Housing Finance in Madagascar
Overview
This profile is also available in French here.
To download a pdf version of the full 2023 Madagascar country profile, click here.
Madagascar is the world’s fifth-largest island, with a total land area of 581,800 km2. The Malagasy economy has been sluggish to revive, with growth of 3.5% expected in 2021. In 2022, current GDP growth is predicted to accelerate to 5.4%. In May 2022, Madagascar’s inflation rate increased to 6.40%, up from 6.17% in April 2022. The central bank raised the benchmark interest rate by 90 basis points to 8.9% in August 2022, hiking borrowing costs for the second consecutive quarter. This has an influence on house affordability and credit availability.
33% of the population lives in cities, the majority of whom live in deplorable circumstances with inadequate access to essential amenities. Because of urban population growth and internal migration, cities have grown a lot, especially the capital, Antananarivo.
Madagascar is significantly impacted by climate change from the standpoint of climatic vulnerability. Tropical storms, floods, droughts, and other extreme weather events pose major challenges for housing and food security. Southern Madagascar has suffered severe drought for the last four years, leading to food shortages and the movement of rural households to urban centers. Four tropical storms hit the island in early 2022, affecting over 450 000 people.
In terms of housing supply, a total of 1,730,00 housing units are thought to be backlogged. Annual demand is expected to be 130 000 units, and this figure is rising.There is a significant mismatch between supply and demand, mostly because of bottlenecks that have built up recently, especially in regions that are quickly urbanizing. By the end of 2022, Madagascar’s unemployment rate is projected to drop from 2.59% to 2.6%. However, the majority of Malagasy people work in the informal sector, which employs 83.9% of Madagascar’s 15.02 million total employees. The majority of people live in low-income households, and only a tiny percentage of people can afford to buy or rent a home.
Madagascar is one of the world’s least credit-friendly economies, according to the World Bank. In 2019, the total outstanding loan amount averaged 8%. Non-performing loans (NPLs) increased to 7.8% of total loans in December 2021 from 7.2% prior to the outbreak of COVID-19. This is due to high interest rates, high collateral and security requirements, limited competition among banks, and a reluctance to finance foreign trade or working capital.
Since 2015, the number of solar kits has considerably grown, with 10% of homes choosing this type of power. Due to the country’s limited access to power, alternative energy sources provide excellent business potential. By enhancing infrastructure and offering essential services, the government is investing in public spending. This partnership with the government also offers investment prospects.
Find out more information on the housing finance sector of Madagascar, including key stakeholders, important policies and housing affordability:
- Overview
- Access to Finance
- Affordability
- Housing Supply
- Property Markets
- Policy and Legislation
- Opportunities
- Availability of Data on Housing Finance
- Green Applications for Affordable Housing
- Websites
Each year, CAHF publishes its Housing Finance in Africa Yearbook. The profile above is from the 2023 edition, which has up-to-date profiles for 55 African countries.
Download yearbookMadagascar
Overview
Madagascar, with a total land area of 581 800km², is the world’s fifth largest island. The country’s high (1 000m-2 000m) central mountainous plateau slopes down to a narrow coastal lowland bordering the Indian Ocean to the east and the Mozambique Channel to the west.[1] It is one of the poorest and most unequal countries in the world. The World Bank estimates that 90.9% of Malagasy live on less than Ar12 639.12 (US$3.10) a day, and the COVID-19 pandemic and extreme weather have pushed a further 1.38 million people into extreme poverty of less than Ar7 746.56 ($1.90) a day in 2022.[2]
Some 33% of the population live in urban areas,[3] most in poor living conditions with limited access to basic services. Urban areas, particularly the capital Antananarivo, have expanded rapidly due to urban population growth and internal migration. The state has invested extensively in upgrading public infrastructure, but this has not brought about real change. Consequently, urban regeneration and the creation of a revitalised capital city is seen as fundamental to Madagascar’s future.[4] Housing plans include building an additional 50 000 dwellings in major urban areas. However, these plans are dependent on economic growth and the ability to manage the country’s growing public debt.
