Document of The WorldBank FOR OFFICIAL USE ONLY ReportNo. 27017-MAG THE REPUBLICOF MADAGASCAR Joint StaffAssessment of The PovertyReductionStrategy Paper October 22,2003 Preparedby the Staff of the InternationalDevelopmentAssociation andInternationalMonetaryFund This documenthas a restricteddistributionand may be usedby recipientsonly in the performance of their official duties. Its contentsmay not otherwise be disclosedwithout World Bank authorization. FOROFFICIAL USEONLY THE INTERNATIONALDEVELOPMENT ASSOCIATION INTERNATIONAL MONETARY FmTD MADAGASCAR PovertyReductionStrategy Paper Joint StaffAssessment (JSA) Prepared by the staffs of the Intemational Development Association and the International Monetary Fund' Approved by Callisto Madavo and GobindNankani (IDA) and Anupam Basu and Martin J. Fetherston (IMF) October 22,2003 I.OVERVIEW 1. Madagascarsubmitteda full PRSPto the Fundand World Bankon July 30, 2003, of which implementationhadalreadybegun. The full Madagascar Poverty Reduction Strategy Paper (PRSP) builds on the interimpoverty reduction strategy (I-PRSP) discussed by the Boards o f the Fundand the Bank inNovember 2000, as well as on a number o f sector strategies and an earlier StrategL.to Fight Poverty (2000), which hadbeendeveloped with support from the UnitedNations Development Program. A first version of the full PRSP hadbeenprepared by end-2001before Madagascar entered a deeppolitical and economic crisis inJanuary 2002, which ended with the international recognition of the new government inJuly 2002; the crisis had a profound impact on the economy as GDP contracted by 12.7percent in2002. Over the past year, the new administration made significant changes to the draft PRSP it had inherited,includingthe elevation o f governance reforms to the core of the strategy andbuildingsector strategies around work program agreementsbetween miiiistr'es and the presidency. A total of fifteen different programs underlie three strategic axes: (i) restoring a rule of law and a well-governed society; (ii)promoting economic growthwith a large social base, and (iii) promoting systems for establishing human andmaterial security and enlarging social protection. 2. The PRSPhastaken into consideration the majorityof the recommendations madeby the 2000 Joint StaffAssessmentonthe I-PRSP.That JSA made the following recommendations for the full PRSP: (i) a clearer roadmap of the participatory process was needed; (ii) assumptions on macroeconomic growthwere optimistic and alternative ' ThisStaff Assessment was preparedjointly with the African Develop,-.mt Bank, the European Commission, and the UnitedNations Development Program. This document hasa restricteddistributionandmay beusedby recipients only in the performanceof their official duties. I t s contents may not be otherwise disclosed without World Bank authorization. - 2 - scenarios would need to be developed; (iii)strategy o fhow growth can reachthe rural a poor would have to be more clearly articulated; and(iv) prioritization and full costing o f the many actions and targets included inthe document was necessary, based on improved analysis o f the linkages between poverty outcomes and inputprovisions. The full PRSP fulfils recommendations (i), (ii). indicatedbelow, there are shortcomings inthe and As articulation o f the strategy to reduce rural poverty andinthe costing o fthe different action plans. 3. The PRSPhas several majorstrengths.First,it is underpinnedby a very high degree o f ownership. The new administration took on the process fully, making important and substantial changes to the draft, which existed before the crisis, and a very inclusive participatory process was followed. Second, the strategy includes a very comprehensive poverty diagnostic, including poverty dynamics over the past years, andtakes this work into account inits strategic orientation. Third, its overall strategic focus i s clear andwell- argued; sector development plans are coherent with the PRSP as they are built on work program agreements between each sector ministry andthe presidency. Fourth, the strategy includes a list o f short-term policy actions, short-term program outputs, multi- year public investment spendingtargets, and a list o f thirty-one indicators, which will allow a regular assessment o fthe progress inimplementation. Fifth, the PRSP develops different macro-economic scenarios, linkingpoverty reduction to various growth paths o f the economy. Lastly, the targets and objectives spelled out inMadagascar's PRSP are consistent with the Millennium Development Goals (MDGs). The strategy uses the Millennium declaration as one o f its references, going as far as to map the different PRSP subprograms to individual MDGs (p. 45). 4. The PRSPhas several weaknesses as well, whichthe staff recommendthe administrationto focus on duringimplementation.First, while all PRSPprograms set specific sector targets for the coming years, only very limited costing has taken place to assess the expenditures needed to achieve suchtargets. Overall planning o fpublic investmentrequirements derive from the macroeconomic framework and do not necessarily matchprogram needs. Planningo fnecessary current expenditure needs-of crucial importance for basic service delivery-has not taken place. Second, only the transport and education strategies outlined inthe PRSP derive from an assessment o f why reforms are needed and why public service delivery has failed inthe past. Other sector strategies, notably those inthe health, nutrition, energy, water and agricultural sectors, have been assessedingeneral and forgo this important step. Third, the list o f measures included inthe PRSP addup to a very ambitious program, which i s boundto test the implementationcapacity o fMadagascar. The government will needto focus on capacity buildingto ensure successful implementation. To improve capacity, andassure an impact on poverty inthe short andmedium term, the government will need to prioritize the actions with potentially the largest impact on the poor and assure follow-up. Fourth, duringthe first year o fPRSP implementation, the government will equally haveto harmonize the many different targets and indicators included inthe document. While, laudably, a list o fthirty-one priority indicators for monitoring has been established, this list o f indicators and their baseline values are not always consistent with the detailed sectoral indicators found inthe body o f the text. Lastly, the PRSP does not include an - 3 - assessment o fpossible risks (and mitigation measures) that could negatively affect implementation. 5. The staff are also somewhatless optimisticthan the government'sPRSPwith respect to the macroeconomicoutlookfor the country.While the base case scenario of the PRSP postulates real growth rates o fthe economy between 8 and 10 percent, the staff thinkthat a6percent growth rate (which falls between the low andhighcaseofthe PRSP) i s likely to be more realistic inthe medium-term-and would itselfmark a significant improvement over Madagascar's growth record inthe past four decades. A real growth rate o f 6 percent, combinedwith a pattern o f growth that helps spread income growth to rural areas, would reduce hunger and extreme poverty by halfby 2015. 11. PARTICIPATORYPROCESS 6. A numberof thematicworkinggroups anda TechnicalCommitteehaveled the PRSPprocess since itsinceptioninthe fall of 2000. The PRSPprocess has been organizedby the Secritariat Techniquede I'Ajustement (STA), which acts as a technical secretariat to a PRSP Technical Committee, composed o f representatives o f all sector ministries, several nongovernmentalorganizations, andacademia. The PRSP Technical Committee, though, has met only rarely and the operational decisions concerning the management o fthe PRSP process have rested largely with STA. Six thematic working groups (rural development, infrastructure, health, education, private sector development and governance) were constituted inthe fall o f 2000, which were responsible for drafting relevant sector strategies. Private and nongovernmentalorganizations participated. 7. Over the pasttwo andhalfyears, PRSPpreparationincludedsubstantial consultationswith allgroups of the Malagasy society. Overall, STA organizedten thematic workshops inall parts of the country, covering such topics as good governance, fightingHIV/AIDS, gender inequalities, rural development, forest fires, urbanpoverty, education, health, and the environment. Regional workshops at the end of 2001 took place ineach o f Madagascar's six provinces to discuss a first draft o f the overall strategy. Large national consultation workshops (with more than 500 participants each) in November 2001 (before the crisis) andMarch 2003 (after the crisis, inwhich the President participated) were held to validate the PRSP. The PRSP consultation process included significant participation o fwomen. The staff agrees with the analysis o f the composition o fparticipants as presented inthe PRSP (p.4). 8. Today, the MalagasyPRSPhas a very highdegree of publicvisibility.The government presented the PRSP to the national assembly inJuly 2003 where the docu- ment was discussed and approved. The final PRSP has been distributed widely inthe country andhas postedon the government web site since June 2003. The president and ministers generally refer to the PRSP as the key government policy document. - 4 - 111. POVERTYDIAGNOSTIC 9. The Madagascar PRSP includes detailed description of poverty develop- ments and the profile of the poor. A large number o fpoverty studies, developed by the statistical institute, INSTAT, the agricultural research institute, FOFIVA, with support from the World Bank, UNDP, USAID, and Cornel1University, underlie the poverty diagnostic section. The evaluation o f household surveys from 1993 to 2001shows that nationwide poverty has varied only little, while the urban poverty rate showed con- siderable variations. But since more than 80 percent o f the poor live inrural areas, the large swings inurban poverty produced only small changes inthe aggregate poverty level. Basedon analysis o f inequality developments, the PRSP shows that the majority o f the poor didnot benefit from the macroeconomic growth achieved duringthe period 1997 to 2001, as welfare gains didnot spread to rural areas. A spatial analysis o f poverty shows welfare differences betweenMadagascar's six provinces. However, inthe staffs view, such differences are somewhat overemphasized, as recent studies usinglow level poverty maps show that major variations inwelfare levels occur between Madagascar's 110 districts rather than betweenprovinces.2 10. The diagnostic section shows that the rural poor largely depend on agriculture, especially the production of rice. Inthe view o f the staff, the PRSP places correct emphasis on low land access (inpart, due to lack o f landtitles), extremely low agricultural productivity linkedto the limited use o f modern inputs, widespread isolation o f communities due to lack o froads, and lack o f access to basic education and health services. It also points to the impact of recent shocks on poverty, such as the 2002 political crisis-which affected urban areas more than rural areas, as it is inthe former that a goodpart o fthe newjobs that hadbeen created from the 1997-2001 growth were located(inthe secondary and tertiary sectors). The PRSP estimates that incomes fell by 20 percent inthe entire country. Usinga variety o f different indicators, the PRSP shows that gender inequalities exist, less so inthe income dimension o f female-headed house- holds, but significantly with respect to other dimensions o f poverty such as illiteracy or access to basic health care. Duringthe implementationo f the PRSP and inthe preparation o f the first progress report, the staffrecommendthat this analysis be complementedby the results o f institutional gender assessments, which have shown that progress is needed, especially inthe enforcement o f gender-responsive laws. Further, discrimination against women exists interms o f access to land through the traditional inheritance system as well as modern law. 11. The staff especially commend the PRSP for incorporating community preferences and listing the vulnerabilities of the population. Basedon recent findings Per the constitutional amendments o f 1998, Madagascar has four levels of government: the center, autonomous provinces, regions, andcommunes. After the political events o f 2002, the elected governors of the autonomous provinces were replacedby special delegates chosen by the central government. Regions are not yet functioning, but an intermediate level o f government exists for deconcentrated ministries, namely districts. In all, there are 110districts inMadagascar, which are particularly important for service delivery ineducation and health. - 5 - o f a census conducted at the commune level, the PRSP shows how community prefer- ences vary spatially inMadagascar andidentifies agriculture, transport, and security as the three most important areas for public intervention. The PRSP also includes a very useful categorizationo f different vulnerabilities (economic, social, environment, and natural disasters) o f the population. While the operationalizationo f this concept i s difficult, the PRSP lays the groundwork for future diagnostic work inthis area. 12. The staff would suggest that, during the first year of implementation of the PRSP, diagnostic work concentrate on four areas. First, it would be important to establish coherence between the indicators derived from householdsurveys with line ministry targets outlined inthe PRSP. This pertains especially to key indicators inthe education, health, andnutrition sectors, which differ significantly today. Second, the staff would encourage the authorities to re-examine welfare developments o f the period 1999- 2001, as important changes inthe householdquestionnaire mighthave ledto larger swings inpoverty than shown inthe document. These modifications would not change the direction o f the major conclusions o f the comparisons, but are likely to affect the assessment o fthe degree o f impact o f growth on poverty. Third, while the PRSP includes a detailed analysis o f growth policies andpoverty reduction, it would be useful to include a detailed discussion inthe first pro ess report on how past development projects and policies have impactedon the poor. Fourth, given the rising inequality between 1997 and F 2001 as demonstrated inthe PRSP, additional analysis may be warranted on whether the factors that have contributed to rising inequality inthe past (such as land) are being effectively addressed. 13. Lastly, the staff would encourage the government to continue regular meetings of the six existing thematic PRSP working groups. These would be good vehicles for available sector-specific poverty diagnostics to be fed into sector analysis. Sector strategies currently do not take full account o f the available diagnostic studies. IV. THEPOVERTY REDUCTION STRATEGY 14. The staff support the main thrust of the Madagascar Poverty Reduction Strategy with its focus on governance, inclusive growth, and service delivery for human and material security. The strategy i s built around fifteen programs. Annex Io f the document includes specific actions andtargets to beachieved byeach ministryby 2004, which is complementedby a policy matrix describing main sector policies at the beginning o f the document (pp. iii-ix). While the incorporationo fthe work program agreements makes for a large number o f general and specific objectives inthe document, itensuresa coherence betweenthe PRSPandsector development plans. This discussion could draw on three sector-wide evaluations currently being carried out (for nutrition, transport, and social infrastructure) as well as the results o f the Poverty and Social Impact Analyses, which are to be completedinthe coming months (including an analysis o f agricultural protection andpoverty impacts o f reforms inservice delivery). - 6 - A. MacroeconomicFramework, Costing of the Strategy, and FiscalPlanning 15. Madagascar has embarked on a three-year macroeconomic program (2001- 04) focused on policy reforms aimed at fostering macroeconomic stability andpromoting economic growth, while contributing to the reduction o fpoverty and the improvement o f key social services. The program i s supported by an arrangement under the Poverty Reductionand Growth Facility (PRGF) o f the IMF, an InterimCountry Assistance Strategy (I-CAS) o f IDA (inresponse to the political crisis o f 2002), andother lending and grant support from international donors. Madagascar reached the decision point underthe enhanced HIPC Initiative inNovember 2000. 16. As recommended inthe last JSA, the Madagascar PRSP includestwo macro- economic scenarios and outlines the external financing needs that would be necessary if the highgrowth (and highpoverty reduction) scenario were to be attained. The high growth (andbaseline) PRSP scenario projects GDP growth to increase to 8 percent by 2006 andto remainbetween 8 and 10percent until2015. Growth would be carriedbythe traditionally strong sectors o f the economy, including mining, the export processing zone, tourism, construction, andtransport. The low growth scenario-at which the poverty reduction targets, according to the PRSP, would not be achieved-assumes growth to average 4.5 percent over the 2004-15 period. 17. The staff are skeptical that the high growth scenario of the PRSP can be attained, butjudge the low-growth PRSP scenario as too pessimistic. This view i s based on several factors: First, past experience shows that project implementation capacity is limited; given the significant deficiencies inservice delivery to the productive sectors in the recent past, limitedimplementation capacity couldprove a significant bottleneck to the attainment o fhighgrowth targets. Inorder to improve implementation capacity, important governance reforms as outlined inthe PRSP would have to take place, especially inthe areas o f public financial management and capacity building.The reforms would be a precondition for efficient absorption o f higher aid flows and improved service delivery for bothprivate sector development (for instance transport, customs, electricity, water management, extension services) and for poverty alleviation (for instance, education, health, andnutrition). Second, and related, the agricultural sector (which would be an important source o f pro-poor growth) i s facing an array o f institu- tional constraints (irrigation, electricity, transport, and social services, to name a few), which make highgrowth inthe sector a particular challenge for Madagascar. Resolution o fthe challenges to rural sector growth i s key to reducing poverty. Third, inview o f commercial banks' past reluctance to increase their exposure to the private sector, the authorities' current efforts to enhance the private sector's access to credit would have to yield results inthe short term. Fourth, the rehabilitation andprivatization o f state-owned enterprises, necessary for raisingthe overall efficiency o f the economy, would have to progress at a timely pace. Finally, should domestic revenues fall short o f projections, or shouldunanticipatedneeds arise from the underestimationo f recurrent costs (as discussed inparagraph 4 o f this JSA), the government would be required to seek additional sources o f financing. - 7 - 18. The staffwould recommendthat the highgrowthscenariobeexaminedin detailinthe first annualPRSPreport.Inthe staffs view, an intermediategrowth rate o f 6 percent i s more realistic and could leadto significant poverty reduction ifgrowth is ledby labor-intensive light manufacturing, increases inagricultural productivity, and investment inagro-busine~ses.~Such a pattern o f growth, could leadto halving o f income poverty inten years. The staff would, therefore, recommend that the first annual review o f the PRSP assess the degree to which conditions for growth inthe agricultural sector and inlabor-intensive light manufacturing have beenimproved. The staff also suggest that progress inimplementationo f governance reforms, which are necessary for broad- based growth to occur, be assessed, together with an evaluation o f implementation capacity andconcomitant financing needs. 19. Eventhoughthe discussionof the macroeconomic frameworkinthe PRSPis limited,the staffjudge the frameworkto be generallysoundbasedonthe tables attachedto the document.The financingrequirements ofthe PRSP are broadly inline with donors' commitments andconsistent with PRGF assumptions. Giventhe assump- tions o fthe framework, the impact on medium-term debt sustainability will be moderate. The staff concur with the monetarypolicyunderlyingthe framework andflexible exchange rate system. The staff would recommendthat the PRSP progress report provide a comprehensive discussion o f macroeconomic conditions, targets, and policies to achieve the inflation objective, savings and investmentbalance, fiscal deficit, and external objectives (including trade reform), as well as an assessment of the ability o f these policies to respond to exogenous shocks. The staff would recommendthat a discussion o fhow a lower growth outcome would be reflected inthe prioritization o f fiscal choices be included inthe progress report. 20. The PRSPrightlypointsout (p. 76) that domestic revenuesinMadagascar are low andthat significantrevenueeffortsare neededinthe mediumtermto financethe ambitiouspovertyreductionstrategy.To this end, the discussion inthe PRSP o f the structural deficiencies o f the tax system i s limited. These deficiencies erode the effective tax base and distort economic activity. Furthermore, the government's recent decisionto reduce the tax burdenon transport and other capital goods was implemented together with a number o f ad hoc exemptions. The PRSP progress report should indicate the authorities' commitment to reversingthe proliferation o f ad hoc tax and customs duty exemptions that do not support the reform's objectives. Inaddition, the PRSP progress report should indicate the authorities' commitment to reforming excise duties, external tariff, and income tax, andimproving tax and customs administration. 21. The staffconsiderthe costing of the proposedactions to be one of the weak pointsof the strategy.While individual sector ministries have defined work plans (included inAnnex l), and most ministries have established targets (input and output indicators), a detailed costing o fthe actions has not taken place (with the exception o f the transport and education programs). Rather, the overall public investment envelope is distributed more or less according to the actual distribution o f the 2003 public investment plan.While it is likelythat spending planswill fit within the plannedstrongexpansion o f See paragraphs 33 through 36 for an assessment o f the rural sector strategy o f the PRSP. - 8 - public investment, a costing i s necessary, as it would establish a linkbetween actions and results to be attained-an important part o fpublic expenditure planning. Similarly, none o fthe sector programs outlined inthe PRSP takes into account the correspondinghigher outlays incurrent expenditures. For example, inthe health sector, information campaigns and salaried doctors and nurses cannot be financed through the planned expansion in healthinvestments. The staffwould therefore urge the government to continue working on a detailed costing plan for major programs, linkingresults to be achieved to both investment and current expenditure outlays. The government would ultimately benefit from developing a preliminary Medium-Term Expenditure Framework once capacity to fully cost program targets is developed for the majority o fexpenditure programs. Insome sectors, like education, the government can draw on advanced sector budget plans, which are currently not reflected inthe PRSP. The first annual progress report could then include an update o f the costed strategy. 22. The staff recommendthat programmingof investmentsfinancedthrough savingsfromthe HIPC Initiativebeincludedinthe normalbudgetaryplanning processandnot, as outlined inthe PRSP, ina separate fashion. The tracking mechanism for HIPC expenditure and financing should also be further improved. Over the past three years, retroactive programming o f HIPC resources has proven to be extremely difficult and cumbersome, leadingto an underutilization o f these resources, which are much needed inthe fight against poverty. The first annual progress report o f the PRSP would also need to report on HIPC expenditure and financing andreconcile the poverty reduction expenditure inthe priority sectors, including those financed by the HIPC Initiative debt relief, with the budget. B. Targets,Indicators,ProgressMonitoring,andPRSPImplementation 23. The PRSPincludeskey baselineindicatorsandtargetsprovidinga bench- markfor subsequentreviews. The PRSP contains 31core indicators (pp. 150-15l), which cover the three top strategic focus areas o f government andwhich complement sector-specific monitoring plans. The priority list includes poverty, infantmortality, school completion, and H N / A I D S infection indicators, which permit to measure progress toward achieving the Millennium Development Goals. Indicators provide an appropriate mixbetweeninput, output, andoutcomemeasures; data sources andnecessary data collection efforts are clearly indicated. The baseline for 2003 andtargets until2006 permit a review within the existing monitoring and evaluation capacity o f the government. 24. Duringthe first year of PRSPimplementation,the staff suggestthat the governmentconductreviews of theproposedpriorityindicatorsandtheir targets, as several indicatorsappear to betoo ambitious.The government might find it useful to substitute several o f the chosen indicators with others more appropriately linkingpolicy measures to results duringthe course o f PRSP implementation. For example, the key indicator for rural development would rather be growth inrice productivity insteado f the chosen indicator measuringthe intensity o f agricultural production. Similarly, it mightbe advisable to replace some o fthe chosen indicators for primary schooling and health (number o fbeneficiary population per operating facility) with service delivery indicators - 9 - (studentkeacher ratio or health utilization rates) and to add a monitoring indicator on private investment, as the latter i s key inany successful growth strategy. The annual progress report would also have to clarify the definitions o f several o f the priority indicators. Inreviewing the indicators, the government mightwant to establish more clearly how the different indicators and objectives are derived from the policy actions and sector investmentprograms outlined inthe PRSP, and integrate this exercise with the full costing discussed earlier. 25. The staff commendthe PRSPfor outlininga comprehensivemonitoringand implementationstrategybutare of the opinionthat substantialtechnicalassistance andcapacitybuildingwould be required.The STA would play the central role of coordinating information from line ministries, the statistical institute, INSTAT, the Directorate o fPlanning, andthe Directorate o f Economy. Itwould present the monitoring results twice per year to participative group meetings, which will include civil society and the technicalworking groups, which have already beenestablished. Short-term actions to operationalize the monitoring and implementation system would include (i) identifjmg, inadditionto the core indicators includedinthe document, the indicators andtargets for each PRSP subprogram andpolicy measure that is to be followed as part o f the monitor- ingeffort (adopting a consistent distinction between input, output, andoutcome measures); (ii) providing each ministrywith terms o freference as to what type o f data would be needed inwhat form and when; (iii) reviewing STA's role, staffing, and organization, as it has encounteredproblems o f effective coordination across sector ministries inthe past; and (iv) developing a comprehensive plan on how to strengthen the entire monitoring and implementation system o f the PRSP, including the necessary steps, which will leadto the first annual PRSP progress report. Madagascar's international partners would support the government inthis process through financial and technical assistance. C. GovernanceandPublicSector Management 26. Madagascar's PRSPassigns governancereformsthe centralroleinthe fight againstpoverty.The staff filly agree with the centrality of governance reforms to improve public service delivery and to create an environment conducive for private investment. While economic and structural reforms had well advanced between 1997 and 2001,governance reforms lagged significantly behind. The new government that took office in2002 faced the following major problems, as assessedby the staff poor financial management practices, piecemeal program evaluation, and poor accountability structures, a highlevel o f perceived corruption (Madagascar ranked 98tho f 102 countries inthe Corruption PerceptionIndex ofTransparency International), cumbersome customs procedures, ajudicial sector ineffective inenforcing contracts or property rights, an Madagascar's partner organizations participated actively inthe PRSP process since its inception, providing both technical assistance as well as regular feedback to the govern- ment. Sixjoint aide-mbmoires have been drafted by thirteen o f Madagascar's bilateral and multilateral donors, offering comments on process and content at the various stages o fPRSP development. - 10- administration that could not access a large share o fthe population (which is rural), forestry and miningsectors operating outside the formal economy, and a decentralization strategy that would adversely affect communes. 27. The staff concur with the broad governance reform agenda outlined inthe document, including the short-term policy measures (pp. iii-ix) andnote that implemen- tation o f the reforms has commenced ina number o f areas. The staff commend the authorities for setting up ajoint publidprivate sector committee responsible for implementing the reforms inthe customs andtax departments. 28. The staffwould liketo urgethe governmentto developa specificplanof how the major reformsare to be carriedout andto identify technical assistanceneeds where appropriate. Many o fthe reforms (e.g., improving budget planning, execution and monitoring; customs reform; fightingagainst corruption, strengthening of thejustice/ tribunal system as well as administrativereforms) remain at a general level, and it would be important to develop a detailed, step-by-step action plan as to how the objectives are going to be attained. Such an action plan already exists for the strengthening o f financial control organs, which could serve as a model for other areas. The implementationplan couldbe part o f the annual PRSP progress report, as couldbe more specific governance indicators, which remain general inseveral areas (such as for justice reform). D. StructuralPoliciesfor GrowthandInvestment 29. Threeguidingprinciplesunderliethe policiesaimedat stimulatinggrowth andinvestmentas outlinedinvariouspartsof the PRSP.First,major investmentin public transport infrastructure is neededto integrate farmers into the market economy through a better roadnetwork. Second, a commitment to public-private partnerships in the management o f key public enterprises. Third, improving the environment for private investmentthrough reforms intax andtariff policies, land laws, andbetter governance. The staff support these three guidingprinciples. 30. The transportprogramoutlinedinthe PRSPis very ambitious,but is built arounda clear strategy developedwith Madagascar's major partners.It contains a carefully developed and prioritized investment plan and appropriately chosen short- and medium-term targets. The PRSP presents important institutional reforms o f the sector, which will change the role o f the public sector from that of an implementing agent to one o f a financier andregulator, allocatingthe construction andmanagement o f roads, ports, airports, andthe railway to independent agencies. A management contract for the national airline and a concession agreement for the Northern Railway were signed in2002. Short- term structuralpolicy objectives (p.viii) regardingthe reform o f the Road Fund(and targeted spending o f the RoadFundto maintainrural roads), andthe signing o f concession contracts for the major port (Tamatave) and airports are appropriately chosen. Short-term output targets (pp.A.I.2-A.I.4) are derived from a sector master plan. 31. Public-privatepartnershipsandtransfer of ownershipto the privatesector also play an importantrole in other sectors, although the strategies are less clearly definedthan inthe transport sector (p. 80). Attracting foreign investment inthe cotton - 11- sector could provide an important boost for cotton producers inMadagascar, as the expanding Malagasy textile sector (benefiting from AGOA) could increasinglyrely on domestically producedraw material as inputs. While not spelled out specifically inthe PRSP, the government i s also currently seeking contracts for private management o fthe sugar company, SIRAMA, and is developing a strategy for private participation inthe electricity sector by seeking a management contract for the electricity and water utility JIRAMA. The staff would suggest that the PRSP progress report reflect developments in these sectors. 32. The PRSP includes policy measures that would entice private investment into regionally concentratedgrowth poles (pp. 81-86, andp. 90). The staffjudge these measures, as well as sector-specific measures outlined inthe document, as appropriate andnecessary to stimulate private investment. Additionally, the staff suggest that the first PRSP progress report reflect the current plans of the government to provide a minimum infrastructureplatform (including complementary energy, water, and transport services) for private sector development. E. Rural andEnvironmentally Sustainable Development 33. Given the predominantly rural basis of poverty, the rural and environmental development strategy of the PRSP is of paramount importance for any success to fight poverty in Madagascar. The outline strategy buildsheavily on the Plan d'Action pour le DCveloppement Rural (PADR) andthe Plan d'Action Environmental (PAE). In the view o fthe staff, the strategy i s correctly built around raising agricultural produc- tivity, attractingagro-business investments to highpotential zones, andpromoting farmingtechniques andalternativerevenue sources to reduce deforestation. 34. However, the staff would like to raise three concerns regarding the presented strategy andwould like to encourage the government to refine its rural and environ- mental strategy inthe first annual progress report o f the PRSP. First, the rural develop- ment section o f the PRSP does not start from a review o f why such policies have largely failed inthe past. This would be an important analysis to undertake as massive investments are currently planned (for instance, inirrigation, which have not worked in thepast), which mayrequirecomplementary institutional changes (such as the creation andempowerment o fWater User Associations) andinvestments inother sectors (such as inenergy andtransport) to yieldresults. Similarly, severe governance problems inthe forestry sector have undermined successful environmental protection inthe past, andthe new government has taken decisive action to deal with them (e.g., fieezing new forestry permits, and banning log exports). The staff suggest that the annual progress reports o f the PRSP include an analysis o f the impact o f recent actions, along with a concrete agenda for the future. 35. Second, the PRSP largely fails to establish the linksbetween the identified objectives, actions to be taken, and expected results. The section on raising agricultural productivity-at the heart o f the strategy-remains unspecific and states only broadpolicy objectives about relaunching agriculturalproduction or production of locally certified and improved seeds. The continuation o f fiscal measures with respect to rice - 12- protection and inputtaxation, which were introduced in2000 to improve the rural terms- of-trade, and especially those for rice producers, are likely to be key inraising rural productivity. Supporting measures such as improving market access byproducers will also be necessary inthis respect. Similarly, the PRSP places emphasis on development o f highpotential areas andthe development o fanexport-oriented agro-business sector, but stops short o f outlining how such investment and export diversification will be financed and implemented. The strategy outlines that income growth inthe less favorable zones would stem from diversification into nonfarm activities, but the PRSP does not specify if necessary investments to achieve a minimuminfrastructure platform (which would include roads and electricity) would be prioritized to help these poorest areas o f the country. Sector-specific indicators (pp. 100-101)-apart from the 31priority indicators discussed above-lack the appropriate baselinenecessary for monitoring or arenot linkedto major strategic orientation ofthe rural development strategy. The staff suggest that the annual progress report provide a more substantiated linkbetween objectives, actions, andresults. 36. Third, the staffjudge the environmentalprotection strategy outlined inthe PRSP as overly focused on area protection and less specific on how the incentive and institutional framework could be changed to promote environmentally sustainable farming practices. The integration o f coastal zone development with local areaprotection andthe development o f the fishing and aquaculture sectors i s not specified. The staff would therefore recommendthat the govemment ensures better coordination between the PADRandthe PAE.The staffcommendthe PRSP for settingtargets for reforestationand for the management transfer o f forest cover to local communities, but would like to encourage the govemment to outline, inthe annual progress report, what more general incentive policies could be developed to limit environmental degradation. F. SocialPolicies 37. The overarching long-term objective of the PRSP education strategy i s to achieve universal primary education and to ensure that all children complete the primary cycle. As such, the stated goals are inline with the Educationfor All initiative and the Millennium Development Goals. Currently, the student flow efficiency in Madagascar is one o f the lowest inthe world, with only one out o f every four children completingprimary school. The short- andmedium-term strategy o fthe govemment consists o f (i)progressively extending the primary schooling cycle to nine years (p. 108); (ii)supportingthe demand for education by continuing to exempt primary school students from paying enrollment fees (p. vii) and supplyingbasic school materials (books and writing material) to all primary school students (p.A-1-19); (iii) providing eachprimary school with a small school-fund for necessary maintenance expenditures (p.A-1-19); (iv) hiring1,700 newrural schools teachers in2004; and(v) constructing 2,300 new school rooms inthe most disadvantaged areas o f the country. Further, the PRSP outlines plans to continue the deconcentration and decentralization o fthe education system and to introduceperformance-based management contracts between the center and deconcentrated education districts. - 1 3 - 38. The staff agree with the outlined strategy, its goals and the announced actions in the education sector. However, the staff has some reservations about the managerialcapacity necessary to meetthe stated goals and the specific indicators chosen to monitor performance. Regardingmanagerial capacity, a quantum leap is necessary (i) inbudgetplanningandreportingat the various levels o fthe government, (ii) the in formulation o fperformance contracts and indicators, and (iii) incoordinationof complementary investments. Regardingthe indicators chosen, the staff would encourage the government to reflect more fully on the work inthe Educationfor All initiative inthe first PRSP progress report. With respect to the specific targets set for the sector (p. 112), the staffwould recommendthat the government revisit inthe annual progress report the objectives for absolute school enrollment expansion inthe primarycycle (p. 112)-which appears very low-and which is not inline with the targeted increase innet enrollment rates postulatedas part of the thirty-one priority indicators (p. 147). Further, the staff would also suggest that the government add a number o fperformance indicators for school districts (such as the number o f school districts with an adequate operational management system) andbudgetary monitoring indicators, including whether primary schools have received their recurrent budget allocation in a timely manner. The government might also consider including the repetition rate as a core PRSP monitoring indicator and, by 2006, develop a learning achievement measurement system that will inform on the quality o f education on a regular basis. Lastly, the staff note that a detailed costing o f current and investmentneeds o f the education sector has already been completed as part o f the Educationfor All initiative and should be included inthe first annual PRSP progress report. 39. The PRSPhealth strategy focuses on various supply-side measures of service delivery, but does not outline the complementary institutional reforms necessary for improved access to health care by the poor. The PRSP includes plans to improve mother-and-child health care services, implementation o f the roll-back-malaria program, and the fight against transmissible andnontransmissible diseases. However, the PRSP does not refer to the population policy of the government to be pursued. A successful population policy would have an important impact on maternal health as well as on health, nutrition, andeducation expenditures. Furthermore, the strategy does not outline how service delivery could be improvedby (i) changing human resource policies so as to improve the very limitedavailability o f doctors and nurses inremote andpoor areas; (ii) creating incentives (and introducing service contracts) to improve maintenance o f health equipment, especially indistrict hospitals; (iii) shiftingaccountability andresponsibility o f healthcare delivery to deconcentrated health districts and/or private providers, combined with both increased financial and technical assistance to these entities; (iv) improving strategic budget planning and regular reporting (of domestic and external funds) inthe government, integrating current andinvestment expenditure programming; (v) raisingperformanceevaluation inthe administrationto improve allocative efficiency ofhealth sector resources; and(vi) the provision o f complementary services (e.g., electricity), which would improve the functioning o f primary healthfacilities. Further, the PRSP announces the reintroduction of the suspended cost recovery for medicines and basic health services (p. 121) "with a human face," i.e. which would exempt the poorest from health fees. It i s not clear, however, how such targeting i s to take place, andthe staff suggest the annual progress report to outline and evaluate the newly installed system. - 14- Lastly, additional financing for health service delivery will inlarge part fall on current expenditures for salaries andmaterials. These costs would have to be integrated into a medium-term budget framework. 