Housing Finance in Madagascar


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:

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.

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