Abstract
In recent years, the IMF has released a growing number of reports and other documents covering economic and financial developments and trends in member countries. Each report, prepared by a staff team after discussions with government officials, is published at the option of the member country.
Poverty in Madagascar1
Madagascar is a country with general, widespread, and increasing poverty. A majority of the population is extremely poor and struggling to pay for food. Madagascar has the potential to grow rapidly. It is endowed with abundant natural resources, a unique wildlife, and a young, vibrant, and rapidly growing population. Taking full advantage of the young population will require higher investment in education and healthcare.
A. Poverty
1. Poverty is widespread in Madagascar. A majority of the population is extremely poor and can hardly afford to pay for food. About 62 percent of the population live below the extreme (food) poverty line (that is, with an income that is less than the cost of consuming 2100 calories a day); (ii) three out of four people live below the absolute poverty line; and (iii) over ninety percent of the population live on US$2/day or less, which is about the same proportion as in Congo DRC, Liberia, and Burundi (which are all post-conflict countries coming out of a civil war). These numbers confirm that Madagascar has become one of the poorest countries in the world. By all definitions (Box 1), poverty has worsened between 2001 and 2010.
Different Measures of Poverty
National definitions:
Extreme (food) poverty line: Percentage of the population living on an income that is less than the cost of consuming 2,133 calories a day (the WHO recommended calorie needs). Absolute poverty line: Percentage of the population living on an income that is less than the extreme (food) poverty line plus about a 30 percent allowance for non-food goods.
International definitions:
Based on the percentage of the population living on less than $1.25/$2 a day at 2005 international prices.
2. Madagascar has a young and rapidly growing population. Half the population is less than 20 years old and the population is growing at 2.8 percent a year, which corresponds to a population increase of about 600,000 people a year. Taking account of population growth, the number of people in extreme poverty grew from about 10 million (60.5 percent of the population) in 2001 to 13 million (61.7 percent of the population) in 2010—a 30 percent increase over nine years.
3. Although poverty is extensive and has been growing, Madagascar is not among the most unequal countries and inequality has not been growing. Income inequality, measured by the Gini coefficient, is close to the average of countries in Sub-Saharan Africa (SSA) and did, in fact, decrease over 2001–10. When dividing households into quintiles from the most poor (first quintile) to the least poor (fifth quintile), it is noticeable that the consumption distribution has been progressive (benefiting the poorest) over 2001–10 and particularly so over 2001–05. While households in the first three quintiles increased their consumption over 2001–10, households in the fourth and fifth quintiles reduced their consumption. According to the World Bank, an economic shift favoring agriculture could be the reason for the decreasing inequality (Figure 1).
Madagascar and Sub-Saharan Africa (SSA): Poverty Data
Citation: IMF Staff Country Reports 2015, 025; 10.5089/9781498353069.002.A001
Source: World Development Indicators, World Bank; and World Bank (2014a).1/ The Gini coefficient is a measure of inequality. A Gini coefficient of zero expresses perfect equality, where all values are the same (that is, all people would have an identical income).Madagascar and Sub-Saharan Africa (SSA): Poverty Data
Citation: IMF Staff Country Reports 2015, 025; 10.5089/9781498353069.002.A001
Source: World Development Indicators, World Bank; and World Bank (2014a).1/ The Gini coefficient is a measure of inequality. A Gini coefficient of zero expresses perfect equality, where all values are the same (that is, all people would have an identical income).Madagascar and Sub-Saharan Africa (SSA): Poverty Data
Citation: IMF Staff Country Reports 2015, 025; 10.5089/9781498353069.002.A001
Source: World Development Indicators, World Bank; and World Bank (2014a).1/ The Gini coefficient is a measure of inequality. A Gini coefficient of zero expresses perfect equality, where all values are the same (that is, all people would have an identical income).B. Who are the Poor in Madagascar?2
Gender
4. There are differences in poverty between men and women when comparing families with only one parent. Families headed by a female who is divorced, separated, or widowed are poorer than corresponding male-headed households. Single women are also significantly poorer than single men.