40. The staff suggest that the annual progress report review both types of indicators and defined objectives in the health sector. First, for several indicators (including the childmortality rate), different baselines are postulated as part o f the 31 priority indicators (p. 147) and as part o fthe sector specific indicators (pp. 114-115). Second, while the target for the vaccination rate o f children applies to the 0-1 1months age group, it should be measured through independent biannual household surveys (DHS, MICS, EPM) inthe 12-23 months age group. The staff also urge the government to improve its Health Information Management System to allow annual tracking o f the vaccination rate. Lastly, the number o f inhabitants per functioning primary and secondary health care center neither takes into account the actual utilization o f health facilities nor the highlyunequal existing distribution o f such healthcenters, disfavoring the poorest areas. The government might consider usingthe utilization rate o f health centers for preventive care inrural areas as an indicator instead. 41. The PRSP includes a clear strategy to combat the spread of HIV/AIDS. Supported by various development partners, fightingthe spread o f HIV/AIDS is a key element o fthe government strategy. A multisectoral HIV/AIDS commission has been created inthe presidency and a national strategic plan to fight the spread o f HIV/AIDS i s being implemented. The latest HIVprevalence rate, estimated inJuly 2003 among pregnant women countrywide, i s about 0.7 percent, substantiating previous fears that, like elsewhere inAfrica, the epidemic inMadagascar i s spreading exponentially. The govern- menthas launched a comprehensive surveillance system to obtain more recent and reliable data. Increased focus on vulnerable groups, especially adolescents and youth, i s o fparamount importance inthe fight against HIV/AIDS. 42. The PRSP announces the much-needed development of an integrative nutrition strategy. Malnutrition rates are close to 50 percent today and pose a direct threat to development possibilities and survival o f affectedchildren. However, the planned actions concern inlarge part its symptomatic treatment (e.g., inspecialized hospital centers for the acutely malnourished) and do not derive from an integrative, national nutrition strategy, which would emphasize food security, improved breast- feeding practices, andnutritional education to improve household level capacity to detect correctly andtreat child growth andhealth difficulties. Nevertheless, the staff welcome that the PRSP announces the formulation o f such a strategy by 2005 (p. 115). 43. The PRSP correctly emphasizes the need to improve basic service supplyin water, sanitation, and electricity, especially in rural areas. Basic service supply in rural Madagascar i s almost absent today with only 31percent o f households having access to safe water (with sanitation connections even lower) and only 4 percent o f households commanding electricity supply. The staff welcome the importanceplaced on basic service supplybut would propose that the institutional mechanismo f service delivery inthe water sector could be outlined. Additionally, although progress has been - 1 5 - made inestablishing the national water and sanitation authority (ANDEA), the short- and medium-term relationship between the ministry andANDEA needs to be clarified. v. R I S K S FOR SUCCESSFULIMPLEMENTATION 44. Several risks couldunderminethe successfulimplementationof the strategy. First, political stability is key for implementingany strategy. The new administration has commenced sweeping reforms ineconomic management, which would leadto the elimination o frents for the elite and to possible pressures for policy reversals. Second, fundamental public finance, budget programming, civil service, andprocurementreforms are a necessary condition for Madagascar to raise public sector capacity and investment levels, which are, inturn, necessary to absorb more external aid inflows. Ifthese reforms were to be delayed and not prioritized, the planned increase inpublic investments for poverty reduction would likely not materialize. Third, sustainable poverty reductionwill depend on attractingprivate investmentinto the labor-intensive manufacturing sector and into agrobusinesses with spread effects to rural areas. Currently, confidence o fprivate sector investors inthe Malagasy economy i s still fragile, due to the 2002 political and economic crisis. Ifthe government does not succeed inreestablishing the confidence o f private investors, the targeted highgrowth andpoverty reductionpathwould not materialize. Fourth, the outlined public investment program o f the PRSP requires Madagascar's partners to (i) increase their financial support (ii) their support fully align with the PRSP, developing common programmatic support approaches; and (iii) har- monize disbursement andprocurement procedures. Underfinancing o f the Malagasy program is a serious riskthat could cause the implementationo f the poverty reduction strategy to unravel. Moreover, ifdonors, including the Bank, were not to undertake such alignment with the PRSP and common cooperation, successful PRSP implementation would be impossible. VI. CONCLUSION 45. The staffview the MadagascarPRSPas a major accomplishment,especially as the PRSP integrates existing sector development programs. Changes, clarifications, and refinements o fthe strategy will naturally have to be made duringimplementation and this refers especiallyto budgetplanning (including the current expenditure budget), costing o f individual actions, concretizing reform steps inthe governance areas, and refining indicators so that they capture well progress inthe implementation o f the strategy. But the staff are confident that the government, with support o f Madagascar's international partners as well as civil society, can make such improvements. 46. The staff consider this PRSP a credible poverty reduction strategy that provides a sound basis for Fundand IDA concessional assistance. The staff recommendthat the respective Executive Directors o f the IMF and the World Bank reach the same conclusion. REPUBLIC OF MADAGASCAR Tanindrazana - Fahafahana - Fandrosoana ....................... P.R.S.P. POVERTY REDUCTION STRATEGY PAPER Updated July 2003 CONTENTS SPEECH BY HISEXCELLENCYMR MARCRAVALOMANANA. PRESIDENTOF THE REPUBLICOF MADAGASCAR .............................................................................. i PRIORITYMEASURES 2003-2004 .............................................................................. 111 EXECUTIVESUMMARY ................................................................................................ X 1 GENERALINTRODUCTION ............................................................................................................ ............................................................................... 1.1. VISION AND AMBITION 11 1.2 THE PARTICIPATORYPROCESS ............................................................................................ 3 1.2.1 3 1.2.2 Inmonitoring................................................................................................ Indesigning and drafting.............................................................................. 5 1.2.3 ................................................................................. 5 1.2.4 Outline of the drafting of the PRSP............................................................... For wide dissemination 1.3 STRUCTUREOFTHE PAPER .................................................................................................. 66 2 GENERALCONTEXTANDSITUATIONOFPOVERTY .................................... 7 2.1 GENERALCONTEXT ................................................................................................................ 7 2.1.1 Generalsituation of poverty .......................................................................... 7 2.1.2 On the economic level.................................................................................. 8 2.1.3 Onthe politicaland institutionallevel .......................................................... 11 2.1.4 The post-crisissituation.............................................................................. 12 2.1.5 The Structuraladjustment program............................................................. 14 2.1.6 Sector-basedprograms .............................................................................. 14 2.1.7 The problems of Governance..................................................................... 15 2.1.8 Appraisalof programs. formaland informalmechanisms of socialprotection16 2.2 ANALYSIS OF POVERTY ....................................................................................................... 17 2.2.1 Characteristics of poverty........................................................................... 17 2.2.2 Determiningfactors of poverty .................................................................... 2.3 POVERTYEXPERIENCES ......................................................................................................23 40 2.4 POVERTYRISKS (VULNERABILITY) 2.4.1 THE TYPESOF RISKS.............................................................................. 43 .................................................................................... 43 2.4.2 GENERAL PROFILEOFVULNERABlLlTY ................................................ 44 2.5 COMPARISONOF THE MlLLENlUMSUMMITOBJECTIVESWITHTHE SITUATIONOF POVERTYANDSTRATEGIC FOCUSESOF THE PRSP .....................................................................45 2.6 SCOPEOF ACTION ................................................................................................................ 46 2.6.1 FACTORSTHAT LIMIT AND RESTRICTTHE SCOPEOFACTION ..........46 2.6.2 FACTORSCONDUCIVETO EXPANDEDSCOPEOFACTION .................47 3 DEVELOPMENTOBJECTIVE.STRATEGICFOCUSESAND GENERAL OBJECTIVESINTHE MEDIUMTERM ........................................................................ 3.1 DEVELOPMENTOBJECTIVE ..................................................................................................49 .................................................................................................49 3.2 THE STRATEGICFOCUSES 50 governedsociety..................................................................................................... 3.2.1 Strategic interventionfocus no .1: Restoringthe rule of lawand a well 50 3.2.2 muchenlarged basis............................................................................................... 3.2.3 humanand materialsecurityand enlargedsocial Protection................................... Strategic intervention focus No.3: Foster andpromotesystemsfor ensuring52 Strategic interventionfocus No. 2: Foster and promote economicgrowth on51a 4 POVERTY REDUCTIONAND ECONOMICGROWTH .................................... 55 5 IMPLEMENTATIONOFTHE STRATEGY ........................................................ 5.1 PROGRAMSFOR ACHIEVING THE OBJECTIVESOF STRATEGIC FOCUS NO 1 . ...........57 59 5.1.1 Governance and the fight againstconuption............................................... 59 5.1.2 Governanceand respect for democracy..................................................... 67 5.1.3 Governanceand rule of law ........................................................................ 67 5.1.4 Localgovernance....................................................................................... 72 5.2 PROGRAMSDESIGNEDTO ATTAINTHE OBJECTIVESOF STRATEGICFOCUSNO 2 76 5.2.1 Macroeconomicstability andgrowth........................................................... . ..76 5.2.2 EMERGENCE AND REVITALIZATIONOF REGIONALDEVELOPMENT POLES78 5.2.3 Developmentand revitalizationof the privatesector ................................... 79 5.2.4 Opening up to worldcompetition ................................................................ Developmentof growth sectors .................................................................. 81 5.2.5 86 5.2.6 Ruraldevelopment..................................................................................... 88 5.2.7 Developmentand increaseddensity of structuring infrastructures .............101 5.3 PROGRAMSDESIGNEDTO ACHIEVETHE OBJECTIVESOF STRATEGICFOCUSNO 3 . 108 5.3.1 EDUCATION ............................................................................................ 108 5.3.2 HEALTH................................................................................................... 113 53.3 Drinkingwater andsanitation 5.3.4 SOCIALAND CULTURALACTIONS........................................................ .................................................................... 121 124 6 COSTSAND FINANCINGOFTHESTRATEGY ............................................ 131 7 MONITORING EVALUATION ........................................................................ 136 7.1 IN-DEPTH KNOWLEDGEOF POVERTY .............................................................................. 136 7.2 MONITORING-EVALUATION 138 7.2.1 PRINCIPLES ............................................................................................ ............................................................................................... 138 7.2.2 MONITORINGSYSTEM....................................................................................... INSTITUTIONALSTRUCTUREOFTHE PRSP IMPLEMENTATION 139 7.2.3 PURVIEWOFTHE MONITORINGSYSTEM ............................................ 141 7.2.4 COORDINATIONOF FOREIGNASSISTANCE........................................ 142 7.2.5 PARTICIPATORYMETHODOF MONITORING....................................... 142 7.2.6 THE MAIN INDICATORSIN RELATIONTO THE STRATEGIC FOCUSES147 111 LISTOF TABLES Table 1. Madagascar:Situationof the externaldebt 2000-2002and sustainability indicators10 Table 2. Madagascar: Poverty profile by province................................................................ 20 Table 3 Madagascar: Distributionof annual per capitaexpenditures . ........................... 21 Table 4 Madagascar: Situation of povertyaccordingto gender and ............................ . 22 Table 5 Madagascar:indicatorsof human development in 1999.................................. . 22 Table 6 Madagascar:Situation of povertyaccordingto the average . ............................ 25 Table 7.Madagascar: Prioritiesfor developmentaccordingto communefocus groups (September-November2001) ......................................................................... 27 Table 8 Madagascar:Accesstimeto various services andmarkets............................ . 30 Table 9 Madagascar: Situation of poverty accordingto remoteness . ........................... 31 Table 10 Madagascar: impactof transportation costs . .................................................. 31 Table 11 Madagascar: Percentageof communeswhere security conditions . ..............32 Table 12 Madagascar: Dlstributionof the population accordingto levelsof education, . by placeof residenceand by gender............................................................. 36 Table 13. Madagascar: Distributionof the population accordingto the levelof education of the headof the householdandthe quintileof per capita consumption................................................................................................... 36 Table 14 Madagascar: Buffer institutionsavailableto vulnerable households............42 . Table 15 Madagascar:General profileof vulnerability by Fivondronana..................... . 44 Table 16 Madagascar: Reductionof poverty and economic growth . ............................. 56 Table 17. Madagascar Poverty Reduction Programs - ................................................... 58 Table 18. Madagascar: Cost of the strategyandfundingneeds.................................. 132 Table 19 Madagascar:Summary of monitoringactivities., . ..................................144 Table 20. Madagascar: Main monitoringindicators .............................................. 147 LISTOF BOXES BOX No.1.A FEW INDICATIVEDATA................................................................................. 7 BOX No. 2. PRINCIPALREFORMSADOPTED SINCETHE IMPLEMENTATIONOF STRUCTURALADJUSTMENTPROGRAMS.................................................... 13 BOX No.3. REPORTSONTHE REGIONALCONSULTATIONWORKSHOPS DEVOTEDTO GOOD GOVERNANCE.................................................................................... 16 BOX No.4.COMMENTSONTHEMETHODOLOGYOF POVERTY MEASUREMENT........18 BOX No.5. REINFORCEMENT OF BUDGETARY CONTROL............................................ 66 BOX No.6.ORGANIZATIONOF THE FIGHT AGAINST HIV/AIDSIN MADAGASCAR .......73 BOX No. 7. PROGRESSOFTHE REFORMSLINKEDTO THE IPPTE PROCEDURE........73 ANNEXES Page 1. Reformmeasuresto be implementedupon approvalof the entire PRSP Improvementofthe framework incorporatingthe poverty-reductionactions A-I-1 Institutionaldevelopment, improvementof governanceandtransparency A-1-1 Socialdevelopment A-1-2 ReducingMadagascar's isolation A-1-3 Improvementofthe businessclimateand development of the privatesector A-1-3 2. Action plansfor the three strategicfocuses IStrategicfocus No. 1:Restorethe ruleof law anda well governedsociety A-11-1 Institutionaldevelopment Strategic focus No.2: Accelerate growthby increasingeffective openingthe economy Developmentof the privatesector andopeningto global competition A-11-2 Energysector A-11-3 PostOffice, telecommunications, communications A-11-3 Developmentanddensificationof structuringinfrastructures A-11-4 Ruraldevelopment A-11-6 Strategic focus No.3: Fosterandpromotesystemsfor ensuring human and A-11-7 materialsecurity andenlargedsocialprotection Secondaryeducationand basiceducation A-11-7 Higher education andscientificresearch A-11-8 Population A-11-9 Health A-11-10 3. Macroeconomicframework Table 1. Madagascar:Selectedeconomicandfinancialindicators,2001-2006 A-111-2 Table 2. Madagascar:Originand useof resources,2001-2006 (inmillionsof FMG) A-111-3 Table 3. Madagascar: Growth rate by branch of activity (annualchange in A-111-4 percentage) Table 38. Madagascar:Availabilityand useof resources at constant 1984prices (in A-111-5 billionsof FMG, 1984prices) Table4. Madagascar: Centralgovernmentaccounts, 2001-2006(inbillionsof FMG) A-111-6 Table 5. Madagascar:Centralgovernmentaccounts, 2001-2006(aspercentageof A-111-7 GDP) Table6.Madagascar: Balanceof payments, 2001-2006 (in millions of SDRs) A-111-8 Table 7.Madagascar:Balanceof payments, 2001-2006 (aspercentageof GDP) A-111-9 Table8. Madagascar:Macroeconomicassumptions, public receiptsand A-Ill-10 expenditure,2001-2006 Table9. Madagascar:Breakdownof the investment budgetbyprogram, 2003-2006 A-111-11 (Scenario1) (inbillionsof FMG) Table 10. Madagascar:Hypotheticalbreakdownof the investmentbudgetbysector, A-111-12 2003-2006(Scenario 1) (Inbillionsof FMG, annual change inpercentage) Table 11. Madagascar:Classification bysectorof institutionsand ministries(and A-lli-14 projects)(accordingto nomenclatureof public investment programs) X SPEECHBYHISEXCELLENCYMR.MARCRAVALOMANANA, PRESIDENTOFTHE REPUBLICOFMADAGASCAR WORKSHOP FOR A NATIONALDISCUSSIONON THE PSRP March 2526, 2003 at iavoloha,Antananarivo Ladies and Gentlemen, First Ishould liketo welcome you. In the present context, Malagasies and their partnersmust mobilize and come together for the recovery andthe rapidand sustainable development of the country, andfor the fight against poverty. Iam particularly happy to see here, brought together, representativesfrom all the sectors of the nation, from all four corners of the island: civil society, economic operatorsfrom various sectors, politicalclasses, churches, secular organizations,citizens, country people. Inshort, all talents from ail horizons are here to discuss and to reach agreement on a strategy to remove this country from the poverty in which it has been plungedfor morethan 40 years. This is witness that Malagasies are no longer prepared to resign themselves to live in precariousconditions, sometimes in intolerable impoverishment,and in a dilapidated environment. Malagasiessay no to authoritarianrule, to waste, to badgovernance, to corruption, etc. Yes, Malagasies are determined to be responsible for their own future, to no longer be assisted, butto bethe primary agents of their own development. You all know as well as I do, that a strategy not imagined and wanted by the people themselves, would be doomedto failure. Theoretical, predetermined,remote-controlled plans are no longer acceptable. Today we are about to begin discussions leading to a strategy to fight for a reduction of povertythat will be created by andfor the people of Madagascar. The governing and the govemed have full responsibility to lead this country on the road to developmentand prosperity. In order to accomplish this we must have a common vision, we must look in the same direction, and act inunison. We are all here today to reach agreement on clear objectives, on a coherent strategy for optimal legibility of the action that we will undertake,to establish a framework for efficientmonitoring and evaluationof our activities. The increased trust of our partners and donors will ensue. I have no doubt that they will constantly accompany us, and that they are waiting to make their contribution, because they too love this country. Ladies and Gentlemen, In a country like ours, blessed by the Gods, in this country that is relativelyshelteredfrom the most devastating cataclysms, far from murderous conflicts, in this hospitable land it is unthinkable and unacceptablethat 85 percent of the population are living in the conditions that we all know. We cannot allow such a situationto continue. Therefore, we must act together to immediately put a stopto and rapidly overturnthis situation. I To do this, we must dare to set our standardsvery high : --A growthrateof at least 8 percent; An investment rateof 20 percent. These are ambitious objectives that are nevertheless realistic, if only we can work together in the rightframe of mind, without beating about the bush, and avoidingsimplistic politicalimpulses. The figures I have mentioned must translate as tangible results and be felt by Malagasies in their daily lives, without which they will have nomeaning. Our action must include : - Immediateand emergencyaction, because a number of daily preoccupationscannot wait, - andthe mostvulnerablesocialcategoriesof societyareindanger; Short- and medium-termaction to lay the basis for a modem, strong and truly democratic society. Ladiesand Gentlemen, I believe inthe abilityof the Malagasypeopleto cometo terms with themselves. I believe in the ability of the administration and of all the authorities, from the central levelto the communes and the fokonfany to take up the challenge, and break away from the legendary red tape and nonchalanceof the administration. We are convinced that like us, you the donors and partners, will also overcome the administrative constraintsand bureaucratic redtape on your side that sometimes put a brake on our collaborationand cooperation. We are counting on a firm commitment by you in the implementation of this PSRP, which reflectsthe hopesfor development of the Malagasy people. Cooperation and partnership based on mutual trust with you, who are Madagascar's friends, are morethan a necessity. If we work handinhand, Madagascarwill become the modernand prosperous country that we wish for with all our hearts. Thank you very much. PRIORITYMEASURES2003-2004 The development objective for Madagascar is the promotion of rapid and sustainable development in order to reducethe poverty rate by half in 10 years. As the outcome of the national participativeprocess, this PSRP groups together strategic orientationsto reachthis objective. Based essentially on the principle of "Public-Private partnership," these strategies are organized around 3 major focuses: -- - Restorethe ruleof lawandawell-governedsociety; Fosterandpromoteeconomic growthonavery enlargedsocial base: Fosterand promoteenlargedsystemsof human and materialsecunty providing expanded socialprotection. To realize this objective, the government is firmly determined to accept the challenge and implementthe following priorttymeasures as early as 2003: OBJECTIVES POLICIESAND MEASURES IMPROVEMENTOFTHE FRAMEWORKUSED A comprehensive PflSP iS completedand its FOR ORGANIZING POVERTY REDUCTION contentssatisfactorily executed in line with the joint ACTIONS evaluation calledfor bythe annual progress report. The savings resulting from the interimdebt relief are usedin line with the criteriaestablished at the decision point. The use of funds resultingfrom the interim debt relief has beenthe subject of reports and discussionstwice a year inthe courseof the process of consultation onthe PRSP. Macroeconomicstabilityis maintainedthanks to satisfactory execution of a programsupported bya PRGF. INSTITUTIONALDEVELOPMENT,BUSINESS Annual reportto Parliamentonthe useof special ENVIRONMENT, PRIVATE SECTOR, funds. IMPROVEMENTOF GOVERNANCEAND Physicaland financialmonitoringsystemfor the TRANSPARENCY budgetcycle (commitment, liquidation, disbursement order, payment) is drawn up and I I (employee unions, civilsociety, etc.) Evaluationof the proposalsput forward by the CoordinationCellof the monitoring agencies; effective implementationof these proposalsvia short- and medium-tem action plans. Start-upof the independentcommissionto fight corruptionvia adoption of a decree or law defining its role and its sphere of competence.The commission is requiredto submit regular reportsto the Presidentof the Republic and the Parliament describingthe current stateof the field under its purview, the actionsto be taken withinthe framework of preventionand education of the citizens. Creation of administrative and courts, accordingto a calendar specified by the government, aimed at achieving effective application of (a) the statutory measures governing relations between provinces and municipalities, and (b) legaland budgetary controlinthe provinces. JUSTICE Implementationof the judicialagencies calledfor by the constitution. Study on creationof a corruption monitoring body. Strengthening of the inspection and controlmissions of jurisdictions and prisonsby the Control Departmentof the Ministry of Justice, and Supreme Court's ControlCommission. Training of magistratesand clerksto improve functioning of the Commercial Courts. Devolution of courts and tribunals. Accelerated processingof cases Increasedstaffingin the prisonadministration. SECURITY implementationof the legaland operational framework of nation, regionaland localagencies concernedwith risk anddisastermanagement. Implementation of the DlNAConventions relatedto I public safety. Strengthening of urbansecurity. Extension of security-maintenanceprocedures to other casesof theft in ruralenvironments. DECENTRALIZATION/DEVOLUTION Creationof a context favorableto economic and socialdevelopment of the communes. N Improvementof the financial independence of the communes. Empowermentof the communes in managementof health and educationservices. ADMINISTRATIVEREFORM Draft decree creatingand specifyingthe territorial administrativeconstituencies of the state. 0 Draft decree defining the powers of administrative heads of territorialconstituenciesof the state. Draft decree defining the compensation, benefits and privilegesgranted to heads of terriiorial constituencies of the state. 0 Presentation of legaltexts relatedto communal elections. CIVILSERVICE 0 Updating anddisseminationof legislativeand regulatory texts on behavior and attitudechange. 0 Reorganizationand clarification of the data base maintained by the Office of Government Personnel. 0 Creationof an Internetnetwork. PUBLIC FINANCE 0 Adoption of legislative and regulatory texts that are organized on hierarchical principles, modernized, made relevant to the current state of affairs, and supplemented by procedureand execution manuals, managementtools gearedto day-to-day activities(internaland externalmanagement), Strengthening of controland internalaudits. V a Development of a new policy on management of the public debt. a Universalextension of the Program Budgetfor the six pilot ministries. Continuation of work on recastingthe General Accounting Plan (PlanComptable General). Finalizationof a new contract with a pre- embarkation inspectioncompany a Revivalof the activities of Tax Centers outside Antananarivo. Expansionof computerization of the customs service. Follow-upof the IPPTE program. Timely preparationof the definitive government accounts. D Settlement of governmentarrearsto the private sector (reimbursementof VAT credits and settlementof invoices in arrears). 0 Establishmentof a guarantee fund. B Revitalizationof the privatesector. B Creation of the One-Stop Shop for Investmentand Business Development(GUIDE). MPROVEMENTOF THE BUSINESS Launchof biddingprocedureafter identificationof ENVIRONMENTAND DEVELOPMENTOF THE the tourism and manufacturingsites. 'RIVATE SECTOR Transparency regardingthe state of affairs in privatization: resumption of the process accordingto an updated schedule. Revisionof regulations inview of possible elimination of approval stamps, in the event that changed circumstances warrant it. Drawing up of a businessethics code for the priiate sector, based on the principlesof he lntemational Chamber of Commerce (ICC); submit this code to Parliament in2004. Harmonization of legaltexts to reflect a responsible, sustainable shrimp harvestingindustry. Recasting of the miningtaxationregime. Creationof a new system for governance of mineral resources. ABOR AND SOCIAL LEGISLATION 1 Finalizationof the lawgoverningthe Labor Code. VI SOCIAL DEVELOPMENT m Continuationof a system of premiumsfor teachers in ruralEPPs; recognitionof the status of teachers supportedby the parents of pupilsprior to recruitmentof newteachers on a contract basis. Gradual coverage of new recruits by the general budget, a Improvementof the flow of pupils in primary schools by implementationof an actionplanto reducethe rate of repeatedgrades. Subsidize registrationfees for basic education. Facilitateaccessto basic education. Recruitmentand reassignmentof rural teachers. Partnershipswith the privatesector invocational training, professionaland higher education. a Expansionof continuing education inthe higher educationsystem. a Decentralizationof management of communal healthcare centers, trainingof paramedic and reassignmentof existing medicalpersonnel. Increasedcoverage of basic drugs basedthe sales of the CentralPurchasingAgency (SALAMA). a Strengthening the system for initialsocial marketing of mosquito netting incollaborationwith the PSI, basedon the strategy formulated by the Ministry of Health, especially as regards the achievementof objectives in keepingwith the action schedule, from 2003 to 2005. a Strengthening of vaccinationactivities against PEV targeteddiseases (tuberculosis, poliomyelitis, diphtheria, tetanus, whooping-cough, hepatitis 6, etc.). a Improvedaccess to qualityhealthcareof all populations. Strengthening of the "Birth without Risks" strategy. Strengthening of the fight against malnutrition. Improvementinthe rate of deliveryof drinking water. a Improvedrate of access to excretadisposal facilities. m Implementationof a new legal and institutional frameworkfor water andsanitation. a Continuationof the nationalAIDS awareness and preventioncampaign, includinga nationalworkshop once a year and identificationof prevalence and behavior indicatorsto be attended to closely. Twice-yearlyreportson the educational and health sectors preparedby central administration and local administrations.These are to include (i) budget allocation and executionof expenditures; (ii) concrete accomplishments. INFRASTRUCTURES Recastingof the statusof the FER: 3 Explicitstatement of specificationsof work to be financed by the FER; k Recoveryof loansavoiding passage of resources throughthe accounts of the Treasury. Turn over runningof the Port of Toamasina to a concession. Pursue a strategy of govemment disengagement from the airport system. Turn over railtransportationsystem (north network and south network)to concessions. Roadmaiptenance needs 100%coveredby the Fondsd'Entretien Routier, including a minimumof 10% allocatedto ruralroads. Definitionand implementationof the road transportationpolicy. Extension of PostOffice, telecommunications and communicationsservices to unservedruralareas. ENVIRONMENT,WATER AND FORESTS Developmentof institutions and regulatory frameworks for protectionof the environment and nature. Promotionof inclusionof the environmental dimensionin regionaldevelopment plans. Promotionof consideration of the MECIEinall investments. Promotionof sustainable management of land, sea and coastalresources. Promotionof a nationalreforestingprogram. Improvementof methods and means for controlling brushfires. Permanentfinancialsupportto the nationalnetwork of protectedareas anddevelopment of a permanent financingmechanism for environmentalaction. . Promotionof environmental educationand related communicationactivities AGRICULTURE, CATTLE RAISINGAND FISHING a Promotionof an informationsystem for the rural world. e Implementationof a national landtenure program (over30 years). a Implementationof a ruralfinancing system. a Developmentof irrigationnetworks. a Developmentof cattle raising infrastructures(animal vaccination corridors,watering holes, slaughtering facilities). a Promotionof transfer of management of reservoirs. a Grantingof industrialfishing permits. Awareness campaignfor harvesters,fishermen, focused on process and practice of hygiene. a Supportto management and planningof reservoirs. a Restockingof continental water bodies with fish. a Identificationof sitesfor shrimpfarming. e Harmonizationof legaltexts gearedto a responsible and sustainable shrimp farming industry. a Trainingof private alewife producers. a Environmentalmonitoringof fishing and fish farming sites. MINESAND GEOLOGY a Publication of various legalapplicationdocuments: Mining Code, IGM Statutes, LGIM, BAM. Establishmentof the Instituteof Gemologyof Madagascar a Study inview of recastingthe MiningTax Code. a Decentralize managementof mineral resources. W The Intermediate Poverty Reduction Strategy Paper (PRSP-I)was drafted in November 2000 and enabled Madagascarto benefit from the Highly Indebted Poor Countries (HIPC) initiative with a reductionof its debt service of US$50 million per year. The drafting processof the complete PRSP started anew in September 2002 after the political events of January to August 2002. The Poverty ReductionStrategy Paper (PRSP) is the fruit of a sustained participatoryprocess involving all vital strengths of the nation: administration, elected representatives, political parties, entrepreneurs, civilsociety, non-governmentalorganizations, professionaland church organizations. Various thematic workshops at the regional and national levels were organized from November 2000 to March2003 to suit these participants. This document is the result of the improved intermediate PRSP, and takes into account the new policy orientationof the government. The objective is to reducethe poverty rate by half over the next 10 years. The strategy to be implemented is ambitious but realistic. The principle of "public- private partnership" will play a predominant role. In addition, this strategy is based on an objective analysis and on precisecriteria, and will be subject to a yearly update. The document consists of 5 major parts. The first part presents the general framework of intervention of the PRSP, situating the overall context and giving a description and an analysis of poverty. The second part defines the strategies of the fight against poverty and provides overall objectives. The programsas well as the actions to be implementedare discussed in the third part of the document. The fourth part presents the cost and the financing of the programs to be implemented. Lastly, the fifth part describes the monitoring and evaluation methods of the poverty reductionstrategy.The action plans of each ministryare presented inthe Annex. Analysis and Descriptionof Poverty In2001, the thresholdof monetary poverty in Madagascar was estimated at FMG 988,600 per year per person, which yields 69.6 percent of Malagasies living in poverty. Poverty diers depending on the provinces. Poverty is essentiallya rural phenomenonsince 85 percent of the poor live in ruralareas. The poor generally come from households whose heads are small farmers. The main assets which contribute most directly to the satisfaction of householdneeds are land and labor. Access to land is becoming more and more difficult. Its distribution is unequal, and the less land households possess, the more acute is their poverty. Labor is seen as a problem of skills and under-employment, linked to the short duration of work hours. Labor costs are relatively low in Madagascar. Food expensestake up 70 percent of the income of the majority of Malagasies, which leaves them with only meager resourcestosatisfyother essentialneeds (health, education, housing, etc.) Some factors hinder increasing the productivity of assets, namely: (i) weak dynamism of agriculture linked to the agricultural policy and to institutionalconstraints; (ii) the distance to the various services and markets reducingthe production output; and (iii) the problem of insecurity. The inadequacy of economic infrastructures contributes greatly to the increase in poverty: roads, transportation, Post-Officeand telecommunications, energy, etc. As for the social situation, much needs to be done to improve the health status of the population. Infectiousdiseases affect Malagasy children; AIDS essentially strikes populationsintheir working years. School indicators show an alarming situation in education. Nearly half of the X population is illiterate(48 percent), and of these, 61 percentcome from ruralareas (versus one third from urban areas) and 50.6 percent are women. Lastly, problems of access to drinking water, to sanitation, and problems related to the environment still persist. Among the poorest households, only 7 percenthave access to drinkingwater, as opposed to 43 percentamong the wealthiest. The poverty situation also reveals weaknesses in governance which affect the entire system and all its actors: the state, civilsociety, the private sector, households,etc. Poverty encourages adoption of personal strategies with no regard for traditional values, for the law, for integrityof the humanbeing andfor environmentalconservation. Developmentobjective The development objectiveconsists in reducing the poverty rate by half within 10 years, Le., to go from the current rate of 70 percent to 35 percent by 2013-this to be achievedthrough the promotion of rapid and sustainable development. The concept of resources for sustainable existence is placedat the center of the fundamental concems of the poverty reductionstrategy and it rightly responds to the challengeof rapidityand sustainability which govems and must govem the principles and actions of the govemment. The strategy, based on the notion of rapid and sustainable development, comes into its full meaning since the phenomenonof poverty is acute among the great majority of the population. The absence of comprehensive strategies in the area of development and social protection and the ineffectiveness of the strategies that have been used up to now, have had negative repercussions, exacerbated by the recent crisis. This situation has forced the authorities as well as various other entities to react and adopt radical strategies capable of resolving the problems of poverty and development in their entiretyquickly, inthe best way possible, and in a durable way, The Strategic focuses The diagnosis and analysis of the characteristics of poverty, the requirements and imperativesof rapidand sustainable development to reduce povertyby half in 10 years, the lessons from the implementation of previous plans as well as the recommendations from various world or/and regional summits Madagascarhasjoined, have pinpointedthree majorstrategic focuses: ---FocusNo. 1:Restorethe ruleof lawandawell governedsociety; FocusNo.2:Fosterandpromoteeconomic growthonavery broadsocialbase; FocusNo. 