## 1. Food insecurity dramatically increased in Madagascar over the last 10 years, hampering human development ## Source details **Canonical URL:** [1. Food insecurity dramatically increased in Madagascar over the last 10 years, hampering human development](https://www.imf.org/-/media/files/publications/selected-issues-papers/2023/english/sipea2023037.pdf) ## Other formats - [Markdown version](/-/media/files/publications/selected-issues-papers/2023/english/sipea2023037.pdf.md) - [Structured JSON version](/-/media/files/publications/selected-issues-papers/2023/english/sipea2023037.pdf.json) --- ### Scale and recent trends - As of September 2022, 8.8 million people across Madagascar (about 33 percent of the population) are food insecure, an increase of one million in three months. - As of November 2022, 2.22 million people in the Great South and Great South-East are facing emergency levels of food insecurity. - Five million people are affected by recurring natural disasters, such as cyclones, floods, and droughts. - Prevalence of acute malnutrition stands at 8 percent. - Prevalence of chronic malnutrition stands at 40 percent, ranking Madagascar as the 10th most affected country by stunting. - The cost of the average food basket on the markets of the Great South stands at MGA 2 013 (USD 0.45) per person per day. - About 85 percent of the population lives on less than USD 1.90 a day. - Up to November 2022, the cost of the food basket increased on average by 19 percent over the last three years. ### Recent shocks and drivers - Prolonged droughts in the South since 2019 reduced agricultural production, placing about 1 million people on average in food insecurity over the last 3 years, among which 250 000 in famine situation. - Madagascar experienced 5 tropical weather events in 45 days during the 2021/2022 cyclonic season (Cyclones Batsirai and Emnati; tropical storms Ana, Dumako, and Gombe). - Heavy rains, strong wind, floods, and landslides caused extensive damage to road network, dams, houses, schools and sanitary facilities, rice fields and orchards, putting pressure on food prices and subsequent harvest seasons. - Cyclonic-season damage impacted cash crops production (cloves, coffee, pepper), which are exported at 90 percent and constitute the most important source of revenue for the national economy. - Increased transportation costs due to rise in international oil prices and administrated pump prices contributed to food price increases. - FAO and other agencies called for preventive pest treatments which authorities ignored; pest damage observed mainly on maize, sweet potato and to a lesser extent rice and cassava. - Agricultural destruction in other regions is also severely impacting prospects for the next agricultural campaign. ### Near-term outlook and scenarios - The 2022/2023 agricultural prospect is uncertain and food insecurity could further worsen. - Despite cyclone-induced precipitation in February 2022, small size of agricultural land in the Great South limits anticipated crop production. - Potential infestations, such as locust and armyworm, may arise. - As a result, 1.5 million people are expected to experience emergency levels of food insecurity (IPC Phase 3) over April to July 2023. ### Structural and climate-related causes - Natural hazards, poor agricultural practices, inadequacy of hydro-agricultural infrastructure, and lack of education are identified as root causes of malnutrition by Malagasy authorities. - Since 2019, periods of drought are increasingly frequent; 2.8 million people were exposed to drought in 2021. - Agriculture employs 83 percent of the population. - Drought in the Great South occurs often with an interval of around two years; precipitations have been declining in the previous twenty years. - Progression aligns with predictions that meteorological drought caused by inadequate rainfall will rise in duration, frequency, and intensity. - The 2030 UN Sustainable Development Goal 2 (SDG2) to end hunger will be difficult to reach amid frequent and recurring droughts, floods, cyclones, and rising temperatures. ### Demographic vulnerabilities and household-level impacts - Household structure and living conditions in the Great South: - More than one-third of households have 4 to 5 members; about one-fourth have more than 7 members. - National rural average household size is 4.3 members. - Multidimensional poverty and degree of deprivation are positively correlated with household size. - On average, 78.5 percent of dwellings in the ten assessed districts are made of precarious materials. - Education and labor: - Less than 15 percent of the Great South population attended primary education; 35 percent dropped out of school. - As a result, 80 percent of the regional population are very low qualified and about 45 percent are analphabet, against 23 at the national level. - The inactive/active ratio is about 48.4 percent in 2021. - Income diversification and shocks: - An average household resorts to more than 13 activity types to generate income over one month. - 75 percent are hit by at least one natural hazard (droughts, pests and cyclones), food price or insecurity shock over 6 months. - Agriculture, livestock, and trade account for the largest share of disposable income. - Half of communities reported a 53 percent decrease in cultivated areas in 2021 compared to normal. - Future production (high season) is expected to be 63 percent lower than normal due to weather conditions, pest infestation, high cost of agricultural inputs. - In half of the districts, harvest coverage in terms of consumption varies between 1 to 5 months. - Over-indebtedness is the fourth shock experienced by households; agricultural households borrow to buy additional seeds when rain is delayed and to buy food between delayed cash transfer payments. - Activity composition (household-level): - Nearly eighty-four percent (84 percent) of households practice agriculture. - Thirty-seven percent (37 percent) practice livestock. - About thirty-two percent (32 percent) engage in trade. - Gender and household headship: - Thirty-five percent of households in the Great South are led by women, compared to 24 percent at the national level. - A large share (37 percent) of households includes only one parent. - Female-headed households are poorer on average, spend relatively more on food, and have higher risk of being severely food insecure. - Fetching water beyond a 30-minute journey time (including waiting time) is the responsibility of 95 