Housing Finance in Madagascar


For the French version of this country profile, click here.

To download a pdf version of the full 2018 Madagascar  country profile, click here.

Madagascar isthe world’s fourth largest island, located off the coast of East Africa with an estimated population of 25.5 million in 2017. The country has a very young and predominantly rural-based population with 60 percent falling under the age of 25 and 64 percent residing in rural areas.

According to the latest available data, there are 11 banks, 25 deposit-taking microfinance institutions and 18 other financial institutions operating in Madagascar. Despite a well-performing sector, banking penetration remains very low in Madagascar. Low levels of financial inclusion, high interest rates, lack of collateral and limited information on borrowers, constrain access to and usage of credit in Madagascar. With bank interest rates ranging from 9 percent to 24 percent per year and effective interest rates reaching up to 50 percent, it is not surprising that bank lending is only accessible to a small portion of the population (and corporates).

Given the low levels of affordability, it is not surprising that most of the residential housing development and sector at large is focused on high-income households and expatriates.  Few, if any, private property developers focus on building affordable, well-located units. Aside from the low levels of affordability, other constraints to new development include the time and cost of accessing construction permits and registering a property, in addition to the inefficient but developing land administration system.

Until Madagascar has a sufficiently robust and reliable land titling and registration system, the country’s housing market will remain suppressed by households’ inability to realise value from their property and land. However, where private titled land is available and owned by the state, the Malagasy Government needs to create policies which facilitate and encourage the new development of affordable housing solutions, including owner-occupied and rental housing, as part of a broader urban development agenda.

The potential for growth and development in Madagascar is pegged to its ability to stabilise the macroeconomic environment, particularly in the face of upcoming presidential elections. Least of all because the international donor community, which the country is highly dependent on, is very sensitive to political uncertainty, given the country’s history of political upheaval and poor governance.

While the country has some way to go before it has an efficient land administration and registration system, good progress has been made in recent years. With improved access to secure title, more opportunities exist for households to realise value from their properties and land.

There are further opportunities for both the microfinance and banking sector to continue to adapt their products to cater for the housing needs of low income earners and non-salaried workers. Given the country’s continued risk of natural disasters, particularly cyclones, opportunities exist for innovative insurance products that can protect households’ (and their assets) in the event of such risks.

Overall, Madagascar’s current focus on realising inclusive economic growth, macroeconomic stability, good governance, improve land tenure and administration and basic infrastructure (roads, sanitation, drainage, sewerage), is a sound strategy given that the country’s housing market cannot flourish with the abovementioned factors in place.

Find out more information on the housing finance sector of Madagascar, including key stakeholders, important policies and housing affordability:

Each year, CAHF publishes its Housing Finance in Africa Yearbook. The profile above is from the 2018 edition, which has up-to-date profiles for 54 African countries.

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