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Madagascar Compact

In April 2005, the Millennium Challenge Corporation signed a four-year, $110 million compact with the Republic of Madagascar to raise incomes by assisting the rural population to transition from subsistence agriculture to a market economy. The strategic investments in three projects were designed to help the rural population secure formal property rights to land, access credit and protect savings, and receive training in agricultural production, management, and marketing techniques. This integrated approach aimed to provide the rural population with the necessary conditions to use land productively, to build profitable businesses, and to help ensure environmental sustainability. In July 2008, the compact was extended for a fifth year.

On August 31, 2009, MCC terminated its compact with Madagascar due to an undemocratic transfer of power that took place in March 2009. MCC worked with MCA-Madagascar, the entity implementing the compact, to ensure an orderly closeout of the program.

Financials

Financials as of July 1, 2016

Program Budget

Milestones

  • Signed:
    April 19, 2005
  • Entry Into Force:
    July 28, 2005
  • Terminated:
    September 1, 2009

Program Projects

This project aims to identify investment opportunities for rural Malagasy in local, regional, or international markets, and train farmers and other entrepreneurs in production, management, and marketing techniques.

  • Identify the project Zones and develop viable zonal investment strategies;
  • Create and operate five Agricultural Business Centers (ABCs) in the five Zones to train rural farmers and entrepreneurs in new agricultural techniques and good business practices;
  • Identify market opportunities and communicate these to investors, local farmers and entrepreneurs; and
  • Establish a National Coordinating Center (NCC) to link the five ABCs with Malagasy government agencies.
Projected Long Term Results at Program Closure
  • 47,525
    Estimated Beneficiaries
  • $0
    Estimated Net Benefits

    N/A - (No Economic Rate of Return analysis was done for this Project as it was still undefined at the time of Compact signing. Therefore total benefits expected from this Project were not calculated)

The main objectives of the Finance Project are to improve a weak banking system, make essential financial services available to rural areas, advance credit skills, and cut delays and risks in payments for goods and services.

  • Improve financial system efficiency by modernizing laws regulating financial instruments and payment systems;
  • Build National Savings Bank branches in rural areas and modernizing operations;
  • Equip and modernize the interbank payment system to reduce risk and reduce delays in settlement from 45 days to 3 days; and
  • Assess and address constraints to providing access to credit for agribusiness.
Projected Long Term Results at Program Closure
  • 480,347
    Estimated Beneficiaries
  • $34,000,000
    Estimated Net Benefits

The Land Tenure Project is designed to increase land titling and land security, and improve the efficiency of land service administration. These will contribute to better land use, increased rural enterprise investment, and a better environment for collateral-based lending.

  • Develop and adopt new land legislation and support its implementation, including through a communications and education campaigns;
  • Improve the ability of the National Land Service Administration to provide land services by inventorying and restoring land documents and by modernizing its operations;
  • Decentralize land service provision by establishing new local land management offices and training local land management staff;
  • Formalize property rights through land titles and land certificates; and
  • Gather, analyze and disseminate information on land tenure reform implementation.
Projected Long Term Results at Program Closure
  • 0
    Estimated Beneficiaries

    TBD - (MCC is currently refining the methodology for estimating the number of beneficiaries of its investments in land and property rights. The numbers will be updated as soon as they are available)

  • $89,000,000
    Estimated Net Benefits

Monitoring & Evaluation

Projected Results by End of Compact

The Madagascar Compact aimed to achieve the results below by the end of the compact in June 2010. Because of its early termination and related events, these results were not fully achieved:

  • Secured 250,000 hectares of land in the zones and Antananarivo with land certificates or titles;
  • Increase the value of savings accounts in CEM branches and MFIs supported by the Program by $28.6 million, and
  • Increased farm income due to improved production and marketing practices by 20%.

Results to Date

Information on results to date is available in the Table of Key Performance Indicators (a subset of the full set monitored under the Madagascar Monitoring and Evaluation Plan). The full set of performance indicators is detailed in the final Monitoring and Evaluation Plan.

Impact Evaluation Framework

Careful monitoring of implementation performance and measurement of intermediate results were carried out throughout Compact implementation. MCC did not fund an impact evaluation of the Madagascar Program but is now planning for an independent program evaluation. This evaluation will use the most rigorous methodology possible to assess whether the Projects have achieved or are on track to achieve their objectives, taking into consideration the fact that most components have not been fully implemented due to early termination. This evaluation will not assess what would have happened in the absence of the MCC investments since no counterfactual exists but will provide a measure of key outcomes and lessons learned.

Projected Long Term Results by Project
Project Estimated Beneficiaries Estimated Benefits
Agricultural Business Investment Project
Objective

To improve production technologies and market capacity in the rural areas, through:

  • The creation and operation of 5 Agricultural Business Centers (ABCs);
  • The creation of a national coordinating center;
  • The identification of investment opportunities, and
  • Building management capacity in the zones.
47,525 $0

N/A - (No Economic Rate of Return analysis was done for this Project as it was still undefined at the time of Compact signing. Therefore total benefits expected from this Project were not calculated)

Financial Sector Reform Project
Objective

To increase competition in the financial sector by:

  • Promoting legal and regulatory reform;
  • Supporting debt management and issuance reform;
  • Strengthening the National Savings Bank (CEM);
  • Providing new instruments for agribusiness credit;
  • Supporting the National Interbank payment system modernization, and
  • Improving credit skills training and increasing credit information and analysis.
480,347 $34,000,000
Land Tenure Project
Objective

To increase land security by:

  • Supporting the development of the national land policy framework;
  • Improving provision of land services;
  • Improving the ability of the national land service administration to provide land services;
  • Supporting decentralization of land management;
  • Supporting land tenure regularization in the zones, and
  • Facilitating information gathering, analysis, and dissemination.
0

TBD - (MCC is currently refining the methodology for estimating the number of beneficiaries of its investments in land and property rights. The numbers will be updated as soon as they are available)

$89,000,000