percent of women. - Energy, health and productivity impacts: - Direct use of wood as fuel is 76 percent in rural areas and 87 percent in the Great South. - Acute respiratory infection affects 6.8 percent of children aged 6-59 months in the ten districts of the Deep South. - World Bank estimates the productivity cost of the use of fuelwood for cooking borne by women at USD 4.71 billion annually. - Water and health outcomes: - Only 4.2 percent have access to a quality water supply from an improved water source in the Great South, compared to 27.7 percent at the national level. - Diarrheal diseases affect 18.3 percent of children aged 6–59 months in the ten districts of the deep south. - Febrile illnesses from all causes, including malaria, affect 66.2 percent of children aged 6–59 months in the ten districts of the deep south. ### Structural issues in the food value chain and agriculture - Main obstacles to agriculture (as perceived by farming households in the Great South): climate (first), presence of pests (second), high cost of agricultural inputs, and non-existence or poor condition of infrastructure to support agricultural production (dams, irrigation canals). - Prevalence of small farm holders limits self-sufficiency: - Among households in the ten surveyed districts of the Deep South, 45 percent operate less than 50 acres, 34 percent between 50 to 100 acres, and only 21 percent have more than 100 acres. - Access to arable land is problematic; a great majority of the land is limestone, worsening impact of rainfall deficit. - Some parts of the South are affected by sand winds (Tiomena) which sand up the land, making agriculture impossible in some areas. ### Agricultural production constraints and practices - Rainfall unpredictability (delay of rain, drought, etc.) leads to delays in seeding and low production because of non-adaptation to change, resulting in lack of control over planting and monitoring of agricultural calendars. - Crop diversification toward more water resilient crops—maize, millet, sorghum, cassava and sweet potato—serves as substitutes or supplements for rice during the lean season. - Low mechanization: reliance on family labor and sometimes employees for seeding and other work; lack of equipment and energy access impacts production yields. - Selling productive livestock is a common crisis strategy when households run out of food or lack resources to purchase food during the lean season. ### Seeds, inputs, and affordability - Severe seed shortages in the Great South; seed supply accessibility is much lower than in other low-income countries. - If a first sowing fails and requires a second attempt, farmers face great difficulty obtaining seeds; only 10 percent of farmers use certified seeds. - Low harvests in previous seasons prevented satisfactory seed replenishment; low purchasing power and inflation driven by structural high demand penalize market sourcing of seeds. - Provision of seed accounts for 3.5 percent of all assistance received by households and 34.5percent of households received it. - In the Southern part of Madagascar, less than half of inhabitants have access to phytosanitary products due to affordability and availability issues. - Other inputs—organic fertilizers, chemical fertilizers, phytosanitary products, and agricultural equipment—are available but often unaffordable; fertilizers are not registered. - Fertilizers and inputs affordability and availability constrain yields and resilience. ### Water, irrigation, and infrastructure - Hydro-agricultural network inadequate for irrigation island-wide, particularly in the Great South; existing infrastructure mostly requires rehabilitation. - Low access to water sources for irrigation and to irrigation equipment forces most farmers to rely almost exclusively on rainfalls; short rainy periods (a few hours to a day at most) significantly limit yields. - Farmers hesitant to invest in equipment or adopt improved techniques given low recent production, leading to weak sector performance. - Inadequate rural road infrastructure limits access to markets and food distribution; farmers mainly produce for self-consumption and sell surpluses to meet daily non-agricultural needs. - Agricultural products for sale are often unprocessed and lack post-harvest conservation, increasing perishability where transportation time and storage needs are high. - Planned rehabilitation activities were penalized by inflation-driven increases in construction materials and transportation costs (about 44 percent in July 2022). ### Livestock and fishing - Livestock: about 62 percent of households practice livestock farming; it generates only 12.5percent of revenues and functions as a store of value sold in extreme necessity. - Main species in the Great South: poultry (local breed hens), small ruminants (sheep and goats), and cattle; breeding methods remain mainly traditional. - Fishing sector bottlenecks: insularity and climate change; difficulties in selling products and decreases in prices; lack of equipment and high input prices challenge maintenance and renewal. - Fish conservation needs identified (cold rooms, smoking/drying transformation tools); many places must sell fish the same day to avoid waste, limiting trade and export. ### Climate exposure and medium-term outlook - Madagascar is highly vulnerable to climate change and among the least prepared to absorb shocks; exposure to recurrent natural disasters inflicts recurring economic losses and threatens food security. - Historical frequencies (EM-DAT, 2022): tropical cyclone every 0.9 years on average; droughts every 2.7 years; floods every 3 years. - A typical tropical cyclone could become 18.4 percent more damaging by 2050 (Acevelo, 2016). - Agricultural productivity is already less than half the global average; a single weather disaster can significantly raise food insecurity. - Climate change expected to decrease agricultural production through: - (i) loss of cultivable land from erosion, more intense rainfall, cyclones, and floods; - (ii) decline in land productivity from more severe drought and drought-induced pests including locust outbreaks; - (iii) loss of labor productivity caused by extreme heat (already fallen by USD 95 per worker over the past 20 years). - Slow-moving climate effects reduce natural capital (terrestrial and marine): tree growth and reproduction affected; marine impacts include coral bleaching, seagrass loss, fisheries loss, ocean acidification. - Silting of reservoir dams and irrigation