After a contraction of 7.1% of GDP in 2020, the Malagasy economy has been slow to recover, with growth estimated at 3.5% in 2021, reflecting the delayed reopening of the economy due to COVID-19, extreme weather conditions and the war in Ukraine, which has affected the European Union, Madagascar’s main trading partner.[5] Current GDP growth is projected to rebound more vigorously to 5.4% in 2022.[6] The inflation rate in Madagascar increased to 6.40% in May 2022, up from 6.17% in April of 2022.[7] The current lending rate is 48.3%,[8] and the exchange rate of the Malagasy Ariary is Ar4077 for every US$1. The central bank raised the benchmark interest rate by 90 basis points to 8.9% in August 2022, increasing borrowing costs for a second consecutive quarter.[9]
As an island country, Madagascar is severely affected by climate change. The government has committed to tackling this through strengthening resilience to climate shocks, as well as developing inclusive and multi-sectoral approaches to infrastructure renewal. Tropical storms, floods, droughts and extreme weather events pose major challenges for housing and food security, and place pressure on local communities, local governments, and the central state to mitigate the impact of these events. Southern Madagascar has suffered severe drought for the last four years, leading to food shortages and the movement of rural households to urban centres.[10] Four tropical storms hit the island in early 2022, affecting more than 450 000 people.[11] Tropical Cyclone Batsirai, over central and southern Madagascar in February 2022, affected over 116 000 people, destroyed at least 8 200 homes and left over 2 700 houses damaged.[12] These events affect housing values in Madagascar, particularly for residences in coastal areas.
[1] USAID (2022). Madagascar profile. LandLinks. https://www.land-links.org/country-profile/madagascar/ (Accessed 01 August 2022).
[2] Bertelsmann Stiftung (2022). BTI 2022 Country Report — Madagascar. Gütersloh: Bertelsmann Stiftung, 2022.
https://bti-project.org/fileadmin/api/content/en/downloads/reports/country_report_2022_MDG.pdf. (Accessed 25 July 2022). Pg.16.
[3] Interview with Gérard Andriamanohisoa, Secretary of State in charge of new towns and housing. L’Express de Madagascar, 18 August 2021. Ambohitsorohitra, Madagascar.
[4] Interview with Gérard Andriamanohisoa, Secretary of State in charge of new towns and housing. L’Express de Madagascar, 18 August 2021. Ambohitsorohitra, Madagascar.
[5] The World Bank (2022). Overview – April 2022. https://www.worldbank.org/en/country/madagascar/overview (Accessed 14 September 2022).
[6] IMF (2022). IMF Executive Board Completes First Review of the Extended Credit Facility Arrangement for the Republic of Madagascar, and Approves $67.5 Million Disbursement.
https://www.imf.org/en/News/Articles/2022/03/07/pr2266-madagascar-imf-executive-board-completes-first-review-ecf-arrangement-approves-disbursement (Accessed 25 August 2022).
[7] Trading Economics (2022). Madagascar Inflation Rate. https://tradingeconomics.com/madagascar/inflation-cpi. (Accessed 22 August 2022).
[8] World Bank (2022). Lending interest rate (%) – Madagascar. https://data.worldbank.org/indicator/FR.INR.LEND?locations=MG (Accessed 22 August 2022).
[9] Bhuckory, K. (2022). Madagascar Central Bank Raises Key Rate to 8.9% From 8%. 2 August 2022. Bloomberg News. https://www.bloomberg.com/news/articles/2022-08-02/madagascar-central-bank-raises-key-rate-to-8-9-from-8-map. (Accessed 22 August 2022).
[10] The World Bank (2022). Overview – April 2022. https://www.worldbank.org/en/country/madagascar/overview (Accessed on 14 September).
[11] The World Bank (2022). Overview – April 2022. https://www.worldbank.org/en/country/madagascar/overview (Accessed on 14 September).
[12] Reliefweb (2022). Tropical Cyclone Batsirai – Feb 2022. https://reliefweb.int/disaster/tc-2022-000160-mdg (Accessed 29 August 2022).