3: Fosterandpromotesystemsfor establishinghumanand materialsecurityand enlargesocialprotection. The first focus combines a group of actions related to the renewal, improvement, modernization, reinforcement and development of an institutional framework of good govemance. The objective is to ensure an environment that is favorable to rapid and sustainable development,whose implementationtums out to be one of the essential conditions for the success of the promotion of economic growth. This focus will allow the state to assume effectivelyand with transparency its role of facilitatorand drivingforce of the economy. The second focus consists in distributingjudiciously and intensifyingthe means of production; in defining, promoting and setting up a framework of action based on partnership andor solidarity; and defining and implementing systems to transfer technical and professionalexpertise as well as competencies in the area of research. Accelerating growth by increasingefficient investment and by opening up Madagascar's economy to the world economy constitutes the objective of the second focus. The private sector will play the role of an engine in this process, whereas the Public Investment Program(PIP) will act as a development lever in the allocationof resources. XI The constitutive elements of Focus 3 deal with the definition and the implementation of systems of management that are geographically dispersed and supportbe-programs of food security, health, education, housing, environment. The commune will serve as an anchor for all actions providing most local services. The objective is to make sure every Malagasy can benefit from the fruits of growth Implementation programs Fifteen programs support the various actions, ranging from the institution of good governance (governance and fight against corruption, governance and respect for democracy, localgovernance, etc.) to education and health, and including macroeconomic stability and growth, development of strong sectors, development and intensification of structuring infrastructures. These programs rely on the current actions. In addition, they take into consideration the new orientations of the government and the recommendationsfrom project portfolio review. Actions to be undertaken in the various programsare prioritizedaccording to the needs stated by each ministerialdepartment. The monitoring and evaluation of all actions undertaken under the PRSP require strengthening of the participatory process. The objective is to have in real time targeted items of data regarding the relevancyand efficiency of implementedprograms. The monitoring system to be created consists in building on the study and research work already realizedinthe area of poverty, and in startingother new actions with a view to have a whole set of reliabledata onthe standard of living of the population and onthe economy. First of all, the strategy for the reduction of poverty calls for a more precise identification of the determinant factors of poverty. Wlh a view to this, efforts have been made in various studies and surveys mainly undertaken by the National Institute of Statistics (INSTAT) in collaboration with various nationaland international partners. The proposed institutional apparatus will see to the clarificationof the various tasks assigned to each group involved. To this effect, steering and coordinatingbodies and consultative groups in each sector will be set up, such as the Technical Cell in charge of drafting and monitoring the poverty strategy. A method of participatory monitoring will be set up with sector working groups involvingthe participationof various groups that took part in the drafting of the PRSP, to analyze results of work carried out by INSTAT and its partners, Sector working groups will have the participation of various entities:administration, elected officials, civil society, privateentrepreneurs, NGOs and associations. Participatoryworkshops onmonitoring will be organizedin each provincial capitalevery 6 months. Programcosts To reducepoverty by half in 10years (povertyrate= 34.2 percent in 2013 versus 71.6 percent in 2002 and 68.5 percent in 2003),the macroeconomic framework indicates that public investment resourcesto be mobilized should be FMG 13,390billion (i.e. about US$1.9 billion) during the period 2004-2006 and the additional resources required are nearly US$1 billion. These figures correspond to the prioritizedfinancing actions. I The first poverty reduction programs were implemented in the late 1980s with a view to alleviating the negative effects of structural adjustment, within the framework of adjustment programswithsocial dimensions. A few measuresorientedtowards the poor were undertaken inthis respect throughsocialfunds, safety nets and specific programs. Such programswere not supported by a truly comprehenshestrategy of poverty reduction, and consequentlythe impacts as well as the results were rather limited: the poverty rate rose from 47 percent to 70 percent during the period 1980-93. Attempts at pursuing a National Poverty Reduction Strategy were carried out during the 1990s. They failed for lack of significant political resoive as to their appropriation. The "restructuring of the economy" aspect received much more consideration. That is also true for the PNARS or the NationalPlan for Social Recoveryadopted in 1994, and later on the NationalAction Plan for Social Development proposed at the CopenhagenWorld Summit on Social Development, which were too muchcenteredon sectoral aspects. In early 2000, the government decided to draft the PRSP or Poverty Reduction Strategy Paper. The finalization of the interim Paper enabled Madagascar to benefitfrom the first tranche of financingfrom the HIPC initiative. The present government firmly undertook to implement rapid and sustainable devetopment. To that effect, the priority of all priorities will be good governance, the development of infrastructures, health, education and support to the private sector. A plan for economic recovery covering the periodfrom 2002to 2005 was establishedinthe course of the years 2001-2002. The intermediate PRSP has been improved upon in order to take into account the major government orientations, and to reflect in operationalterms the government's politicalwillingness to carry through the recovery plan, and by so doing cut the poverty rate by half in ten years. The strategy is ambitious but realistic: it gives priority to the "public-private partnership" principle, relies on objective analysis and accurate criteria, and will be updatedevery year. It is a national strategy in that it is the fruit of consultation involving all the segments of Malagasy society. It hews to the objectives of international agreements to which Madagascar has subscribed: Millennium Declaration, NEPAD,World Summit on sustainabledevelopment, etc. The stakes underlying the decision to complete the PRSP are considerable since the document itself reflects a political choice and resolve which will engage the responsibility of the public authorities in the medium term vis-a-visthe urgent expectations of the Malagasy population, notablythe poor. This is in no sense a makeshiftchoice imposedbythe currentcircumstances. 1,l VISIONAND AMBITION Poverty could be described as a state of enslavement and helplessnessin which a person is partially or totally deprived of sustainable means of existence, and finds himself excluded from enjoying the fruits of growth. It results in such a person feeling alienationwhich makes him feel like '`a stranger" to the developmentprocess'. 'This description does notquestion the classicaldefinitionof povertybased oncalorieconsumption. Malagasy people, deeply impregnated with ancestral spiritual and religious values-"ny fanahy no mahaolona" '-have a tendency, when experiencing poverty, to deviate from the way expressedby thesevalues, and to adopt ``deviant"behavior in order to survive, or resortto makeshift solutionsthat belongto no overall framework. Malagasy people, especially the poor, have the impressionnowadaysthat they are losing part of their souls--"very fanahy mbola velona"4s all the values attached to their authenticity as Malagasies respectingfihavanana-solidarity,mutualaid, humility, and dialogue-have vanished as though by magic. They then adopt a drifting life illustrated by the Malagasy saying, Fjainanakodia very tsihy". The rebirth of a society that recovers its soul constitutes the main desire of the majority of Maiagasies, who see in it a framework for their reinsertion intothe development process. Restoring fahamarinanaand fahamasinanahas become the leitmotiv of a whole people. Each of these two notions carries a whole spectrum of meanings, ranging, in the case of fahamarinana, from accounting accurateness to rectitude, to moral integrity, to psycho-cultural authenticity; as for fahamasinana, it includes notions ranging from personal identity and individual temperament to the capacity for reserve and self-discipline. The availabilityof sustainable means of existencefor the benefit of the whole of the population and itsvarious components-social, economic and geographical-and if possible the opportunity for these components to enjoy the fruits of growth according to their needs andlor aspirations, constitute the other two types of ambition which motivate the vast majority of the people of Madagascar. In other words, the national ambition thus defined can be expressed in the following way: "Enable the majority of the Malagasy population as a whole to (i) live in serenity; (ii) produce normally and efficiently; and (iii) meet honestly its basic needs and protect those of future generations". Vision and ambitionconstitutethe backdrop of the strategyfor reducingpoverty. Spiritmakes us who weare. 3A lost, distraughtperson. A life on the road to ruin. 2 Vision andambition ......,..,......, ContexVEnvironment 4................ Developmentstructure Result intens of Development policy development Structuring aspect and Nature and intensity Objectives, focus of execution modes c- action and measures 12.1 INDESIGNINGANDDRAFTING The drafting of the PRSP passedthrough several major steps that may be summed up as follows: i) At the beginningof the year 2000, the government set up aTechnical Cellcomposedof high rankingcivil servants,academics, localcouncilors andentrepreneursfrom the privatesector`. - TheCell's taskwasto: Assist sectoral officers of ministries in the preparation of the basic working documents - necessaryfor the groups'thematicinquiries; Participate inorganizingandcoordinatingthe participatoryprocesses; - Ensurethe synthesisof the results of the groups' thematic inquiries and reportto the Prime Minister; Decree No. 2000-703 of September 13, 2000 of the Prime Minister, Head of the Government. 3 - Participateinthe dynamic analysisof everyaspect of poverty Permanent staff are in charge of the secretariat of the Technical Cell, together with the Adjustment Technical Secretariat (STA) . ii) Six technicalcommissions, set up withinthe framework of the PRSP, workedactiielywith the secretariat of the Technical Cell during the finalization of the paper, with the participationof technicalministries,the representativesof the privatesector, civilsocietyand the bilateraland multilateraldevelopment partners. iii) After the change inadministrationin2002, following the crisis which occurred in the country, theTechnicalCellwas linkeduptothe Ministryof the Economy, Financeand Budget. iv) The workshop on the strengtheningof the participatoryprocess for the drafting of the poverty reduction strategy was organized on September 7 and 8, 2000 in Antananarivo. The first interim draft Poverty Reduction Strategy Paper (PRSP-I) drawn up on the basis of the recommendationsof the workshop and previousconsultations, round tables and workshops relatedto sectoralstrategies,was discussedduringthe secondworkshop in Antananarivo on November 10, 2000, with even greater participationthan in September on the part of civil societyandthe provinces(morethan60 percentcomparedto 40 percentof the participantsin September). v) Subsequently, thematicworkshops were organizedbetween February2001 andAugust 2001 in order to analyze in depth m e of the major themes in poverty reduction, and discuss the outlinesof the strategywiththe population,namely: - "RuralDevelopmentandpoverty"themeheldinMahajanga; --- "Inequalitybetweenmenandwomen"theme heldinToamasina; "PovertyandAIDS heldinAntsiranana; `The Effects of bush fires and the practice of forest slashand-bum ("tavf) on poverty" - theme heldinFianarantsoa; "Govemance andpovertyreduction"themeheldinToliary; - "Urban poverty"themeheMinAntsirabe; -- "Health" theme heldinAntananarivo;and "Education"themeheldinAntananarkivo. vi) The completedraft PRSP was then presentedand discussed in regionalworkshops heM in the sk provincialcapitals (with an average participationof 120people per workshop). At this stage the object was to gather the different opinions of the Malagasy population in the provinces, mainly the points of view of the poor, either directly or through organizations capable of expressing their feelings, needs, expectations and suggestions, which were the conditions for their present and future approval of the fight against poverty, before being the subject of debates in a nationalworkshop in Antananarivoon November 15and 16,2001; at that workshop, more than 500 participants examined in detail the draft document and the synthesisof the recommendationsfromthe regionalworkshops. vii) The reinforcementof the participatoryprocesscontinuedwiththe resumptionof the finalization of the document afterthe suspensionof the processdueto the eventsof the first hatf of 2002, with the organization of two otherthematicworkshops on environment and good governance during November2002. The nationalconsultationworkshop took placeon March2526,2003. Analysis of the representative character of the various entities that have participated in the workshops organized since the year 2001 up to the finalization of the document, revealedthat the administration-councilors included-represented on average 34.8 percent of the participants, the private sector, civil society and the various organizations, 45.8 percent, internationalinstitutions 10 percent,and the other components of the population, 6.6 percent of the participants. The complete draft PRSP, the fruit of these various consultations and the activities of the six technical commissions, was drawn up in order to be submitted to the foreign partners of Madagascarwho wish to assist in the implementationof the strategy for poverty reduction. 4 122 INMONITORING The same participatory approach will be used for monitoring and evaluating the implementationof the action planswithin the framework of a process which will includecontributions to the collection of data, as well as the analyses and inquiries within the framework of specific seminars. At the same time the population's active participationwill be requested and guaranteed within the scope of studieson the sectoral strategiesand programs, such as the Rural Development Action Plan (PADR), the Urban Poverty Reduction Program (PULP), the Sectoral Transportation Program (PST), the National Support Program for the Private Sector (PNSP), the National Population Policy for Economic and Social Development (PNPDES), the National Population Program (PNP), the National Policyfor the Promotion of Women, the Environmental Program, the AIDS ControlProgram,etc. 12.3 FORWIDEDISSEMINATION For the dissemination of the Poverty Reduction Strategy Paper, a website project has been undertaken with the help of technical and financial partners.The site will enable the public and any of Madagascar's development partners to have access to the results of the workshops organized in conjunctionwith the reinforcementof the participatoryprocess andthe studies undertakenregarding the dynamics of povertyin Madagascar.Inaddition, it will includeinformationon the donors' actions in Madagascarrelatedtothe programof poverty reduction. 5 12.4 OLlTUNEOFM E0RA"G OFTHEPRSP Government International Sectoral Resolutions Macroeconomic policy and resolutions strategies and from thematic framework and programs workshops religions - civilsociety -and Foreigntechnical financial Strategy implementation -partners - Organisations and Communes Programsand Implementation action plans structure -associations Academics Im3STRUCTUREOFTHE PAPER The PRSP isstructured asfollows: General contexiof the PRSPandanalysisof poverty; --- -- Objectivesandstrategiclinesof intervention; Povertyriiks; scope of actionsandscenarios; -- Programs implementingthe strategy; Costandfinancingof the programsfor implementingthe strategy; Systemforthe monitoring-evaluatingthe implementationof the strategy. 6 2 GENERALCONTEXTAND SITUATIONOF POVERTY Two types of factors, one linked to the general context of the Malagasy economy, one linked to the problems as well as the actual characteristics of poverty, define the general intervention framework of the strategy for reducingpoverty. 2.1 GENERALCONTEXT BOX No. 1. A FEW INDICATIVEDATA 1988-1990 1991-1996 1997-2001 Economic growth rate 3.5% 0.1% 4.6% Per capita GDP growth rate 0.7% -2.7% 1.a% Populationgrowth rate 2.8% 2.8% 2.8% Inflation rate 16.0% 22.9% 8 . 3 ~ ~ 1960 1980 1993 1999 2001 Incidenceof poverty 43% 47% 70% 71% 69% Difference in poverty 9% 19% 32% 33% 34% Percentage of children who do not attend 50% 30% school Illiteracy - 48% Of which, women 56% 50% 2.1.1 GENERAL SITUATION OFWVERTY Despite a very high rate of 69 percent in 2001, the poverty situation in Madagascar improved a little between 1993 and 2001. The improvement could be seen especially in urban areas. However, it was not true for each region, because in some regions it improvedwhile in other regions it deteriorated. Moreover, rural areas continued to become increasingly poor. Consequently, it can be said that the recorded economic growth-and thereforethe economic policy during the period- hardlybenefitedthe poor in ruralareas6 The presentstate of income levels in Madagascar is the result of a long process characterized by (i) weak economic growth caused by an insufficient level of investment (less than 15 percent of GDP), and (ii) a rather high birth-deathratio (around2.8 percent). Such performancesare caused principallyby insufficiencies: E Dynamicsofpvew: 7999-2007,Comell University1NSTAMloridBank October,2002. 7 - Ineconmic and socialdevelopment policies: (9 the diagnosis of the country`s technicaland soci~cufturalcharacteristics in all their dimensions; (ii) the definition of a coherent set of overallandsectoralobjectkesandthe strategiesfor implementation; and (Mi)givingconcrete expression to these objectives in terms of projectdprograms,appropriate measures and actions in the long run and their implementation, monitoring and evaluation. Such insufficiencies resulted in imbalances affecting resources and the use of goods and services, distributed incomes and effective expendiures, financing needs and means of - financing. On the organizational level, intervention agencies, the decision-making process, - programmingandmanagementtools, andthe optimum ufilizationoffunds; Support measures aimed at enlarging the productive bases for development in the rural environment: agricultural yields remain low in spite of actions undertaken in terms of supervision and extension work. To all this should be added land ownership insecurity, difficult access to the means of production and credit, problems related to physical - accessibility. The involvement of the civil society in the decisiommaking processand implementationof development programs and actions; and involvement of rural people in the process of identification, decision making and implementationof the projects that might improve their meansof production. As stable elements in the process of social mobilization, traditions and cultures may facilitate organization in social life, both in productive activities and in the security field. In many instances, however,this is not true. 2.12 O " E ECONOMICLEE1 . Economic orowtb Prior to the 1980s, the Malagasy economy grew too modestly in relation to population growth to allow actual improvement in the living conditions of the people. The implementationof a stabilization and structural adjustment program at the beginningof the 1980s (deregulationof the exchange rate, liberalization of domestic trade, deregulation of prices, withdrawal of the state from production and trade activities, liberalizationof imports, etc.) enabled positive economic growth in real terms to be achieved at the end of the decade, even though annual inflation remained at a rather highaverage levelof 16 percent.This program was supported by the donor community. This improving economic situationwas disruptedby the events of 1991. The upheavalwhich ensued resulted in the suspension of internationaleconomic agreements. The average per capita growth rate fell to a negative 2.7 percent between 1991 and 1996. Per capita GDP reached its lowest level in 1996 (US198 in constant 1997 dollars), that is 60 percent of its level in 1971 (US$338inconstant 1987dollars). Inflationwas morethan 50 percent. The period 1997-2001was markedby a measure of stability and the promiseof an economic recovery with minimal social impacts. The measures taken included: (i) reduction of customs barriers; (ii) elimination of tax exemptions; (iii) implementation of numerous budget restrictionsand budget expenditures controls; (iv) privatization; (v) elimination of quasi-budget activities of the Central Bank, etc. These measures enabled restoration of the major economic balances in public finance, as well as in external trade and the currency, to be re-established. The inflation rate decreased from 14 percent in 1999to 8 percent in 2001, and the interest rate from 17 percent to 12 percent; the exchange rates stabilized. Foreigndirect investmentrose from US10 million in 1996to U.33120million in2001. The private investment rate reached7 percent of GDP in 2001 compared to 4 percent in 1997.The average growth rate of the economy was 4.5 percent. 8 Of the 4.5 percent of economic growth in the years 1999 and 2000, about 1.5 and 0.8 points were due to "secondary activities" of exports and trade, respectively.Tourism, construction/ building and public works activities accounted for 0.6 and 0.4 points, respectively. As for the primary sector, the good performance of fishing (0.9 percent) should be noted. On the other hand, it appears paradoxicalthat agriculture, which provides the great majority of Malagasies with their livelihood, should pull the country's economic growth rate down. Regarding industries (EPZs excluded), they contributedfor about 0.4 point. It is the secondary activities of these sectors which will be examined successively below: Concerning the agricultural sector, nearly 70 percent of the country's production was dominated by rice growing, Yet rice productionhas increasedby only 1.2 percent per year since the 1980s, and its yield has never reached the threshold of 2.1 tons per hectare. Rice growing techniques still remainto a large extent quite traditional, and the use of inputs is notvery developed. The share of agriculture in GDP and the primarysector has undergonea downwardtrendfor several decades. In real terms, the weight of agriculture in GDP was 17.5 percent (48.5 percent of the primarysector)in 1990,comparedto 15.3 percent (44.5 percent of the primary sector) in 2001,This situation was due to the combination of two factors: a low growth rate for agriculture (2 percent of the average annual growth from 1997 to 2000, at constant prices), compared to much more sustainedgrowth of the other sectors such as forestry (9.8 percent on average). A big difference has been observed betweenthe retail prices for rice and the producer prices. This difference can be explained by the absence of fluidity in the movement of goods (from productionsites to the markets) owing to the deficiency in road infrastructures and the non-mastery by the farmers of storage resourcesandtechniques. Such an environmenttends to be profitable for downstream operators (storage and other activities), and maintains a situation marked by sporadic income and speculation in the rice growing sector. Since the beginning of the 1970%the national rice supply (with an average yearly growth of 1.4 percent for the production of paddy) has not always been sufficient to cover the yearly consumption needs of the country, Le. about 1,650,000 tons. Regardingthe weight of the Export Processing Zones (EPZs) in the Malagasy economy, their directcontribution to the formation of GDP is slight and hardly reaches 1percent, whereas it is 11.2 percent for the other industries in Madagascar: 10.6 percent for trade and 9.9 percent for transportationof merchandise. The imponance of the EPZs lies in their ability to generate jobs and stimulate the activities of other economic sectors in the country (transportation of merchandise, transit, telecommunications, commerce, indirect taxes), creating jobs indirectly at the same time. Therefore, they are part of the enterprises which have a high capacity for employment, since startingfrom less than 20,000 direct jobs created in 1994, there were 75,000 direct jobs created in 2000, and about 100,000 in 2001, to which 25,000 indirect jobs should be added. According to IMF data, nearly 80 percent of foreign investments in Madagascar go to the EPZs. Of this total, 38 percent comefrom France, 25 percentfrom Mauritius and 9 percentfrom other Europeancountries. To sum up, the period gave rise to prospects of economic recovery. Such prospects were again jeopardized by the post-election crisis of 2001. The crisis highlightedthe fact that the good economic performances, against the backdrop of an apparent politicalstability, were in reality hiding a creeping, deep discontent and tension since they depended on the povertyof the great majority of Malagasies. Situation of the debt Madagascar`s indebtedness problems remain entire. In 1995, debt-servicing represented nearly 152 percent of tax receipts, and 52 percent of export receipts. The absence of any rescheduling agreements between 1991 and 1996 aggravated the situation, causing a significant accumulation of outstanding external payments. The rescheduling agreements of 1997 (Paris Club 9 Average 2000 2010 2000 2001 2002 2003 2004 2005 2006 2007 2009 2019 NPV DebUExports 220.4 192.7 211.3 223.3 233.3 193.8 174.2 156.7 178.2 99.1 NPV Debflax receipts 470.7 476.8 624.7 443.3 395.5 3654 337.7 312.0 382.7 182.3 NPV DebUGDP 55.0 48.4 49.9 47.2 45.5 43.8 42.2 40.6 43.8 29.8 Debt servicdEqorts 12.9 10.6 11.9 11.3 12.5 9.9 9.4 8.4 9.7 4.4 Debtserviceffax receipts 27.6 26.2 35.2 23.5 21.1 18.6 18.2 16.7 20.8 8.0 Extemaldebt-servicing is expectedto remain rather substantial, having reached US$128 million in2002, or 11.9 percent of receipts from exports of nonfactorgoods and services,and 35.2 percentof tax receipts. Nevertheless, inthe wake of interim assistance, debt-servicingfell to US50 million, Le.4.7 percent of receiptsfrom exports of nonfactorgoods and services,and 13.8percent of tax receipts. These indicators point to a situationin which Madagascar would be sensitiveto a change in parameterssuch as an unfavorable extemalshock, which would put the countryinto an intolerable position by worsening its debt burden. Insuch circumstancesMadagascar's debt burden would be unbearable,even inthe presence of a stable climate, stable politicalsituationand restructuredflows. Added shockswould only increase the needfor externalfinancing. 10 Problem of accessibility The problems of impassable roads and physical inaccessibility remain pivotal determining factors in the progressof the Malagasy economy. Because of its rugged relief and the great size of the island, the cost of local movement of goods, production factors and competences is relatively high here compared with other similar countries. Taking account of the geographic situation of the island which leads to high costs, it is time Madagascar "moved nearer" to the rest of the world in order to ensure development. To a large extent, the policies to be carried out consist in reducing distances inside the island as well as between the island and the rest of the world. The country's economic development depends very largely on the reduction of these costs. As a general rule, 33 percent of the communes which do not have access to a national road and 30 percent which have noaccessto a provincialroadconsidertransportation as their priority of priorities'. Factorof Droduction Endowments in land and equipment are small and unequally allotted among farmers' households and notably the poorest of them. Access to land is becoming more and more difficult in the wake of the rapid population growth of the last few years, combined with the vagueness of real property law and the inadequacy of the agencies responsible for land tenure. A tendency toward more intensive exploitation of non-irrigated plots of land such as hills and forests is growing. Therefore, questions relatedto pressure on plots of land, with the impactthat the latter has on the ecology and poverty, become crucial in that they have strong negative effects on the productive resourcesof ruralhouseholds. ReaionaldeveloDment On the regional level, despite a certain homogeneity of the Malagasy population, some discrepancies from the point of view of development exist between regions. A more balanced development of the regions therefore remains a leitmotiv of the country`s overall policy. An appropriate balancemust always be maintained betweenregionaland nationalinterests. Ecosvstemand climatic chanaes Madagascarpossesses an economic potential which derives from the diversityand quality of its manpower on the one hand, and its ecological and environmental heritage on the other. Such assets are being threatened, however, as the Malagasy ecosystem is undergoing a disturbing deterioration, and the prevalence of communicable or endemic diseases risks jeopardizing the healthof its manpower. The impacts of "climate changes" are particularly serious and might cause considerable damage to the ecosystems of the country's natural environment as well as to human beings. Agricultural activities are becomingvulnerable becausethe increase in the sea levelcauses erosion of the coasts andfloods, the invasion of estuaries by salt water and the deteriorationof saltmarshes and coralreefsas well as the loweringof the volumes of freshwater tables. 2.13 ONTHE POMCALANDlNSmllTlONALLEVEL As a consequence of the pactfying actions which followed the political events of 2001-2002 after the presidential election, a retum to political stability can be felt. The effective implementation ' The Clients' Voice: development priorities according to a participatory approach. Comell University/lNSTAT/FOFIFA, October2002. 11 of the Parliament (Senate and National Assembly) is one sign of accomplishment. This stability will be consolidatedbycommunal elections scheduled inthe course of the year 2003. Within the framework of streamlining the administration's actions and in order to improve its efficiency, the government clarified the missions of the various ministerial departments, 22 in number, and has divided them into three major categories of function: sovereignty, development, society. 2.1.4 THEWST-CRISlSSrmATlON The political crisis of the first six months of 2002 engendered economic and social disorganization, characterized by a decline in growth on the order of negative 12 percent, and brought about the aggravation of the vulnerability of regions, economic agents, population strata (vulnerable groups, including women, children, senior citizens, the disabled, the homeless, etc.). Besides, the effects of the various shocks have brought about the emergence of a new category of poor people in urban areas (e.g. employees in Export Processing Zones) and all sorts of deficiencies,notably in terms of food, income, employment, infrastructures,stability/serenity/security and credibility. The secondary sector has been affectedthe most, with a decline of 25 percent, followed by the tertiary sector, with a negative 12.5 percent. Agricultural production recorded a negative growth rateof 1.4 percent. To meet this situation, the government established a recovery and reconstruction plan. Through the commitment of Friends of Madagascar at the Paris conference of July 2002, an assistance package totaling US$2,477 million is available over a period of 4 years. One part of this amount, on the order of US$219.5 million, is principally earmarked for the priority emergency program (2002 to July 2003). The latter began to be implemented by the government and the EmergencyCredit for Economic Recovery (CURE) granted by IDA (US$50 million)towards the last quarter of 2002. The measures taken within the framework of the priority emergency program proved to be relevant and had immediate impacts on the sectors of education, health and security, notably in the rural context. The cancellation of school fees led to an improvement in the school attendance rate (morethan 11percent inthe primaryschools compared with the year 2000-2001). Services in health care have become more accessible thanks to the cost recovery suppression policy. The newly adopted policy for reducing insecurity (increase in the number of interventions together with an increased number of full time field personnel) engendered a stronger feeling of security among the rural population. Consequently, security is no longer regarded as the main development priority for most of the rural communes. Nevertheless, a certain distrust vis-a-vis the legal system still exists. The measures taken also permitted the Inter-bank Currency Market (MID) to open, and the resumption of the BTA system or Treasury Bonds by Auction, which was temporarily suspended during the crisis period. However, the negativeeffects of the crisis are still perceptible. The tiding-over period in the rural areas seems to be difficult compared with the previous years. The people believe that their average income has decreased by 20 percent, the poor havingsufferedmore than the rich and the middle-income strata. The level of success in the CEPE fell substantially: 19 points for rural public primary schools, and 31 points for urban public primary schools. The increase in enrollments for schools has incidentally aggravated the problems of insufficiencyand/or allotment of teachers and school rooms. Prices reached staggering heights in the depths of the crisis, but have stabilized since, and have assumed a downward trend with the normalizationof the politicalsituation. On yearly average 12 the inflationrate stands at 15 percent.The MID suspension and the retaining of an officialexchange rateduring the 6 monthsof itsclosure enabledcontrolof the risks of depreciationof the MGF. During the crisis there was a foreign assets freeze from March until July 2002. The situation ledto a drop inthe volume of trade transactions, andthe level of imports and exports diminished. As a result there was a slight deterioration inthe trade balance of negative4.5 percent in2002versus a negative 1.3 percent in 2001. The tax burden recorded a serious decline of about 7 percent of GDB in 2002 afterthe 9.6 percent in2001. BOX No. 2. PRINCIPAL REFORMSADOPTEDSINCETHE IMPLEMENTATIONOF STRUCTURALADJUSTMENT PROGRAMS Budaetarvreforms: Applicationof value addedtaxes (VAT) (1994-2001) Reinforcement of fiscaland customs administrations(1997-201) Reformsof civilservice (1998-2001) Strengtheningof the budgetaryexecutionfollow-up (2001) Financialand monetarv sector reforms: Privatizationof public banks (1996-1999) Independenceof the CentralBank (1994) Privatizationof Dublic enterprises: Establishmentof legislativebases for privatization(1996) Deregulationof telecommunications: licensesfor cellular phone operators (1996) Privatizationof the oilcompany (2000) Privatizationof stateowned enterprises (1988-2001) Exchanaeand Dayment Dolicc Adoption of afloatingexchange rate (1994) Liberalizationof current transactions(1996) CommercialDolicv: Liberalizationof productionandmarketingof coffee, cloves, vanillaand rice (1987-1997) 4 Abolition of pricecontrols(1986) Abolition of export taxes (1988) Eliminationof import restrictionsand licenses (1988-2001) Regionaltariff alleviation(1987-2001) 13 2.15 THEaRUClURALADJUSTMENTPROGRAM The cumulative effect of the structural adjustment programs launched in 1985 was to create an economy that was more open and market oriented. On the whole, the execution of the reforms has been satisfactory. In certain areas, progress has been slow. Problems still exist and new difficulties have emerged. Significant results appeared starting in 1988, with growth rates greater than the birth rate, except for the period 1991-1996, during which the programs were suspended. The average annual growth ratewas 3.5 percent over the period 1988-1990, and 4.3 percent for the period 1997-2000. 2.1.6 SECTOR-BASED PROGRAMS In terms of social development and poverty reduction, the first National Program for the Improvement of Education implemented from 1989 to 1997 (PNAE I),provided the country with instruments for managing the sector. The second program, PNAE It, implemented since 1997, was aimed at consolidating the previous achievements by basing its implementation strategy on a partnership involving the participation of student parents' associations from each school and local communities,and by linking up the budget itemsfor primaryschool teachers with the school level. Regarding the health sector, fresh energy was imparted to the system based on health care districts,which enabled the provision of human resources and equipment that is indispensable for a smooth running of the services;this led to a noticeable impact on the rate of access to health care facilities, thanks to a better articulation of efforts with the other sectoral actions related to health, such as nutrition, drinkingwater, food security. Specific programs were also launched to facilitatethe promotionof employment and income- generating activities through food security projects, the implementation of basic infrastructures in urban and ruralenvironment (HILfor irrigationcanals, ruraltracks, etc.), and the promotion of micro- enterprises. Integration of these actions into a coherent and larger whole within the framework of multi-sectoral programs oriented towards poverty reduction, will enable obtaining of significant results at the nationallevel. Concerning environmentalprotectionthe "Malagasy EnvironmentCharter" (Law No. 90-033of December 21, 1990) sets the general framework of the environmental policy in Madagascar. The NationalPlanfor EnvironmentalAction (PNAE) operationally reflectsthis policy,whose objective is to reconcile the Malagasy population with its environment with a view to sustainable human development. Severaltools have beendevelopedwithin the scope of the various projects, such as: - Designingsupport toolsfor the decisionand a referencesystem: NationalForest Ecological Inventory (IEFN), forest development plans, slope management plans, land occupation maps and forest evolution maps. ProtectedAreas Network Management Plan, reports on the state of the environment, National and Provincial Environmental Key Indicators, - EnvironmentalInformationSystem. Protection and management of the natural biodiversity heritage: national network of - protectedareas andecotourism; Implementation of mini-projects in soil conservation, agreforestry and other community projects;disseminationof anti-erosiontechniques and agraecologic techniques, communal --development plans; Communitymanagementof naturalresources: GELOSEandGCF; Studies onenvironmentalimpacts. 2.1.7 THEPROBLEMSOFGOVERNANCE Two modes of governance have succeeded each other in Madagascar: govemance of the patemalistic type in the middle of the 197Os, and of the democratic type since the beginning of the 1990s. The first, based on the predominance of the public sector and centralized management of resources, led to the stagnation of the economy, causing a decrease in incomes and a widening of the differences between the rich and the poor. Indeed the regime came up against a dysfunction of the administration and the public enterprises owing to malfunction in the supervisory bodies and control mechanisms. The second mode is based on gradual decentralization of public affairs management, and is characterized by (i) new energy imparted to the participatory process; (ii) the deregulation of information as well as political life, in order to promote transparency and accountability; and (iii) the liberalization of markets. The poor quality of public affairs management as well as the serious erosion of wages paralleled the deterioration of public administrations, demoralization of civil servants and the difficultiesfacing the services. 1. The deterioration of public administration is characterized by a dearth of resources in the Civil Service, the deterioration of the status of civil servants and the high incidence of unpunished corruption. As for public affairs management, the main problems are the bad management of public finances concerning the implementation and control of the budget, the absence of transparency concerning the information related to public finances, and the irresponsible behavior of state representatives. As for the judiciary system, salient features are the lack of independence of judges and the slownessof the judicialadministration. 2. The slowness of the decentralizatioddevolution process can be seen throughout the very centralized institutional structures as reflectedinthe low rateof expenditure decentralization. 3. The poor organizational capacity of the civil society is clearly seen in the absence of a genuine platformof civil society. 4. The lack of incentives for the development of the private sector due to the slowness of the administrative formalities and the judiciary procedures; the lack of information about sectoral statistics. 15 BOX No. 3. REPORTSONTHE REGIONALCONSULTATIONWORKSHOPS DEVOTEDTO GOOD GOVERNANCE Consultation workshops have revealed: an excessive use of discretionary measures resulting in a lack of uniformity in the application of the law, regulations and measures; a lack of clearly understandable intentions on the part of the administration; a lack of predictability and stability of regulations; and a legislation that is often redundant and at times contradictory. This discretionary environment is a source of uncertainty for the population and particularly in the world of business, breedingan environment favorableto corruption. The implementation of regulations governing Export Processing Zones, for example, has reduced costs resulting from governmental bureaucracy and its ponderousness, a source of corruption which entails, along with inefficiency, serious economic coststhat are borneultimately by the poor. The workshops brought out the following essential points which hinder the rapid and sustainable development of the country : - A notverycompetitiveeconomybutwithahighpotential: - A barely literate young population, whose schooling is only average, receives little health careand isat riskfor diseases; - An inabilityto formulatestrategiesandprioriiiesfor the investmentprogram; - Lowefficiencyof publicservices; - Lackof coordinationof govemmentalactions. 