canals due to environmental degradation reduces water storage capacity for rice irrigation. - Human footprints exacerbate climate risks: poor land use practices and land degradation are largest contributors to Co2 emission; agriculture contributes to 16 percent of Co2 emissions as subsistence agriculture destroys forest and wetland carbon stocks rapidly. - Vulnerability impacts mangroves and coral reefs; Madagascar highly vulnerable to coral bleaching and reef loss, while the blue economy holds potential conditional on large investments in infrastructure and equipment. ### Emergency preparedness and response findings - Authorities capped prices of 4 main imported products—rice, oil, sugar, and cement (without paying explicit subsidies)—from April to July 2022 to contain transmission of international inflation. - In 2022, 4.7 million people benefited from cash and in-kind humanitarian and development partners’ assistance for food and subsistence. - National Risk and Catastrophe Management Bureau (BNGRC) budget history: LFI 2023 allocates MGA 15.6 billion to the BNGRC and projects an increase to MGA 19.8 billion in 2024 and MGA 22.4 billion in 2024. - BNGRC set up as an administrative public institution under technical supervision of the Ministry of the Interior and Decentralization. ### Policy recommendations — Emergency preparedness and social protection - Strengthen BNGRC with adequate financial and human resources to improve crisis response locally. - Extend and operationalize a flexible and responsive single registry for social safety nets; scale up school feeding programs; support financial inclusion. - Specific measures: - Harmonize targeting approaches and eligibility criteria; use community platforms for targeting beneficiaries; establish evidence-based triggers for shocks; build systematic responses during lean and hurricane seasons into the system. - Extend social safety nets to prevent negative coping strategies and asset depletion; help households maintain access to food and essential services for health and education during crises. - Further develop conditional cash transfers and social safety nets; remove financial barriers and promote health care, nutrition services and appropriate food and nutritional products. - Scale up food supply to schools based on local production; use school feeding programs to reach shock-prone families; provide family rations and promote school retention; develop food education and vegetable garden training. ### Policy recommendations — Preparedness, coordination, and community resilience - Strengthen preparedness and collaboration among central government, local authorities, communities, and international partners: - Establish monitoring and early warning systems for climate, hydrological, geological, and vulnerability monitoring to anticipate extreme weather and floods, and health monitoring for epidemics. - Develop local emergency response plans with humanitarian organizations including evacuation strategies, back-up mechanisms, and support for the most vulnerable; include prevention and management of emergency-related conflicts. - Integrate prevention of food security risks into climate change strategies: crop diversification, improved resilience of food production systems, integrated natural resource management, education programs, and promotion of sustainable agricultural practices. - Implement programs to reduce rural community vulnerability: strengthen resilience through food security promotion, income diversification, access to basic services (drinking water, health care), and social protection for the most vulnerable. - Strengthen coordination of international aid within national structures: partnerships for research and development, funding for sustainable initiatives, and cooperation on policy and program implementation. ### Policy recommendations — Food reserves, value chains, and climate-smart agriculture - Establish regional/community grain reserves for activation during lean periods or shocks to address household-level gaps and limited reserves; reserves are an effective mechanism for rapid intervention and can be adapted to context. - Develop sustainable and climate-smart agricultural practices to improve resilience: conservation agriculture, drip irrigation, and water management systems. - Protect agricultural land from urban expansion; promote sustainable land management; implement policies supporting smallholder training and communication for practices that preserve soil organic matter. - Diversify agriculture to build resilient systems and increase crop variety for food security. - Address structural food value chain weaknesses: provide access to affordable fertilizers and strengthen locust control to support production and productivity. - Strengthen access to agricultural services and equipment through the Agricultural Development Fund. ### Policy recommendations — Energy-water-food nexus and digital innovation - Promote Energy-Water-Food Nexus initiatives and digital innovation in rural areas (e.g., rapid rural transformation project establishing hubs to provide remote communities with scalable services). - Support off-grid green energy solutions with a capacity of 25kW as an entry point for multiple services: drinking water supply, internet connection, digital classrooms, climate/agriculture/health information sharing, processing and conservation equipment for value chains, entrepreneurial opportunities, and access to local public administration services. ### Cleaner cooking fuels, renewable energy, and reforestation - Favor more modern and cleaner cooking fuels and technologies to: - decrease deforestation - reduce CO2 emissions - reduce negative health impacts from harmful smokes - Increasing the share of renewable energies in the national energy mix, including for isolated grids still relying on fossil fuels, would: - reduce CO2 emissions - reduce fuel costs - reduce exposure to volatility of international markets - Implement these energy measures alongside accelerating reforestation interventions at scale, including: - green belt programs - dune fixation - promotion of alternative energy sources to reduce pressure on forests - strengthening livelihoods to ensure forest sustainability ### Infrastructure investments to address food insecurity and market access - Important investments needed to rehabilitate and develop: - the road network - irrigation systems - electricity infrastructure - telecommunications infrastructure - Investing in rural infrastructure to