Access to Finance
The Malagasy banking system is made up of 11 commercial banks, most of which are branches of foreign banks headquartered in Mauritius, France, and mainland Africa. Their total assets accounted for 27% of country GDP in 2018. Together these institutions control the commercial banking sector, holding over 87% of assets, 88% of total deposits and 94% of profits, effectively limiting competition in the sector.[1] There are also six non-bank financial institutions (NBFI) and 31 microfinance institutions.[2] Financial markets are rudimentary and the bank penetration rate is low, although this has improved in recent years. Only approximately 5% of the population actually use banks, while 7.4% are members of a microfinance institution.[3] Approximately 12% of Malagasy adults possess a bank account while 17% have a financial service agreement with other formal suppliers (such as mobile money), and 30% of adults in Madagascar are involved in informal financial services.[4] The number of people accessing formal financial services in Madagascar increased from 29% in 2016 to 45% by 2022.[5]
According to the Malagasy Fiduciary Risk Assessment’s gender index, Madagascar’s score was 64 out of 100 in 2018, representing a gender gap of 36%.[6] The National Land Program (2016-2020) does include a focus on increasing land certification for women through the education of local authorities and widespread communication on the importance and benefits of land registration.[7] Among 27 councils in urban areas, 41% of women reportedly have access to land and 64% of women are allocated housing. The proportion of land and housing allocated to women has increased by 14 and 22 percentage points during 2017 and 2020 respectively.[8]
The housing finance landscape in Madagascar is diverse. Commercial banks offering housing-related loans include BNI Madagascar, Bank of Africa Madagascar (BOA), BFV-Société Générale (BFV-SG), Accès Banque Madagascar, Banque Malgache de l’Ocean Indien (BMOI), BGFI Bank and Mauritius Commercial Bank (MCB). A few microfinance institutions offer housing loans, including Baobab (formerly MicroCred), OtivTana, and First Microfinance Agency. Societe General Madagasikara, for instance, offers three types of mortgages: the Tany real estate loan; Trano; and Travo. These all require a personal contribution equal to 20% of the loan amount, a maximum salary component of 33% of the loan, and the purchase of land with a maximum repayment term of eight years. They also offer loans to buy or build a home with repayments of up to 17 years. Smaller loans for repair and renovation are also offered, with repayment terms set at a maximum of eight years.[9]
The amount of total outstanding loans in 2019 averaged 8%.[10] Non-Performing Loans (NPLs) increased to 7.8% of total loans in December 2021, compared to 7.2% prior to the outbreak of COVID-19.[11] According to the World Bank’s development indicators, the percentage of bank non-performing loans relative to gross loans in Madagascar amounted to 6.75% in 2019.[12] The World Bank ranked Madagascar at 132 out of 190 countries in 2020 for ease of accessing credit, while it was ranked 161 out of 190 economies for ease of doing business.[13]
Madagascar’s financial markets are relatively simple and banking penetration is low. This is due to high-interest rates, high collateral and security requirements, limited competition among banks, and reluctance to finance foreign trade or working capital, even when loans are secured by letters of credit.[14] However, lending to small businesses has increased in the last two years as banks and microfinance institutions (MFIs) offer partial portfolio guarantees for loans to small and medium-sized enterprises (SMEs) that have been in business for more than three years. The portfolio fund guarantees 50% of loans disbursed to eligible borrowers.[15] According to Malagasy Securities Law, no specific restrictions bar granting security for foreign lenders. All moveable and immovable properties can be secured to guarantee debts. However, foreign individuals or entities can only own land in Madagascar on 99-year lease. [16]
Madagascar has neither capital markets nor an established stock market, only a commodity exchange. Financial markets are limited to foreign exchange and bond markets where the state remains the sole issuer of securities. Madagascar has sufficient capacity to repay its loans, with annual repayments projected to peak in 2026 at 0.7% of GDP, 5.4% of government revenue, and 2.6% of exports.[17]
[1] Bertelsmann Stiftung (2022). BTI 2022 Country Report — Madagascar. Gütersloh: Bertelsmann Stiftung, 2022.
https://bti-project.org/fileadmin/api/content/en/downloads/reports/country_report_2022_MDG.pdf. (Accessed 25 July 2022). Pg.21.
[2] Bertelsmann Stiftung (2022). BTI 2022 Country Report — Madagascar. Gütersloh: Bertelsmann Stiftung, 2022.
https://bti-project.org/fileadmin/api/content/en/downloads/reports/country_report_2022_MDG.pdf. (Accessed 25 July 2022). Pg.21.
[3] Bertelsmann Stiftung (2022). BTI 2022 Country Report — Madagascar. Gütersloh: Bertelsmann Stiftung, 2022.
https://bti-project.org/fileadmin/api/content/en/downloads/reports/country_report_2022_MDG.pdf. (Accessed 25 July 2022). Pg.21.
[4] Republic of Madagascar (2018). Financial inclusion strategy.
https://finmark.org.za/system/documents/files/000/000/191/original/Madagascar_FI_Strategy_English_Nov2018_web.pdf?1601970124. (Accessed 05 August 2022). Pg. 13.