2.1-8 APPRAISALOFPROGRAMS,FORMALANDINFORMALMECHANISMSOFSOCIALPROTECTION In the course of the last twenty years, documents aimed at limiting the effects of the deterioration of the economic situation and/or social security have been drafted. Examples are: the Economic and Social Development Recovery Plan (PREDES), the National Social Recovery Action Plan (PNARS), the National Poverty Reduction Program (PNLCP) preceded by the drafting of the National Poverty reduction Strategy (SNLCP). However, these documents remained as mere guideline documents and have not been followed up by actual implementations for lack of financing, as succeedingadministrationswere unable or unwillingto appropriate them. Programslikethe Program of Social Action and Support to Economic Management(PASAGE) continued by the Project of Institutional Support to Public Management (PAIGEP); the Support Programto District Initiatives (PAIQ);and the UNICEF Programs, were designedand implementedin order to help alleviate poverty. The implementation of these various programs remains limited to well defined geographical zones, and their impactsare for that reason slight. Inaddition, the approach usedwithin the scope of the activity program planning was not in keepingwith an overall long-termvision of the problems nor with the quest for synergy with all the other interventions.Other factors includedthe smallvolume of programmed investments, the limited follow-through on the part of execution and maintenance 16 structures in order to ensure the functional quality of the infrastructures implemented. For this reason, they had limitedstimulus effectson the economies of the zonesconcerned. Althoughthe various programs cover a great deal of the nationalterritory, the interventions fall short of the actual needs. The gap, as evaluated from the point of view of beneficiary populations in relationto the number of people vulnerable to risks, ranges on average between 80 percent and 100 percent, except for programs related to the preventionof cyclones and natural catastrophes (gap of 38 percent) and programs relatedto malnutrition control in the schools, and mother and child health (gap of 46.4 percent). Programs related to economic insertion and prevention of economic risks and shocks are almost nonexistent. Safety net programs do not provide perennial solutions to the precariousnessof the vulnerable populations. It seems that there is a lack of synergy between the various actions carried out in the field owing to the absence of a well defined national strategy for social protection. Concerning the social protection system constituted by CNAPS, the National Social Welfare Funds, the civil and military pension funds, company medical services, the supply of social credit services, and the public services of social security, an ILO report analyzing the situation notesthat at presentonly 7 percent of the working populationbenefitsfrom some form of social protection. As for the informal mechanisms of social security, they may be mechanisms prejudicialto the vulnerable sections, or positive mechanisms in reactionto shocks and risks. Informalcredit systems are proliferating.In the rural environment there exist similar systems to which rural people resort in the event of difficulties (tiding-overperiod, happy and unhappy events). 2.2 ANALYSIS OF POVERN 22.1 CHARAcTwsTIcsOFPOVERTY 22.1.1 Thelevelofpoverty, measuredbythepovertyrate,the intensityofpovertyandthehuman demlopmentindicator,remainshigh Internationalstandards define the poor as individuals whose resources' are insufficient for consuming, in addition to indispensable non-food elementsg, a food ration of 2,133 calories per day, the minimumdeemed necessaryfor maintaining a normalactive lie. Applying the abovementioneddefinition, the povertythreshold" for individualswas estimated at MGF 998,600 per year in 2001, which served as the basis for calculating the rate of poverty (or incidence of poverty). This rate determines the percentageof people who live underthe poverty line, estimated to be 69.6 percent for Madagascar (in 2001). In order to understand the fate of the poor, a Household resources may be monetary (wages or proceeds from sales), or non-monetary (auto- consumption, transfers, payments in kind). Note that the rental value of durable goods is included in the evaluationof households'consumptions. For exampleclothing andother staple articles. lo Povertythreshold: income necessary for buying in additionto indispensablenon-food elements, a food ration of 2,133 calories per day. Poverty ratio: percentage of the populationwhose average income is belowthe povertyline (percentageof the poor). 17 the poverty rate is supplementedby the notion of poverty intensity". It measures the seriousness of the situation of the poor and determines the difference in Incidence and intensity of poverty as a percentage of the average income of percentage the poor in relation to the poverty threshold. It was evaluated at 34.9 5 70 .-N3 ' '-"E percent in 2001. Incidence Bo SO 40 Intensity 30 20 The decline in economic 1D 0 performances between 1991and 1996 1393 1897 1338 ZOC had negative repercussions on the - ..,-.-- . *. ... situation of poverty, which deteriorated I ,I._..'.- in 1997 compared with 1993 (73.3 percent versus 70.0 percent), and became more intense (34.6 percentversus 31.3 percent). But economic recoverysuch as that observedsince 1997is reflected by a gradual improvement of the situation, the poverty rate in the year 2000 being estimated at 70.2 percent, a level comparable with that of 1993. Such improvement continued until 2002, eventually becoming a downturn in the incidence of poverty of 69.6 percent; on the other hand, the intensity remainedvirtually unchanged. BOX No. 4. COMMENTSONTHE METHODOLOGYOF POVERTYMEASUREMENT The method for measuring poverty was improved in 2001. Supplementary elements were added to the evaluation of households' consumption, notably the evaluation of durable goods and payments in kind. For this reason, the results obtained between 1999 and 2001 are not perfectly comparable. Nevertheless, using the database of 1999 and 2001, it was possible to chart the progress of poverty. In order to get comparable figures and preserve the results obtained in 2001, the measures concerning the previous years comparable to those of 2001 were assessedfrom the changes between the various years. For example, at the national level in 1993, the incidence of povertywas 70 percent:the corresponding ratecomparablewith 2001 was 70.4 percent(see table). Madagascar is still classifiedamong the poorest countries in the world. More than two out of three persons are poor. The Indicator of Human Poverty (IHP)'* makes it possible to situate the "Povertyintensityrepresentstheproportionofthepovertythresholdwhichhastobeaddedonaverage to the consumptionof poor individualsso that there will notbeany poor. ''The value of the IHP reflects deficiencies in most of basic human potential (live a long time, acquire knowledge and enjoy a decent standard of living). The value of the IHP ranges from 0 to 1 and thus allows establishmentof comparisonsintime and place. 18 progress of Madagascar's development in relation to other countries. The indicator focuses on three essential aspects taking into account humanneeds: longevity, educationanddecent livingconditions. With an IHP of 0.467 in 1999, Madagascar was among the countries whose human poverty is high. However, compared to 1997, the IHP (0.517) has fallen by 9.8 percent, reflecting an improvementin the distributionof humandevelopmentwithin the pop~lation'~. 22.12 Povertyprofile Poverty in Madagascar as in several African countries is a rural phenomenon and shows significant Contribution to poverty of variations from one region to another as well as place of residence in 2001 according to socioeconomic groups and gender. 2.2.1.2.1 Povertvaffects85 percentof the rural tiotiulation More than three-fourths (85 percent) of the poor live in a ruralenvironment. Urbanhouseholds seem to have a muchmore decent life than ruralhouseholds. This difference is reflectedin percapita consumption, since in the rural environment consumption is inferior to the poverty threshold and represents 32.5 percent less per capita in comparison with consumption in the capital. The improvement of the situation in 2001 as compared with 1999 principally concerns the urban environment where the incidence rate came down by 2.1 percent, versus a slight diminution (1.8 percent) in the rural environment. As for poverty intensity (graph), it was more salient in 2001 (39.8 percent versus 18.3 percent) and reveals a deterioration of the situation of the poor in the rural environment Trend in poverty intensity during the period1997-2001. according to environment (in percent) 22.12.2 The stiatial distributionof povertv is uneaual The poverty phenomenon undergoes significant variations from one region to another. These variations are evidenced in the following table. In terms of income, poverty is localized in Fianarantsoa and Toamasina with a poverty rate bordering on 80 percent in 2001. The rate is lower in the province of Antananarivo in comparisonwith the other regions. It is 10percentmore likely that a personlivingin Fianarantsoa will be poor than when living in Antananarivo. InToamasina this rateis 13per~ent'~. l3National report on human development,Madagascar (UNDP2000). 14Analysis using multivariable regression carried out by INSTAT and Cornel1 University in October 2001. 19 Table 2. Madagascar: Poverty profile by province Source: INSTAT/DSM The incidence of poverty has not developed in the same way across the six provinces. The province of Antananarivosaw its poverty diminish gradually, with a rate dropping from 63.4 percent in 1993 to 48.3 percent in 2001. The province of Toliara followed the national trend with some deterioration in 1997 and a recovery in 1999, and with continuous improvement until 2001. The provinceof Toamasina followedthe same trend except in2001, when poverty worsened and returned to its level of 1997. In the other three provinces (Antsiranana, Fianarantsoa and Mahajanga), persistent poverty in the rural environment led to a deterioration of the overall situation up to 1999. Such aggravation of the situation went on until 2001 in Mahajanga, whereas it stopped in Fianarantsoa. Antsiranana experienceda noticeable improvement between 1999and 2001. It is important to distinguish the rate of poverty from the contribution to poverty, which is the proportionof the total number of the poor living in the regions. It is worth noticing that the province of Antsiranana, which has a rather high Contributionto total poverty poverty rate (69 percent), has only a small proportion of poor people (7.5 percent). Infact, it Mb u m 7.m is the least populated of the 6 provinces (7.6 percent of the total population live in the region versus 30 percent inAntananarivo). * Y 2.2.1-2.3 The Doorare tam" essentiallvfarmers ._ . . ..e.= ._. . , .C -c -- .--.- ---., In general, the socioeconomic class of the head of the household determines the household's level of expenditures, and consequently its situation vis-&vis monetary poverty. The table below confirms that households whose head is engaged in farming or cattle raising as his principalactivity are, in the majority of cases, the poorest in the country, in particular small farmers. The highest poverty intensity is also found in this class. Shopkeepers and entrepreneurs as well as managerial personnel, onthe other hand, are less affectedby poverty. 20 Table 3. Madagascar:Distribution of annual per capita expenditures according to the socio-economic group of the head of family in 1999. Socio-economic group Incidenceof Percapita poverty consumption (asa %) (thousandsof francs) Owner of a large farm 90.8 628 Average farmer 86.6 691 Small farmer 85.9 598 Stock breeder, fisherman 79.5 805 Farmer 47.4 1,239 Shopkeeper,service entrepreneur 32.6 1,851 Salaried manager 16.7 2,687 Employeesand skilledworkers 40.2 1,497 Laborer 64.1 915 Other 48.0 1,572 Total 69.6 981 Source: INSTAT/EPM2001 In the agricultural sector, farmers are the most vulnerable group. Over the period 1993-1999, the percentage of poor people as well as the intensity of poverty in this socio-economic category, which were already high, increasedin a significant way. 2.2.1-2.4 impact of aender: female headsof householdmanacleto face UDto the situation as mendo About 19 percent of households are headedby women. While in 1993, households headed by women were poorerthan those headed by men, in 1999 the situation became almost equal in both cases. The situation leveledout between 1997and 2001. Households headed by divorced women or widows are poorer than families headedby married or single women. But single women have more difficulties than married women who are heads of households. 21 Table 4. Madagascar: Situation of poverty according to gender and the marital status of the head of the household. Incidenceof poveny Intensity 1993 1997 1999 2001 1993 1997 1999 2001 Gender of the headof the household Male 69.7 73.4 71.6 69.7 31.9 35.3 34.7 34.7 Female 73.9 74.6 71.5 69.2 34.0 37.5 35.5 35.5 Maritalstatus of the headof the household Married 64.0 76.5 58.1 38.7 39.6 27.8 Divorcedor widow 74.5 74.3 72.6 32.8 36.1 34.8 Single 54.2 67.7 60.6 22.4 32.9 31.O Source: INSTAT, EPM 1993,1997,1999 and 2001 2.2.1.2.5 There is a aao in develoPment to the detrimentof women The gender-specificindicator of human development (ISDH) shown in the table indicatesthat there is a developmentgap to the detriment of women. The difference betweenthe IDHandthe ISDH measuresthe size of the disparity betweenmenand women. Indicators National Antananarivo Fianarantsoa Toamasina Mahajanga Toliara Antsiranana IDH 0.481 0.515 0.356 0.427 0.383 0.382 0.444 ISDH 0.460 0.493 0.333 0.405 0.362 0.360 0.424 Differen -4.6 -4.3 -6.5 -5.4 -5.5 -5.8 -4.5 Source :RNDH2000 In rural environments, this gap is striking, with a low level of the ISDH (0.354) compared to urban environments, where it is 0.596. At the regional level, the sociological disparity between men and women respectinghumandevelopment can be observed in all the autonomous provinces, with a more marked disparity for the provinces of Fianarantsoa (ISDH of 0.333), Toliara (0,360) and Mahajanga (0.362). In education, illiteracy is higher among women (50.6 percent). The female school attendance rate is 70.2 percent versus 73.8 percent for men. The girls' graduation rate (from primary to secondaryschool) is often inferior to that of the boys. 22 Women have more difficulties obtaining loans and financial services because of the lack or insufficiencyof collateral relatedto their slim financial base and low levelof education. There are inequalities in employment:there is a highproportion of women inthe informalsector and inthe low-ranksocio-professionalcategoriesand in less qualified jobs. The structure of women's income isvery fragile, with 12 percentof it from non-stable resources (transfers). Concerning family planning, there is a related gender problem in that women do not have sufficientfreedom inthe choice of the methodsusedfor birthcontrol. 222 DETERMININGFACTORSOFPOVERTY Poverty is characterizedby an unacceptable deprivation (psychological,social, physical, etc.) of socialwell-being. It can be defined as a non-appropriationor a non-masteringof livingmeans (lack of assets) as well as a non-enjoymentof the fruits of growth in order to acquirethe basic essentialgoods (inequality). 2221 Themainassets The assets at the disposal of households are deemed to have an influence on their well- being. They act as insurance guaranteeing their survival. The study of the determining factors of poverty'sshows that land contributes most directly to the satisfaction of family needs, especially in rural areas. Manpower is also a powerful generator of consumer power, both in rural and urban areas. 2.2.2.1.1 A The distributionof landis unequal. Land plays a primordial role in agricultural activities because 73.2 percent of Malagasy householdsare farmers. Inruralareas, the richestfamiliesown plots of landthree times larger (0.57ha) thanthe poorest families (0.19ha). The phenomenon is more salient for agricultural ruralfamilies, with a ratio of 1to 3.7. The graph belowgives an illustrationof this unequaldistributionof cultivatedland. The evolution of the curves shows a deterioration in the distributionof land which became more and more unequal between 1984and 2001. l5INSTATand Cornell Universityin 1998. 23 Distribution of total cultivated lands inrural areas, 1984,1994 and 2001 45 Percentage degrees of I 1984 surface areas 1994 2000 0,O 0.2 0.4 0.6 0.6 Percentageof households Source: RecensementNationalAgricole (RNA 1984)and EPM 1994 and 2001. 2.2.2.12 Access to landis difficult From 1993 to 1999,the average per capita land area diminished slightly at the national level and especially in agricultural rural areas. This downward trend can be seen in all categories of households. The contrast between small parcels of farmland and large surface areas of uncultivated landshows that there are obstacles to access to land. These obstacles are due to the lack of precision of land law and the structure of land administration. They take many forms: (i) on the social level, land occupation is governed by complex customary regulations; (ii) on the administrativelevel, the legal acquisitionof land is subject to a long and expensive administrative process; and (iii) on the culturallevel, Malagasy people have a deep-seatedattachmentto land, which is reflectedina tenacious retention of land. The less land households have, the more acute their poverty is. In 1999,more than 85 percent of families who had less than 0.2 ha per head were poor, with a high poverty intensity. Poverty is more serious for agricultural rural families, affectingmore than 91 percent of the individualswith an even higher intensity (51 percent). 24 Table6. Madagascar:Situation of poverty according to the average land surface owned (Average percapitasurface area in hectares of the parcels owned) Poverty rate Intensity of poverty 1993 1999 1993 1999 Surface area owned (hafper capita) Ruralhouseholds Lessthan 0.001ha 58.0 68.9 24.7 31.O 0.001 to 0.09 ha 84.2 86.2 40.6 49.2 0.10 to 0.19 ha 82.4 87.9 38.3 46.3 0.20 to 0.39 ha 79.5 84.1 33.2 38.8 0.40 to 0.79 64.7 62.6 25.9 24.6 0.80 ha and above 50.7 46.4 21.7 15.5 AgriculturaL ruralhouseholds Lessthan 0.001ha 61.1 69.8 30.1 35.6 0.001 to 0.09 ha 86.3 91.7 43.1 54.1 0.10 to 0.19 ha 82.9 91.1 38.2 48.6 0.20 to 0.39 ha 80.1 85.0 33.7 39.8 0.40 to 0.79 65.3 63.9 26.1 25.3 0.80 ha andabove 53.9 47.5 23.2 15.8 Source: INSTAT, EPM 1993and 1999 2.2.2.1.3 ManDower Employment and poverty are closely linked as it is by his work that a man ensures his existence and that of hisfamily. Hetherefore receivesthe bulk of his resourcesfrom hiswork. 2.2.2.7.4 The emdovment rate is relativelvhiah but inadeauateskillsand UnderemDlovmentareevident The employment rate is 65.5 percent in Madagascar: 56 percent in urbanenvironments and 70 percent in rural environments. Men work more than women (the insertion of women into the labor market is 62 percent versus 68 percent for men), but active women are relativelyolder than men (31 years versus 32.2 years). According to the Permanent Household Survey of 2001, unemployment is fairly low; it affectsonly 3.6 percent of the activepopulation. It rather concerns urban environments, in which the estimated unemployment rate is over 12 percent. Madagascar does not lack plentiful manpower: problems arise in terms of lack of skills and underemployment related to limitedworking hours, whichstands at 22 percent. 2.2.2.1.5 The Doorwork in aariculture About 90 percent of the poor work in agriculture. Better off individuals work in trade, administration or transportation. It has been demonstrated that to be employed in the agricultural sector in comparison with being a manufacturersubstantially increasesthe probability of being poor (15 percent).This result is verifiedirrespective of the fact that the household is in a ruralor an urban environmenti6. 2.2.2.1.6 The rate of childemulovment in Doorfamiliesis hiqh Children's work is most frequent among the poor. More than 11 percent of the active population are under 15, and this proportion diminishes as living standards increase. Among the richer families it is estimated at 3 percent. The phenomenon is more marked in the provinces of Mahajanga (17 percent) andToliara (21percent). 222.1.7 Incomeis relativelvlow A salaried employee earns MGF 294,000 per month" on average. This amount is lower in rural areas. Rural employees earn half of what those in the capital eam. A large disparity exists therefore betweenemployees differently situated. Manpower costs are relatively low in Madagascar. Convertedinto dollars, the average yearly personnel expenses per employed person are about five times lower than in Cameroon and eight to nine times lower than in Ivory Coast". The average monthly wage in the garment industry is about US$60,versus US$70in Indiaand US225 in SouthAfrica. l6Source: INSTAT~DSM2001 ''SurveyEPM2001 l8 Dynamiquedu SecfeurRive a Madagascar.AFD February2000. 26 Moreover, the income of the majority of Malagasies hardly covers their essential expenses. Consumptionexpensesare dominated by food (70 percent), which leaves little possibilityfor meeting the other needsthought to be indispensable(health, education, housing,etc.). 2.2.2.1 -8 Income is uneauallvdistributed Povertyand inequality are two different notions butthey areclosely linked. Inequalitygives an ideaof how incomes aredistributedandserves as basic informationto account for poverty. The Lorentzcurve (see graph below) shows a slight increase in inequality in2001. Morethan half of the populationmobilized only a quarter of income in 1999and only 22.5 percent in 2001. The increase in inequalitiesconfirms the fact that growth between 1999and 2001 was beneficialmainlyto betteroff people (individualsabove the povertythreshold). Graph: Curveof concentration of per capita expenditures for the years 1999and 2001 Overall percentage of the measure of expenditures Overall percentage of the population Source: INSTATIDSMIEPM2001 2222 Factorsimpedinganincreaseinproductivity These are factors that thwart the growth of the productivity of assets (land, manpower). However, properly employed, these factors may foster the betterment of the living standards of households. A study conducted by INSTATand Cornel1University in the communes enables us to classify the priorities of the population. Each focus group was given the choice of classifying by order of importance the government's interventions, namely health, education, security, transportation, agriculture, environment, and wafer. The results are presentedinthe form of averagesby commune. First of all, agriculture, transportation and security come in first place, with 27 percent, 26 percent and 15 percent, respectively, of the respondents. Then come the social sectors with 14 percent, 10percent and 6 percentrespectivelyfor health, education and water. Table 7.Madagascar: Prioritiesfor development accordingto commune focus groups (September-November 2001) 27 Prioritiesof government Percentageof communes interventions 1.Agriculture 27 2.Transportation 26 3.Security 15 4.Health 14 5.Education 10 6.Water 6 7.Environment 2 Total 100 2.2.2.2.1 Lack of dvnamism inaariculturedue to aaricultuml policyand institutionalconstraints A large partof Madagascar'sagricultural potential has remained unexploited until now.This is due to the agricultural policyand institutional constraints. Since the mid-I970s, the policies undertaken in the agricultural sector have not produced satisfactory results. They led to systematic nationalization, high duties, a chronic overvaluation of the exchange rate, generalized price and marketingcircuit controls-especially regarding export crops. The latter kept real producer prices down to the point of discouraging production. The growth rate of agricultural productiondid notexceed 1percent between 1985and 1999. Since the 1990s and in particular since 1994, reform programs have been undertaken. A certain liberalization of exchange and agricultural prices was then observed. Nearly all the export duties were eliminated and partlypassedonto the farmers inthe form of higher producerprices. The sector sufferedfrom the preference given to cities by a system of budget policies which discouragedfarmers' participation. The response from the various subsectors was extremely varied. For instance, rice production was unable to follow the pace of population growth, and as a result the country still imports rice despitethe existence of avast irrigation network. The reforms managed to improve price incentives but they had less effect on other structural and institutional constraints. Indeed the government did not play its role of facilitator and regulator activelyenough. 28 Institutionalobstacles: The land system and propriety rights are uncertain, which checks investments and the improvement of agricultural productivity. Not holding title to land is a barrier to credit access in that real estate constitutes the main collateral required by banks. Therefore the poor have great difficulty in obtainingbankloans. As the poor basicallygrow rice, owning irrigated plots of land isan essentialfactor in improving their situation. Moreover, increases in taxes have not been compensated for by substantial investments in rural areas. Public investments inruralareas are neither sufficient nor truly effective. Huge investments are neededfor developing the agricultural sector. It is necessary to expand poor peoples' access to assets, notablyto landand credit. Lack of service roads'': distance from various services and markets reduces Droduction v[eld. A studyz0on the importance of transportation in rural development revealedthat 33 percent of communes have no access to a national road and 30 percent have no access to a provincial road. Although one mightthink that transportation by bush taxi is possible in several communes at national level, people spend a lot of time (an average of 10 hours) in order to arrive at a bush taxi stop or a railway station. This average refers to the provinces of Fianarantsoa, Toamasina and Toliara. The length of time requiredmay be as much as 20 hours inthe province of Mahajanga. The map below reveals that it is principally in the eastern part of the country that transportation development appears in the foreground of priorities. Serious transportation problems are concentrated in the region that connects Tolagnaro to Toamasina, except for the Manakara- Vangaindrano stretch. That is alsothe case for the major partof the northeasternregion. "The indicator of lackof accessto roads isdefinedbythe quintileof distancesfrom; (a) a road; (b) a busor bushtaxj stop; (c) access to agricultural Infrastructuresand modem fertilizers; and (d) distanceto cover in order to reach the nearestbasicinfrastructures (schoolor healthcenter). The first quintileof the index (the mast remote) correspondsto 20 percentof individuals in ruralareas WIOhave the least accessto services(thisincludesthe great distancesto coverto get healthcare orto go to school). At the other extreme isthe fifthquintile(theleastdistant), composedof indwidualshavingthe easiestaccessto theservices. 2o nle Clients'Voke.ComellUniversity-INSTAT-FOFIFA. October2002. 29 MAP2: LACK OF ROADSLINKING THE FIVONDRONANA (ACCORDING TO THETYPE OF TRANSPORTATIONGENERALLYUSED) Source: Commune census2001, 110Program, Cornell University with the cooperation of INSTAT and FOFIFA. The same problemarises the case of accessto daily market and extension services. Table8. Madagascar: Accesstimeto variousservices and markets usingall means oftransportation (Inhours) Servicesand markets Country Antananarivo Fianarantsoa Toamasina Mahajanga Toliara Antsiranana Bushtaxistation 10 3 9 9 20 10 8 Daily market 8 4 5 8 19 8 9 Agricultural extension service 12 3 9 9 23 15 9 Source: EPM2001 INSTAT The absence of access roadsgreatly increases poverty interms of rateas well as intensity.The more deprivedof service roadsthe areas are,the higher the rate of poverty is. The following table indicates direct relationships between the problems due to the absence of roads and other sectors of the economysuch as agriculture. In fact, the least distant regions have rice yields twicethe size of those of the most remote regions. Table 9. Madagascar: Situation of poverty according to remoteness Poverty rate Intensityof poverty Quintile distancerating 1997 1999 1997 1999 The most distant 78.0 82.8 34.8 42.4 Pdquintile 78.2 78.9 38.1 35.6 3d quintile 74.5 78.9 32.7 37.7 4" quintile 77.0 77.7 36.6 36.5 The least distant 72.6 65.9 31.6 29.0 Source: INSTAT, EPM 1997and 1999. The availability of a road in rural environments contributes to increased productivity, and thereforethe livingstandardof ruralfamilies who.can use it. Table 10. Madagascar: Impact of transportation costs Distancequintile Percentage of Rice yield kglha poor Nearest 52.1 3,500 79.1 2,500 3m 88.2 1,950 4'h 89.5 1,670 I Most remote 91.4 1,670 Source: EPM 2001, INSTAT Insecurity in rural areas On the whole, security in rural areas is somewhat improved, except in the region of Antsiranana. Although the provinces of Mahajanga and Toliara considered insecurity as the most important problem to be solved in 2001, this was no longer the case in 2002. The improvement of security inthese provinces is quite noticeable.The situation has also improvedgreatly in the province of Fianarantsoa. 31 Table 11. Madagascar: Percentageof communes where security conditions are bador very bad (Perception of focus groups in percent) July-December January-June July-December 2001 2002 2002 Madagascar 39 38 16 Antananarivo 4 13 8 Fianarantsoa 38 38 8 Toamasina 14 25 0 Mahajanga 63 38 25 Toliara 63 54 4 Antsiranana 54 63 54 Source: Post-crisissurvey 2002. Program ILOANSTAT FOFIFA. The success of the various interventions by the new government (increasein the number of personnel and security-maintenance interventions) expresses its willingness to reduce insecurity which prevailedall over the island priorto and duringthe crisis. 2.2.2.2.2 Health2' The state of health of the population is an essentialelement of well-being and a factor which contributes to an increase in workers' productivity in the short term. If medical services are well directed towards women and children, the care will have long term impacts on their life expectancy and children's mental and physicaldevelopment. Malagasy pupils are thought to have lost 3.5 million schooldays each year owing to diseases related to the environment=. It is therefore imperative to give healthand environment high priori so as to reduce povertyand implementsustainable development. Much stills remains to be done in order to imorove the state of health of the Malaoasy pooulation Health indicators enable us to assess the socioeconomic development levelof a country. The infant mortalityrate, for instance, reflectsparents' income,food security, access to drinkingwater, etc. Source: EDS1997andMlCS2000. 22 On the whole, security in rural areas has improvedsomewhat,except in the region of Antsiranana. Although the provincesof MahajangaandToliaraconsideredinsecurityas the most importantproblem to besolved in2001, it was nolongerthe case in 2002. Theimprovement of security inthese provincesisquite noticeable.The situationhas also improvedgreatlyinthe provinceof Fianarantsoa. 32 If one confines oneself to indicators contained in Trend in death rates national inquiries (EDS, EPM, MICS), one sees that much (for 1000) remains to be done to improve the state of health of the populationand in particular that of women and children. 200 For example, the Demographic and Health Enquiry 1m (DHE) of 1997 indicates that although life expectancy at rm birth is 54 years (estimatedat 57.5 years in 1999), it is only so 40 years for 32 percent of the population. 0 The various mortality indicators (infant, juvenile Infant mortality and infant mortalities), show a decline on the whole, Juvenile-infant despite their rates, which are stili relatively high, (97 and rate death 159 respectively per 1,000 live births in 1997 versus 88 rate and 138for 1,000 live births in2000). As for the childbirth mortality rate, the DHE estimated it at 488 deaths per 100,000 live births over the period 1990-1997 using the direct method of estimation. This means that Malagasywomen still run rather serious death risks during their child bearing years. Conceming the vaccination coverage rate, it remains at a rather low level despite improvement in the situation from1997 to 2000. In fact, less than half the children aged 12 to 23 months received all the vaccines recommended by the PEV (36 percent in 1997versus 44 percent in 2000). The same holds as far as the protection rate against neonataltetanus goes; the proponion of newborn babies immunized against neonatal tetanus was 35 percent in 1997 versus 48 percent in 2000. All these factors largely contribute to infant mortality. The administration of vaccines and the observance of the vaccination schedule combined with other factors of prevention(for instance, the quality of nutrition) make it possibleto control, if not diminish, the impact of infectiousdiseases. In spite of its small improvement (49.3 percent in 1997 versus 48.6 percent in 1999), the indicatorof nutritional state (height for age index) gives informationabout the extent of malnutrition amongchildren under 5. Infectious diseases affect Malaaasv children; AIDS essentiallv strikes the workina DoDulation The diseases which most affect the population, Evolutionof HIV positivity rate notably children, are acute respiratory infections, (in percent) including influenza (21.6 percent), malaria (19.4 percent) and diarrheal diseases (8.4 percent). People of working 0.4 1---*---*-. L~ 43- age (25 to 59) and children under 5 are the most 0.3 _- vulnerable to these diseases. In addition, diarrheal 0 2 0.m L:.:. _..: diseases constitute a huge public healthproblem affecting a.1 . .:.. ..%. 50.9 percent of children under 5. 0 . ,-c; ' .' w m3 9' Communicable diseases like plague, bilharzhiosis, cysticercosis , leprosy and malaria constitute genuine curses to the population and worsen the poverty situation as a result of the insufficientnumberof weapons againstthem. The first two cases of HIV infection were detected in Madagascar in 1987. The monitoring system applied from 1987 to December 2001 made it possible to spot 271 HIV-positive cases out 217,890 peopletested, including 45 cases of AIDS. The virus essentially strikes members of the working population. The average age of HIV- positive people is 27.5 for women and 34.4 for men. In addition, 10.3 percent of HIV-positives are 33 farmers. This means that HIWAIDS risks aggravating poverty in Madagascar through a fall in production at the national level if effective measures are not taken quickly. The virus continues to multiply (see graph) although short- and medium-term plans for control were implemented in these periods. Itspresence doubledduringthose first five years and trebled duringthe followingfive years. Concerning non-communicable diseases which cause discomfort and handicap individuals and families (blinding cataracts, cancers, diabetes, mental and psycho-motor troubles, cardiovascular diseases), a rising incidence is observed. Placed within the poverty circle, these diseases are beginningto represent a burdenfor the society. HoSDitalSand basic health centers are the most visited bv Door families Over the entire territory, public sector health servicesP hold a preponderant place. They are the most used (59 percent of patients), particularly by poor families (78 percent of the poorest households). In rural environments these facilities are the most visited (61 percent). Private sector service providers include NGOs, church-runcenters, and private physicians.They are used by 26.2 percent of the patients and visited rather by the rich (36 percent of the most well off). In urban environments, these private services are the most visited (38 percent of the consultations in the big agglomerationsand 53 percent inthe capital). After the implementationof the UFP or Users Financial Participation, the quality of the services improved; on the other hand, there has been less access to medicines, especially for the needy. Besides, pending the implementation of the more acceptable system for all, the government temporarily suspended the UFP from mid-2002. This decision has entailed an increase in the visitation rate of health centers, which might give rise to a risk of inventory shortage in essential medicines in the publichealth clinics. The income level constitutes one of the factors influencingthe useof health services The very low income level of the populations constitutes one of the main causes of their infrequent recourse to health services. Constrained by high food expenses (70.2 percent of total expenses), householdsearmarkonly 2.4 percentof their expenses for health. Inaddition,owing to the relative high cost of office calls, less than half the patients (45.9 percent) go to doctors' offices.The cost of a single consultation (service fee, medicines, transportation and meals, etc.) represents 5 percent of the yearly average income of the poorest households, compared to 2 percent for the richest household^^^. To these factors are addeddistanceto or even absence of health centers and the shortage of medical personnel in some localities, and the non availability of medicines. About 60 percent of the population live within a radius of three miles or about one hour`s walk from a public health office. In rural environments, 37.2 percent of the consultationplaces are situatedmore than six miles away from the village people's place of residence. One also sees an imbalance in the distributionof medical personnel: 21 percent of the population (mainly living in urban areas) are served by 41 percentof healthcare providers. On average, a physiciantakes care of about 10,000 inhabitant^^^ and 23The publicsector healthofficesincludehospitalcentersandbasichealthcenters. 24Accordingto the EPM-1999, physician's office calls cost MGF 10,880 for the poorer households whose yearly average percapita income is MGF229,649. As for the richer households,With a yearly average per capitaircome of MGF1.5million,officecallscostMGF36,930. 25Secondnationalreporton humandevelopment,Madagascar(INSTAT,1999). most of the health personnel are located in urban areas. Incidentally,the proportion of female health personnelis lower in rural and no-accesszones. Public healthexpenditures on basic health services are verv low The health master plan 1998-2000 focused on implementing various sectoral reforms (reproductive health, integrated coverage of childhood diseases, vaccination and nutrition, health informationsystems, etc.), by increasingpublic expendituresallottedto this sector. Between 1995and 2001, the share of the expenditures increased in relation to total public expenditures, from 3.4 percentto 6.7 percent;the percentagein relation to GDProsefrom 0.6 percent to 1.5 percent. Sill, the expenditures allocated to basic health services Trend in pubic expenditures frequented by the poor representedonly 4 percent of the allocatedto healthin MGFbillions expenditures, which is equivalent to a per capita annual amount of MGF 10,010 in 2000-a long way from the !!a' MGF 220,000 (US$34) recommended by the WHO to cover the costs of basic healthservices?6 sQ1 - -.-- ~~~ m 2.2.2.2.3 Education ?Po . --.-. 0 Education represents a long-term investment in w97 1- r s g x w the individual's productivity. Thus, finishing primary school reduces the risk of being poor by 5 percent; Source: Ministryof the Economy, finishingsecondary and university education reduces the Finance, and Budget risk by 17percenf'. Education indicators revealan alarrnina situation ineducation In 2001, nearly half of the populationwere illiterate (48 percent), including 61 percent from rural areas (versus one-third for urban areas) and 50.6 percent of women. These percentages remainedstable incomparison withthe results for 1999. Although these figures represent an improvement in comparison with 1997, all children of school age do not go to school, as evidenced by the net rate of school attendance in primary education, which was only 72 percent for the whole countp, 54.2 percentfor the poorest quintile and 88.1 percent for the richest quintile. The rate of grades repeated is sizeable, affecting 30 percent of all the various different levels. Those who do not go to school or who abandon school early come in a large part from the poorest sections of the population, and this phenomenon is more marked in ruralenvironments. Conceming school achievement,we note that in primary education, only 33 percent of the pupils who enter the first year reach the end of the primary cycle and 18 percent of the pupils leave school before the end of the basic education curriculum without obtaining the necessary level of knowledge;we can also notethe inadequacyof schoolandvocationalguidance. The differences between rural and urban areas are important, with 60 percent of the children in urban environments completing schoolversus only 12percentfor those living in ruralenvironments. 26 ''Source:INSTAT/DSM2001. Recenteconomic developmentdoc No. 4 UNDPMay2002. 28(1998-1999source: RNDH2000). 