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 where 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 the land productively, to build profitable businesses and help ensure environmental sustainability. In July 2008 the Compact was extended for an additional 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 to ensure an orderly closeout of the program.

Financials

Compact Budget

Milestones

  • Signed:
     April 18, 2005
  • Entry Into Force:
     July 28, 2005
  • Terminated:
     August 31, 2009

Compact Projects

Agricultural Business Investment Project

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

  • Estimated Beneficiaries 47,525
  • 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)

Financial Sector Reform Project

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

  • Estimated Beneficiaries 480,347
  • Estimated Net Benefits $34,000,000

Land Tenure Project

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

  • 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)
  • Estimated Net Benefits $89,000,000