and improve governance across sectors, particularly in energy. This will help foster a more favorable business environment, promoting job creation and sustainable development.
Enhancing Economic Resilience and Long-Term Growth
Ultimately, the Financial Management and Resilience Support Programme seeks to enhance Madagascar’s economic resilience by ensuring that public resources are managed more efficiently, while fostering an environment conducive to private investment. This effort will not only strengthen the country’s economic foundation but also help alleviate poverty and create opportunities for the Malagasy people.
Source: AFDB