[5] Republic of Madagascar (2018). Financial inclusion strategy.
https://finmark.org.za/system/documents/files/000/000/191/original/Madagascar_FI_Strategy_English_Nov2018_web.pdf?1601970124. (Accessed 05 August 2022). Pg. 16.
[6] AFDB (2022). Madagascar Country Strategy Paper 2022-2026. https://www.afdb.org/en/documents/madagascar-country-strategy-paper-2022-2026 (Accessed 22 August 2022). Pg.9
[7] Bertelsmann Stiftung (2022). BTI 2022 Country Report — Madagascar. Gütersloh: Bertelsmann Stiftung, 2022.
https://bti-project.org/fileadmin/api/content/en/downloads/reports/country_report_2022_MDG.pdf. (Accessed 25 July 2022). Pg.24.
[8] Genderlinks (2020). Centres of Excellence for Gender in Local Government: What we have learned in
Madagascar October 2020. https://genderlinks.org.za/wp-content/uploads/2021/12/LGCOE-PAMPHLET-Madagascar.pdf
(Accessed 05 August 2022). Pg.2
[9] Societe Generale Madagasikara. Real estate loan Soahonena.
https://societegenerale-mg.translate.goog/fr/particuliers/credit/credits-immobiliers-soahonenana/credit-immobilier-tany/. (Accessed 08 August 2022).
[10] Wood, D. (2019). Housing Investment Landscapes Madagascar. CAHF Research. January 2019. https://housingfinanceafrica.org/app/uploads/Madagascar-Housing-Investment-Landscapes-Final-_Publish.pdf (Accessed 31 August 2022). Pg. 8.
[11] IMF (2022). Republic-of-Madagascar First Review Under the Extended Credit Facility Arrangement-Press Release; Staff Report; and Statement By The Executive Director For Republic Of Madagascar. March 16 2022.
https://www.imf.org/en/Publications/CR/Issues/2022/03/16/Republic-of-Madagascar-First-Review-Under-the-Extended-Credit-Facility-Arrangement-Press-515241 (Accessed 31 July 2022). Pg.6-35.
[12] Trading Economics, (2022). Madagascar – Bank Nonperforming Loans to Gross Loans.
https://tradingeconomics.com/madagascar/bank-nonperforming-loans-to-gross-loans-percent-wb-data.html (Accessed 31 July 2022).
[13] World Bank (2020). Doing business. Madagascar.
https://archive.doingbusiness.org/content/dam/doingBusiness/country/m/madagascar/MDG.pdf
(Accessed 25 August 2022). Pg.4.
[14] Bertelsmann Stiftung (2022). BTI 2022 Country Report — Madagascar. Gütersloh: Bertelsmann Stiftung, 2022.
https://bti-project.org/fileadmin/api/content/en/downloads/reports/country_report_2022_MDG.pdf. (Accessed 25 July 2022). Pg.21.
[15] Republic of Madagascar (2021). Yearbook Economic report Madagascar 2021 – Malagasy emergence. 13 August 2021. https://depeche-taratra.mg/year-book-rapport-economique-madagascar-un-document-a-consulter/ (Accessed 01 August 2022). Pg.98
[16] Bowmans (2022). Guide Banking on Africa. https://www.bowmanslaw.com/wp-content/uploads/2017/05/Guide-Banking-on-Africa-1.pdf (Accessed 22 August 2022). Pg.31.
[17] IMF (2022). Republic-of-Madagascar-First-Review-Under-the-Extended-Credit-Facility-Arrangement-Press; Staff Report; And Statement By The Executive Director For Republic Of Madagascar.
https://www.imf.org/en/Publications/CR/Issues/2022/03/16/Republic-of-Madagascar-First-Review-Under-the-Extended-Credit-Facility-Arrangement-Press-515241. (Accessed 31 July 2022). Pg.17.
Affordability
The backlog of housing is estimated at 1730 000 units.[1] Demand is estimated at 130 000 units a year and is increasing annually. A strong imbalance between supply and demand exists, mainly due bottlenecks accumulated in recent decades, particularly in rapidly urbanising areas.