address root causes of food insecurity and facilitate distribution of food, cash transfers, and other goods, specifically: - construction of water reservoirs - irrigation facilities - rural roads to strengthen market connectivity and facilitate farmers’ access to markets, public, and financial services ### Rice import taxation, VAT exemptions, and incentives for local production - Imported rice is exempt from custom duty; the tax expenditure is estimated at MGA 124bn (0.2 percent of 2021 GDP). - The import of other milled or semi-milled rice dominates total rice imports with over 92 percent of the total for 2019, 2020, and 2021. - Customs tax exemptions are not appropriate or effective in controlling or stabilizing rice prices; a comprehensive tax reform of the sector would be needed to boost production. - The exemption of rice from domestic VAT: - accounts for almost three-quarters of total domestic VAT tax expenditures - amounts to 4.7 times the tax expenditure on imported rice - Distributional considerations: - Small producers would not be affected by removal of the VAT exemption as they fall under the VAT applicability threshold - Larger cooperatives could deduct VAT on inputs from tax declarations - Additional VAT treatment: - Agricultural inputs (including for crops and corn and soybean seeds) are largely exempt from domestic VAT - Imported agricultural materials and equipment also benefit from significant VAT exemptions ### Nutrition, inclusion, and livelihoods - Improve nutrition through greater local production and food supplementation programs for the most vulnerable households. - Promote economic inclusion via vocational training programs and microcredits to help people lift themselves out of poverty and reduce food insecurity. ### Integrating climate and disaster risk into macro-fiscal planning and budgets - Observations on the 2023 Budget Law (LF): - LF 2023 does not integrate climate shocks in baseline projections nor include a climate risk analysis to the baseline. - Official macroeconomic and fiscal projections do not factor in climate and climate change risks despite frequent natural disasters. - Growth projections reflect authorities’ objectives and are not adjusted for possible climate shocks. - Macroeconomic impacts of climate are only mentioned in a paragraph of the Annex of the LF among risks to the real economy. - LF 2023 lacks discussion on contingency plans for budget reallocation in case of severe climate events or on public policies to address Kere (chronic food insecurity in the Great South). - Additional spending needs are handled reactively via supplemental budgets and emergency donor funding instead of pre-emptive contingency measures. - An annex dedicated to climate risk should provide an overall picture of policies at the Primature and line ministries and their financing. - Comprehensive reporting on implementation progress and use of funds for climate mitigation and adaptation is currently lacking and is essential for better policy management and unlocking future financing. ### Strengthening Green PFM and C-PIMA; PFM and PIM reform opportunities - Use ongoing PFM and PIM reform efforts to mainstream climate considerations: - Strengthen relations between the Ministry of Environment, Ministry of Economy and Finance, and line ministries at the planning stage; mainstream climate change concerns into comprehensive sectoral strategies. - Identify infrastructure assets most vulnerable to climate change and define maintenance methodologies by main sectors. - Define a methodology to integrate climate change into ex-ante project assessments and criteria for project prioritization. - Introduce climate budget tagging (e.g., through the ongoing work on the public investment manual) to identify and track spending on adaptation and mitigation and to create/enrich a document or annex dedicated to climate change in the annual budget. ### Financing, international climate funding, and leveraging donors/private finance - IMF-supported program context: - The 40-months Extended Credit Facility (ECF) arrangement focuses on sustaining inclusive growth, addressing long-term fragilities, maintaining macroeconomic stability, improving governance, and creating fiscal space for investment in physical and human capital. - Program objectives include improving budget execution, PFM, strengthening social safety nets, developing a shock-responsive cash transfer program, and capacity development (including a long-term resident expert on budget expenditure tagging). - Madagascar received an SDR allocation of US$322 million on August 23, 2021, that can be used to finance the water pipeline project in the Great South and other PEM objectives related to food security, adaptation to climate change, and sustainable development. - International climate finance landscape: - The OECD climate finance database reported US$1.29 billion in climate funding committed to Madagascar between 2015 and 2019. - Bilateral and multilateral climate funds (e.g., EDF and GCF) provided approximately US$377 million (29 percent) of this funding. - Improving knowledge of the donor landscape and capacity to meet financing requirements can unlock international financing. - Measures to tap private sector finance include facilitating risk assessment and transparency of the policy environment. ### Resilience benefits, damage estimates, and adaptation costs - 2022 tropical storms impact and resilience benefits: - Total damage in the infrastructure sector (mainly roads and railways) from four tropical storms in 2022 assessed around USD170 million (Global Rapid Damage Estimation (GRADE) Report for Madagascar, February 2022). - If roads and railways had been more resilient, damage would have been reduced by USD85 million. - Adaptation investment cost estimates: - Adaptation investment could cost between USD25 million and USD115 million, depending on cost assumptions. - Comparative assumptions: - LMIC average is 5 percent. - Madagascar has assumed 25 percent in general. - Conclusion: adaptation investments may have paid off from one year’s climate events alone. *Source: sipea2023037 (IMF PDF chapter/section).