35 The level of education varies accordinato area and aender In the whole country, only 11.6 percent of the populationcomplete secondary education or a higher level. The situation is even more worrisome in rural environments, where the percentage of those who have no education risesto 53.4 percent. The table shows a disparity in educational level between urban areas and rural areas. For instance, in urban environmentsthe percentage of individuals who have completed higher education reaches5.2 percent, whereas only 0.8 percent of the rural populationhaveattainedthis level. Although the difference according to gender does not seem to be too striking, it appears that the females are neverthelessunderpriiileged.Infact, about half of the women (49.7 percent) have no education compared to 46.2 percent for men. Access to civic literacy must be promoted for girls in poor areas. Table 12. Madagascar: Distributionof the populationaccordingto levelsof education, by placeof residence and by gender Levelof Environment Sex education Urban Rural Male Female Country No formal 30.2 53.4 46.2 49.7 48 schooling Primary 47.4 40.3 42.4 41.5 41.9 Secondary 17.3 5.5 9.2 7.4 8.3 University 5.2 0.8 2.2 1.4 1.8 Total 100.0 100.0 100.0 100.0 100.0 Source: INSTAT EPM 2001 There is an obvious correlation between the educationallevel of individualsand the size and precariousnessof their incomes, as shown in table 13. Table 13. Madagascar: Distributionof the populationaccording to the level of education of the headof the householdandthe quintlleof per capita consumption Levelof Noformal Primary Secondary University Total education of the schooling HH Quintile Poorest 32.4 16.7 3.0 0.0 20.0 Quintile-2 24.2 21.3 8.8 0.0 20.0 36 Quintile-3 20.0 22.9 14.0 2.2 20.0 Quintile-4 16.3 21.9 24.5 13.0 20.0 Richest 7.2 17.2 49.8 84.8 20.o Total 100.0 100.0 100.0 100.0 100.0 The table shows that the less educated one is, the poorer one is likely to be. Acquiring even a minimum of education (primary)improvesthe chances of getting out of poverty. Povertv implies that the population cannot meet school expenses Inadequate schooling is due to several factors. Poverty implies that the population often cannot meet schooling costs (school equipment, insurance costs, contributions to student parents' association, schoolfees if any, maintenanceof schoolbuildings, etc.). Parents have less confidence in the effectiveness of the educational system because of various problemsrelatedto it such as: inadequateeducation of the parents and school andvocational guidance, irrelevant curricula, shortage of teachers and pedagogical equipment, dilapidatedschool rooms, unmotivated teachers who mooniight, insecurity, etc. That is why they find it more advantageous to put their children to work to meet the family's expenses rather than send them to school. The fact that the media are not accessible to all the population fosters a lack of interest among parentsto send their childrento school. Moreover, there is as yet no clear educational policy concerning early childhood. The pre- school rate is only 8 percent (source: Ministry of Education), is of questionable quality and is concentrated in urban environments, as well as isolated sectoral interventions; this leaves a major part of the target populationuntouchedby full, integratedprograms. Also, distance in relationto schoolestablishments and the deterioration of roads and rural tracks, notably duringthe rainy season, deterteachersas well as students and parents. Informal education seems an alternative to the basic educational needs of the population The de-schooling and school defection phenomenon constitutes one of the major causes of illiteracy. That is the reasonwhy reinforcement of informaleducation appears as a credible and viable alternativeto meetthe basiceducational needs of the population. In Madagascar, poverty is multidimensional and manifests itself, among many other things, in the educationaldeficit of the population.One of its manifestations is illiteracy. It has been noticedfor a number of years that there is a multiplicityof NGOs and associations intervening inthe social educationalfield, buttheir actions are dispersedand not well organized. Technical and vocational trainina is not adeauate Problems regarding technical and vocational training are still topical. The existing action programs do not succeed in meeting the needs. Recourse to vocational training is still relatively low, which accounts for the low levelof skillsof the workforce. It is clear that, despite the actions carried out by the PREFTEC to convince economic operators of the importance of vocational training, their capacities are limited and restrain the emergence of training needs. Moreover,qualifyingvocationaltrainingofferingsfrom the LTP and CFP are insufficient and not adaptedto the real needsof the job market. The need for a more realistic and pragmatic policy for enhancing human resources and the recuperationof deflated assets by implementing reformsin both ruraland urban settings has not been felt as a necessity. 37 Inhifahereducation trainina is fraqmented Young people, who account for 40 percent of Malagasies aged from 13 to 35, are culturally disorientedand are largely marginalizedon the socioeconomic level. Indeed,the government granted priorityto the generalizationof basic education and seeks to repositionhigher education as the driving force of economic andsocial recoveryand development. The problems of higher education are: fragmentedtraining, prohibitive unit costs, costly open professionalsections and low proportion of teachers of professional rank. The Universities do not possess instruments which might enable them to identify accurately the requirementsof the job market. Moreover, the system of resource management is inefficient and access to higher education remainsthe privilege of avery select minority. Svstematic evaluation is still aliento educators Systematic evaluation is still alien to educators. It has been observed in visits to the field, through class observation and discussions with educators, that evaluation techniques are not mastered by educators in general and teachers in particular; the latter do evaluation in a routine manner and the practiceof evaluation is not systematic for educators when carryingout their work. Public exPenditures for education are still Trend inpublic expenditures allotted to education in MGFbillions The small size of total public expenditures in 10M t----- _. . -.--.....-, --- the sector no doubt constitutes a major cause of the problems observed inthe educationfield. The credits earmarked for the education sector are small and 2UDi. those allocated to the informal sector and vocational 0 training are insignificant.The creditsearmarked for the 1987 1SPa 1898 sector'' represent less than 20 percent of total . - , - . , I . . - . expendituresand involve around 2 percent of GDP. However a new trend was begun in the course of the last few years by a policy of resource allocation which better reflects the priority assigned to education. For instance, between 1995 and 2000, allocationsto education increasedfrom 8.7 percent to 16 percent, that is from 1.5 percent to 3.1 of GDP. This increase made it possible, inter alia, to recruit new teachers for rural schools, reconstruct and rehabilitate some school facilities, pay teachers' salaries promptly, and distribute didactic materialand schoolsupplies. As regards expenses for basic education, they progressedfrom 4.5 percentof the state's totalexpenditures in 1997 to 7.7 percent in200030. 2.2.2.2.4 Access to drinkina water and sanitation In2000, access to drinking water, an essentialelementof health, was a concern at the national levelfor 24.4 percent of households or 23.8 percent of the population(59 percent in urban areas and 29Highereducationnot included. 3oRecenteconomicdevelopment doc. No. 4 UNDPMay2002. 38 9.85 percent in rural areas). Among the poorest households, only 7 percent had access to drinking water compared to 43 percentof the richest (figures: EPM 99). At household level, the province of Antananarivo is the best served (43.1 percent) owing to the fact that 92 percentof the households inthe capitalhave access to potable water. It is followed by the province of Toliara (24.9percent) which benefitsfrom the contribution from various water projects (AES, impluvium, etc.). Looked at in terms of population, the rates become 32.08 percent for Toliara versus 32.53 percent in Antananarivo. It is in the provinces of Toamasina and Fianarantsoa that one sees the lowest access rate (14.1 percent and 9.8 percent respectively of households, or 12.44 percent and 15.21percent of the population) where the populationgets its supplies principallyfrom rivers, springs and lakes, numerous in these provinces. Concerning sanitation, several aspects of services have to be taken into account. But in the fight against poverty, the essential basic service to be considered is the access to infrastructures for evacuating excreta. For 2000, household access rates in percentage were 87.3 percent in urban areas, 52.2 percent in rural areas (MICS results for 2000). For all of Madagascar, irrespective of location, the percentage was 58 percent (only one household in two has a way of disposing of excreta) with pronounceddifferences betweenthe provinces, the best equipped being the provinceof Antananarivo (84 percent), and the lowest rateobserved in Toliary (13.5 percent). This situationwas attributable to customs incertain regions. 2.2.2.2.5 Environment Cause of Deforestation. Deforestation,one of the mainenvironmental problems, constitutes a serious threat to biodiversity in Madagascar. The problems are the result of rapid populationgrowth, generalized pauperization of the population, the need for land, the necessity of increasing food resources, and the increase in the need for firewood, lumber and wood for construction. It is estimatedthat the forest cover will disappear in25 years if the present tendencies continue. The acceleration of forest cover reduction can be said to be due above all to the practice of itinerant slash-and-burn farming ("tavy") to meet the food needs of a sizeable section of the rural population, andto wood felling activities to satisfy energy needs. Relations between poverty and environment. Poor populations are highly dependent on the environmental context and suffer significantly when environmental conditions worsen. Material destitution and the necessity to satisfy vital needs (food, energy, etc.) generate in the population behaviors jeopardizing the sustainable management of natural resources. The continuous deterioration of this natural capital actually mortgages the socioeconomic opportunity for environmental preservation and worsens the povertysituation. This accountsfor the vicious circle: deterioratedenvironment-poorer population- more rapiddeteriorationof the environment. In rural environments, the population is highlydependant on agricultureto ensuretheir survival. The impact of soil deterioration combined with the effects of price fluctuations brings about a decrease in agriculturalproductivity entailing a constant slide in incomes, deepening even more the pauperization of the agricultural population. This state of poverty fosters the clearing of new forest zones leading to a destruction of natural resources. Such situations make the rural economy vulnerable to the slowdowns of the globaleconomy. In urban environments,the most underprivileged populations are the most exposedto diseases related to pollution of the air and water, such as respiratory and intestinaldiseases, malaria, etc. This 39 entails a worsening of human health as well as a fall in productivity, which therefore limits economic growth. The deterioration of water resources, the diminution of the fishery stock, intensivepoaching,the illicit trade in native species and the irrational exploitation of the forest constitute so many problems affecting the most underprivileged populations both in rural areas and in urban areas. These latter populations become evenmorevulnerable vis-a-visnaturaldisasters (cyclones, floods, drought, etc.). 2.3 POVERTY EXPERIENCES Poverty fosters the adoption of personal strategies which privilege the search for "miraculous" solutions incontempt of law, the integrity of the human person and environmentalpreservation. Alienation: Poverty creates feelings of lack of interest in public affairs and the impossibility of taking part in social activities. It therefore appears logicalthat the Malagasy people composed of 70 percent of poor individuals, which corresponds in figures to about 10 million people, abstains more and more from expressing its choices. A survey carried out by the UNDP3' revealed that, at the various elections, the participation rate was 50 percent in the communal elections of November 14, 1999 and only 45 percent in the provincial elections of December 3, 2000, although the latter were meantto leadto the designation of the governors and senators. Unrestllnstability: A certain distance has widened between ordinary citizens and the authorities; in this respect, the majorlty of the population does not believe in the will and ability of politicians. Such a situation weakens and increases the instability of the country's political system, The level of poverty and the feeling of exclusion generates behaviors of revolt. This explains the events which struck the country in 1972,1991and 2002. Deviance: The situation of the poor and the non poor who feel that they risk falling into poverty accounts for a craze for gambling, the decision to migrate or to emigrate towards more prosperous zones or countries, the recourse to delinquency, prostitution, the development of corruption, the overexploitation of non-renewable natural resources, the sale of assets, the rooting of a dual attitude of passivity/aggressiviiy vis-a-vis the authorities and foreigners, who are considered both as the potentialsource of and solution to the state of poverty. Poor households react in several different ways according to economic shocks. A series of recent studies was aimed at understanding these reactions and under what circumstances the reactions make it possible to reverse the fall; also, under what circumstances the fate of the vulnerable populationsworsens. UNDP Recent economicdevelopments and consequences of thepresent political crisis on the economy and the livingconditiDnsof Malagasies.Doc. No.4 May2002. 40 Chart: Impact of shocks on vulnerable households 1. tendame - 2.choc Time Source: Cornellet al. (1999). The chartshows the possibility of resortingto buffer mechanisms to avoidfalling into regressive individual strategies-such as the selling of land, withdrawing children from school-which risk jeopardizing the future in order to preserve the present. Those who can do so have recourse to external support mechanisms to which they have access. A family may adopt both types of strategy simultaneously-first individual reactions, then recourse to institutional supports, since they are complementary. Table 15 shows that the heads of vulnerable families resort in varying degrees to three categories of external support in case of emergency: mutual aid, giftddonations and credit. Mutual aid operates within lineages and communities. It takes concrete form in reciprocal exchanges of manpower or material assets, which occur at the time of farming activities, funeral ceremonies, in case of accidents or misfortune incurredby a family (theft, fire, diseases). Donations-from the family, the church or NGOs-are also available in certain cases. In the event of divorce, separation, or death of the husband, women who find themselves suddenly at the head of a household often resort to land loans within the family. As for migratingworkers, they send back money to the other members of the family (Dorosh et al. 1998; MaDIO, 1997). The attempts at quantificationsuggest that the transfers are larger (in absolute and relativeterms) in urban areas than in rural areas. In rural environments, the biggest beneficiariesof net transfers are the poorest rural households. But in urbanenvironment, the results are contradictory. Some suggest that they favor the richest;accordingto others, boththe poorest and the richest benefitfrom them (MaDIO, 1997). Loans are also available-from family, religiousassociations, shopkeepers and neighbors. The terms vary enormously according to the sources. (COMODE, 1999; Lupo and Raveloarimanana, 1999;Zeller, 1997). These institutions, which have been operating for centuries, are at present undergoing major changes. Increasingpressure on lands, migrationto towns and successive droughts leadto a strong call on traditional mechanisms, provoke failures and stimulate adaptations. In rural environments, communitymutualaid mechanisms are loosing strengthand evolvingtowards other forms, especially as regardscredit. In urban environments, we witness the breaking up of families under the effects of 41 these pressures; but at the sametime one witnesses the birthof neighborhoodsolidarityassociations. (COMODE,1999; Lupo and Raveloarimanana). Table 14. Madagascar: Buffer institutions availableto vulnerable households Vulnerable oups Buffer institutions G I G2 G3 G4 G5 G6 G7 Small Landless Unskilled Single Underprivileged Homeles Handicapp farmers workers parents casts s people ed aged Adaptive mechanisms 1 Mutualaid C* C* C* C* C* _. C* a- Family C* - C' C* - C* b-Community 2 Donations a- Family C' C' C' C' C* - C* b- Associations, C* C' C* C* C' C* NGOs c- Churches - C' C' C' C* C* C' 3 Credit a- Family C* C' C' C* C' - C* b- Shopkeepers c' c1 C* C* C* - - Regressive mechanism c- usury C* C* C' C' C* C' C* 4 Decapitalization C* C* C* C* C* C* * All shocks C1 = Periodical and regular (tiding over period) C2 = Natural, unpredictable(drought,cyclones, locusts) C3 = Macroeconomic (priceincreases, unemployment) C4 = Biographical (diseases, accidents, deaths, separation, divorce) -= none Source: Cornellet al. (1999). Deficiencies The mechanisms available to a given household often depend on the extent of the shock undergone. When a household undergoes a shock of some sort (death, illness, theft), it fosters resort to other households (gifts, loans, mutualaid) who are not affected by the event. Therefore, in the face of biographical shocks (C4) priiate safety nets function with relative efficiency. On the other hand, shocks which strike a group of households at the same time-like natural disasters (C2) and a macroeconomic slump (C3)-foster an external intervention, since they throw all the households into difficulties simultaneously. It is in these situations in particular that the buffer mechanisms risk breakingdown completely. 42 Some vulnerable groups-notably the 4 - M l and the underprivileged casts-do ~ ~ ~ not have access to the whole range of support. Private transfers are principally favorable to the rich town dwellers. The informal credit market also favors the better-off. The poorest, who present the greatest risksfor lenders, find credit only at high interest rates. Infact, there exists a positive correlation betweeneconomic and socialcapital. Householdswho possess enough resources can contribute to mutual aid ceremonies. A contribution in time of availability of resources functions as an informal insurance, putting the household in a position of creditor, entitled to appeal in turn for assistance in the future, when the need arises. The neediest- the 4Mls, the landless and the underprivileged casts-who are mainly debtors, are the least well served by these solidarity networks. Such networks play an important role with households that are average or poor, butfailto a great extent when faced with the requirementsof the extremely poor. 2.4 POVERTYRISKS(VULNERABILITY) Vulnerability can be defined as the probabilityof suffering the consequences of unpredictable events, or sensitivity to external shocks. 2.4.1 THETYPESOFRISKS In fact, households face different sorts of risks in their lives: economic, social, environmental and natural. If these risks actually become shocks, they engender consequences and threaten the well-being of families, which can fall under the poverty line or push those who are already poor into dire poverty. This situation can make households vulnerable and can reduce their means for managingfuture risks. Risks Types of risks Vulnerable groups Economic - Insufficiency of income in Farmers: cashcrops urban or ruralenvironment Smallfarmers (c0.34hdper capita) Farmersvictimsof naturaldisasters Employed laborers - Underemploymentor Low-rankcivilservants(urban) lossof EPZ employees employment Workers without formal contract Discouragedworkers Unskilledlabor force (rural) Social - Non-respectfor law - Malnutrition Childrenfrom 0 to 5 years old Pregnant and nursingwomen - Noschoolingandschool Childrenwho can besent to schoolaged6 to 15 -defection Illiteracy Populationin rural environmentsand women Le. homelesspeople. 43 Risks Types of risks - Illness: Vulnerable groups Mahajanga,Toliara, Toamasina, * Malaria Fianarantsoa, Antananarivo, Toliara * Acute shortnessof breath Childrenaged 0 to 3 Diarrhea - Marginalization Oldpeople Handicappedpeople Streetfamilies Women (ruraland heads of family) Environmental - Drought and famine Southern farmers and natural disasters - Cyclonesandfloods Small farmers: East, South-East, South-West -Environmentaldeterioration Smallfarmers: Highlands,South-West,West 2.42 GENERALPROFILEOFWLNERABlLFlY Facedwith the situationof vulnerability, the ability to respondof the state as well as private and international bodies is still very limited. In fact, some weakness can still be seen in targeting vulnerable groups, lack of coordination and synergy of actions undertaken, insufficiencyof indicators that might enable identification of the impacts of the various actions, and problems related to contlnuation of assistance after the donors' withdrawal. At the present time, the percentage of the population that benefit from social protection mechanismsis estimated at only 5 percent to 7 percent. Current interventions are only palliativesand not preventive measures, and do not provide durable solutions to the precarious situation of the vulnerable populationcategories. Table 15. Madagascar:General profileof vulnerability by Fivondronana Generalprofile of vulnerability by Fivondronana basedonthe povertymap33 Regions Degreeof Number of Causes of vulnerability vulnerability Fivondronana Antananarivo >BO% 11 - Deficient consumption needs - Highproportionof activepopulation Fianarantsoa >BO% Majority - Small farmers - Unskilledworkers Toamasina >BO% 13 - Highrate of malnutrition(50.3%) - Deficit of food production - Drop in income - Unavailabilityof roads 33Drafted bythe World Bank 2002. 44 Toliara >8O% Majority - Those who are the most exposedto highrisk of insecurity - Food shortage (due to drought and locustplagues) 2.5 COMPARISONOFTHE MILLENIUMSUMMIT OBJECTIVES WITH THE SITUATION OF POVERTY AND STRATEGIC FOCUSESOF THE PRSP Situation-Causes Strategic Focuses Access to land is difficult Lack of skills and underemployment Fightagainst povertyand famine Total number of population concentrated in agriculture 1 Provide Relatively low income education for all Work activity rate of grown children Lack of skills and underemployment Women are able to confront the Promoteequality interms of gender situation Inciteand and number Developmentto the detriment of promote human women and material Reducethe percentage of people Low access rate securitysystems without accessto drinkingwater Disparitybetween urbanand rural andexpanded areas socialprotection High mortalityrate Reduce infantmortality Low income Non-existence of healthcenter Distantcenters Improvematernalhealth Shortage of doctors Nan-availability of medicines Fight against malaria,AIDS and other diseases Public expenditures are low Ensurea sustainable environment Rapidpopulation growth Restorethe rule Pauperizationof the poor of law and a well Expanddevelopment partnerships Badcoordination of assistance governed society The government must provide itself with the means for caving out its policy. On this point, it seems timely to present the elements and factors likely to limit and restrict its scope of action and those likely to enlarge it, with a view to understanding better the programs and actions to be implemented. 2.6.1 FACTORSTHATLlMlTANDRESTRICTTHESCOPEOFACTION The main lessons relating to weaknesses, threats, adverse tendencies as well as uncertainties, enable usto highlight the following aspects: - Insufficient economic growth, in the past characterized by, inter alia, (i) weak economic growth which resultedfrom an insufficientlevel of investment(lessthan 15percent of GDP) - and (ii)a ratherhghdemographic rate(about 2.8 percent). Constraining burden of indebtednessdespite successive debt-reschedulingagreements andor debt cancellation with the Pari Club concluded since 1981. The rescheduling agreements from 1937to March2001 (ParisClub Ix) did not reducethe net presentvalue of the debt in a substantial way, as by the end of the year 2000, the nominal outstanding - extemaldebt stillstoodat about SDR 3billion. National industries and duty-free zones still fragile and weakened by the post- presidentialelection crisis: the prospects of growth draftedby the Associationof Duty-free Zones and Partners(GEFP) inthe course of the secondhat of 2001%includedanestimated MGF 280 billion in investmentfor the period 2002-2004, which could bring about a boost in exports of 75 percent to 100 percent and create direct jobs numbering up to 110,000 to - 130,000by2005; theseforecasts nowseem questionableandsubjectto downwardrevision. Strong sectors hardly mobilizedfor the time being, and still under the shock of the post- - presidentialelectioncrisis. Acceleratedpopulationgrowth by comparisonwith the past: current rateof 2.8 percent, comparedto 2.7 percent in19752.2 percent in 1966and1percent upto 1950. - Sluggish recovery from the crlsls, with impacts in human and financial terms on public finance, inparticularonthe PublicInvestmentProgram. -- - Uncertainenergysupply withthe prospectof war in Iraqimpactingthe priceof oil. Lmitedcapacityfor inveslmentbythestateandtheprivatesectorirrespectiveofthe source. Insufficient coordination among the players leadingto a lack of synergy betweenactions - inthefield coupledwith amultiiudeof approaches(caseof the PCDs). Relatively high geographical concentration of certain actions and development instruments - (PSDR, microfinancing,FER, PCD,AGERAS, GELOSE, priorirtyactionzones,etc.) Lack of synergy among actions undertaken; inadequateabsorptioncapacrtyof financing; few incentives in the legaland regulatory framework (legal, financial, tax system); absence of a - results-orientedandevaluativecultureat the administrationlevel;highdegreeof corruption. Strongtendencytowardsenvironmentaldeterioration(about 100,000haof forestscontinueto disappear everyyear) inspite of greatefforts deployedto betterpreservetheir integrity. 34These estimates have beenreviseddownwardsslightlyfollowing the attack of September 11,2001and the global economic recessionrecordedduringthat period. 2.62 FACTORSCONDUCIVETO EXPANDEDSCOPEOFACTION The strongfactors, forces and opportunitiesthat might enlargefreedom of action incorporate: - Political will on the part of the government; requiring the players to contribute within a - partnershipframework (publdprivatepartnership);anda participatoryprocess; Participationof religiousorganizationsand civil society inthe implementationof development - actions; Priority given to the facilitation and intensfcationof communication in physical, economic, - socialandculturalterms. Progressivetendency to decentralize development actions and instruments (RDSP, micro - financing, FMF,CDP, AGERAS, GELOSE,priorityactionzones, etc.). - Multiplicationof supervisoryagencies and intermediaryagencies(NGO,consultants,etc.) Conspicuous willingness of internationalsupport bodies to really support Madagascar through the cmmibnent to fund approximately USg.477 billionat the MadagascarFriends --ConferenceheldinPans. Attainment of a pointof noreturnconcemingprivatization. Willingness to be actively inserted into the system of regional and intemationalcooperation - (COMESA,IOC, SADEC, NEPAD, French-speakingcountries, African Union,etc.). Existenceof opportunities and possibilities offered bythe presence of numerous bi- and - multiilateralprograms. The recovery of confidence by the great majority of Malagasies supported by the - prospectof politicalstabilityafterthe resultsof the legislativeelections. Developmentof TICSandenthusiasmfor them onthe partof youth. In spite of the restrictive factors mentioned above, the promotion of rapid and sustainable growth does not lack majorassets, which lie inthe willingnessof the stateto constitute and implement the material and psycho-sociological objectives which will enable the start-up of the country's development with more serenity. For this reason, the government's freedom of action appears fairly large and calls for the setting of ambitious objectives to be reached through programs which, while ambitious, are realistic and remainwithin the nation's reach. Conclusion In Madagascar, poverty has created the conditions for its geographic expansion and transmission between generations. LOWincomesand the large portion of income allocatedto food expensesin thepoor families' budget limit theiraccess to basic healthservices, increase the dropout rate,and therate of abandonment of studles. Thehigh rate of illiteracyshows not only the relatlve character of the success of recovery programs undertaken,but qualifies the effectiveness of future actions. Madagascar's future adults are running the nearly certainrisk ofjoining thealready large groupof uneducated heads of household,whoare unlikelyto seize the opportunities offered to improve their situation and that of their progeny: agricultural techniques, birth contra/, children's education etc. The deterioration of the environment as well as the insufficiency and poor condition of infrastructures aggravate the poverty of the population. Such situationsmust be avoided. The strategies adopted must be ambitious but at the same time realistic and feasible, so as to enable the poor to get out of poverty and the non- poor toavoid failingintoit, all the while preserving the environment. 47 The government has at its disposal a range of intervention tools with which it can interveneon behalf of thepoor in theshort, mediumand long terms. Interventionsliable to play an important role are ones that have an impact on the assets of thepoor (landand manpower). As a pmrequisite, trust in governingofficials,civil society and theprivate sector, on the part of the populationand in particular the poor, must be revived. Thereforethe institutionof good governanceis alsoessential. In the short term, the key instruments are economic and financial strategies targeted towards restoring macroeconomic stability. In fact, mastery of inflation and a good fiscal strategy will directly influence product prices and consequently the level of household consumption. In the medium and long terms, the most important instruments are public investment and currentexpenditureon infrastructuresand thesocial sectors. 3 DEVELOPMENTOBJECTIVE, STRATEGIC FOCUSESAND GENERAL OBJECTIVES INTHE MEDIUMTERM Acting as a reference framework for all the policies and actions regarding reduction in poverty, the PRSP has a place in a long-term perspective. To this end, the document proposes an operational approach madeconcrete by: 1. Establishmentof a medium-termdevelopment objective with targetedresults; 2. Implementation of strategic focuses of intervention which will enable players to identify the priorities and to draft various action programs (macroeconomic, sectoral, specific) as well as to facilitate the actions: 3. Basicprinciples to befollowed inthe approachto executingthe programs; 4. An implementationschedule identifying landmarks spreadout over time. The basisfor the strategy consists in fact in ensuring that allthe operational actions undertaken through the various programs will be directed towards development of the economic, social, cultural, political, environmental, personal resourcesof the poor. 3.1 DEVELOPMENTOBJECTIVE The development objective for Madagascar is promotion of a rapid and sustainable development in order to reducethe poverty rateby half in 10years. The fact of putting the concept of sustainable means of existence at the center of the basic concem of the strategy for reducing poverty corresponds quite accurately to the challenge of rapidity and sustainability which commands andshould commandthe government's principlesand actions. The implementation in the immediate future of innovative approaches as well as the search for positive impacts of the development for the benefitof the great majorityof the population, viz. the poor in this case, means that at the present moment development with a double component consisting in the possessionof andlor control over means of productionand effectiveness of the enjoyment of the fruit of the growth, is and must be devised andcarriedout for and with the poor. It is in this sense that development is rapid. The concern about basing development on a secure foundation by establishing, for the benefit of the great majority of the population, material conditions and psycho-sociological and legal frameworks (revivalof identity values, effectivenessof the rule of law and good govemance), means enlargement; consolidation and perpetuation of the development basis. It is in this way that developmentis sustainable. By taking account of everything mentioned above, Madagascar proceeded to devise and implementastrategy that intends to be operationaland effective, andcapable of reducing poverty. Its objective consists in reducingthe present poverty rateby half by 2013. 49 The diagnosis and analysis of the characteristics of poverty,the requirements and imperatives of a rapid and sustainable development in order to reduce the rate of poverty by half in ten years, the lessons drawn from the implementation of previous programs, as well as the recommendationsfrom the various international and/or regional summits in which Madagascar has participated, enable us to circumscribethe three major strategic focuses around which actions to be taken in the course of the next three years (2003-2006)will be articulated. 32.1 %RATEGK: INTERVENTIONFOCUSNo.1:RESTORINGTHERULEOFLAWANDAWELLGOVERNED SOcIm This focus, whose objective is to ensure an environment favorable to rapid and sustainable development, groups together actions related to the renewal, improvement, modernization, reinforcement and development of an institutionalframework of good governance. This focus will allow the state to assume effectively and with transparency its role of facilitator and driving force of the economy, and it will also allow the private sector to create wealth and jobs; as for civil society, it will serve as the intermediary between the people and the state, explaining, and making the population aware of its rights and responsibilities. In order to institute the rule of law and ensure a well-governed society, the government has defined4 overallobjectives: 32.1.1 OverallobjectiveNo.1:Ensuregoodgovemanceandcarrythroughthefight against comption Theattainment ofthis objectiverequiresthefulfillmentof intermediaryObjectives, namely: - Establisha reliable informationsystem necessary for knowing the country's economic and --financialsituation. Implementa budgetpolicy. Fightagainst corruption, ensuretransparencyand improvethe quality of services renderedat - ministrylevel. Putinplaceatransparentand effectivecivilserviceatthe serviceof the citizens. 32.12 OverallobjectiveNo.2: Respectingdemocracy Democracy: free elections, status of the opposition, respect for human rights; freedom of speech of the mediawill be respectedwith transparencyand respectfor the people's choices. 32.13 OmallobjectiveNo.3: Institutingtheruleof law Inorder to restorethe rule of law, the intermediaryobjectivesto be reachedare: - Ensuring an equitable, healthy syste'm of justice respectful of human rights and instilling a feeling of security as regards investments. - Ensuringthe protection of persons, their assets and their productive activities. 3.2.1.4 OverallobjectiveNo. 4: Bringingthegommmentclosertothecitizensthrough decentralizationanddevolution Devolution and decentralization of services ensure hghqualrty, accessible services. The following intermediaryobjectivesare linkedtodecentralizationanddevolution: - Creation of a context favorableto economic and social developmentof the communes, the - improvementoftheirfinancialautonomyandawareness of their responsibility; Strengtheningthe institutionalcapacitiesofthe communes. 322 STRATEGICINTERVENTIONFOCUSNO. 2: FOSTERANDPROMOTEECONOMICGROWTHONA MUCHENLARGEDBASS Strategic focus No. 2 requires the attainment of the overall objectives, namely: (i) reaching an economic growth rate of 8 percentto 10 percent; (ii) improvingthe investment rate so as to reach 20 percent; ( iii) stimulating the dynamism of the private sector so that it takes part in investment to the tune of 12 percent to 14 percent; (iv) opening up the Malagasy economy to greater competition with a view to reducing costs and improving quality; (v) fostering the population's will to participate. 322.1 Global objectiveNo.1: Reachaneconomicgmwthrateof 8to 10petcent In order to reach a high annual rate of growthon the order of 8 percent to 10percent, the government will increase its efforts to extend the investment field by implementing and reinforcing macroeconomic stabilityand a wider opening up and diversification of the economy, The following intermediaryobjectiveswill be pursued: - Ensuremacroeconomicstabilrty. - Exploitthe economic potentialof thecountrythrough: i) Promotionof tourist andemtourist development which preservesthe naturalenvironmentand socio-cuttural identity. ii) Increasingthe contributionofthe miningsectorto Madagascar's development. iii) Ensuringfood securityandoptimizethe useof fshery resources . iv) Preservationof the unique environmentandbiodiversityof Madagascar. v) Building and maintaining roads, developing urban centers, improving the productivity and efficiencyof the transportsystem. vi) Doublinghouseholdaccessto electricity. 3222 Global objectiveNo.2: Improvetheinvestmentrateso asto reach20 percent The ambitious objectives ineconomic growth require a highlevelof investment. The following objectives aretargeted: -- Pursueandstrengthenthe improvementof macroeconomicmanagement; Increasenationalsavings; - Mobilizeintemationalsavings, especiallythroughdirectforeign investment. 51 3.223 GlobalObjectiveNo.3: Fosterthedynamismof the privatesectorsothatitparticipatesinthe investmentratetothetuneof 12percentto 14percent The economy is sustained by activities directed towards exports, in particular duty-free zones, tourismandmining. To this end, the following intermediaryoperationalobjectiveswill be taken into consideration. - Promotingprivate,nationalandforeign investments; - -- Promotingpartnershipsbetweenthe stateandthe privatesector; Reinforcingnationalcompetitiveness; Fosteringgreater dynamismamong ExportProcessingZones. 3.22.4 GlobalobjectiveNo. 4: OpenupMadagascar'seconomyto greatercompetitionWithaview to reducingcostsandimprovingquality. Recapturing regional and/or international markets necessitates not only the promotion of Malagasy products but alsothe continuation and improvementof competitiveness. The intermediaryobjectivesconsist in: -- Ensuringthe integrationof Madagascarinto SADEC; Strengtheningpartnershipwith the various intemationaland regionalorganizations, to which -- Madagascar belongs; MultiplyingdiplomaticandcommercialrelationswithAfricancountries. Promoting the development of economic and commercial functions of Madagascar`s embassies. 3225 GlobalobjectjveNo. 5: Fosterthewillingnessofthepopulationto partkipate To be effective and durable, the implementation of the poverty reduction strategy requires the total support and mobilization of the population, especially the poor, in the various activities. Awareness and consultation actions will be necessary to convince them to get invobed deeply inthe proceduresandto appropriate the fruitsof the efforts. The following objectives are targeted: ---Ensureintensivecitizeneducation; Inducewomenandmarginalgroupsto participateactively; Consult the regions, entrepreneurs and end-users when deciding on the drafting of various programs. 323 SrFfATEGlCINTERVEFmONFOCUSNO.3: FOSTERAND PROMOTESYSTEMSFOR ENSURING HUMANAND MATERIALSECURITYAND ENLARGEDSOCIALPROTECTION The objective of this focus is to ensure that every Malagasy can benefit from the fruits of growth. The constitutiveelements of this focus deal with the definitionand implementationof systems of managementthat aregeographically spread out and supportive; programs of food security, health, education, housing, the environment, etc. The commune, asthe main localserviceprovider, will serve as the anchoring point for all actions undertakenwithin its competence. In fact, in addition to widening the base of development by strengthening every individual's assets, this focus aims at enhancing human capacitiesthrough education, and improvement of health 52 and nutrition, because an increase in human potentialities and a sustainable economic growth can reinforceeach other mutually. Other objectives include: - Ensuring employment to all individuals of working age, by promoting job placement activities, creating productive jobs, ensuring relevance of professionaltrainingto the needs of the labor market, and improvingthe IT systems involved in employment. -Improving workers' condition by honoring Madagascar`sobligations towards the International Labor Organization, by implementing programs aimed at promoting the fundamental rights of -workersonthethe job, by updatinganddisseminatinglabor legislationandmakingsure it isapplied: Defending social rights of workers by improvingthe current system of social protection, extending the system of social protection, and drawing up a plan for strengthening the preventionof workplace hazards, The globalobjectives listedbeloware meant to be relevant inview of the dimensions of poverty inthis area. They are: 323.1 GlobalobjectiveNo.1: Ensurebasiceducationfor all Malagask-"Education forall"; train andenhancethevalueof thecountry`shumanresources Thegovernmentwill pursuethis objectiveby: - Graduallyinstitutinga nine-yearqualitybasiceducationsystem; - Reducingthe repeatedgrade rateinthe first cycleof basic education (primary)andstrivingto - enableall Malagasiestocompletethe cycle; - Ensuringequalityof accesstoeducation; Training and teaching young people according to their socioeconomic needs at both the - nationalandthe regionallevel: Developing the production and working capacity of assets in the basic, traditional, non- industrialsectorsof production. 3232 GlobalobjectiveNo.2: Ensurethe qualityofeducationatalllevels The quality of education will be ensured by : -- Providingyoung Malagasypeoplewith knowledgeandhumancapilal; Improving the quality of the school syllabus insecondary education,vocationaltraining, and professionaland highereducation. 323.3 Global objectiveNo.3: Promotethe healthof motherandchild The objectives aimed at arethe following: - Attainment of a vaccination coverage rate of at least 80 percent for all the PEV antigens amongchiidrenaged0to 1year, and80percentfor anti-tetanusvaccine(VAT2)for pregnant -- mothers: Reductionofmatemalmortalityfrom488 to285per100,000livebirths; Reductionof the infant mortality rate from 96 to 72 per 1,000 live births and infant-to-juvenile - mortal@from 156to 111per 1,000 livebirths. Transformationof 100percentof the schoolsinto"HeatthSchools". 53 3.23.4 GlobalobjectiveNo.4: Iniensifyingmalnutritioncontrol The objectives aimed are as follows: - Reduce hospital mortalitycausedby severe malnutritionamong children under five from 26 percentin2002to 15percentin2005; - Reducethe percentageof childrenwith hemeralopiafrom 1.9 percent in 2001 to less than 1 - percentin2005; Reducethe prevalenceof malnutritioninchildrenunderfive from 48.6 percent in 2000 (EPM) -- to 36 percentin2005; Improvecoordinationof interventionsandresources. Ensuremonitoringandevaluationof actkities relatedtothe nutritionalsituation. 3238 GlobalobjectiveNo.5: Strengthencommunicablediseasecontrol By 2005 the intermediaryobjective isto reduce by 50 percentthe socioeconomicburdenof the maincommunicablediseases. 325.6 GlobalobjectiveNo.6 Reinforcenoncommunicablediseasecontrol The strategy consists in : -- DraftingaNationalProgramto FightAgainstCardiovascularDiseases(MCVanddiabetes); Establishingdiagnosticandcarefacilities; -- Setting uparefenalsystemandpromotingsocialmobilization; Integratingpreventionactivitiesintohealthtraining; - Standardizingreferralcenters; -- Seaingupspecializedservices; Developingoperationalresearchonnon-communicablediseases. 393.7 GlobalobjectiveNo.7 Reducesocialexclusioninthe rapidandsustainabledevelopment P- The intermediaryobjectives for reducingsocialexclusion consist in: - Developingextensionwork on family planning; - Intensifyingthe fight against illiteracy; Implementinga socialsecurity systemfor vulnerable and marginalized groups; - -- Promotingthe inclusion of the populationdimension by gender inthe development programs; Encouragingparticipation bycivilsociety inthe social projects. 