The unemployment rate in Madagascar is expected to reach 2.6 % by the end of 2022[2], compared to 2.59 % in 2021. However, most Malagasy are active in the informal sector: Madagascar has a workforce of 15.02 million, of which informal workers make up 83.9%[3]. Most citizens have a low household income, and only a small portion of the population can afford to buy or rent a house. The latest Madagascar statistics report indicates that “in urban areas as a whole, only one out of two households own their home” (50%).[4] A person working in the formal sector in Madagascar typically earns approximately Ar1 310 000 (US$321,30) a month. These salaries range from Ar333 000 (US$81,67), the lowest average, to Ar5 870 000 (US$1 439,74), the highest average for an amount that includes housing, transport and other benefits – actual maximum salaries are higher.[5]. Monthly mortgage loan repayment as a percentage of household income is set at 16.33%.[6] Madagascar Government Debt to GDP is projected to be approximately 43.00 percent of GDP in 2022.[7] Mortgage interest rates vary from 12.0% to 20.0% yearly, for an average term of 20 years.[8]
A typical monthly rent for a one-bedroom apartment in the city centre is estimated to be Ar1 450 000.00 355.64), while a one-bedroom apartment outside the city centre is Ar411 434.06 (US$100.91).[9] Rental for a three-bedroom apartment in the city centre is approximately Ar3 800 000.00 (US$932), while a three-bedroom apartment outside the city centre is Ar2 121 748.01 (US$520.40).[10] The purchase price for an apartment in the urban centre is Ar4 000 000.00/m2 (US$981.08/m2), while outside the city centre it costs Ar2 000 000.00/m2 (US$490.54/m2).[11] These rentals and prices are unaffordable for the average household in Madagascar and as a result, most people – specifically female-headed households – opt to rent houses in informal settlements in urban and rural areas. The government does assist through the construction of low-cost housing units through Agence Nationale d’Appui au Logement et a l’Habitat (ANALOGH), which plans to construct 500 social housing units a year, aiming to build 10 500 units in total.
[1]Ranjalahy, E. (2021). Housing – decent housing, a challenge to be met. 3 September 2021. L’Express de Madagascar,
https://lexpress.mg/03/11/2021/habitations-logement-decent-un-challenge-a-relever/ (Accessed 26 August 2022).
[2] Trading Economics, (2022). Madagascar Unemployment rate. https://tradingeconomics.com/madagascar/unemployment-rate#: (Accessed 24 August 2022).
[3] Centre for Labour Research. Madagascar. https://clr.org.pk/lri-2022/lri-2022-madagascar/. (Accessed 25 August 2022).
[4] Madagascar Instat (2020). Third General Census of Population and Housing. https://www.instat.mg/documents/upload/main/INSTAT_RGPH3-Definitif-ResultatsGlogaux-Tome1_17-2021.pdf (Accessed 04 August 2022). Pg.82.
[5] Salary Explorer (2022). Average Salary in Madagascar 2022. http://www.salaryexplorer.com/salary-survey.php?loc=128&loctype=1 (Accessed 20 August 2022).
[6]Numbeo. Property Prices in Antananarivo, Madagascar https://www.numbeo.com/property-investment/in/Antananarivo. (Accessed 29 August 2022).
[7] Trading Economics. Madagascar Government Debt to GDP. https://tradingeconomics.com/madagascar/government-debt-to-gdp. (Accessed 29 August 2022).
[8] Numbeo. Cost of Living in Madagascar.
https://www.numbeo.com/cost-of-living/country_result.jsp?country=Madagascar. (Accessed 25 August 2022).
[9] Numbeo. Cost of Living in Madagascar.
https://www.numbeo.com/cost-of-living/country_result.jsp?country=Madagascar. (Accessed 11 August 2022).
[10] Numbeo. Cost of Living in Madagascar.
https://www.numbeo.com/cost-of-living/country_result.jsp?country=Madagascar. (Accessed 11 August 2022).
[11] Numbeo. Cost of Living in Madagascar.
https://www.numbeo.com/cost-of-living/country_result.jsp?country=Madagascar(Accessed 11 August 2022).
Housing Supply
Madagascar has three main types of housing: permanent, semi-permanent, and traditional.[1] Permanent dwellings are made of materials such as cement or brick and include a foundation. Semi-permanent construction uses cement slabs and concrete uprights, with walls made of local materials, such as planking, woven bamboo, and ravinala leaves. Traditional dwellings are made exclusively with local materials, such as planking, bamboo, or other natural materials and are vulnerable to extreme weather conditions. Houses are typically rectangular and crowned with steeply angled roofs for rainwater runoff. In general, 73.1% of buildings deemed to be of good quality are located in urban areas, while 60.5% of dwellings in rural areas are considered of poor quality.[2] Local government authorities in Antananarivo-Toamasina focus on improving the living conditions of high-density residential areas, developing areas, promoting affordable housing, and setting the minimum lot size at 150m2, which is regulated by Land Use Zoning Categories for Development.[3] However, plots of 75m2 are also being developed, which could be due to the extent of the unregulated housing construction market or because these plot sizes are affordable.
