Madagascar Faces $7.27 Billion Annual Development Funding Challenge

Madagascar’s economic growth slowed from 4.3% in 2024 to 3.2% in 2025, with agriculture, services and investment providing much of the activity recorded during the year.

Madagascar will need to mobilise around $7.27 billion every year by 2030 to finance development, lift economic growth and reshape an economy still held back by structural weaknesses, according to the African Development Bank Group's 2026 Country Focus Report. Released in July under the title "Mobilising Madagascar's Development Financing at Scale in a Fragmented World," the report examines the country's economic prospects and sets out reforms that could expand access to domestic and international finance.

Economic Growth Remains Under Pressure

Madagascar's economic growth slowed from 4.3% in 2024 to 3.2% in 2025, with agriculture, services and investment providing much of the activity recorded during the year. Growth is projected to ease further to 3% in 2026 as external pressures and domestic structural constraints continue to affect businesses, public investment and household opportunities. The Bank expects the economy to regain momentum in 2027, when growth could reach 4.5% on the strength of extractive industries, tourism, telecommunications and continued infrastructure investment.

That recovery will depend on Madagascar's ability to turn promising sectors into productive industries that generate employment, tax revenue and wider benefits for communities. Improvements in the business environment could encourage local entrepreneurs and international investors to expand their activities, while better infrastructure would reduce the cost of moving goods, accessing services and connecting businesses with regional and global markets.

Reforms Could Unlock New Sources of Finance

The annual financing requirement presents a major challenge at a time when international development funding is becoming more constrained and fragmented. African Development Bank Country Manager for Madagascar Adam Amoumoun said the country needs to mobilise resources on a much larger scale from both domestic and external sources, alongside reforms that strengthen its ability to design and carry out productive investment programmes.

The report indicates that Madagascar has considerable economic potential despite the size of its financing gap. Stronger public revenue collection, deeper financial markets, a broader range of funding sources and improved institutional capacity could give the country more space to invest in infrastructure, essential services and economic diversification. Effective project preparation and implementation will also be important because securing finance alone will not produce lasting results unless funds are directed towards investments that raise productivity and improve people's lives.

Madagascar and AfDB Seek a Stronger Partnership

Dorette Mbinison Ratsiavahana, Madagascar's Director General of the Treasury and Alternate Governor for the African Development Bank Group, described the report's focus as crucial for the country. She highlighted the government's work to address continuing economic and social difficulties and called for stronger support from the Bank and its development partners as Madagascar pursues its national priorities.

African Development Bank Chief Economist and Vice President for Economic Governance and Knowledge Management Kevin Urama encouraged the authorities to accelerate the implementation of the New African Financial Architecture for Development. Known as NAFAD, the initiative is supported by African leaders and seeks to strengthen the continent's financing systems, improve capital mobilisation and reduce the obstacles that often prevent development projects from moving forward.

Presented by African Development Bank Country Economist Godwill Kan Tange, the report offers Madagascar both a warning and a pathway. Mobilising $7.27 billion each year will demand major policy changes, stronger partnerships and careful investment choices, yet the country's natural resources, growing industries and development opportunities give it a foundation on which to build a more resilient and productive economy.