3.23.8 GlobalobmveNo.8 Promoteculturaldiversity The intermediaryobjectives are: - Developingsocio-culturalactivities for the young; - Promotingthe development of individualandteam sports; - Ensuringthe development of activities for preventionof socialscourges. Concerning culture, the objective consists in making of culture a driving force for development. - Promotingculture domestically as well as abroad; - Promotingculturaldiversity; - Encouragingthe development of arts and letters. 4 Based on a household survey undertaken by INSTAT in 2001, the rate of poverty is estimated at 69.6 percent. The Millennium DevelopmentGoal (MDG) is to reduce poverty by half between 1990 and 2015. In 1990no information about poverty was available, but by usingthe 2001 data as a basis, the objective in2015 would then be to reducethe rateof poverty to 34.2 percent. Having opted for rapid and sustainable development, Madagascarenvisages going beyond the Millenniumobjective and reducing the rate of poverty by half in 10years, that is by 2013. Economic growth is a sine qua non condition for creatingwealth and development, However, a significant reduction in poverty rate is not possible without strong, better distributed growth. The graph below gives simulations of growth rates necessary for reaching three poverty reductionscenarios: ---Scenario(1): Reducethe levelof povertyrateby half in 10years: Scenario(2): Reducethe levelof povertyrateby ha8 by2015 (Millenniumobjective); Scenario(3): The average annual growth rate of the Malagasy economy reaches only 4.5 percent,theaverage for the period1997-2001. GraDh: Reductionof povertvand economic srowth Poverty Average rate growth rate of 4.5 percent Average growth rate of 8 percent Average growth rate of 9.3 percent In order to reduce poverty by half within 10 years, an average rate of economic growth of 8 percent per year is a prerequisite. Macroeconomic projections geared to the strategy of poverty reduction calls for a rise in annual per capita GDP of 5.2 percent. Such projections are based on maximum assumptions of public and private investment driien by a substantial increase in public investment and foreign direct investment flows: the requiredaverage investment rate is 21 percent of GDP. Public investments must be well conceived and well targeted, and be responsive to the expectations of the Malagasy population and private investors. To that effect a sizeable portion of these investments will be earmarked for government priorities (governance, rural development, infrastructures and the social sectors) with a view to the improvement of the well-being of the Malagasypopulation. 55 Privatesector investments are expected in the major strong growth sectors: ruraldevelopment, fishing, mining, manufacturing industries (especially those directed towards exportation), public works and tourism. The medium-term macroeconomic accounts for 2004-2006 corresponding to this scenario are detailed inthe Annex. With an average annual economic growth rate of 4.5 percent (Scenario 3), about half (49.2 percent) of the population will stillbe poor in2013. The average investment rate is 12percent of GDP. Table 16. Madagascar: Reduction of poverty and economic growth Scenario (I) Scenario (2) Scenario (3) Reducingthe poverty Reducingthe poverty Average annual rate by half in 10years rate by half in 2015 economic growth (2013) trend of 4.5 percent 2013 2015 2013 2015 2013 2015 Povertyrate 34.2% 29.8% 38.4% 34.2% 49.3% 46.1% (basis in2002= 71.6%) Average change inpoverty rate -6.7% -5.6% -3.2% (averagechange in percent per year) Average economicgrowth 9.3% 8% 4.5% (annualchange in percent per Year) Investmentrate 24.8% 21.O% 12.0% (As percent of GDP per year) Source: DGWMEFB 56 The actions in the poverty reduction strategy paper mUSt be implemented from a regional development perspective.Therefore, the following guiding principles must beconsidered: To give a priority to regional and local integration: it is necessary to reinforce the development of local and regional economies as well as inter-regional economic relations. This will call for the preparation of a series of spatial and conceptual reference schemes and a number of spatial investmentstrategies such as urban investmentstrategy, rural developmentstrategy, industrial localizationstrategy.. . To enable activities in leading growth areas (buoyant andlor export sectors) to function with maximumefficiency with a view to making redistributiontowards other regions possible: instead of dissipating efforts, existing resources should be employed and maximized. Any policy to disperse efforts would be extremely costly, as everything would needto be done in several places at once. To give special importanceto the human and economic environment of projects more than to their purelytechnical aspects: each investmentmust be affordedthe opportunityto function normally, itseffects must beasfar-reaching as possible, and the populationmust take ownership of it. To take account of regional criteria when defining sectoral or economic actions: the success of the strategy will depend muchmore on the coordination over time and in space of multiple sectoral actions as well as the coordination in space of numerous legal and regulatory measures (tariffs, tax system, credit...) decreed by the public authorities. This involves defining a public investment strategy to make the actions carried out by several different ministries-even several different departments of the same ministy-oherent. To stop the process of natural resource depletion:in order to stop the deterioration of the environment, all major projects should be subject to impact studies during the design phase and appropriate measures shouldbetaken during their implementation. To develop the technical capacity of the communes with a view to enabling them to participate in their development: given the present lack of capacity of the communes as far as development management is concerned, they needto be trained, coached, supplied with institutional and technical tools so that they can really take charge of their development. To implement mechanismsto enable the populationsconcernedto really participate in the choice of investments choices to be made in their areas and to give them a sense of responsibility for the implementation, maintenance, and functioning of these projects: the participation of the beneficiaries is essential at all stages of the projects (identification, formulation, financing, setting-up, functioning...). Mechanismsfor participationadapted to the real capacity of the beneficiariesmust betherefore instituted. To encourage and guide private investor interesttoward a regionalapproach: such action implies that the regions needto create the conditionsfor attractingand developing the private sector. To bring to fruition the public-private partnership:it will be necessary to set up specific mechanisms to coordinate government actions and those of the regions as well as those of the private sector. In the short term, the use of existing credit lines in the Public Investment Program is possible. Inthe longterm, in additionto setting up loan and subsidy structures, it must be ascertained how a genuine contractual relationship could be developedbetween the Government and the regions, the Governmentand the private sector, the regionsand the priiatesector. 57 The PRSP has retained fifteen (15) operational programs for implementing the strategy. Such programs were derived from ongoing actions being taken (ongoing programs and projects). They also take into consideration at the same time the new governmental trends, the recommendations resulting from the project portfolio reviews (World Bank, UNDP, France- Madagascar Cooperation...)with a view to restructuringkefocusing them, the approach as well as the objectives in the strategy framework. Inaddition, the activitiesthought to be prioritiesnot covered by the ongoing programs requirethe adoption of newoperationalprograms. It should be recalled that strategic intervention hinges on areas through which actions and operationalprogramscan have a decisive impact on the principaldimensions of poverty. In order to move from vision and strategic focus to real actions, the Government adopted an approach including (i) the formulation of various business plans and action plans with operational programsand (ii)the establishment of the monitoringmodalities and criteria in implementingthe strategy. The object of the approach is to ensure that the activities proposedby each of the focuses will be includedin a program of realactions. The table belowsummarizes the programs. Table 17. Madaaascar -Povertv Reduction Proarams STRATEGIC FOCUS PROGRAM SUBPROGRAMS 1.IGovemanceand fight 1.I CivilService Reform .1 against corruption 1.I Administrative Reform .2 1.I Public Finance .3 1.2 Governanceand respect 1.2.1 Transparency and respect for the Restorethe ruleof law for democracy people's choice and a well-governed 1.3 Governance and Rule of 1.3.1 Justice society Law 1.3.2 Security 1.3.3 Civil protection 1.4 Localgovernance 1.4.1 Decentralization and strengthening the commune 1.4.2 Actual deconcentration of government 2.1 Macroeconomicstability 2.1-1 Developmentstrategy 2.1.2 Public investment policy Stimulate and promote and growth 2.1.3 Privatization program economic growth with a 2.2 Developmentof arowth - 2.2.1 Tourism muchbroadersocial sectors 2.2.2 Mining base 2.2.3 Fishing andfish farming 2.2.4 Manufacturing industries 2.2.5 Other manufacturing industries, small and micro-enterprises 2.3 Ruraldevelopment 2.3.1 Agriculture 2.3.2 Environment 2.4 Developmentand 2.4.1 Roads, Transport, Land increased densityof development structuring infrastructures 2.4.2 Energy 2.4.3 Postalservices, telecommunications, communications 58 2.5 Developmentand 2.5.1 Promotionof private and foreign revitalizationof the investment privatesector 2.5.2 Enhancedcompetitiveness 2.5.3 Revitalizationof free zones 2.6 Opening up to global 2.6.1 Regional integration competition 2.6.2 Internationalmarkets 3.1 Education 3.1.1 Basic education 3.1.2 Quality education at all levels 3.2 Health 3.2.1 Mother and the child health 3.2.2 Malnutrition Foster and promote 3.2.3 Transmissiblediseases systems for ensuring 3.2.4 Nontransmissiblediseases human and material 3.2.5 HIV/AIDS security and social weIfare 3.3 Water andsanitation 3.3.1 Water 3.3.2 Sanitation 3.4 Reduction of swial 3.4.1 Safety nets and socialwelfare exclusionand social 3.4.2 Literacy welfare 3.4.3 Familyplanning 3.4.4 Populationgender 3.5 Cultural diversity 3.5.1 Youth and sports 3.5.2 Culture The operationalprogramscomprisethree broadcategories,namely: vii) Sectoralprogramssuchas ruraldevelopment,education,health,drinkingwater.. .. viii) Thematic programs (governanceand corruptioncontrol, governance and human fights, local govemance ....),and ix) Muhisectoral, specific or cross-sectionalprograms 5.1 PROGRAMSFORACHIEVING THE OBJECTIVESOF STRATEGIC FOCUSNO. I 5.1.1 GOVERNANCE ANDTHEFIGHT~ N SCORRUPTION T Fighting against corruption is a determining factor in the practice of good governance. The government has shown a commitment to fight against it, to be successful in its policy of fast and sustainable development and particularlywithin the framework of implementing measures to improve public affairs management. The objectives to ensure good governance and to succeed in the fight against poverty require that everyone adhere to the principle of public-private partnership (PPP) and the development of a spirit of citizenship. 59 5.1.1.1 Fightagainstcorruption In the framework of its commitment to fight against corruption, the Government has set up the High Councilagainst Corruption under the authority of the President of the Republic by Decree 2002- 1128of September 30,2002. The responsibilities of this Council are: (i) to develop national strategy to fight against corruption, (ii) to participate in the preparation of appropriate laws, (iii) to draft texts relating to the creation of an anti-corruption agency, (iv) to monitor the impact and results of the anti-corruption program. This Council comprises seven members and has a permanent secretariat headed by an executive secretaryappointed by decree of the President of the Republic. For itsfunctional needs, the Councilreceives funds from a special government budget appropriation. Besides, for the main purpose of promoting transparency in the exercise of public functions, Decree 2002-1127of September 30, 2002 institutedthe obligationfor ministers, civilservants holding posts of high responsibility at levels equal or superior to that of ministry director, and magistratesto make a periodical declaration of assets. An agency in charge of receiving and assessing the above-mentionedcivilservants' declarations will be established. Inaddition, to intensifythe fight against corruption, the programsof the Govemment are: - strengtheningthe anti-corruptionplan to contain or to prevent corruptionwhile repressing all - proveninstancesof corruption; implementing a range of actions aimed at reorganizing public services, building capacity ---amongstaff, rapidlyprocessingdocuments; setting up`one-stopshops'throughoutthe country andopeninglistsof complaints; setting upananti-corruptionagencyineveryministry; intensrfylngInformation-Education-Communicationactions, namelycivic education in schools andat all levels; - reducingcorrupt practices and favoritism in the civil service, disseminatingtexts on conduct - andethics; settingup institutionalplansto makethe HighCouncilagainstCorruptionoperational. 5.1.12 CivilServiceReform The Government is planning to set up a transparentand effective civil service to serve citizens within a framework of goodgovernance. To fight against corruption and favoritism(priorityactions),the following actions will bestarted: - depollticizationofthe administrationandappointmentsbasedoncompetenceandmerit; --- updatinganddisseminatinglegaland regulatorytexts aswell aschangingmentalitiis; requirementthatseniorcivilservantsdeclaretheir assetsperiodically; - developingafavorableworking environment(environmentalincentive); institutingperformancebasedcompensation(salaryincentive). Inorder to prepare and cany out a programof civil service reform: - -- Modernizethe managementof civilservantsbysetting upasingledatafile by: developinghuman resourcenetworksbetweenthe differentMinistrydepartments; setting upan intemetnetwork. 60 x) Ensurethe qualiyof the professionaltrainingof civilservantsby: - ensuring that 100 percent of graduates from training schools are prepared to serve the - administration; developingappropriatetraining inevery department. xi) Informcivilservantsand users periodicallyof civilserviceactivitiesby: - using the appropriate means for ensuring transparent and permanent informationfor users (negotiate agreements with the mass media and design periodical new broadcast - programs); reinforcingthe communicationssystemat all levels(central,provincial,subprefecture). xii) Get monthly reliable monitoring and evaluation data for decision-making regarding the management of human resourcesthrough: -- establishmentof monitoringandevaluationstructuresinallcentralandprovincialdirectorates; development of a programof human resourcetraining inmonitoringandevaluation; - monthlyconsolidationof dataonhumanresourcemanagementreform. For 2003, the expected outcomes of civilservice reform are: - a %-percent reduction in the number of civil servants brought before the Disciplinary - Committee (CODIS)for corruption; 40 percent of the reportson the managementof the cbil servants reachingthe Civil Service -- Ministrypmessed andregularized; 10percentofthetrainingneeds of eachministrysatisfied; plansto establishENAM(NationalMalagasyAdministrationSchool) implemented; - generalstatutesfor civilservantsvalidatedandadopted. 5.1.13 Publicaffairsmanagement Accountability, rigor,streamlined and transparent procedures and results, and effectiveness are essential to good economic governance with intemal controls throughout the administrative expenditure chainand the creationof the "one-stop-shop" system wherever possible. The efforts made in this area will be continued on and increased. There will be continued strengthening of institutional capacity in the budget management process, the customs and fiscal services, the justice system, the General State Inspectorate (IGE), the Directorate General of Committed Expenditure Control (CDE), the Central Procurement Commission (CCM), and the Audit Office. Implementing a reliable system of information necessary to know the financialsituation of the country in order to make specific contributions to the development of the financial system, consistsof the following actions: i) Produce, use, coordinate,anddisseminatestatisticalandeconomicinformation,namely: - having exhaustive, reliable, information m real time to help make decisions regarding economicanddevelopmentpolicy; -- setting upa systemofregionalinformation; ensuringthat foreigntrade statisticsarereliable; - acceleratingthe processingof operationsandthe productionof accountingdata. ii) Contributetothe developmentof thefinancialsystem: 61 -- - take actionto mobilize savings; facilitatecorporateaccessto bankfinancing; contributetotheestablistmentof the modemfinancialmarket; -- - graduallyliberalizeandstabilizethe insurancesector; improvethe legalframework for foreignexchange; - acquirebetterinformationonthe privatesector by setting upa centralbalancesheet unit; gradually integrate the informalsector by establishing approved management centers after rewritingthe GeneralChartofAccounts (FCG)tocurrentinternationalstandards. With a view to implementing an effective budget policy {relevance and impact of resourceallocationfor poverty reduction), thefollowingactionswillbe taken: - reform publicfinance: strengthenbudget control, achieve more speedy, economical and transparentprogram managementin reaching objectives,, strengthenmonitoring agencies and inslitutions(General State Inspectorate, Committed Expenditure Control, Central Procurement Commission,Audit Office)(see Box 5below); - implement abudgetpolicyasan economicsteeringand promotioninstrument: control theplanning, execution and monitoring of thebudget throughreinforced multiyear budget planningand monitoring frameworksand rationalbudgetary choices, use the taxationsystem as a toolof development, managepublic debt proactively by definingpolicy, modernize customs by developingapartnershipwithasupervisioncompany stressing control of the valueand transferof know-how, givepriority to thepartjc@ativeapproach by consulting withpartners for a better understandingof actions by thepublic authorities; - increaserevenueto reachinternationalstandardsfor thetax ratio. Taxrevenue: continueactionsto collectandtrack arrears, makethestructuresaresecure bybuildingthecapacityoftax offices, - - -- maketax revenuesecureby computerizingtax offices, expand the tax base by including high-yield activities in forward planning, implementing a circuit of crosscheckswith public expendituresand imports, as well as through onsitechecks - with delocalizedservices, harmonizethe calculation of market value (taxes) by establishinga single methodology in all - the offices, foster the integrationof the informalsector by continuingactionsto raisetax awarenessinthe informalsector. - Customsrevenue: makecustomsreceiptssecurethroughthe computerizationof allareasof customs. Nontaxrevenue: - improvethe collection of nontax revenue by increasingthe rate of collectionof dividendsand revenuefromthe counterpartvaluefunds (FCV),controlandmonitoringof debtorcompanies, 62 - controlover publicexpenditureanddistributioninaccordance with overallsectoralobjectives. Actions to be taken are: reinforce the budget planning and monitoring frameworksto implement the monitoring andassessment system, control theplanning, execution and the monitoring of the budget, better aqust public expenditureplanning to objectives witha view tosetting upa national budget execution framework that is coherent, transparentand manageable by all those involved and by private individuals, set up a computerizedintegratedmanagement system and draff the related procedure manuals, clean up the civil service database, . improve working conditions andbuild capacity, institute new decentralization and projectmanagementprocedures, in agreement with internationaldonors, with a view to transferringknow-how and decentralizinglarge projects. - Coordinationof externalassistancebythefollowingactions: reduce the debt burden to a sustainable level by continuing negotiations on debt restructuring, reduce the outstanding external debt makingservicepayments when due, monitoring programs under the HIPC Initiative, andimplementingcommitments beforereaching HlPC completionpoint, raise external financing to meet developmentobjectives and government economic policy by negotiating new external financing and disbursingsignedgrants and loans, trainpersonnel, updatedata. With a view to eradicating corruption, tailoring the public expenditureprogram to its objectives, ensuring transparencyand improving the quality of the services provided by the ministries, the followingactions are tobe taken: iii) Fightagainstcomption - make public users and ministry staff accountable by simplifying and publishing procedure manuals, informing users of such procedures,making payment modalities transparent and - improvingthe staff compensationsystem, adopt a program to fight against corruption by creating an antkconuption central o f f i - responsiblefor receivingcomplaintsand reports, combatfraudby reinforcingcontrolsandby bringingtheadministrationcloserto users. N ) Transparencyof proceduresandaccounts - ensurethat proceduresare transparent by simplifyingand communicatingcustoms clearance - procedures, improvethe legal apparatus by drawing up and disseminatingthe implementing interpretive -texts of the GeneralTax Code, draw upthe Government'sfinalaccountsinorderto improvefinancialgovemance, 63 - implementa nationalbudgetexecutionframework that iscoherent,transparent andmastered by allthose invoked inthe budgetand by private partners.This implies, updatingregulatory - texts relatingto budgetexecution,monitoringgovemmentassetsandprocurementcontracts, standardizeaccountingmethodsbycontinuingto reworkthe generalchart of accounts. V) improvementof the qualityof servicesprovidedbythe ministry -- reinforcehumanresources, strengthen the staffs' capacity for enhanced skills in the execution of their work throughthe -- implementationof the trainingprogramsinCustomsandintheTreasury, renovate andmaintaintheTreasurybuildingsandfumishthem, enhance the reliability and rapidity of processing by setting up an intemal communications network, strengthening the mputerized management and processing of payroll and - pensions,aswell as byspeedinguppaymentsto government creditom --- reorganizepaymentfacilities, improveworkingconditions, improvesuppliestothe mainrevenuecollectionoffices, speed upcustoms clearancebylimitinginspectionsat the customsborderandlimitingexpost controlincompanies. vi) Implementationof a systemof intemalcontrol -- - makeauditand inspectionssystematic, audit needsandcapabilitiesinorderto buildthe capacitygovemmentstaff, implement a complete programof institutionalstrengtheningby modemizingservices, giving staff more responsibilityand institutingperfonance indicators as well as continuoustraining - andprofessionaldevelopment, giveagentsincentivesfor a betterefficiency intheir work (careermanagement). Within the scope of reforms: The Govemment has made the decision to sign a contract with the Societe Generale de Services (SGS). The program is not confinedto pre-shipment inspectionbut also contains a program which provides places great importance on modernization of the Customs system in Madagascar together with technologytransfer. The program with the SGSwill beginon April 1,2003. The Ministry of the Economy, Finance and Budget has just set up a Directorate General of lntemal Audit (DGAI), placed directly under the responsibility of the Minister of this department and whose main mission will be to control on a day-today basis the smooth running of all the ministry's activities. The DGAI will work with the police. The same structure should be set up in the other ministries.A special directorate for financialdelinquency has beencreated. lmplementationof a reliableinformationsystem: -- websitetakingaccount of the users'needs, available systemof regionalinformation,operational 64 Contrlbutionto thedevelopmentof the financialsystem: -- - guarantees and loans, granted flight of premiumsabroad, limited - lawand licensingof institutions,enacted centralbalancesheets unit,operational Public finance reform: - legislativeand regulatorytexts have been ranked, enhancedquality-wise,modernized, adaptedand supplemented by operating and procedure manuals, daily activity management tools (intemal and externalmanagement) Increased revenue: tax ratio, acceptable (12percentin2006) tax revenuecollectionrate,increased FCVcollectionrate,up3percentper year 30tax officesset upor rehabilitatedfor the secondhatf of 2003 30tax officescomputerizedfor the secondhalf of 2003 crosscheckswithexpendituresand imports,performedfor the secondhalf of 2003 ASYCUDA ++,functional in2003 Public expenditurecontrol: - budgetLawpresentedin Public ExpenditureProgram(2004-2005) - databasefile on Govemmentpersonnel,updated(20032005) Coordinationof aid: - restructuringagreementswiththe ParisClub andother credjtors, finalized - printoutsandschedulesoftasks inprojects,completed: - 2003: FMG 930 billion - 2004: FMG 1550billion - 2005: FMG 1850billion Fight against corruption - anti-conuptionoffice, publiclyannouncedin2003 - proceduremanuals andguides,simplified - levelof purchasingpower, improved Transparencyinproceduresand accounts -- - customsclearancetime, reduced newsinglecustomsdeclarationform (DDU),applied Treasurybalancesandsettlementlaws, produced 65 BOX 5. STRENGTHENINGBUDGETCONTROL In April 2001, the Governmentcompleted a study on strengthening budget control, consisting of a program of measureswhich envisages the redrafting of legislativeand regulatory texts and the organic restructuring of control units. The program also plans to draft procedure and operating manuals, install information systems and performancemeasurement,preparetraining programs,and include inthe budgetthe followingcontrolunits and institutions: - The General state Inspectorate (IGE) will be permanently assigned the task of intemal auditing and performing ad hoc operatingaudits as part of its mission or as a means of self-supervision[autosaSine].The General StateInspectoratewill have universalfunctions covering all public entities (central govemment, the autonomous provinces and their decentralized local government, nationalstatutory authorities - EPN - provincialor local) andallentities benefitingfrom publicfinancing inMadagascaror abroad. - CommittedExpenditureControl(CDE) willtake back its tradftional name FinancialControl, and will be part of the payment authorization process for expenditures by central govemment or the main governorships within the framework of the control system envisaged inthe nationallaw. This will ensure that the entities submitting applicationsfor prior approval have complied with the intemal control regulations, which will be progressivelyestablished inthose entities. - The current Central Procurement Commission (CCM) which will be set up as an autonomous administrative control structure, and the specialized and provincial procurement commissions will not only v e r i compliance with govemment contracting prwdures, but will playan identicalrole, incontracts presentedto them for their approval prior to the endorsement by FinancialControl, certifying that the services were provided. The new structure will receive the contracts financed wm the provincial budgetsfor the purposeof setting upa database. - The Audit Office reviewsthe accountsof public accountants,controls the executionof the budget laws, and assists the Govemment and members of parliament in monitoring implementation of the budget laws. It rules on appeal on decisions made by financial tribunals on the management of decentralized local governments in the autonomous provinces. It will also strengthen its management audits of public enterprises and all establishmentsreceivingfinancialhelpfromthe Govemment. - Administrative Tribunals and FinancialTribunals installedin the capitals of each province will play the same role at the level of the autonomous provinces and decentralized local govemments as the Council of State and the Audit Office plays at the level of central govemment, withthe exceptionof appeals. - The rules of intemal control, intemal audt, extemal audit or operating audits will be panemed on standards generally accepted internationally. Human resources will be strengthened, motivatedandsubjectto strict rules of ethics and professionalconduct. The four inspectionor controlunitsand institutionwill haveappropriate workingtools (operating and proceduremanuals, informationsystems, and performancemeasurements).They will be providedwrth a specificbudgetfor missions and mandates, regardingthe objectives set in their annual work plan, including expected outmes and performance.The ordinary operating and invesiment budgets will include Information-Education-Cmmunication actions andtraining activities. Specifically, capacity building measures and actions for the four inspection and control unit: and institution, which must be carriedout over three years (2001-2003),will include: - review of texts on improving the operation of the four control or inspection units anc institution(jointarrangements and individualarrangementsfor each unit or institution); - drafting of quality, ranked legislativeand regulatorytexts including the design of a simplifiec durableandstable legalframeworkfor budget execution: 6( - legislativeandregulatorytexts dealingwithdeconcentration-decentralization; 5.12 GOVERNANCEANDRESPECTFOR DEMOCRACY Democracy requiresthe active participationof the people in public affairs by freely electing the government. It means ensuring that free elections function smoothly, are fair, transparent, ensuring the participation of the peoplein a framework of dialogue, and encouraging plurality of information. The tasks consist mainly inthe draftingof organic laws and regulatory texts dealing with: -- - publicfreedoms namelyof opinion, expressionandassembly Fundingof politicalpartiesandelection campaigns - havinganopposition revision of the election code in collaboration with the national elections committee (CNE), - observers'associationsandNGOs charter of civic education.The nationalelections committee (CNE) will playthe major role in --voter educationas moralguarantor ofthe authenticityandaccuracyof thevotecount buildingthe capacityof CNE support and the reinforcement of the capacity of civil society by providing it with adequate resources The structuresto beset upare: --A nationalobservatoryof democracy A platformfor dialogueandexpression OutcomesexDected reaardinaresnect for democracy -- - Citizensinformedof their rightsandduties Reliableelectoralrolls Candidatestreatedinanegalitarianmanner 5.13 GOVERNANCEAND RULEOFLAW Regarding restoration of the rule of law, the Government is committed to instituting sound impartialjustice that respects human rights and provides securityfor investments. Therefore those in power, like all citizens, are treated equally under the law, and any kind of ifnpunity at any level is eliminated. It is also committed to: (i) protecting the independence of the judiciary, (ii) guaranteeing attomeys freedom of action, (iii) depoliticizing the civil service, (iv) increasing the scope of the judiciary's power and extending it to all through impartial and independent authorities, (v) enforcing and ensuring compliance with the existing laws and regulations. The govemment sees systematic penaltiesfor acts of corruption as one of the measuresfor returningmoralityto public life. Increasing the number and effective use of spaces designedfor economic and socialdialogue, and bringingthe courts closer to the peoplethey serve are integralparts of its effort to establishgood governance. In addition, the Government will take some measures to establish an environment where the security of the people, of their property, and their production activities inthe countrywill be ensured, a climate favorable to the promotion of fast and sustainable economic, social, political, and cultural development 67 5.1.3.1 Thejusticesystem In the justice system, a series of measures will be implemented to strengthenthe system and improvethe functioning of these services,basedon the following five points: - Rehabilitatingthe functionsandinfrastructureof the judiciaryandpenitentiariesthroughoutthe country strengtheningthe anti-conuptionsystem acceleratingthe processingof cases - -- - improvingthe legalenvironment,especiallyfor the economy humanizingincarceration 5.1.3.1.1 Rehabilitatethe iudicialsvstem infrastructuresthmuahoutthe country Actions will be relatedto: - setting up the structures provided for in the Constitution, Le. the Supreme Court with the Supreme Court of Appeal [Courde Cassation],the Council of State,andthe Audit Office,the NationalCouncilof Justice and the High Court of Justice. This will be effective bythe end of 2005; - constructionof newbuildings: a newbuildingfor the Ministryof Justice anda complexfor the - Supreme Court, the Audit Office,the Councilof Stateandthe HighCourt of Justice; continuationof deconcentrationof the courts bythe constructionof courtsof appeal; - creation of two or three courts of first instance per year and the activation of administrative - andfinancialtribunals; modernization of the working tools of the central authorities of the Ministry of Justice by - providingthe meansfor rapidcommunicationwith allthejurisdictions; development of human resources by improving the quality of the initialtraining and of the professionaldevelopmentofstaff andmagistrates. 5.1-3.1.2 Strenathen the anti-corruptionsvstem Actions to be taken are: (i) to focus efforts mainly on containing or deterring corruption in the justice system, while severely repressing provencases of as corruption, (ii) to educatethe population in order to sensitizeit to participate in this importanteffortwhich requires its involvement Prevention - cany out a survey on the usefulness of instituting a corruptionobservatory.This observatory would be responsiblefor: (i)reviewingeach stage of the processto determinewhich are the mostat risk, (ii)analyzingthe causesandeffects of corruption,(iii) proposingrefoms aimedat eradicating corruption in the sector. Internationaltechnical assistance may be envisagedto - this end; ensuretransparencyof judicial decisions and unifiitionof jurisprudence by publishingall the decisionshandeddown bythe Supreme Court andthe courts of appeal, the commentsmade byjurists andacademics.The mediawillcontributeto improvingsuchtransparencyaridto the - coherenceof case law; improve the working conditions with motivated personnel, appropriate and sufficient resources,welCestablished standards of work in the organization of a jurisdiction and in the time neededfor processingcases; 68 - plan regular inspections in the jurisdictions, conducted by various bodies, notably the Directorate of the Supervisionof the functioning of the jurisdictions and penitentiaries,the General Inspectorateof Justice, the supervisory section of the Supreme Court, monitoring headsof courts andjurisdictions.This year, the Directoratesupervisingthe functioning of the - jurisdictionsenvisagesgoing on inspectiontoursto the 24 jurisdictions: encourage the reportingof acts of corruption.The complaints bookopened inthejurisdictions and inthe prisonswill be maintainedand used. Ordinarycitizens' complaints will be checked and investigated.Inquiriesintocomplaintsarecoupled,asfar as possible, with the inspections of thejurisdictions; - ensurerespectfor the ethicalandprofessionalrulesgoverning the magistratesbydesigninga genuine code of ethicsandprofessionalconduct, whichincludessanctions. Remession -- - adoptanantkconuptionlaw; prosecutebeforethe disciplinarymuncilof authorsof corruptpractices; sue perpetratorsof corruptionwithoutdiscriminationand inopenly. -- Educationof Donulation: draft allverdictsandjudgmentsin Malagasyby2006; educateandinformthe populationaboutjustice: holdpublicinfomationsessions, whichmight ---begeneralor targeted; createsupportfor informationanddisseminationof the rightsanddutiesof thecitizen; trainfacilitators,trainers,andcoachesonthe ground; facilitate accessto courtsand offies by putting up signs inoffices, a map of the court at the entrance, indicatingthe names of units on the doors, and posting of official rates in clerks' - offices, inbailiffs'offcesandinnotaries'offices; develop an anti-mrmption culture by raising public awareness of the damage due to corruptionespeciallyinthejusticesystem.The anti-corruptioncampaigncannotbesuccessful - withoutthe support of the public; make the administrative and financial jurisdictions operational: the establishment of administrative and financial tribunals in every provincial capital and an Audit Office in the nationalcapital will enable these controls on action to be effective and the budget for local - governmentauthoritiesto bedecentralized; informall personssubjectto trial of akemativedisputesettlementoptions, such as institutional - or civilmediation; facilitatethe provisionof legalassistance. 5.13.1.3 ExDeditethe orocessinoof cases: Actionto be taken inthis area: - devebp the monitoring and control of the activities of the jurisdictions by examining - documentsperiodicallypreparedbythe jurisdictions; increase the number of hearings by organizing several ordinary criminal court sessions as - wellassessionsof specialcriminalcourtandcircuit courthearings: improve working relations and methods betweenthe various persons involved in an action, namelythesystematiccommunicationof thedecisions tothe policeor the Gendarmerie; 69 - make legislativereforms in order to shortenthe durationof detention pendingtrial andspeed - upciviltrials; computerize departments inthe jurisdictions. 5.1.3.1.4 lmwovethe IeQalenvironment for businessandsocial(labor)riQhtS: Actions to betakenare: - continue the installation of Trade and Company Registers (RCS), notably in high-activity -- regions; set upthe RCScoordinationcommitlee; adopt the draft Business Law as it pertains to commercial companies, the collective - procedures for checkingliabilities,goodwill,guarantees: reactivatethe businesslaw reformcommission. 5.1.3.1 d Humanizeincarceration Actions to be takenare: - Increasepenitentiaryadministrationstaff: (publicationof statutory instruments of Law No 95- - 010ofJuly 15,1995onthe statusofthe personnel) improvethe infrastructuresdetentionfacilities by transferringthe Antanimora central prisonto Anjanamasina, separate those in preventive detention from convicts, adults from minors; rehabilitate the Anjanamasina Re-educationCenter. Register the plots of land allocated to - DAPES; implementan actionplantocombatmalnutritionby increasingfood rations,sanitationfacilities in the prisons to meet hygiene standards, installing infirmaries in all prisons, systematic doctors'visits and medicalcare, carefor the young childrenof prisoners,and specifcactions - for fightingagainstSTDsandAIDS; modemitepenitentiary servicesthrough a computerizedmanagementof the locationswhere - prisonersare held; reinforcethe securityof detentioncenters by the acquisitionof new equipment for armament and ammunition, as well as by the acquisition of communication systems, and by the construction of enclosing walls for the penitentiaries, and stronger measures for dangerous - prisoners(Tsiafahy); strengthen control over penitentiaries: program of tours and oversight controls of prison - establishmentswithregardto, interalia,arbiirarydetention, hospitalizationof prisoners,etc.; facilitate social reinsertion by increasing the number of occupational training workshops, literacy and primaryeducation,as well asfarming orfishing inthe coastalregions,creationof - penitentiaryvillages, raisingpublicawareness; reactivateparole. 5.132 Security To ensure the security of individuals, their property and productionactivities in rural as well as urban areas, the Govemment has entrusted the introduction and implementation of this ongoing policy of combating insecurity in all its forms to two ministerial departments, Public Security and NationalDefense. The Ministry of the Interioris the main agency responsiblefor civil protection. 