Due to the mismatch between housing supply and demand, Madagascar aims to create at least six new cities and neighbourhoods, with 38 220 sustainable social housing units, 2 235 mid-range units, and 300 high end homes.[4] The goal is to house 203 775 people in the long term, of which 94% will benefit from social and affordable housing. The Malagasy State has dedicated funds for this project based on strengthening public and private partnerships, which are crucial in reducing the housing backlog.[5] One of the most important challenges for the Malagasy Government is to ensure between 50% and 70% of the Malagasy population access affordable electricity by 2030[6]. The rate of access to electricity at the national level increased marginally from 15.6% in 2016 to 16.4% in 2020. During the same period, access to drinking water increased from 25% to 47%, sanitation increased from 25% to 46%, and the percentage of people not practising open defecation rose from 60% to 68%.[7]
Most dwelling construction materials are locally produced. The supply of building materials to the island was badly affected during the pandemic, particularly for imported items such as polished wood, steel, concrete, and tiles. Local material is cheaper to source, and can generally found within 50km of a building site. The construction industry is largely informal and most small construction companies are not registered. Even registered contractors work with unregistered businesses, and often hire informal subcontractors for small projects and/or specific tasks.[8] The Public Works Contractors Association regulates builders and contractors in the formal sphere, while large or high-quality projects are usually contracted to large foreign construction companies through their Malagasy subsidiaries. In 2019, the number of women employed in the manufacturing industry, including construction, was approximately 8.73% of total employment, while jobless women represent 4.83% of those seeking employment.[9]
In the World Bank Doing Business index, Madagascar ranked 182 out of 190 countries for “ease of dealing with construction permits” in 2020. Currently, it requires 17 procedures and takes 194 days to obtain a construction permit, a process costing approximately 35.2% of the warehouse value.[10] The overall process for registration of a property requires six official steps, which can take up to 100 days at a cost of approximately 9% of the value of the property.[11]
[1] Republic of Madagascar (2008). Damage, Loss, and Needs Assessment for Disaster Recovery and Reconstruction after the 2008 Cyclone Season in Madagascar – Cyclone Fame, Ivan and Jokwe in Madagascar. May 2008. https://www.gfdrr.org/sites/default/files/publication/pda-2008-madagascar.pdf (Accessed 25 August 2022).
[2] Madagascar Instat (2020). Third General Census Of Population And Housing. https://www.instat.mg/documents/upload/main/INSTAT_RGPH3-Definitif-ResultatsGlogaux-Tome1_17-2021.pdf (Accessed 04 August 2022). Pg.61
[3] Republic of Madagascar (2022). Chapter 6 Strategies for Urban Development and Housing. Development in Antananarivo Agglomeration. https://openjicareport.jica.go.jp/pdf/12340725_02.pdf
(Accessed 24 July August 2022). Pg.7-8
[4] Zasy, M. (2015). New Cities and Housing in Madagascar. «SDG Acceleration Actions: Towards Sustainable Recovery and Development » https://www.uneca.org/sites/default/files/ACPC/Madagascar_HLPF%208%20July%2015h.pdf. (Accessed 29 August 2022).
[5] Republic of Madagascar (2021). Second Report of Madagascar for The Voluntary National Review on the Sustainable Development Goals.
https://sustainabledevelopment.un.org/content/documents/279572021_VNR_Report_Madagascar.pdf. (Accessed 24 August 2022). Pg. 39
[6] Republic of Madagascar (2021). Second Report Of Madagascar For The Voluntary National Review On The Sustainable Development Goals 2021. July 2021. Ministry of Economy and Finance.
https://sustainabledevelopment.un.org/content/documents/279572021_VNR_Report_Madagascar.pdf
(Accessed 04 August 2022). Pg. 31
[7] Republic of Madagascar (2021). Second Report Of Madagascar For The Voluntary National Review On The Sustainable Development Goals 2021. July 2021. Ministry of Economy and Finance.
https://sustainabledevelopment.un.org/content/documents/279572021_VNR_Report_Madagascar.pdf
(Accessed 04 August 2022). Pg. 57
[8] Unites States of America (2021). Madagascar – Country Commercial Guide. 17 October 2021. International Trade Administration.
https://www.trade.gov/country-commercial-guides/madagascar-design-and-construction-services-sector
(Accessed 24 August 2022).