* ### 1. Food insecurity dramatically increased in Madagascar over the last 10 years, hampering ### 1. Food insecurity dramatically increased in Madagascar over the last 10 years, hampering human development ### Scale and recent trends - As of September 2022, 8.8 million people across Madagascar (about 33 percent of the population) are food insecure, an increase of one million in three months. - As of November 2022, 2.22 million people in the Great South and Great South-East are facing emergency levels of food insecurity. - Five million people are affected by recurring natural disasters, such as cyclones, floods, and droughts. - Prevalence of acute malnutrition stands at 8 percent. - Prevalence of chronic malnutrition stands at 40 percent, ranking Madagascar as the 10th most affected country by stunting. - The cost of the average food basket on the markets of the Great South stands at MGA 2 013 (USD 0.45) per person per day. - About 85 percent of the population lives on less than USD 1.90 a day. - Up to November 2022, the cost of the food basket increased on average by 19 percent over the last three years. ### Recent shocks and drivers - A prolonged period of exceptional droughts in the South since 2019 has reduced agricultural production, placing about 1 million people on average in food insecurity over the last 3 years, among which 250 000 in famine situation. - Madagascar was hit by no less than 5 tropical weather events in 45 days during the 2021/2022 cyclonic season (Cyclones Batsirai and Emnati; tropical storms Ana, Dumako, and Gombe). - Heavy rains, strong wind, floods, and landslides caused extensive damage to road network, dams, houses, schools and sanitary facilities, rice fields and orchards, putting pressure on food prices and subsequent harvest seasons. - Cyclonic-season damage impacted cash crops production (cloves, coffee, pepper), which are exported at 90 percent and constitute the most important source of revenue for the national economy. - Increased transportation costs due to rise in international oil prices and administrated pump prices contributed to food price increases. - The FAO and other agencies called for preventive pest treatments which authorities ignored; pest damage has been widely observed mainly on maize, sweet potato and to a lesser extent rice and cassava. - Agricultural destruction in other regions is also severely impacting prospects for the next agricultural campaign. ### Near-term outlook and scenarios - The 2022/2023 agricultural prospect is uncertain and food insecurity could further worsen. - Despite cyclone-induced precipitation in February 2022, small size of agricultural land in the Great South limits anticipated crop production. - Potential infestations, such as locust and armyworm, may arise. - As a result, 1.5 million people are expected to experience emergency levels of food insecurity (IPC Phase 3) over April to July 2023. ### Structural and climate-related causes - Natural hazards, poor agricultural practices, inadequacy of hydro-agricultural infrastructure, and lack of education are identified as root causes of malnutrition by Malagasy authorities. - Since 2019, periods of drought are increasingly frequent; 2.8 million people were exposed to drought in 2021. - Agriculture employs 83 percent of the population. - Drought in the Great South occurs often with an interval of around two years; precipitations have been declining in the previous twenty years. - Progression aligns with predictions that meteorological drought caused by inadequate rainfall will rise in duration, frequency, and intensity. - The 2030 UN Sustainable Development Goal 2 (SDG2) to end hunger will be difficult to reach amid frequent and recurring droughts, floods, cyclones, and rising temperatures. ### Demographic vulnerabilities and household-level impacts - Household structure and living conditions in the Great South: - More than one-third of households have 4 to 5 members; about one-fourth have more than 7 members. - National rural average household size is 4.3 members. - Multidimensional poverty and degree of deprivation are positively correlated with household size. - On average, 78.5 percent of dwellings in the ten assessed districts are made of precarious materials. - Education and labor: - Less than 15 percent of the Great South population attended primary education; 35 percent dropped out of school. - As a result, 80 percent of the regional population are very low qualified and about 45 percent are analphabet, against 23 at the national level. - The inactive/active ratio is about 48.4 percent in 2021. - Income diversification and shocks: - An average household resorts to more than 13 activity types to generate income over one month. - 75 percent are hit by at least one natural hazard (droughts, pests and cyclones), food price or insecurity shock over 6 months. - Agriculture, livestock, and trade account for the largest share of disposable income. - Half of communities reported a 53 percent decrease in cultivated areas in 2021 compared to normal. - Future production (high season) is expected to be 63 percent lower than normal due to weather conditions, pest infestation, high cost of agricultural inputs. - In half of the districts, harvest coverage in terms of consumption varies between 1 to 5 months. - Over-indebtedness is the fourth shock experienced by households; agricultural households borrow to buy additional seeds when rain is delayed and to buy food between delayed cash transfer payments. - Activity composition (household-level): - Nearly eighty-four percent (84 percent) of households practice agriculture. - Thirty-seven percent (37 percent) practice livestock. - About thirty-two percent (32 percent) engage in trade. - Gender and household headship: - Thirty-five percent of households in the Great South are led by women, compared to 24 percent at the national level. - A large share (37 percent) of households includes only one parent. - Female-headed households are poorer on average, spend relatively more on food, and have higher risk of being severely food insecure. - Fetching water beyond a 30-minute journey time (including waiting time) is the responsibility of 95 percent of women. - Energy, health and productivity impacts: - Direct use of wood as fuel is 76 percent in rural areas and 87 percent in the Great South. - Acute respiratory infection affects 6.8 percent of children aged 6-59 months in the ten districts of the Deep South. - World Bank estimates the productivity cost of the use of fuelwood for cooking borne by women at USD 4.71 billion annually. - Water and health outcomes: - Only 4.2 percent have access to a quality water supply from an improved water source in the Great South, compared to 27.7 percent at the national level. - Diarrheal diseases affect 18.3 percent of children aged 6–59 months in the ten districts of the deep south. - Febrile