70 The main actions concerningcivil security and protectionconsist in: Reinforcingsecurity in urban areas by: - strengthening security by the "local and surveillance police" system, adapted to the local communities, in60majortowns in Madagascar; - reinforcing the operating capacity of the units in charge of the Criminal Investigation Departmentthroughoutthe country, to handlethe maintenanceof lawandorder, regulationof - urbantraffic,violence,drugs, HIWAIDS, naturaldisasters(cyclones,floods, fires); buildingthe operationalcapacityof the unitsin chargeof judicial policeto dealwith organized crime,terrorismand kidnappings; - building the operational capacity of the units responsiblefor prevention in the fight against - corruptionandfinancialandeconomicdelinquencythroughoutthe country; reinforcing the airport and port safety and marine and coastal surveillance (PNSA-PSMC). Programcarriedout bythe nationalpolicejointiy withthe national Gendarmerie,civilsecurity, and other entities invotvedin prevention, regularmeasuresemergencymeasuresinthe event of a crisis (naturaldisasters, hostagetaking, bomb scares, plain crashes and hghjackings, - epidemics,fires,andmarinepollution,etc); reinforcing the capacity to steer, coordinate, monitor/evaluate, and regulate the DNSP to institute law and order, ensure good governance, and guarantee the security of the population's productive and economic activities with a view to fast and sustainable development. Reinforcethe national police corps providingappropriate training by: - improving the system of initial and further training of the National Police corps, aiming at - balancingemployment-recruitment-training; equippingthe schoolswith appropriateeducationalsupplies. Providethe national policewith modern infrastructureand equipment by: - buildingthe operating capacrty of the units in charge of transmission and processingof data - onprofessionalactivities; - providingnewmodemequipmentfor maintainingorderandapparel(appropriateuniforms); reinforcingthe infrastructurefor the strategic steering, coordination,monitoring/evaluationand regulatoryunitsof the DNSPandfor thetacticalandoperationalunits. Civil protection by: -- setting upa nationalcivilprotectionsystem; rationalizing disaster risk management (cyclones, floods...) by implementing and activating the disaster relief organization ORSEC, in conjunction with interventions by all the entities involved; - strengtheningcivilsecuriity (monitoringthe movementof persons,....); - setting upadepartment incharge of training andeducation; - setting upallthecivilprotectionunits in2004. Ensuringrural security by: - extending security-keepinginterventionto other cases of theft (exceptzebus): theft of crops, particularlyvanilla,theftof miningandfishing resources; 71 - standardizingthe traditionalsafeguardsystem ("dina"),forwhichparticipativeworkshops were - organizedinthe six provinces, followedbyaconsolidationworkshop; establishinglocalsecurii, by maintainingan almost permanentpresence inthe populationto preventratherthan repress crime, andthe LocalSecurii Plan (PLS), which representsallthe actions tobeconductedor carriedoutto meetthe needsexpressedbythe population; - awareness and accountabilityof the fokonolonaby reinforcingthe operationalcapacity of the - unitsinchargeof thejudicialpoliceandruralsecurii; carryingout frequentsecuriityoperations. The following stations will therefore be instituted: -- advanced, brigade-likestationsinthecommunes; f ~ e stations,for surveillancemissionsat agivenobservationpoint (e.g. on "kizo"duty during d - a lunarcycle) shifting stations, for very specific missions, limited in space and time (e.g. surveillance of majorroadways). In areas reputed to be insecure, "Autonomous Security Detachments" (DAS) are set up to complement the Gendarmerie`sactions in preventingcrime and reducing the lengthof time neededto contain the problem. Surveillance of the coastline and bordercontrolwill be ensured by: -- creatingsea andair patrols placingcanine brigadesat internationalairports. Exipecfed outcomes in terms of security: -- criminalityrate, reduced - places,maximumsecurity actions,rapidandefficient 5.1A LOCALGOVERNANCE The Government believes that the goals of fast and sustainable social, political, and economic development can be easily attained if the population becomes more accountableand the best local government management practices are used. Therefore the implementation of genuine decentralization provides an anchor and sense of ownership of development for the grassroots population. It will be accompanied by suitable deconcentration, respectful of the values of traditional "fokonolona" society. 72 Within this context, the Government has initiated the deconcentratioddecentralization of decision-making and management powers, which will make the actors of development more responsibleand enable policiesto be made at the populationbase. The deconcentratioddecentralizationof the services makes it possible to develop quality local services. Budget management will be rationalized in order to ensure better resource allocation between operating and personnel costs and the actual allotments to deconcentrated services as operationalstructures. The new units of the autonomousprovinces will be fully responsiblefor local actions, which are in great demand for the poor. These agencies will be in a position to collaborate with public- or nonpublic-sector executing agencies to prevent useless administrative duplications. They should receive the necessary support to correctly respond to the demands of the poor, which will help establishthe credibility of these new local political institutions. The resulting transfers of know-how will be particularly important in the fields of education, health, rural development and infrastructures, and will consolidate and institutionalize the systems that are already in place. Thus, the main objective being `to bring the Government closer to the people through decentralization and deconcentration', five key actions will contribute to its implementation, namely: - creatingafavorable contextfor the economicandsocialdevelopmentof the communes, --- buildingthe institutionalcapacityof the communities, enhancingthe financialautonomyof the communes, making the Communes more responsible for the management of health and education - services, reinforcingthe interventioncapacity(supportandcontrol) atthe centrallevel. 5.1-4.1 Createanenvironmentconduciwetotheeconomicandsocialdevelopmentofthecommunes This entails developing an institutional, socioeconomic and organizational framework allowing the communes, as basic community units in the autonomous provinces, to fully assume their role as agents of development, sewing their populationby supplyingsatisfactory goods and services locally. It is also a question of preventing efforts from being dissipated and coordinating their actions in the field. Activities to be carried out consist of: -- makingexistingtexts coherent; promoting satisfactory local services: drinking water, electricity, rural roads, vital statistics, sanitation,publicmarkets,and libraries; --- - harmonizinginterventionbythe supportagencies:ANAE, FID, PSDR, PAICAL, PAGU,etc.; developingintercommunalcooperation:managementof inter-communalinfrastructures; developingdecentralizedcooperation:partnershipfor development; implementing incentives to attract private investors and support local initiatives (through decentralizedcooperation): landuseplanningsubsidyfor the poorercommunesandregions; - making ministeriil departments aware of the need to create local public utilities - (deconcentration); fostering incentivestoattract priiate investorsandsupport localinitiatives. 73 5.1.42 Buildinstitutionalcapacityatthe communitylevel: Measures involve continued implementation of the different structures in the autonomous provinces, such as the special solidarity funds, the economic and social council, etc., ensuring that they are operational, andsupporting them in preparingthe tools for their development (provincial and regionaldevelopment scheme) andfor monitoring and supervision. Actions to be taken are: - continuing to set up structures create structures in the autonomous provinces: special - solidarityfunds,economicandsocialcouncil, inter-provincialconference,regions,etc.; supporting the drafting, implementationand monitorinq/evaluationof the regional and local -- development schemes; supportingthe autonomous provincesinthe identificationof regionalpolesof development; implementinga disseminationsystem. 5.1.43 Improvethefinancialautonomyofthecommunes financial autonomy is a decisive factor in decentralization allowing the communes adequate financial resources to develop quality public services. Therefore, training the communal authorities and improvingof the tax system (drawing up tax rolls, collection, and monitoring) will be done with the help of the tax administration to ensure that the Government's fiscal efforts are oriented towards investment. Measuresto betaken are: - harmonizingand rationalizingthe Gwemment's fiscaleffortsandthefinancialinterventionsof -- development partneragencies; improvingthe fiscaVquasi-fiscalresourcesof thecommunes; ensuring widespread application of the system of autonomous collection of tax and other -- resourcesbythe communes; encouragingcommunities(nationalandor international)to sharetheirexperiences; - definingprogramsandpromotingtrainingfor commune officials; improvingthe systemof monitoringthe communesandensuringitseffectkeness. 5.1.4.4 Makethecommunesmoreresponsibleforthe managementof healthandeducationservices Support specific to health andeducationwill be developed, in order to give the communes more responsibilityfor the management and functioning of the healthandeducationsystems. In addition, it means clarifying the responsibilities and roles of the various actors, promoting quality services and developing monitoringtools (files, reports, annual performancereports). Actions to betaken are: - promotingsatisfactory localhealthandeducationservices; - revisingthe organizationalchart of communalservices(seedecentralizationpilotprojects): - inventorying the number and location of Basic Heath facilities and Public Primary Schools - (CSWEPP); requiringthe communesto produce periodicalreportson the enrolhent of children under 14 andthe heathstatusof the population; -- - clariingthe rolesandfunctions of the communesregardinghealthandeducation: monitoringandsupervisingthe managementof allocatedresources; producingnewsletters(Mayor's letter). 74 5.1-4.5 Buildinterventioncapacity(supportandsupervision)atthecentrallevel Severalactionsare planned, including: -- - strengtheningandredeployingpersonneland resourcesatthe centraland regionallevels; organizingtrainingandstudytoursto countrieswithgreatexperienceindecentralization; - creatinga documentationcenteranda website; reducing the incidence of under-administrationby strengthening the capacity of heads of administrativeandterritorialdivisions; - modemizinggovernment. Main outcomes exDected - 60 communeswill have a minimumlevelof operationalservicesin2003,120 percentin2004 - and 140percentin2005; increased number of communes managing healthand education: 60 in 2003, 120 in 2004 -- and300 in2005; 10communeswillhaveadequateresourcesin2003,x) in2004and50 in2005; effectivegovernmentpresencethroughoutthe nationalterritory. 75 5.2 PROGRAMS DESIGNEDTOA'ITAIN THE OBJECTIVESOF STRATEGICFOCUSNO. 2 To improve the performance of the economy, Madagascar must the appropriate instruments to implement measures conducive to the realization of the objectives of sustainable growth and maintaining key balances. 52.1 MACROECONOMIC STABILITYANDGROWTH The economic and financial policy of Madagascar is designed to preserve macroeconomic stability. Internal equilibrium would be restored by reducing the public deficit, which would affect domestic demand by keeping its growth within limits compatible with inflation reduction objectives. The resulting gain in competitiveness doubled by the effect of promoting dynamic sectors would contribute to the reduction of external deficit, the maintenance of a viable balanceof payments and the improvementof the overall situationof external payments. 521.1 Macroeconomicpolicy 5.2.1.1.1 Effectivetax andfiscal Dolicies Great efforts will be made to reach public deficit objectives; (i) improvement of tax collection to raise the tax ratio to international standards, (ii) optimum expenditure control and programming, in conformrtywith global andsectoralobjectives. The Government will continue with the actions it has initiatedfor improvingtax revenue, etc., deconcentration and computerization of tax offices, and awarding of govemment contracts, securitization of customs revenue by developing local customs offices, effective action by the company in charge of declared customs value and computerization of units using ASYCUDA++ software. The joint arrangements governing regional cooperation are causing capital losses in external receipts. In addition, the policy of opening up requires an increasingly less functionaltax system. The Government therefore must rely on the domestic tax system by extending the system of composite taxes to all activities not subject to corporate income tax and by intensifyingthe collection on nontax claims (countervalue funds, subsidies, dividends,cash advances). Improvements in govemance through the anti-corruption system and the reform of the supervisory agencies should help bolster the quality and effectiveness of public expenditure. According to government guidelines, the latter will be allocated largely to infrastructure, social spending, and security. The budget as well as related instructions to appropriationmanagers will be established in time. The Govemment will implement the regulatory arrangements arising from the redrafted texts governing the supervisoryagencies, particularly as regards govemment procurement contracts, supervision and monitoring of the implementation of each stage of the budget chain (commitment, verification, payment authorization, payment). It will oversee the establishment of an updated database for managing civil servants and will ensure that adequate counterpart funds are availableto effectively benefit from intemationalprojectfinancing. 76 5.2.1.1.2 Prudent monetaryandfinancial Dolicy Monetary policy aims to control inflation while ensuring that there is adequate financing for economic activities. The rates policy will be continued to supply the banks with central bank money. The training mechanism will take into account anticipated and observed inflation. The monetary authorities will change the required reserve ratios as the economic and financial situation changes and will interveneon market terms inauctions to mop up or inject liquidity. The penaltysystem will be maintained for noncompliance with reserve requirements. The floating exchange regime will be maintained to enable the economy to become internationally competitivethereby ensuring the viabilityof the balanceof payments.The centralbank will interveneinthe interbank foreign exchange market only to achieve foreign reserve Objectives and prevent majorfluctuations inthe Malagasy franc. There are also plans to set up an ongoing exchange market. Incentives are being offered to increase the number of exchange bureaus to ensure full competition. Concerning the extemal debt, Madagascar will strengthen its partnership with the donors and will honor its international commitments in order to benefit external debt relief, which will allow the release of additional resources to finance development programs. Only concessional borrowing will be undertaken. Negotiationsto restructure and cancelexternal debt will be pursued. Important efforts will be made to mobilize external funds in accordance with the Government's development objectives and economic policy. Regarding extemal debt management, the DMFAS system will become operational. 52.12 Draftingalong-termdevelopmentstrategyandmedium-termmacroeconomicframeworks andestimates For the period 2003 to 2006, the Government will focus its efforts on the following actions: (i)preparing long-termdevelopmentguidelines; (ii)taking inventoryand plottingamapshowingthe spatialkectoraldistribution of projects and resources; (iii) defining and coordinatingsectoral policies; (iv) defining a public investment policy consistent with the strategy for alleviating poverty; (v) building the institutional capacity of the institutions responsible for economic management by establishing the Center for Research, Surveys and Support to Economic Analysis in Madagascar (CREAM); (vi) drafting of the National Monitoring-Evaluation Policy(PNSE); (vii) monitoringand coordinatingthe implementation of programs of cooperation and integration in the world economy, placing special emphasis on regional integration; (viii) drafting and monitoring implementation of the action plans set out in the PRSP; (ix) coordinating and providingtechnical support for designing regional as well as local plans; (x) developing a database on Official Development Assistance and private funding; (xi) short-term economic forecasting; (xii) developing and fine-tuning macroeconomic and sectoral models; (xiii) updating data on macroeconomic performance; (xiv) carrying out and monitoring commitments made at the Friends of Madagascar Conference; and (xv) implementing the safety net program providedfor in the Emergency Economic Recovery Credit(CURE). These actions will make an economic growth rate of 8 to 10 percent on average and an investment rate of 20 percent possible by 2006 59.13 Updatingandimplementationof the privatizationprogram The privatization programhas reacheda point of no turning back. The measures envisagedwill be continued but with the introduction of a few adjustments to the present social context, so that the measurestaken might contribute more effectivelyto attainingthe objectives. The actions consist in: (i) inventorying and updating the assessment of enterprises earmarked for state divestiture and preparing an implementation schedule; (ii) completing the process for the enterprises being privatized; (iii) applying accompanying measures by standardizing social plans; (iv) using piggy-back financing to create a stock exchange and develop domestic shareholders; (v) monitoringthe companies in which the Government has interests; (vi) updating implementationof the privatization program, ensuring better good management of change and of the impact of privatization. 5 2 2 EMERGENCEANDREVITALIZATIONOFREGIONALDEVELOPMENTPOLES Economic recovery will be faster by drawing mostly on the regions with strong growth potential, throughrevitalizationof the privatesector anddevelopment of the leadingsectors. A strategy for emergence and revitalization of development poles will be implemented to materialize and bringtogether all development policies and programs. The following objectivescan then be achieved: - from an emnomic point of view: regional integrationthrough intensificationof localeconomic and social exchanges between towns and the countryside, and through the spread of economic development brought about by the extension of the exchange zones to the neighboringterritories, which will be gradually revitalized through the initial strengthening of - the mainleading poles; fromthe populationand urbanization point of view: increasedgeographicmobilityof people, - who areexpectedto establishmoreconcentratedhumansettlements; in terms of effective public and private investments: optimaltheir social and economicyield, - which is largelylinkedtothe concentrationof humansettlements; from the point of view of national unlty: stronger economic, social and cultural exchanges betweenthe regionsthatsupport nationaleconomicintegration,andpopulationmixing. To achievethis, the following will be developed: - a policy to support the private sector, particularly to encourage it to invest in the regional - development poles; a policy to promote and support the leading growth sectors and regional and intersectoral - integration; a policy on the regional level to hamess the growth effects of intemational trade through - dynamic andvoluntaryintegrationintothe worldeconomy; - a policyof integratedruraldevelopment; an increase in structuring infrastructure organized around a policy that is adapted to land development. 78 52.3 DEVELOPMENT REVITALIZATION OFTHE PRIVATESECTOR AND Madagascar has a frame of reference for developing and revitalizing through the National PrivateSector Support Program (PNASP).The program's growth objectives will be reflectedin major investment efforts not only in terms of volume but also in terms of productivity. As the privatesector is the engine of economic growth, two key factors influence its investment, namely a framework that provides greater incentives and security and adequate infrastructure. The priiate sector will be developed within the framework of good public/private partnership (PPP) synergy and the establishment of economic developmentpoles. The actions of the Government will therefore seek effective public investment and incentives to foreign and national private investment.The needto integratetrade policy in all development policies has beenstressed with regard to various initiatives, includingthe Integrated Frameworkset up bythe Ministers of Trade of the World Trade Organization (WTO) for the benefit of the least developed countries (LLDCs) and approved at the conference of ministers in Doha in November 2001. Madagascarwas the subject of a pilot study in the context of a program aimed mainlyat integration in the world market as a poverty reductionstrategy. Apart from establishing a soundmacroeconomic framework, the following measureswill haveto be implemented: ----improvement ofthe businessenvironmentandinstitutionalframework; restructuringandcapacitybuilding; setting upanappropriatetechnologyandinformationsystem; prmotion of direct,foreignandor nationalinvestments; -- export promotion; definitionof aclear landtenurepolicy. 52.3.1 Improvementofthe businessenvironmentandinstitutionaiframework The main objective is the development of the privatesector. To achievethis, the legal,statutory andjudicialsupportsystem must bestrengthened inorder to create a safe and attractiveenvironment Actions to be taken include: (i) identification, consistency and disseminationof the regulatory and legal provisions on business law (tax system, immigration, exports, landtenure...) in accordance with the regionalor international agreements to which Madagascar is a signatory; (ii) reinforcement of bilateral agreements for the protection and promotion of investments; (iii) restructuring and reactivation of the Chamber of Commerce, Industry and Agriculture (CCIA) and the Trade Council; (iv) setup of the One Stop Shop for Investment, and Enterprise Development (GUIDE) aimed at facilitating and alleviating the formal administrative procedures for establishing, investing in, and operating a investment (bureaucratic red tape, tax system, licensing; etc.); (v) establishment of strategic oversight with a view to improving the main domestic production costs; (vi) drafting and adoption of regulatoryinstruments governing savings and loancooperatives; (vii) facilitationof access to land ownership; (viii) setup of new financial instruments for households and enterprises; (ix) overhaul of the free zone regime, emphasizing the reduction of red tape; (x) drafting of an Investment Charter including promotion of partnerships, incentive measures, social planning, and minimal contributions of capital; (xi) improved texts on intellectual properfy and (xii) creation of a Small and Micro-Enterprise Office (OMPE); (xiii) increase in the number of cottage industry zones; and (xiv) revival of the cooperative movement. The implementation of these measures will build confidence among economic operators and will develop businessrelationsconduciveto nationalas well as foreign investment. 79 5.2.32Stmturingandcapacitybuilding Capacity building is very important and thus it is essential to devote substantial effort and resources to it if tangible results are to be obtained for economic operators under a medium- and long-term program. The actions and measures to be taken are as follows: (i) implement an operating structure, decentralize and strengthen the Enterprise Steering Support Committee (CAPE), which is the key platform for action and dialogue between the Government and the private sector; (ii) implement a program to upgrade enterprises and continue the activities of the CNFTP; (iii) promote economic interest groups; (iv) enhance the quality and the intake capacity of occupationaltraining centers and set up local training centers; (v) implement identification and inventory proceedings (for example communes with the potential to exploit opportunities, sectoral specialization); (vi) implement support and assistance for projects to create and/or develop export-oriented units and to organize and structure branches of industry; (vii) build the capacity of govemment operators with a view to effective participationin the activities and work of multilateral and regional organizations (COMESA, ACP/UE, OMC). All these measures will improve the managerial capacities of operators and match training to jobs. 523.3 Implementationof atechnologyandinformationsystem Information allows the evaluation of the functioning and the development of the economic environment. The main objective is to improve the collection, the analysis and the spreading of the information so that public and private sector companies are fully conscious and informed of commerce and investmentopportunities. To reachthese objectives, actions to betaken are: (i) reinforcement and decentralization of the BlPE in order to build confidence between the private sector and the government for the sake of transparency and to improve accounting information and betterorient govemment economic policy as an information base for identifying economic opportunitiesand investment niches to be given priority; (ii) improved communications and strengthening of the information system that serves foreign trade; (iii) rehabilitation of the WTO Reference Center; (iv) grouping in a single center systems for job trainingand corporate information and technology; (v) monitoringof information on world productivity standards; (vi) strengthening of the quality approach (Madagascar label, traceability, etc.), establishment and strengthening of the national standards bureau, as well as adoption of national standardsfor all products; (vii) setup of a facilitationframework for transfers of techniquesand know how; (viii) enforcement of the regulatory instruments of the law on the management and control of industrial pollution; (ix) drafting of the ICTnational policy and legislativeframework. Implementation of all these measures will lead to a flexible, progressive, viable and reliable informationsystem. 5.23.4 Nationalandlorforeigndirectinwstmentpromotion To attract foreign investment and to encourage domestic investment, Madagascar has set up a numberof programs whose mainobjectives areto enhance country's image and simplify procedures. To attain these objectives, the main actions will be to: (i) create a free trade zone corridor; (ii) draft an investment promotion strategy; (iii) develop dedicated industrial zones: (iv) support the creation of a platformfor exchanges among foreign and nationaloperators; (v) renegotiatethe use of the guarantee fund to better respond to the needs of enterprises: (vi) effectively implement the piggy- back funds system; (vii) set up a system for financing MSMEs and incentives for formalizing the 80 informalsector; (viii) implement measures that provide incentivesfor and attract subcontracting and partnerships; (ix) define and implement the development of a strategy for local productionof inputs; (xii) promotedecentralizedcooperation.... The main impacts of these measures will be a reduction in the processing time for cases and promotingpartnerships. 5.2.3.5 ExportPromotion In this area, the general policy is to develop economic and commercial relations within the framework of globalization. In this case, the actions to be taken are: (i) setup of permanent showcases of exportable products establishments like the Maisons de Madagascar and the Chambers of Commerce, Industry and Agriculture (CCIA); (ii) integration of E-trade and websites in the BIPE and support for the organization of and participation in international economic events; (iii) the strengthening and revitalization of the roles of trade attaches and advisors,with the appropriate profiles, with a view to setting up economic growth offices; (iv) organization of the awareness and outreachcampaignfor the African Trade InsuranceAgency (ATVACA) agreement. The main performance indicator in this area is the increase involume andvalue of exports. 52.3.6 Seewelandownership Actions will cover: (i) definition of a clear transparent land policy by implementing a national program to establish land rights and determine ownership (ODOC, collective registration), including the modernization of land conservation of land conservation, (ii) definition of the practicalprocedures for domestic management of private domain by local communities, and the effectivenessof granting long leases, (iii) buildingthe capacityof land tenure circuit courts. As the land tenure problem is a sensitive issue for the population, decision-making in this area might require the organization of a national conference, especially as regards access to land ownership for nationals andforeigners. 52.4 DEVELOPMENTGROWTHSECTORS OF There are five growth sectors: tourism, mining, fisheries and aquaculture, export-oriented manufacturing industriesand other manufacturing industries, smallandmicroenterprises. 52.4.1 Tourism The tourism potential of the Island remains quite largely under-exploited. The wealth of the Malagasyfauna and flora, the biologicaldiversitycharacterizedby the thousands of endemic species make of Madagascar an attractive destination for tourists. Despite the country's enormous tourism potential, flows of arriving tourists changed only by about 10 percent per year in the last decade. Furthermore, the crisis has affected the tourism sector to a large extent and tour operators find themselves at present in a critical situation. The decline in activity in the sector was estimated at 80 percent and the impact was reflected, inter alia, in the closure of agencies, mass cancellationsof bookings, layoffs, non-payment of tourism taxes, and in the destination not being recommended by foreign operators. - 81 In other words, the country needs appropriate measures and a number of specific actions involving the Government, private tour operators and bi- and multilateralpartners for the immediate recoveryof tourism activities. Usingthat approach,the objectiveswill be: - to promotetourism and ecotouriim development, which protects and preserves the natural - environmentandthe socioculturalidenti of Malagasies, to make tourism an instrument of sustainable development that directly benefits village - communities, to improveand increasetourismrevenuefor allsector operators. Possible new guidelines include: - Revival of tourism activities through basic facilitation: removal of the visa requirement for some countries,to enable publicas well as private agentsto resumeallthe country'stourii - activitiesas rapidlyaspossible. Opening up the air space in terms of competitive rates basedon transparent regulations is also necessary. - Promotionof Madagascaras a destination for the privatesector by setting up a permanent and sustainable plan which will act as an interface between the Ministry of Tourism and - operators. Enhancement andsupportfor the developmentof infrastructureandthe creationof incentives to investors in the sector: creation of Tourism Land Reserves (Rmthrough an appropriate distribution of the sites, creation of the National Office in charge of managing the RFTs, alleviationof existingprocedurestofacilitate inveslment,and redraftingof the TourismCode. - Rehabilitationof tourism tax sticker by amending laws governingthis quasi-fiscaltax bothas - regardsthe collectionproceduresandthe useof receipts. Availabilrty of mechanisms relatingto the specific financing of the touriim sector to facilitate - accesstocreditespeciallyfor smallandmedium-sizedinvestors. Modernization and development of permanent structures for hotel and tourism capacrty - building:training intourism-relatedoccupations. Combatingsex tourism and drug trafficking inthe main tourist areas in collaborationwith the other ministeriildepartmentsconcerned. The impact and results below are expected within the period2003-2006: - creationof 900to 1,500additionalrooms; -- - demarcationoftourismzonesandconstitutionof tourismlandreserves; increasedtouristarrivalsafterthe revivalof the sector; setting up of TourismOffices. 52.42 Mining Given its geological makeup, Madagascar has significant mining potential, which s not well known and scarcely exploited. The contribution of the sector to the country's economic and social development remains minimal. The recent discoveriesof preciousstone deposits and the systematic rush it caused requires a specific strategy and a strict integratedmanagement of those non renewable resourcesat the mining and processinglevels, to maximizetheir value-added. The Government has startedto standardize small miningventures in recent years by designing an integrated management plan for non-industrial small mines. In addition, a number of didactic instruction manuals for small holders, as well as an information and environmental management system have been designed. The legal framework has also been set up by drafting legal and 82 regulatory texts (mining policy, mining code, law on large mining investments, statutes and organization of the National MiningCouncil ...). The objective is to increasethe contribution of the mining sector to the national economy. The mining of titanium sands and of nickeland cobalt might in time, multiply the contributionof the mining sector tenfold. The Government's strategic actions, to better develop potential, will consist in (i)setting up a transparent mining system, (ii) promotinglargemining investments and decentralizedmanagementof mining resources,and (iii)eradicatingfraud inthe miningsector. Inorder to attainthese objectives, the program of actionwill focus on: -- consolidationandreinforcementof the centralminingadministration: controlof productionand the operationof a system for collectingdata on usable resources, economic deposits inmines,mappingof miningdevelopmentsites; -- - extensionofthe systemfor monitoringandcontrolof miningactivity; incentivesto privateoperatorsto investinthe miningindustry; control of the legal,judicial and financial framework for relatedfields and mining affairs, and -- relatingtothe sub-soil; strict applicationof environmentalresourcereplenishmentandconservation; increaseinthecapacityfor controllingandmonitoringminingactiviiies; - securnyfor investors; -- - promotionof andsupporttothe privatesector; enhancementof thevalueof Malagasyproducts; -- stabilizationof informalsectortraffic in minerals; creationof researchanddevelopmentstructures; differentiationbetweenregulationsgoverningrawminesandworkedmines. The main impact and outcomes expected from the mining sector in the period 2003-2006 are the following: - increaseinrepotledproductionof preciousstones bylegallyestablishednon-industrialminers - from USD20 millionin2002to USD33 millionin2006; increaseinthe percapita incomeof the populations inthe non-industrialmining districtsfrom - a baseindexof 100in2002to 120in2006; increaseinthe collectionof miningroyalties, usingcollectionmechanisms,from 10percent in 2002to56percentin2006; - increase in the value of yearly exports of gold and precious stones from USD 21 million in - 2002to USD40 millionin2006; increaseinthe yearlyvalue of investmentsinthe miningsectorfrom USD 10million in2002to USD60millionin2006. 52.43 Fishingandfishfarming Implemented since 2000, the new system of non-discretionary, competitive, transparent managementof shrimpfarming licenses has helpedto improvethe performance of this subsector and enhance the economic gains for the country, including higher tax and nontax revenue for the Government. Between 1999 and 2000, export revenue increased by 19.3 percent%andgovemment revenue from fisheries by 29.5 percent. The recently implementedtools to assist in decision-making, 35Source:Ministry of Fisheriesand FisheriesResources,Activjiy Report May2ooO-MayZOO1 83 namely the economic observatory and the bio-economic simulation model for fisheries, will be fully exploited. The Government will propose zones conducive to shrimp farming to investors, while ensuring strict environmental and health (epidemic supervision) monitoring at the same time. Within this framework, in conjunction with professionals, it will amend (lawon aquaculture) or will publish (inthe area of health) the necessary regulatory texts. The possibility of developing controlled artisanal fish farming will be explored. The perspectives of developing maritime fisheries will be explored using a program for assessing fisheries resources in Madagascar, with a view to introducing sustainable, responsible and transparent managementof each resource. Inthis context, a special effortwill be madeto bringabout the appropriate and sustainable solutions to traditional fisheries and to coastal communities that dependonthe use of marine resources. At the same time, the promotion of inland fishing will bring extra sources of incomes to the populationthrough capacity building actions. To promote fish farming, farmers will be targeted for sensitization in collaboration with NGOs and projects; species suitable for farming will be diversifiedand the productioncapacity of operators strengthened. Where possible, in order to implement the principles of transparency, partnership with private sector, and accountability, joint management arrangements will be sought, which incorporate all the partners involved in exploiting the resource. With a view to preserving market access and providing the health guarantees necessary to protectconsumers and to meet the demands of importingcountries(EU),the government will provide the necessary facilities for the financial autonomy and independence of the competent health authority, the Directorate of Veterinary Services (DSV) The expectedmain impact and resultsfor the fishing andfishfarming sector are the following: - increase of the products for export (shrimps, crabs, lobsters .) from 28,872 metric tons in .. 2000 to 36,700 metric tons in 2005, valued at FMG 850.163 billion in 2000 and FMG - 1,310.153 billionin2005; total production in fishing and fish farming for local consumption of 120,000 metric tons in 2005; - increaseof localfishconsumptionto 8 kgpercapitaperyear in2005; - increaseinjob creationfrom47,600 in2000to70,500 in2005 (formaland informalsectors). 52.4.4 Exportorientedmanufacturingindustry Duringthe last ten years, Malagasyexports havemorethan doubled in value. This performance can be explained by the appearance new types of goods, coming essentially from the free zones, to the detriment of traditionalproductssuchas vanilla, coffee and cloves. Created in 1989, the free zone had nearly 162 enterprises in operation by the end of 2001, employing over 72,000 people and covering several areas of activity from garment making to infomation processing. In the current FMG, its contributionto GDP was about 2.9 percent in 2000 and clothing items alone accounted for a little less than 40 percent of all Malagasy exports. Almost 80 percent of foreign investments are attracted to this sector due to Madagascar eligibility for the Africa Growthand Opportunity Act (AGOA). 84 Its prospectsfor rapid growth and expansion in light of the country's assets madeand makethe free zone an important growth pole. It will also have a spin-off effect on the development of other manufacturing industries. Although the sector felt the full impact of the crisis during the first six months of 2002 the objective is to attract more foreign direct investments, increase the number of direct jobs, expand exports and encourage integrationof the productivesystem. Tothat end, the action planwill be gearedtowards: -- the establishment of anadministrativecoordinationbureaufor the activitiesof thefreezones, vertical integrationand anchoring of the textile sector by the improvementof cottongrowing - andsettingupspinningandweaving plants, intensified diversification of the activiiies of export enterprises in general and free-zone -- enterprisesinparticularservingothersectors (jewellery,NICT,assembly, . ..), strengtheningsubcontractingbytakinglegalmeasures, continuedtax incentives. The main outcomes expected in this sector are an increase of goods flows, increased job creation, and enhancedcompetitivenessof Malagasycompanies. 52.45 Othermanufacturingindustries,smallandmicroenterprises Madagascar's industrial apparatus (free-zone enterprises excluded) has a dual problem. First it uses mostlyobsoletetechnology and faces fiercecompetition from importedproducts. Second, it lags behind in terms of competitiveness because competitiveness no longer relies only on production technique but also on marketing technique, which largely required information and communication technologies. Inorder to revitalizethe industrialapparatus, several actions will becarriedout: - upgradingand restructuring enterprises by improvingtheir productivity, notably in the target -- sectorsof activityconsideredpriority,suchas agroindusttyandconstructionmaterials; investmentandtechnologypromotion; - improvement of standardsandqualityto makethe productscompetitive;and implementationof a policy for integrating the rural economy in the industrial economy and establishmentof agroindustrialdevelopmentpoles. The development of small and micro enterprises in general and cottage industry in particular helps thicken the economic fabric, increasejobs opportunities, and improve incomes. To promote this sector, credit institutions must be set up, in collaborationwith the privatesector, which would deal first and foremost with enterprises, small ones in particularthat currently find it difficultto obtain loans from commercialbanks andfinancial institutions. The programsto be implementedwill consist in: - supporting the revival of the cooperative movement through the emergence, consolidation andself-sufficiencyof grassrootsorganizations, - promotingcooperatives of micro enterprisesand cottage industry by organizingthe sector to - createsynergies, improving the performance of micro and small enterprises by strengthening their capacity, - particularlythroughtechnicaland managerialtraining andcoaching, providing institutional support for the promotion and development of micro and small enterpriseswith atrack record, - developingsuitablefinancingsystemsfor enhancingthe competitivenessof smalland micro enterprises and for assisting in the development of microcredit systems with a view to their financial autonomy. As a result,the sector is expectedto be revitalizedand productivity improved. 525 OPENINGUPTOWORLDCOMPETmON Opening up to world competition calls for relevant actions to ensure the competitiveness and performance of Malagasy products. Beside AGOA, which will come to an end in 2004, the United States of America is at present developing the Millennium Challenge Fund, which amounts to USD 5 billion and is intendedfor emergingmarket economy countries. The eligibilitycriteria are linked to good governance, transparency, the rule of law, and other conditionalities. This is a new opportunity for which Madagascarmust be prepared. Fromthis viewpoint, actionsto take shouldfocus on intervention inthe followingareas: - to ensurethat trade canbean engineof growthanddevelopment,trade policymustfit intoan overalldevelopmentframework. More specifically,this process of integrationcallsfor priori actions ampanied by an action plan that envisages consistent and concerted technical - assistanceandcapacitybuildingrelatedtotrade: to be effective, integration also requires a major program that expends "beyond borders" giventhat the actions of the public authorlies inthis area will probablyenhancethe role that trade mayplaypovertyreduction. It is also necessary for the development policy to be consistent with regional integration. Thus, integrationefforts must be enhanced by improved market access. 