Absolute Poverty by Household Head
(Percent of households)
Citation: IMF Staff Country Reports 2015, 025; 10.5089/9781498353069.002.A001
Source: World Bank (2014a).Absolute Poverty by Household Head
(Percent of households)
Citation: IMF Staff Country Reports 2015, 025; 10.5089/9781498353069.002.A001
Source: World Bank (2014a).Absolute Poverty by Household Head
(Percent of households)
Citation: IMF Staff Country Reports 2015, 025; 10.5089/9781498353069.002.A001
Source: World Bank (2014a).Age and household size
5. Younger people and large families are on average poorer than older people and small families. Younger people and large families with many children also became poorer between 2001 and 2010, while older people (50–59 years) and smaller families did relatively better. Families with seven or more members (representing about 38 percent of the population) had a poverty incidence of 86 percent compared with 36 percent for families with one or two members in 2010.
Education
6. There is a strong connection between poverty and lack of education. Households headed by an individual with no or little schooling are significantly more likely to be poor. The growth in poverty between 2001 and 2010 also occurred primarily in households where the household head had no formal education. While education makes a difference, the World Bank’s poverty analysis concludes that the positive impact of increasing literacy rates has been relatively weak and the strongest poverty-reducing effect is among people with secondary or higher education. Against this background it is worrying to note that the proportion of the population with secondary or higher education declined from 16 percent in 2001 to 11 percent in 2010.
Absolute Poverty by Education of the Household Head
(Percent by education group)
Citation: IMF Staff Country Reports 2015, 025; 10.5089/9781498353069.002.A001
Source: World Bank(2014a).Absolute Poverty by Education of the Household Head
(Percent by education group)
Citation: IMF Staff Country Reports 2015, 025; 10.5089/9781498353069.002.A001
Source: World Bank(2014a).Absolute Poverty by Education of the Household Head
(Percent by education group)
Citation: IMF Staff Country Reports 2015, 025; 10.5089/9781498353069.002.A001
Source: World Bank(2014a).7. Many education indicators are weak and some have deteriorated in recent years. Enrollment in primary education has fallen since 2009. Many children do not attend school, particularly in rural areas, or leave after only a few years. World Bank estimates indicate that about half a million children who should attend primary education are absent. The strategy to use so-called community teachers supported by the Association of Parents (FRAM) has improved access to education, but it may also have had a negative impact on the quality of education. The community teachers, which now constitute about two-thirds of all primary school teachers, have not received the full educational training that had been planned.
Public Spending on Education
(Percent of GDP)
Citation: IMF Staff Country Reports 2015, 025; 10.5089/9781498353069.002.A001
Source: World Development Indicators, World Bank.Public Spending on Education
(Percent of GDP)
Citation: IMF Staff Country Reports 2015, 025; 10.5089/9781498353069.002.A001
Source: World Development Indicators, World Bank.Public Spending on Education
(Percent of GDP)
Citation: IMF Staff Country Reports 2015, 025; 10.5089/9781498353069.002.A001
Source: World Development Indicators, World Bank.8. Public spending on education has declined from a starting point where Madagascar was already spending less than other SSA countries. Madagascar’s public spending on education amounted to 2.7 percent of GDP in 2012, while the SSA average was 4.3 percent of GDP in 2010. In addition, GDP per capita adjusted for purchasing-power parity was on average about the double in SSA compared with Madagascar and thus, the difference in actual resources set aside for education was even larger than the difference in share of GDP.
9. Access to education is rationed by income. In primary education, 85 percent of children from the fifth quintile (least poor) attend school, while only 60 percent of children from the first quintile (poorest) do so. Few children from the lower quintiles have a chance of going through secondary education and only children from the highest quintile have a chance (albeit small) of attending post-secondary education. Notwithstanding these shortcomings, Madagascar’s youth literacy rate (70 percent) is more or less on par with the average for SSA. That said, the fact remains that more than a quarter of the youth are entering the labor market without being able to read and write.