illnesses from all causes, including malaria, affect 66.2 percent of children aged 6–59 months in the ten districts of the deep south. ### Structural issues in the food value chain and agriculture - Main obstacles to agriculture (as perceived by farming households in the Great South): climate (first), presence of pests (second), high cost of agricultural inputs, and non-existence or poor condition of infrastructure to support agricultural production (dams, irrigation canals). - Prevalence of small farm holders limits self-sufficiency: - Among households in the ten surveyed districts of the Deep South, 45 percent operate less than 50 acres, 34 percent between 50 to 100 acres, and only 21 percent have more than 100 acres. - Access to arable land is problematic; a great majority of the land is limestone, worsening impact of rainfall deficit. - Some parts of the South are affected by sand winds (Tiomena) which sand up the land, making agriculture impossible in some areas. *Source: sipea2023037 - 1. Food insecurity dramatically increased in Madagascar over the last 10 years, hampering (IMF PDF).* ### 12. Framers struggle to anticipate seeding due to rainfall unpredictability. Significant ### 12. Framers struggle to anticipate seeding due to rainfall unpredictability. Significant ### Agricultural production constraints and practices - Rainfall unpredictability (delay of rain, drought, etc.) leads to delays in seeding and low production because of non-adaptation to change, resulting in lack of control over planting and monitoring of agricultural calendars (Figure 11). - Some crop diversification observed: more water resilient crops—maize, millet, sorghum, cassava and sweet potato—serve as substitutes or supplements for rice during the lean season. - Low mechanization: farming households rely on family labor and sometimes employees for seeding and other work; low mechanization owing to lack of equipment and energy access impacts production yields. - Selling productive livestock is a common crisis strategy when households run out of food or lack resources to purchase food during the lean season. ### Seeds, inputs, and affordability - Severe seed shortages in the Great South; seeds supply accessibility is much lower than in other low-income countries. - If a first sowing fails and requires a second attempt, farmers face great difficulty obtaining seeds; only 10 percent of farmers use certified seeds. - Low harvests in previous seasons prevented satisfactory seed replenishment; low purchasing power and inflation driven by structural high demand penalize market sourcing of seeds. - Provision of seed accounts for 3.5 percent of all assistance received by households and 34.5percent of households received it. - In the Southern part of Madagascar, less than half of inhabitants have access to phytosanitary products due to affordability and availability issues. - Other inputs—organic fertilizers, chemical fertilizers, phytosanitary products, and agricultural equipment—are available but often unaffordable; fertilizers are not registered (Figure 12). ### Water, irrigation, and infrastructure - Hydro-agricultural network inadequate for irrigation island-wide, particularly in the Great South; existing infrastructure mostly requires rehabilitation. - Low access to water sources for irrigation and to irrigation equipment forces most farmers to rely almost exclusively on rainfalls; short rainy periods (a few hours to a day at most) significantly limit yields. - Farmers hesitant to invest in equipment or adopt improved techniques given low recent production, leading to weak sector performance. - Inadequate rural road infrastructure limits access to markets and food distribution; farmers mainly produce for self-consumption and sell surpluses to meet daily non-agricultural needs. - Agricultural products for sale are often unprocessed and lack post-harvest conservation, increasing perishability where transportation time and storage needs are high. - Planned rehabilitation activities were penalized by inflation-driven increases in construction materials and transportation costs (about 44 percent in July 2022). ### Livestock and fishing - Livestock: about 62 percent of households practice livestock farming; it generates only 12.5percent of revenues and functions as a store of value sold in extreme necessity. - Main species in the Great South: poultry (local breed hens), small ruminants (sheep and goats), and cattle; breeding methods remain mainly traditional. - Fishing sector bottlenecks: insularity and climate change; difficulties in selling products and decreases in prices; lack of equipment and high input prices challenge maintenance and renewal. - Fish conservation needs identified (cold rooms, smoking/drying transformation tools); many places must sell fish the same day to avoid waste, limiting trade and export. ### Climate exposure and medium-term outlook - Madagascar is highly vulnerable to climate change and among the least prepared to absorb shocks; exposure to recurrent natural disasters inflicts recurring economic losses and threatens food security. - Historical frequencies: tropical cyclone every 0.9 years on average; droughts every 2.7 years; floods every 3 years (EM-DAT, 2022). - A typical tropical cyclone could become 18.4 percent more damaging by 2050 (Acevelo, 2016). - Agricultural productivity is already less than half the global average; a single weather disaster can significantly raise food insecurity. - Climate change expected to decrease agricultural production through three channels: - (i) loss of cultivable land from erosion, more intense rainfall, cyclones, and floods; - (ii) decline in land productivity from more severe drought and drought-induced pests including locust outbreaks; - (iii) loss of labor productivity caused by extreme heat (already fallen by USD 95 per worker over the past 20 years). - Slow-moving climate effects reduce natural capital (terrestrial and marine): tree growth and reproduction affected; marine impacts include coral bleaching, seagrass loss, fisheries loss, ocean acidification. - Silting of reservoir dams and irrigation canals due to environmental degradation reduces water storage capacity for rice irrigation. - Human footprints exacerbate climate risks: poor land use practices and land degradation are largest contributors to Co2 emission; agriculture contributes to 16 percent of Co2 emissions as subsistence agriculture destroys forest and wetland carbon stocks rapidly. - Vulnerability impacts mangroves