[9] World Perspective. Employment in the industry sector. https://perspective.usherbrooke.ca/bilan/servlet/BMTendanceStatPays/?codeStat=SL.IND.EMPL.ZS&codePays=MDG&codeTheme=8 (Accessed 24 August 2022).
[10] World Bank (2020). Economic profile Madagascar. Doing business. https://www.doingbusiness.org/content/dam/doingBusiness/country/m/madagascar/MDG.pdf. (Accessed 29 July 2022). Pg.4.
[11] World Bank (2020). Economic profile Madagascar. Doing business. https://www.doingbusiness.org/content/dam/doingBusiness/country/m/madagascar/MDG.pdf. (Accessed 29 July 2022). Pg.4.
Property Markets
Madagascar has a dual system of private property rights and traditional land ownership.[1] Land dynamics lead to different forms of property ownership, as well as different lease and concession agreements that can facilitate foreign investment. Given the low levels of affordability for the formal housing sector, it is not surprising that most residential housing development is focused on high-income households and expatriates. In 2021, 16 years after land reform, 520 000 land certificates have been issued through communal land counters and 300 000 files are still being processed. These are significant figures, particularly since the total number of land titles issued over the last century is estimated at 600 000.[2] The World Bank reports that of the 150 000 land certificates issued since 2015, 24.6% are held by women.[3]
In Madagascar, the central deeds registry issues land certificates to ensure ownership at communal level. Registering property in Madagascar entails six procedures, on average takes 100 days, and costs 9% of the property value.[4] Madagascar ranks 164 out of 190 country economies globally on the ease of registering property score. In many countries, including Madagascar, only registered land enjoys full legal protection and is taxable.[5]
Local land sale and rental markets are increasingly active and land brokers operate in both the informal and formal sectors. In highly commercialised areas purchased plots can make up 40% of holdings.[6] Land purchased in a high-demand area such as Antananarivo attracts high rentals. In Madagascar, a landlord can expect as return on his investment before taxes, maintenance fees and other costs, 7.38% , representing annual rental income as a percentage of the property purchase price.[7] An average price for property is Ar2 120 040/m2 (US$520/m2).[8] Three quarters of all jobs in Madagascar are in the primary sector, nine out of 10 workers work in the informal sector and the public sector accounts for only 2.5% of jobs.[9]
[1] De Satgé, R. (2021). Madagascar – Context and Land Governance. 25 June 2021. Land Portal. https://landportal.org/book/narratives/2021/madagascar. (Accessed 02 August 2022).
[2] Farmlandgrab.org (2021).Madagascar: strong concerns around the new land law. 29 November 2021. Land Portal. https://landportal.org/news/2021/12/madagascar-strong-concerns-around-new-land-law. (Accessed 02 August 2022).
[3] Widman, M. (2014). Land Tenure Insecurity and Formalizing Land Rights in Madagascar: A Gender Perspective on the Certification Program. Feminist Economics 20(1): 130-154.
[4] World Bank Group (2020). Economic profile Madagascar. Doing business. https://www.doingbusiness.org/content/dam/doingBusiness/country/m/madagascar/MDG.pdf. (Accessed 29 July 2022). Pg. 4.
[5] Farmlandgrab.org (2021).Madagascar: strong concerns around the new land law. 29 November 2021. Land Portal. https://landportal.org/news/2021/12/madagascar-strong-concerns-around-new-land-law. (Accessed 02 August 2022).
[6] USAID (2019). Madagascar—Land Tenure and Property Rights Profile. LandLinks. https://www.land-links.org/wp-content/uploads/2010/12/USAID_Land_Tenure_Madagascar_Profile-2019.pdf. (Accessed 29 August 2022). Pg.7.
[7] Global properties guide. Rental Yields in Madagascar compared to Africa https://www.globalpropertyguide.com/Africa/Madagascar/rent-yields. (Accessed 25 August 2022).
[8] Global properties guide. Square Metre Prices in Madagascar compared to Africa. https://www.globalpropertyguide.com/Africa/Madagascar/square-meter-prices. (Accessed 25 August 2022).
[9] Republic of Madagascar (2021). Second Report of Madagascar For The Voluntary National Review On The Sustainable Development Goals 2021. July 2021. Ministry of Finance. https://sustainabledevelopment.un.org/content/documents/279572021_VNR_Report_Madagascar.pdf.
(Accessed 04 August 2022). Pg. 25.