Urban and rural areas
10. The poor live prevalently in rural areas. Close to 80 percent of the population live in rural areas, where absolute poverty is almost twice as high compared to urban areas. As a result, 86 percent of the poor live in rural areas. Most farmers practice subsistence farming with yields that are barely enough to feed their families. Real per capita value added in agriculture has been falling by about 1 percent a year since 1960. Not just poverty, but also other development indicators are less favorable in rural areas. Infant mortality is higher, life expectancy is shorter, literacy is lower, malnutrition is more widespread, school attendance is lower, and only an extremely small minority of the rural population has access to electricity and safe drinking water. That said, as a reflection of decreasing inequalities and the progressive consumption distribution (see paragraph 3), consumption declined faster in urban areas than rural areas over 2001–10 (Figure 2).
Madagascar: Indicators in Urban and Rural Areas
Citation: IMF Staff Country Reports 2015, 025; 10.5089/9781498353069.002.A001
Source: World Bank (2014a).Madagascar: Indicators in Urban and Rural Areas
Citation: IMF Staff Country Reports 2015, 025; 10.5089/9781498353069.002.A001
Source: World Bank (2014a).Madagascar: Indicators in Urban and Rural Areas
Citation: IMF Staff Country Reports 2015, 025; 10.5089/9781498353069.002.A001
Source: World Bank (2014a).Healthcare
11. Spending on health is lower than in other SSA countries. A declining proportion of the population is choosing or can afford to visit a health center, the use of formal healthcare varies significantly depending on the income of the households, and inequalities have grown since 2001. In 2010, the consultation rate in case of illness for the poorest quintile was 22 percent (down from 34 percent in 2001), to be compared with 43 percent (down from 59 percent in 2001) for the least poor quintile. Furthermore, the prevalence of malnutrition in children under five (stunted height incidence of 49 percent in 2009) is one of the highest in the world. That said, Madagascar has made significant progress on some key health indicators. Mortality in children under five (62 deaths per 1,000 births in 2012) is significantly below the SSA average and life expectancy (64 years in 2012) is significantly above the SSA average. In fact, these indicators are similar to those in lower middle income countries. These favorable results are probably positively influenced by the climate and by lower prevalence of malaria and HIV than in many other parts of SSA (Figure 3).
Malnutrition
(Percent of children under 5 with stunted height)
Citation: IMF Staff Country Reports 2015, 025; 10.5089/9781498353069.002.A001
Source: World Development Indicators, World Bank.Malnutrition
(Percent of children under 5 with stunted height)
Citation: IMF Staff Country Reports 2015, 025; 10.5089/9781498353069.002.A001
Source: World Development Indicators, World Bank.Malnutrition
(Percent of children under 5 with stunted height)
Citation: IMF Staff Country Reports 2015, 025; 10.5089/9781498353069.002.A001
Source: World Development Indicators, World Bank.
Madagascar: Health Indicators
Citation: IMF Staff Country Reports 2015, 025; 10.5089/9781498353069.002.A001
Sources: World Development Indicators, World Bank; and World Bank (2014a).1/ Lower Middle Income Countries.Madagascar: Health Indicators
Citation: IMF Staff Country Reports 2015, 025; 10.5089/9781498353069.002.A001
Sources: World Development Indicators, World Bank; and World Bank (2014a).1/ Lower Middle Income Countries.Madagascar: Health Indicators
Citation: IMF Staff Country Reports 2015, 025; 10.5089/9781498353069.002.A001
Sources: World Development Indicators, World Bank; and World Bank (2014a).1/ Lower Middle Income Countries.C. Growth
12. A key reason for Madagascar’s persistent and increasing poverty is weak economic growth. Madagascar’s long-term economic growth has been underperforming in comparison with the average in SSA and has lagged relative to population growth. The result is declining per capita GDP and a widening gap versus SSA (Figure 4). This relative decline is confirmed whether measured in constant U.S. dollars, current U.S. dollars, or adjusted for purchasing power parity (PPP). Madagascar has also underperformed in comparison with a peer group consisting of 25 countries with the lowest GDP per capita (in constant 2005 U.S. dollars). While Madagascar’s GDP per capita fell by 19 percent over 1990–2012, the average country among the poorest 25 reported a 26 percent increase. Only four countries (Burundi, Congo DRC, Zimbabwe, and Tajikistan) reported a larger drop in per capita GDP than Madagascar. A comparison with six countries that had a similar PPP adjusted GDP per capita in 1990 (Bangladesh, China, Cape Verde, Comoros, Senegal, and Ghana) is also informative. All countries with the exception of Comoros outperformed Madagascar. While Madagascar’s PPP adjusted real GDP per capita fell by 19 percent over 1990–2012, Senegal’s real GDP per capita increased by 17 percent, Ghana’s by almost 100 percent, Bangladesh’s by over 100 percent, Cape Verde’s by close to 300 percent, and China’s by close to 600 percent.