and coral reefs; Madagascar highly vulnerable to coral bleaching and reef loss, while the blue economy holds potential conditional on large investments in infrastructure and equipment. ### Emergency preparedness and response findings - Authorities capped prices of 4 main imported products—rice, oil, sugar, and cement (without paying explicit subsidies)—from April to July 2022 to contain transmission of international inflation. - In 2022, 4.7 million people benefited from cash and in-kind humanitarian and development partners’ assistance for food and subsistence (Figure 18). - National Risk and Catastrophe Management Bureau (BNGRC) budget history: allocations often revised down from the LFI; LFI 2023 allocates MGA 15.6 billion to the BNGRC and projects an increase to MGA 19.8 billion in 2024 and MGA 22.4 billion in 2024. - BNGRC set up as an administrative public institution under technical supervision of the Ministry of the Interior and Decentralization. ### Policy recommendations — Emergency preparedness and social protection - Strengthen BNGRC with adequate financial and human resources to improve crisis response locally. - Extend and operationalize a flexible and responsive single registry for social safety nets; scale up school feeding programs; support financial inclusion. - Specific measures: - Harmonize targeting approaches and eligibility criteria; use community platforms for targeting beneficiaries; establish evidence-based triggers for shocks; build systematic responses during lean and hurricane seasons into the system. - Extend social safety nets to prevent negative coping strategies and asset depletion; help households maintain access to food and essential services for health and education during crises. - Further develop conditional cash transfers and social safety nets; remove financial barriers and promote health care, nutrition services and appropriate food and nutritional products. - Scale up food supply to schools based on local production; use school feeding programs to reach shock-prone families; provide family rations and promote school retention; develop food education and vegetable garden training. ### Policy recommendations — Preparedness, coordination, and community resilience - Strengthen preparedness and collaboration among central government, local authorities, communities, and international partners: - Establish monitoring and early warning systems for climate, hydrological, geological, and vulnerability monitoring to anticipate extreme weather and floods, and health monitoring for epidemics. - Develop local emergency response plans with humanitarian organizations including evacuation strategies, back-up mechanisms, and support for the most vulnerable; include prevention and management of emergency-related conflicts. - Integrate prevention of food security risks into climate change strategies: crop diversification, improved resilience of food production systems, integrated natural resource management, education programs, and promotion of sustainable agricultural practices. - Implement programs to reduce rural community vulnerability: strengthen resilience through food security promotion, income diversification, access to basic services (drinking water, health care), and social protection for the most vulnerable. - Strengthen coordination of international aid within national structures: partnerships for research and development, funding for sustainable initiatives, and cooperation on policy and program implementation. ### Policy recommendations — Food reserves, value chains, and climate-smart agriculture - Establish regional/community grain reserves for activation during lean periods or shocks to address household-level gaps and limited reserves; reserves are an effective mechanism for rapid intervention and can be adapted to context. - Develop sustainable and climate-smart agricultural practices to improve resilience: conservation agriculture, drip irrigation, and water management systems. - Protect agricultural land from urban expansion; promote sustainable land management; implement policies supporting smallholder training and communication for practices that preserve soil organic matter. - Diversify agriculture to build resilient systems and increase crop variety for food security. - Address structural food value chain weaknesses: provide access to affordable fertilizers and strengthen locust control to support production and productivity. - Strengthen access to agricultural services and equipment through the Agricultural Development Fund. ### Policy recommendations — Energy-water-food nexus and digital innovation - Promote Energy-Water-Food Nexus initiatives and digital innovation in rural areas (e.g., rapid rural transformation project establishing hubs to provide remote communities with scalable services). - Support off-grid green energy solutions with a capacity of 25kW as an entry point for multiple services: drinking water supply, internet connection, digital classrooms, climate/agriculture/health information sharing, processing and conservation equipment for value chains, entrepreneurial opportunities, and access to local public administration services. *Source: sipea2023037 (PDF chapter/section).* ### 32. Some measures can reduce reliance on biomass as a cooking fuel and increase ### 32. Some measures can reduce reliance on biomass as a cooking fuel and increase ### Cleaner cooking fuels, renewable energy, and reforestation - Favoring more modern and cleaner cooking fuels and technologies to: - decrease deforestation - reduce CO2 emissions - reduce negative health impacts from harmful smokes - Increasing the share of renewable energies in the national energy mix, including for isolated grids still relying on fossil fuels, would: - reduce CO2 emissions - reduce fuel costs - reduce exposure to volatility of international markets - Implement these energy measures alongside accelerating reforestation interventions at scale, including: - green belt programs - dune fixation - promotion of alternative energy sources to reduce pressure on forests - strengthening livelihoods to ensure forest sustainability ### Infrastructure investments to address food insecurity and market access - Important investments needed to rehabilitate and develop: - the road network - irrigation systems - electricity infrastructure - telecommunications infrastructure - Investing in rural infrastructure to address root causes of food insecurity and facilitate distribution of food, cash transfers, and other