Policy and Legislation
According to the 2030 Agenda and the UNDP Sustainable Development Goals (SDGs), SDG 11 “sustainable cities and communities,” has been identified as one of the catalytic objectives that the Malagasy governments hopes to achieve. The government of Madagascar is committed to developing new cities and building decent housing in partnership with private sector, which entails the government intervening in the market on the supply and demand side.
Law No. 2021-016 (revising Law No. 2006-031) of November 24 2006, establishes the legal basis for untitled private land ownership in Madagascar.[1] This law stipulates that citizens who do not possess title or land certificate may be evicted without any compensation and confers disproportionate power on the state’s land services. This law, passed by both Houses of the Parliament and accepted by the High Constitutional Court in June 2021, overturns all the advances made in the Malagasy land reform process of 2005 and 2006.
Research suggests that women are less likely to obtain land certificates in their own names through the processes of recorded land rights and certification.[2] Furthermore, these laws will mostly favour the rich and increasingly weaken the poor, including women.
Madagascar has a pluralistic legal framework governing land and property ownership. The country has a formal land tenure system that recognises individual property right under formal law and community-based customary land tenure systems.[3] The systems are governed by national law and community-based rules that regulate land access, acquisition, and use. The forced removal of a person from their place of residence is the subject of a judicial or administrative decision, which should be preceded by an eviction notice and activate an eviction procedure.
Approximately 59% of regions and 5% of Rural Communes in Madagascar have integrated and sustainable participatory planning tools.[4]
[1] Foncier-developpement (2022). Madagascar: Summary and analysis of the salient points of the new law n°2021-016 governing untitled private land ownership. https://www.foncier-developpement.fr/wp-content/uploads/Points-saillants-de-la-loi-2021-016_2501b.pdf (Accessed 30 July 2022). Pg. 2.
[2] De Satgé, R. (2021). Madagascar – Context and Land Governance. 25 June 2021. Land Portal. https://landportal.org/book/narratives/2021/madagascar (Accessed 02 August 2022).
Opportunities
As an alternate means to access to electricity, the government’s target for green energy production is 50% in 2023 and 70% in 2030. Solar kits have increased significantly since 2015, with 10% of households opting for this source of electricity.[1] With low levels of electricity access, alternative energy solutions present good opportunities for investment in the country. The government is investing in public expenditure by upgrading infrastructure, providing public services and basic services. Partnering with the government in this process also presents investment opportunities
[1] Republic of Madagascar (2021). Second Report of Madagascar for the Voluntary National Review on the Sustainable Development Goals. July 2021. Ministry of Economy and Finance.
https://sustainabledevelopment.un.org/content/documents/279572021_VNR_Report_Madagascar.pdf
(Accessed 04 August 2022). Pg. 31.
Availability of Data on Housing Finance
General economic and financial statistics are available from the Central Bank of Madagascar and the National Institute of Malagasy Statistics. Both sources are in French. Statistics are not regularly updated. The Central Bank also provides periodic data, census and mortgage statistics.
The National Institute of Statistics disaggregates some data by gender.
The Ministry of Finance and Economy provides a price index, economic and financial statistics.
Data gaps for housing finance in the country include a lack of annual availability and online availability of information
Green Applications for Affordable Housing
Hydropower is the main source of electricity in Madagascar. Only 16.4% of Malagasy have access to electricity, 47% have access to clean water, and improved sanitation systems are available to only 46% of the population. Clean fuel and technologies reached 0.8% of the total energy market in 2019; and renewable energy has a total share of 36%, with solar at 10%.
In Madagascar, Silicon Valley International provides green building services such as green building certification, which is required to standardise buildings as green buildings. However, there is no regulatory body that enforces green standards in the construction industry.
Societe d’Equipement Immobilier de Madagascar (SEIMAD) and Agence Nationale d’Appui au Logement et a l’Habitat (ANALOGH) provide investment support and advisory services.
Based on available information, no banks have been identified that offer affordable housing projects or green mortgages that meet EDGE (Green) certification. In addition, the names and website addresses of domestic Greenhouse/Green Microfinance providers have not been confirmed.
Websites
INSTAT Madagascar – Institut National de la Statistique : https ://www.instat.mg
Ministère de l’Economie et des Finances : http://mef.gov.mg
Central bank of Madagascar: https://www.banky-foibe.mg
National Treasury of Madagascar: http://www.tresorpublic.mg
African Development Bank: https://www.afdb.org/