Selected Countries: GDP per Capita
(Constant 2011 U.S. dollars, PPP adjusted)
Citation: IMF Staff Country Reports 2015, 025; 10.5089/9781498353069.002.A001
Source: World Development lndicators, World Bank.Selected Countries: GDP per Capita
(Constant 2011 U.S. dollars, PPP adjusted)
Citation: IMF Staff Country Reports 2015, 025; 10.5089/9781498353069.002.A001
Source: World Development lndicators, World Bank.Selected Countries: GDP per Capita
(Constant 2011 U.S. dollars, PPP adjusted)
Citation: IMF Staff Country Reports 2015, 025; 10.5089/9781498353069.002.A001
Source: World Development lndicators, World Bank.
Madagascar and Sub-Saharan Africa (SSA): Economic Growth
Citation: IMF Staff Country Reports 2015, 025; 10.5089/9781498353069.002.A001
Source: World Development Indicators, World Bank.Madagascar and Sub-Saharan Africa (SSA): Economic Growth
Citation: IMF Staff Country Reports 2015, 025; 10.5089/9781498353069.002.A001
Source: World Development Indicators, World Bank.Madagascar and Sub-Saharan Africa (SSA): Economic Growth
Citation: IMF Staff Country Reports 2015, 025; 10.5089/9781498353069.002.A001
Source: World Development Indicators, World Bank.D. Conclusions
13. Madagascar has not been able to reduce poverty since 2001. Poverty has increased and become more widespread from already high levels and overall per capita consumption fell over the period 2001–10. This is the general conclusion of the poverty analysis. A further analysis of more detailed data reveals several notable aspects on poverty:
Economic inequality appears to have declined and the poorest have in fact increased their consumption. Thus, while it is true that more people are poor today than in 2001, on average those who are deepest into poverty appear to be economically better off today than in 2001.
Poverty is primarily a rural challenge. An overriding majority of the population lives in rural areas and rural poverty rates are almost double those of urban areas.
Access to education and healthcare is very unequal and rationed by income. With a young and rapidly growing population, spending on education and health should be a key priority. However, the resources set aside for education and health in Madagascar are less than in most SSA countries and have decreased as a percent of GDP. That said, some general health indicators like under-five mortality and life expectancy are encouraging and comparable with lower middle income countries.
About one third of Madagascar’s population is deprived on multiple dimensions. For example, people who are poor, with no formal education, and without access to electricity constituted 26 percent of the population in 2010.
Alleviating poverty will require structural reforms with the potential of raising economic growth. This has to be accompanied by higher investment in education, healthcare, and infrastructure to give the young generation better opportunities.
References
World Bank (2014a), “Face of Poverty in Madagascar,” World Bank Report No. 78131-MG, 2014.
World Bank (2014b), “Opportunities and Challenges for Inclusive and Resilient Growth: Compendium of policy notes for Madagascar,” 2014.
Prepared by Lars Engstrom.
The discussion in this section is based on the analysis in “Face of Poverty in Madagascar,” World Bank 2014a.