goods, specifically: - construction of water reservoirs - irrigation facilities - rural roads to strengthen market connectivity and facilitate farmers’ access to markets, public, and financial services ### Rice import taxation, VAT exemptions, and incentives for local production - Imported rice is exempt from custom duty; the tax expenditure is estimated at MGA 124bn (0.2 percent of 2021 GDP). - The import of other milled or semi-milled rice dominates total rice imports with over 92 percent of the total for 2019, 2020, and 2021. - The authorities use imported rice to stabilize prices due to insufficient domestic supply, but: - customs tax exemptions are not appropriate or effective in controlling or stabilizing rice prices - a comprehensive tax reform of the sector would be needed to boost production - The exemption of rice from domestic VAT: - accounts for almost three-quarters of total domestic VAT tax expenditures - amounts to 4.7 times the tax expenditure on imported rice - Distributional considerations: - Small producers would not be affected by removal of the VAT exemption as they fall under the VAT applicability threshold - Larger cooperatives could deduct VAT on inputs from tax declarations - Additional VAT treatment: - Agricultural inputs (including for crops and corn and soybean seeds) are largely exempt from domestic VAT - Imported agricultural materials and equipment also benefit from significant VAT exemptions ### Nutrition, inclusion, and livelihoods - Improving nutrition through: - improving access to nutritious and affordable food via greater local production - food supplementation programs for the most vulnerable households - Promoting economic inclusion of disadvantaged populations through: - vocational training programs - microcredits - these measures aim to help people lift themselves out of poverty and reduce food insecurity ### Integrating climate and disaster risk into macro-fiscal planning and budgets - Observations on the 2023 Budget Law (LF): - LF 2023 does not integrate climate shocks in baseline projections nor include a climate risk analysis to the baseline - Official macroeconomic and fiscal projections do not factor in climate and climate change risks despite frequent natural disasters - Growth projections reflect authorities’ objectives and are not adjusted for possible climate shocks - Macroeconomic impacts of climate are only mentioned in a paragraph of the Annex of the LF among risks to the real economy - LF 2023 lacks discussion on contingency plans for budget reallocation in case of severe climate events (e.g., 2022/2023 cyclonic season) or on public policies to address Kere (chronic food insecurity in the Great South) - Additional spending needs are handled reactively via supplemental budgets and emergency donor funding instead of pre-emptive contingency measures (e.g., adequate provisions commensurate to expected risk) - An annex dedicated to climate risk should provide an overall picture of policies at the Primature and line ministries and their financing - Comprehensive reporting on implementation progress and use of funds for climate mitigation and adaptation is currently lacking and is essential for better policy management and unlocking future financing ### Strengthening Green PFM and C-PIMA; PFM and PIM reform opportunities - Ongoing PFM and PIM reform efforts offer an opportunity to mainstream climate considerations: - Strengthen relations between the Ministry of Environment, Ministry of Economy and Finance, and line ministries at the planning stage; mainstream climate change concerns into comprehensive sectoral strategies - Identify infrastructure assets most vulnerable to climate change and define maintenance methodologies by main sectors (building on road sector efforts) - Define a methodology to integrate climate change into ex-ante project assessments and criteria for project prioritization - Introduce climate budget tagging (e.g., through the ongoing work on the public investment manual) to identify and track spending on adaptation and mitigation and to create/enrich a document or annex dedicated to climate change in the annual budget ### Financing, international climate funding, and leveraging donors/private finance - IMF-supported program context: - The 40-months Extended Credit Facility (ECF) arrangement focuses on sustaining inclusive growth, addressing long-term fragilities, maintaining macroeconomic stability, improving governance, and creating fiscal space for investment in physical and human capital - Program objectives include improving budget execution, PFM, strengthening social safety nets, developing a shock-responsive cash transfer program, and capacity development (including a long-term resident expert on budget expenditure tagging) - Madagascar received an SDR allocation of US$322 million on August 23, 2021, that can be used to finance the water pipeline project in the Great South and other PEM objectives related to food security, adaptation to climate change, and sustainable development - International climate finance landscape: - The OECD climate finance database reported US$1.29 billion in climate funding committed to Madagascar between 2015 and 2019 - Bilateral and multilateral climate funds (e.g., EDF and GCF) provided approximately US$377 million (29 percent) of this funding - Improving knowledge of the donor landscape and capacity to meet financing requirements can unlock international financing - Measures to tap private sector finance include facilitating risk assessment and transparency of the policy environment ### Resilience benefits, damage estimates, and adaptation costs - 2022 tropical storms impact and resilience benefits: - Total damage in the infrastructure sector (mainly roads and railways) from four tropical storms in 2022 assessed around USD170 million (Global Rapid Damage Estimation (GRADE) Report for Madagascar, February 2022) - If roads and railways had been more resilient, damage would have been reduced by USD85 million - Adaptation investment cost estimates: - Adaptation investment could cost between USD25 million and USD115 million, depending on cost assumptions - Comparative assumptions: - LMIC average is 5 percent - Madagascar has assumed 25 percent in general - Conclusion: adaptation investments may have paid off from one year’s climate events alone *Source: sipea2023037 — content from the provided IMF PDF chapter on Madagascar.* --- _Source: https://www.imf.org/-/media/files/publications/selected-issues-papers/2023/english/sipea2023037.pdf_