Resource information
This Country-Level Effectiveness and
Accountability Review (CLEAR) examines the efficacy of
microfinance aid in Madagascar, based on an objective
analysis of donor assistance for the sustainable development
of financial systems targeting the poor. The three levels of
the financial system are the micro level (e.g., retail
institutions), the meso level (e.g., apex, technical service
providers), and the macro level (e.g., regulations and
policies). At the micro level, there is a large number of
stakeholders, and an increasing interest of banks and
private investors, including a predominant stake by the
Decentralized Financial Systems (DFS), as well as major
roles by the local Savings Institution and the Post Office.
At the meso level, there is a supply of services such as
auditing. Finally, at the macro level, coordination and
supervision exist, and a specific legal framework on
microfinance is in place. Notwithstanding, microfinance in
Madagascar remains weak, and, concerns suggest DFSs carry
structural weaknesses at various levels. Additionally, it is
specified services in support of microfinance are still
rare, and its quality it debatable. Professional
organizations need to be strengthened, particularly as lack
of reliable information on financial results is concerned.
At the macro level, supervisory and coordinating agencies
rely on limited means, whereas the legal framework is not
fully supportive. Risks suggest potential market disruptions
resulting from subsidies and interest rate hikes, an
implication by which the Ministry of Agriculture not always
agrees with the Microfinance National Strategy. Finally, the
judicial system does not rely enough in favor of the
development of the financial sector.