5.2-5.1Intemational,regionalandnationaleconomicintegration The objective is to contribute to the establishment, advancement, and materialization of a subregionaland regionaleconomic communityand integrationintothe world economy. Actions to becarriedout will be as follows: - to intensifyawareness anddisseminationcampaignsonthe agreementsandconventionsthat Madagascar has signed: organizationof informationand training actions for operators and the Administration on the implications of regional integration (Indian Ocean Cmmissio+ IOC, Common Market for Eastem and Southem Africa-COMESA, South African DevelopmentCommunlty--SADC, Ocean Rim Association for Regional CooperatioHOR, Regional Integration Facilitation Forum-RIFF.. .), multilateral and bilateral agreements (AGOA, Cotonou PartnershipAgreement...) and of WTO rules to better use the advantages and opportunities derived therefrom and detect compliance or noncompliance with - commitments; prepareanddistributecommercialinformationbulletins, a guidefor exporters, anda collection of texts relatingto trade and regionalintegrationtranslated intoseveral languages(Malagasy, - French,English); rationafizeand harmonizerelations with intemational nongovemmentalorganizationsthat are operating in various areas with a view to developing inter-regional and inter-provincial exchanges.Promotionof newformsof cooperationemphasizingpreferenceto directcontacts betweenentitiesof thesamesize andof the same socialobject. - to coordinateandactivatethe whole programof govemment and non-governmentactions 86 - totake advantageof the regionalintegrationto develop partnershipandtowntwinning The expected result is the increase in value and in volume of the exports by expanding and diversifyingthe market. 5252 Developmentofthe industrialmanufacturingsector The objectives are to increasethe availabilityof goods and services and to promote exchanges and to draft a strategyto improvecompetitivenessinthe industrial sector, all with a view to developing trade. The actionsto be taken are: - define an industrialization policy in collaboration with the private sector, particularly the representative group, aimed at the promoting links through specialization, paying special - attentionto comparativeadvantage; reexaminethe systemof importcontrolby: (i)combiningveriimtion and informationsystems, (ii) effectively computerizing the customs service, (iii) implementing a customs security procedure,(iv) re-examiningthetariffpolicybydifferentiatingthe rateson inputsfrom thoseon productsimportedfinished. The expected result will be to create more nationalvalue-added. 5.25.3 Investmentpromotion This concerns the adoption of macroeconomic measuresthat will attractprivate investments. The actions to be taken are: - mobilizationof intemationaland nationalflows of funds by fosteringthe developmentof joint- ventures and partnership, either in the form of foreign direct investment (IDE) andor stock market funds, ether by acquiring equity participations or any form of capitalization through - incentivemeasureswithinthe frameworkof a simplifiedlegalandregulatorysystem; emergence of "national capitalism" bythe facilitatingsecure technologytransfer andtechnical supportagreements,creatingpiggy-backfunds andparticipations, implementingmechanisms - for accessingandevaluatingpropertycontributions; promotion of corporate governance with respect for shareholders, taking into account the measures takenbythe BusinessLawReformCommission(CRDA) onminority rights. The expectedoutcome is an increaseinthe volume of investments. 525.4 Investmentsecurityinthecontextof cmtingafavorable investmentclimate The government will take measures to protect and guarantee investments. The actions consist in: - prioritizationand accelerationof business law and regulatoryreform (creation,promotionand developmentof enterprises,long leaseand insurance): - setting up an investment securitysystem pursuantto internationalagreements and reguhted by a simplified and clear InvestmentCharter, listing the various advantages, possibilitiesof insurance, reinsuranceor of internationalcounter-guarantees,and encouraging recourseto arbitration through the Madagascar Arbitration and Mediation Chamber; and consolidating their applicationbeforethe courts; -- developmentof bilateralagreementson investmentprotection; observance of intellectual property rights in the promotion, transfer and dissemination of technology. a7 As mentioned earlier, the expectedoutcome is an increase inthe volume of investments. 52.6 RUFUUDEVELOPMEW Its intensityand its incidence indicate that poverty is a muchgreater concern in the rural areas than in the urban areas. The goals of economic growth and poverty reduction are, however, dependent upon the performance of the rural development sector. Accordingly, the latter is expected to play a prominent rolein poverty reductionstrategy, a role that will result inan annual growth rate of at least 4 percent over the period2003 -2005. For this purpose, the program drawn up under the PRSP will have a number of components which will rest on rural developmentpolicyand sectoral strategies, particularly the five guideliness of the Rural DevelopmentAction Plan (PADR), which constitutes the implementationframework for the various actions. Thanks to the participative and bottom-upapproach initiated under the PADR, it will be possibleto decompartmentalizethe subsectors of ruraldevelopment, to involve all invobed in rural development, and to take into account the needs expressed by the regions and subregions. The process will also add an element of coherence to the interventions. 5.2.6.1 Gommanceandimprovementoftheinstitutionalframework The PADR is subject to an improvement of its institutional framework and of the access structures regarding to the need to clarify the roles and responsibilities of rural development agents. The government will continue the institutional reforms now underway at the local, regional and national levels. They should be favorable to economic development, in harmony with respect for the environment and for the most underprivilegedsegments of the society. The measures taken will eventually result in the division of roles, namely those conferred on groups of rural development agents. The principles of divestment and refocusing of the role of Govemment on its essential missions have been established. From now on, the Government will assume the functions of support for production, steering sectors (defining policy, setting and controlling standards of quality of agricultural products, etc.) and the management of public sector financial and human resources. Production and marketing activities have been definitively handed overto the privatesector including farmers' associations. This institutional reform is based on deconcentration and decentralization of services with a view to developing quality local services. To attain the objectives, development programs on a regional basis will have to be designed, monitored and implemented. In this connection, the government has initiated the deconcentratioddecentralizationof decision-making and management authorii, which will give more responsibilities to development agents and enable policies to be formulated inthe field. 36 The fwestrategicguidelines of the PADR are: * To ensure good managementof the ruralareas by definingand implementinginstitutionalreformsand aregulatory framework *To foster the emergenceof economicagentsandpartnersof ruraldevelopment * To increase and promote agricultural production with optimum use and sustainable management of resources, infrastructureandagriculturalmaterials To ensurethat sufficientfood isavailablein all regions To developsocialinfrastructureinorderto improveaccesstosocialsewices 88 In view of the large number of economic operators and the decentralization process, it is essential to have a strong national capacity for consensus building and coordination to fully decompartmentalizerural development subsectorsand ministerialdepartments. In the context of good governance in the sector, a number of measures aimed at improving transparency will be taken and red tape will be eliminated. Moreover,the administration'scapacity for control and research strengthened and services will be reorganized in order to improve the administration's performance. A legal and regulatory environment favorable to the different rural development sectors will be established (compliance with rules and procedures, ensuring the safety of ticket-giving officers), It consists in reviewing and/or amending, updating the regulatory texts, statutes (Water Utility Users' Association-AUE, Vaomieran'ny Ala, non-mutual institutions), rules (marketing, exportation), animal health police, tax system, land laws, etc., as incentivesfor investment in ruraldevelopment. Thus, taxation on agriculturalproducts, inputs and farm materials, the transportation system, etc. will be adapted to maintain strong incentivesfor sector growth. The first measures taken in 2000 made it possible to eliminate the bulk of the negative effects that had put pressure on the sector, causing economic distortions in the cost of inputs and excessivecompetition with such local products as rice. This refers to the 35-percent tax on imported rice (15-percent import tax + 20-percentVAT) and the exemption of inputs and strictly agriculturalequipment from import tax and VAT. The means of perpetuatingsuch measures will be examined in order to provide security for developing marketing and distribution. The Government will continue to liberalize trade and investment, in particular within the framework of regional initiatives to which Madagascar is a party. The bidding procedure is now commonly used to ensure transparent management of grants (food and agriculturalproducts, inputs, agricultural materials), which makes markets more fluid. Import managementwill reflecttransparency (importvolumes, custom duties actually applied).Inorder to improve exports, export quality standards will be brought in linewith internationalrequirements. The development of a system of information and the promotion of information networks is important in the farming and livestock sector, to make available to agricultural development agents the necessary economic, technical and statistical information. In the forestry sector, this system will allow for better management of forestry resources. In the field of research, it will make it possible to developthe content of agriculturalinformationisland-wide. Development agents, namely the private sector and the farmers' associations (OP), need regular information about price changes, available supply, international market conditions, or the list of export opportunities, etc. The Market Information System (SIM) has been institutedto provide a survey and regular dissemination of informationon the prices of agricultural products. In addition, the rural observatory network (ROR) has been used to evaluate the impact of a number of economic measureson ruralhouseholds. To win the support and participationof rural communities, information for the general public on rural development will be reinforcedthrough the media and the Documentationand Training centers on the New Informationand Communications Technologies (NCIT), which began to be opened in all the fivondronanain2001. 52.62 Developmentof agriculturalproduction The increase in productionand therefore the diversificationand increase in sources of income for producers and of exporters will come about through the development, intensification and diversification of production in the growth sectors (livestock, forestry, fisheries, fruits and vegetables, 89 etc.) by taking advantage of the comparative advantages of each region. To this end, dynamic poles of growth will be developed with the support of the operators who provide backing [opefafeursawl]. The point is to encourage the development of income-generating secondary activities (cottage industry, non-woodforestry products,tourism,fisheries, and others) insupport of poor populations. In order to succeed in efficiently developing the sector, support for the organization and professional development of producers is important, by encouraging them to form associations to makethem partners inthe ruraldevelopmentprocess. The creationof the Chambers of Agriculture or Tranon'ny Tantsaha at all levels (national, regional, departmental and communal) is an essential element for makingthe structures permanent. Furthermore, the system of agricultural education and training will be restructured by introducingsynergies between researcWproductionltraining, promoting agricultural training to improve the sector's performance and competence. Strengthening and revitalization of technical and occupational training will be implemented to cover the sectors needs in human resources and technicalexpertise(needfor technicians at different levels). Put on hold since the last decade, the resumption of agricultural mechanizationis absolutely key to the drafting of strategies for combating poverty. An important measure that the Government has taken is to removetaxes on agriculturalmaterials. Moreover, to enhance the specialefforts in this area, ruraldevelopmentprojectswill be oriented towards incorporating mechanization. A setting favorable to the emergence of organizations of producers and farmerswill be created to promote a "pro-environment" label. In view of the growth of financial flows mobilized at the decentralizedlevel, the capacity for financial controlwill be reinforced. 52.63 Financingfor the ruralworld For a number of years, rural areas have begun to be financed through micro finance institutions, both mutuals, operating under Law 96-030, and non-mutuals, whose regulatory framework should come out shortly. The results are modest at present but the outlook is very promising. Practically all the autonomous provinces have at least one chain, which in the coming years will significantlyincrease its rate of penetration intothe provinceas a resultof: - greater participationby ruralproducersinproviding ruralfinancing and better risk sharing with financialagencies havinganacceptableinstitutionalcapacity; -- introductionof an"educationcredr approach intoareas notservedbythe financialagencies: promotion of farmers' investment funding in areas with a Joint Guarantee Fund and a - Fanners'OperatingStructure, havingthe necessarysupervisoryandmonitoringsystems; interventioninzoneswith highpotential. The Government will also have to work out the means of setting up financing systems that are adapted and accessible to the poor for income-generating activitiesthat are environmentally friendly (cottage industry, crop credit, socialinfrastructure, smallfarming implements). 52.6.4 Research A research program responding to the technical problems of development in the regions and/or the development of productionchains will be implemented. In additionthe results of the research will be acknowledged, used, and disseminated in partnershipwith private and internationalinstitutions. As far as livestock farming is concerned, development and dissemination of animal immunization will be achieved by modernizing the veterinarian vaccination production line, with the scientific assistance of regional and international institutions. Some technological research applied to priority human needs and environmental research to improve livingconditions will be carried out so as to: (i) improve housing conditions, (ii) make rural roads usable all year round, (iii) manage naturalresources better, (iv) reduce agroindustrialpollution, and (v) reduceenvironmentalfactors that contribute to disease. 52.65 Foodsecurity Animal diseases and plant health problems are among the major causes of food insecurity.This can be controlledby means of: - consolidationof partnershipwith bordercontrolofficers andthe privatesectorto guardagainst new diseases that might find their way into the island, and reduce the cases of prevailing diseases: - plant health control against the dissemination of organisms that might damage crops, underpinned by effective control of imported and exported plant matter, to control crop - diseases andpests; adoption of an appropriateplanof attack. The fight against food insecurity is a key objective.Thus, a stable supply must be ensured in all places and at all times. The fact that service roads are unfit for traffic, especially in rural areas, puts crop producing zones at a disadvantage and taxes returns on rural production. Supplies of inputs, materials and essentialgoods are hampered. The development of rural transport is taken into account in the Rural Area Transport Program (PTMR)whose strategies consist in: (i) setting up a RuralTransport Coordination Unit, (ii) integrating intermediatemeans of transport (MIT), (iii) involvingdecentralized local authorities,and (iv) improving transport infrastructure. A marked effort will be made to disenclave producing areas by rehabilitating and maintaining rural roads. The communication routesto be rehabilitatedwill be rankedso that their rehabilitation and maintenance can be underwritteneither at national, provincialor communal levels. At least 10 percentof the annual budget of the RoadMaintenance Fund (FER) will be allocatedto the repair and maintenanceof rural roads. (see sectionon basic infrastructure). To cope with emergency situations (cyclones, drought, swarms of migratory locusts, animal epidemics and plant health problems, etc.), the systems for forecasting and monitoring natural disasters and warning systems, as well as the intervention capacity of the localcommunities and the Farmers' Associations, will be strengthened. The national strategy for risk and disaster management will be implemented. The foodsituation is deteriorating after the frequent droughts and cyclones that the country has undergone. The setup of an emergency fund that can be easily mobilized enabling an immediate assessment of damages, assistance and support for the poor, an emergency supply of agricultural inputs, or artificially induced rainfall, will be of essentialto the task of coping immediatelyreviving the agricultural sector. Development activities will be aimed mainly at enhancing farmers' response capacity (advancedavailability of seeds, Joint Village Silos-GCVs, etc.). Moreover,the assistance of NGOs in emergency operations and the regional structure of disaster and risk management will be improved to better coordinate activities (distribution of seeds, rehabilitationof labor-intensivehydro- agricultural infrastructure). 91 5.2.6.6 Securelandownership Land is either the main problem of problem of poverty in rural areas, or at the center of that problem. Secure land ownership is a prerequisite for numerous actions aimed, in particular, at ongoing managementof environmentaland hydro-agriculturaldevelopments.The design of an overall land policy that makes it possible to provide public security for the various rural land owners remains one of the priorities of the Government, which is now firmly preparing a National Land Tenure Program. With this in view, ongoing actions in the area of access to land and security of land ownership will be intensified,Le. the determination of priority zones of intervention, setup of a topographic and land tenure information system, reinforcement of decentralized agencies, development of a private network of certified land surveyors, information and sensitization of all the players and beneficiaries, and generalizedland registration procedures. The modalities for application of the SFD, SFI, SFO and ODC procedures, depending on the type of land ownership and needs, will be adapted to irrigated developments and areas. The land tenure code will be rewritten so as to simplify and facilitate land acquisition for farmers, clearly demarcate the lots allocated to such territorial divisions as the fokontany, communes, regions, autonomous provinces and the Government. The management of land tenure information will be computerized. Pending the refom, temporary measures to compile a land.tenure directory will be taken to provide security for farmers. To guard against misappropriation, genuine land development and actual payment of landtaxes will serve as the basiccriteriafor acquisition. 52.6.7 Spacemanagement Madagascar is marked by glaring disparities inagro-economic potential, landcapital in low-lying areas and in irrigationareas, proximityto urban markets, networks of economic operators, and degree of isolation of the subregions. Thus, in the rural areas there are: (i) areas with the advantages of having a favorable environment, large surface area, well-watered highlands and lowlands, where the opportunities for economic activity abound, and (ii) poor areas, which usually have rougherterrain and are more enclaved, with an accumulation of structural and naturalconstraints. The process of developing the endowed areas, which are true poles of production,." Fostered " by targetedsupport actions, could meet the growing domestic demand for foodstuffs and provide the bulk of the supply to export markets, while absorbing the surplus manpower in the poor areas. Investment and access to land ownership must be facilitatedthere in order to develop modernmodes of farming (land investment areas), and encourage more intense farming, particularly in irrigation areas (GPI, PPI, etc.). This process could lead to increased specializationin the various zones and the strengthening of downstream functional linkswith localagro-industrialpoles. By contrast, in the poor or "vulnerable areas" in terms of agro-ecology, income-generating secondary activities will be developed (cottage industry, forest harvesting, tourism, fishing, seasonal migration) and maximum investment in forestry and environmental capital for reforestation and stabilization crops grown under shade trees. The production poles and the urban secondary sector (textile, food industry) can be expected to become increasingly attractive to people in the vulnerable areas. Those areas would have to gradually withdraw from agricultural activities and move into secondary activitieswith highvalue-added. The permanent management of forestry resources in these areas is a part of the strategy of catchment basin management, on which the sustainabilityof the main irrigation areas inthe region depends. At the regional level (Rural DevelopmentWorking Groupsor GTDR), it is therefore necessaryto think about how support would be coordinated to ensure balanceddevelopment, which is based on 92 poles of production with high potential, strengthens their ties with the urban agro-industrialpole@), and stabilizes the vulnerable areas. Also, each GTDR must prepare a regional development diagnostic study based on dividing the space into poles of production, vulnerable areas in agrc- ecologicalterms, and agroindustrialpoles. WRh the economic growth of the industrial sector and services (5-6 percent between 1998 and 2000), which is twice as high as in the primary sector (2.5-3 percent), the Malagasy economic landscapeand its nationalnetwork of secondary towns and major is changing radically. The rapid development of market towns and regional urban centers, reflected by an urban population growth rate three times that of the rural p~pulation,~~ is a decisive factor in the regional dynamicsof regionaldevelopment. Itcreates more outlets and accessto services. The small agro-food enterprises (processing, distribution, restaurants) play an essential role in constructingthe socialfabric, developingeconomic activities, and organizing urbanand ruralspace. The agro-foodand agro-industrialsector, in intermediaryzones between ruraland urban areas, generates employment. It is a significant asset in advancing agriculture and, at the same time, integratesthe rural economy with the industrial economy. It can accelerate overall economic growth and raise incomes, absorb rural unemployment and strengthen food security. The vertical integration of agriculture with the processing industry and local industry will not be a success unless it is accompaniedby an appropriate infrastructure(roads, energy, water, communication). De facto, the GTDR work in collaboration with Regional Development Committees and the regional authorities in order to implement town-country synergy. The prioritization of roads to be rehabilitatedand areas to bemade accessible must includethe concept of supplying urbanmarkets. 5.2.6.8 Agriculture The PRSP implementationprograms in agriculture will essentially aim to "ensure food security and make the best use of resources", through the following five objectives: - increasingagricutturalproductivityandcuPiatedareas; - promoting small invesments in rural areas and partnership between farmers' associations - andthe privatesector; promotingagriculturalandafrefoodexportsand improvingquality; - ensuring transparent and rational management of the resources to guarantee their - sustainability; facilitating producers'access to landcapital. To each specific objective correspond programs which include several well-defined actions to be carried out in the course of !he next four years, with a view to attaining all the general objectives for an economic growth rate of 8to 10percent peryear. 5.2.6.8.1 lncreasinaaaricultural Droductivitvand croDareasthrouah the followha actions: 1- Increasedanimaland plant production by: --revitalizingagricutturalproduction; importinginputsandproducingcertifiidseeds locally; - makingthe bestuseoftechnicalitinerariesof agricutturalproduction; 37iNSTAT 1997 Demographic projectionsand forecasts: the growth differential between the rural population (1.5 percent)andthe urbanpopulation(4.7percent)is morethan 3 percentbetween1999and2015 93 - wider useof the invitro plan to regenerate heatthyplants: - developingvariousanimalfarmingsectorssuchas dairy farming, pigfarming, modernpoultry farming, shortcyclebreeding,raisingsmallruminants, beekeeping,silk production,andrabbit rearing. 2- The development of productionand use infrastructures based on the rehabilitation of rural roads with the ongoing projects andthe construction of vaccination corridors. 3- The controlof animal diseases by: ensuringdiagnosisof the disease; -- -- implementingplansto combat disease; makingthe epidemic supervisionnetworkoperational; ensuringsanitaryprotectionat the frontiers; -- receivingsupport from privateveterinarians. buildingthe operationalcapacity of the centralas well asdecentralizedstructures; 4- The development of irrigationareas and the neighboring catchment basinsby: -- rehabilitatingirrigationareas throughhydroagriculturalprojects; repairingdamageto theseareas; - maintainingstrategicworks periodically. 5- The implementation of the anti-locust surveillance system and the strengthening of the system of forecasting, supervisionand warning of naturaldisasters. 6- Support for producers' efforts to Qrganizeand become more professionalto increase their performancethrough: - trainingtechnicians; -- disseminatinghigh-performanceproductiontechniques; providingequipmentandsupplies. 7- Strengtheningof a legal and regulatoryenvironment favorable to ruraldevelopment through the updating and dissemination of the texts governing farmers' organizationsand the laws on fishing and fish farming. 8- Reactivation of mechanization in agricultureby setting up six pilot mechanizationsites and disseminating, through operations light agricultural equipment such as ploughs, harrows and weeding hoes. 9- Strengthening of the information system on rural development by conducting basic referencesurveys to identify exponproductsand ploywater zoning maps. 10- Institutional support aimed above all at facilitating the authorization for harvesting, inland fishing licenses, and industrial fish processing licenses, and implementing fishing supervisioncenters. 11 Intensify applied research into ruraldevelopment by: - -- introducingstocksor newspecies: -- carryingout researchonseeds; creatingpilotcentersfor breedingexperimentation; carryingout a study/actiononfreshwater shrimpfarming 5.2.6.8.2 Promote small investmentsin ruralareas and Dartnershiowith farmers'associations and with the Drivatesector throucahthe followinaactions: 1 The development of income-generatingactivities through: - dissemination of little practiced breeding techniques (breeding in a cage and within an enclosingfence): productionof young fish; support for harvesting and marketing crayfish and other inland fishing products; re-stockingponds with fish; recognitionof the value of secondary fish. 2- Establishment of systems of funding adapted and accessible to the poor by particularly emphasizing the mobilizationof fishing and fish farming credits and supporting facilities for financialoperations. 3- Development of production and operating infrastructure by improving the slaughtering process through the creation of 23 facilities, establishment of 100 points of sale, and full functionality of all sanitary inspectors. 5.2.6.8.3 5 Actions will invotve: 1 Developmentof growthsectors by: - strengthening and diversifying export crops: establishing quality assurancefor export products; diversifying and improvingfisheries products; increasedcompliance controlof fisheries products: identifying aquaculture sitesfor shrimp farming; increasing media publication of information: sales of post-larvaeand unfedfries; promotingsnailfarming; developing the ostrich business. 2- Controland supervision of plant healthproblems by implementing a procedurefor analysis basedon quality standards and capacity buildinginthat area. 5.2.6.8.4 Ensuretransoarentand rationalresourcemanaaement The sustainability of resources is one of the major concerns for any development of action. Rural development is particularly affectedby kt owing to the existence and diversityof such resources in the ruralenvironment. As a result, attainingthis objectivewill requirethe followingactions: 1 Increased plant and animal production through training programs, dissemination and - communicationfor retraining60 officers per year. 2- Developmentof productionand operating infrastructure through: - -- the establishmentof cattlemarkets; supportfor integrateddevelopmentof thecoastline; creationof fish breedingsites; 95 motorizationof boats; - -- creationof harvesting,processinganddistributionpoints: buildingtwo pilotfacilitiesfor marinefishing. 3- Resumptionof mechanizationinagriculture by drafting and implementing such a policy 4- Reinforcementof ruraldevelopment informationsystems by: - developing adata bank: -- developing the system of informationon ruralmarkets; developing acomputer system; -- - producingcommunicationssupport; setting upregionaldocumentationcenters; monitoringandevaluatingprogramsandprojects. 5- Strengthening a legal and regulatory environment conducive to rural development by applying the standards governing animalfarming. 6- Institutionalsupport by: ---setting up 12newtrainingfacilities; designing20 professionalrepositoriesinaccordancewithtrainingneeds; establishment of a support system for the priiate establishments engaged in agricultural - training; integratingnew qualified agronomists into the rural development sector with 100 operational -- engineers every year; buildingthe capacrtyof agriculturaltraining centers; strengtheningmanagement programmingandtechnicalandfinancial monitoring. 7- Support for producers to organize and become more professional through the technical training of 20 associationsevery year. 8- Dissemination of research results to rural development agents through training, extension work and communicationprogramsand disseminationof agro-ecologicaltechniques. 9- Preservationand enhancement of the environment as well as of marine and inlandfisheries resourcesby: -- -- setting upenvironmentalunitsindecentralizedoffices; implementingthe policyof integratedmanagementof coastalareas: creatingandmanagingmarineandcoastalprotectedareas; -- reinforcingtransfersof fisheriesresourcemanagement; strengtheningthe protectionof protectedspeciesagainst unlawfultrade; environmentalmonitoringof fshingandfishfarming companies. 5.2.6.8.5 Facilitateaccess by Droducersto landcaeital: Land constitutes the key factor of development in agriculture. Secure land ownership is therefore a prerequisitefor good land use. Yet, the state of land ownership in Madagascar still leaves a lotto be desired and requiresa number of actions,such as: 1- Programsto ensuresecure landownershipby: -- markingthe boundariesof 212,000 hectaresof landby2006; - collectiveoperationstoestablishtitle resultingintitle deedsfor 200,000 lotsbyend-2006; securinglandownershipinareas whereyoung ruralentrepreneurs(JER)areestablished. 2- Support for producers to organize and become more professionalthroughthe development of 1,500 ha of new land: - settlement of 150migratingfamilies; - training of JERs and the coaching of farmers with a view to setting up 325 agricultural enterprises. 3- Support for micro-finance to meet the needs of 600 beneficiaries of rural credit in the framework of the PROJER, 4- Implementationof the National LandTenure Program: - Strengtheningof the operatingcapacty ofthe LandOfficeandits decentralizationdown tothe levelof the fivondronana; ---computerizationofthe systemof landandtopographicalinformation; amendmentof landtenuretextsanddraftingof the landtenurecode; -- updatingof legaltexts andregulationson migration; alleviationof administrativeproceduresfor obtainingtitleto land; creationof incentivesfor localandforeigninvestors(creationof inveslmentlandzones). 52.6.9 Environmentalconservationandsustainablemanagementof renewablenatural resources: It is fair to say that the at least 50 percent of income in the Malagasy economy is directly dependent on natural resources. If one considersthe labor market, 9 jobs out of 10 are in the sectors that depend directly on natural resources. Eradicating poverty in Madagascar will necessarily be contingent on the sustainable management of this capital that is keyto the nationaleconomy, namely the environment. Madagascar adopted the Malagasy Environmental Charter in 1990, which sets the general framework for implementationof the environment policy. During the first two stages of the Environmental Plan of Action (PAE) from 1991 to 2002 the main foundations for sustainable management of the environment and renewable natural resources (biodiversity, forests, pastures, water and marine resources) were laid with the involvement of regional and local actors (decentralized institutions, operators, associations, NGOs, grassroots communities) and the access of Madagascarto internationalconventions. Environmentalmanagementcannot betreatedseparately from development. Itgoes far beyond the scope of the institutions responsible for the environment by complete integration with all areas. From now on, all development actions are formulated and followed-up taking account of the environmental aspect. Every new project is subject to an environmental impact evaluation while all ministerialdepartments have an environmentalunit. The transfer of natural resource management to rural grassroots communities (GELOSE - Forestry Management by Contractors) has begun and has shown its efficiency. Through these managementtransfers, grassrootsrural communities beginto take a greater part in poverty reduction with due regard for the environment. Such management transfer initiativeswill be strengthened and intensified. With the various agencies engaged in rural areas, the ministerial departments (forestry,animal farming, agriculture, environment, research) are seekingto develop aitemativesolutionsacceptable to farmers accustomed to slash-and-burnmethods (tavy) and animal breeders accustomedto burning landto provide pastureland. The objective is for them to desist from such practicesand turn to other activities, and to steer them towards alternative cultivation techniques, including improvedtraditional 97 practices such as improved fallow land, agro-ecological techniques (direct sowing, zero-plowing, crops grown under shade trees, etc.), improvedor intensive rice growing ... Regarding reforestation,the statutory instrument for Law No97-017 of August 8, 1997, relating to reforestationprovides incentives (land, techniques, finance), which consist in granting benefits in kindto reforestationand nursery operators . In order to safeguard ecosystems and threatened species, specific actions will be taken, including consolidating the representation of the ecosystems in the national network of Protected Areas, setting up new conservation sites and creating Voluntary ProtectedAreas. The granting of the 50 percent of the entrance fees to ProtectedAreas (DEAP) to the riverside population would enable the latterto finance activities inthe peripheralzones andthereby enhance their sources of income. The sustainable managementof coastal zones and marine ecosystems is of crucial importance for providing continuous and sustainable access to these resources to the poor populations earning their livelihoodfrom traditional fishing. There is also the needto include marine parks into the present system of parks and reserves. Interactionsbetween managementof natural land resources with the coastaland marine zones require integratedactions (sustainable use, conservation zones, environmental education...), aimed at sustainable management of marine and coastal zones, which will alleviate poverty in the coastal communities of Madagascar. The degradation of catchment basins affects the coastal zones of the country and the performance of irrigation areas (silting of rice fields and coastal plains, deterioration of production infrastructure,erosion of reefs andmangroves, soil salination....) and callsfor simultaneousreviewof rural development and environmentalpolicies. Improvedgovemance and the implementation of anti-corruption systems in the institutions in charge of natural resources would build the confidence of the poor and develop their interest in sustainable management.The Observatory of the ForestrySector (OSF) has already beenset up; its mission is to crosscheck and disseminate reliable informationconcerning forestry management (use, marketing, forestry royalties, etc. Measures for rehabilitatingthe forestry sector have been taken in partnership with the private sector with a view to sustainable management of the resources and sustainability of the timber sector. The PRSP implementation programs concerning this sustainable management of the environment and natural resources will be essentially aimed at "safeguarding and enhancing the value of the environment andthe unique biodiversity of Madagascat`through the following objectives: - maintain the voiume and qualii of natural resources with a view to sustainable economic - growthanda betterqualityof life; satisfying the population's economic, ecological and social needs in terms of forestry - resources,soilandwater; integrating the environmental dimension in sectoral development policies and actions (transport, energy, tourism, mining, fishery, health...) and in regional, municipal and local planning. 5.2.6.9.1 Maintainthe volume andaualitvof natural resourcesto allow sustainableeconomicarowthand a betteraualitv of lifethrouahthe followinaactions: 1- Developingthe institutions and regulatoryframeworksfor protectionof the environment and nature: 98 --- - the legalinstrumentsof officialintemationalconventions; the environmental code and its officiallegalinstruments; managementsystems (standards,certification, control...)implemented; govemance and anti-corruption systems (Forestry Sector ObservatotyOSF, forestry - committees...) set up; Environmental ManagementIndicatorsavailable. 2- Promotingthe sustainable managementof natural resources: - simplifiieddevelopment and management plansfor land resources (forests, pastureland, lake resources...)preparedand implemented; -- - 60,000 haof landtransferredto grassroots ruralcommunities: forest zoningpreparedandadopted; technicalitineraryrelatingonthe procedurefor grantingpermitsbyauctiondisseminated: -- prioritysectorsof non-woodforestry products(includingtheConventionon lntemationalTrade timber sectorsrehabilitated: in EndangeredSpecies-CITES)structuredandenhanced: - cleandevelopment mechanism(carbontrapping...)studiedandmanaged. 3- Ensuringthe sustainable managementof marine and coastal resources: - integratedmanagementof coastalandmarinezones implemented: -- .100 simplifieddevelopment andmanagementplansfor marinezones drawn upand implemented; contractsfor transferringmanagementof marineand coastalresourcesto the grassroots localcommunitiesimplemented; - marineandcoastalecdourism developed. 4- Ensuring permanent financing of the network of Protected Areas and developing mechanismsfor a sustainablefinancing for environmentalactions: -- the"trustfund' for thefinancingof the parksystemoperational; the national network of parks, conservation sites as well as the voluntary protected areas - developedandsustainable: sustainablefinancingmechanism(greentaxes, polluter-payerprinciple...) developed. 5.2.6.9.2 Meetthe economic, ecoloaicaland social needsof the DoDulationin terms of forest, landand water resourcesby: 1- Promoting a national program of reforestation and in particular adopting incentives regarding economically profitable reforestation activities (fruit trees, aromatic plants, medicinalplants...), aimed at improvingthe population's livingconditions: --- surfaceareasof 6,000 hareforested: 45 reforestationlandreservescreated; 100 municipalities peripheral to the Protected Areas receiving support for growing native species. 2- Combating bushfires: - preventiveandactivecontrolcampaignsstaged, - forestrysupervisionreinforced. 3- Restorationof the ecologicaland economicfunctionsof the catchment basins inthe regions with highdevelopmentpotential: 99 - actions relatedto catchment basindevelopment (directseeding-DSR, anti-erosionsystems, economic reforestation...) intensified(500,000 haunder protection). 4- Support for substituting rural practices (agro-ecological techniques, energy, alternatives to tavy...) --- sustainabledevelopment alternativesimplemented; woodfuel management improved; techniquesof agro-ecologicalcuttiation (directsowing, zereplowing, cultivation undershade trees ...) madebroadly disseminated. 5.2.6.9.3 IncorDoratethe environmental dimension insector-based Dolicies and deVel0m"t actions ItransDort, enerav.tourism, mininq, fishina. health ...)and in local,reaionaland communalolannincl by takinathe followinqactions: 1 Promotingenvironmental-friendlypublic and private investments: - - the instruments for implementing the MECIE decree (standards, guidelines, procedural manuals,resource centers...) published: - environmental evaluation of public and private projects and programs carried out and - assessed; sectoralandenvironmentalproceduresmadecoherent. 2- Promotingenvironmentaleducationandcommunicationactions: ----educationpolicyrelatingthe environmentimplemented; environmentaleducationintegratedintoschoolcurricula; training programsspecializing inthe environmentreinforced; localandregionalout-of-schooleducationactivities(adulteducation,etc.) developed. 3- Promoting incorporation of the environmental dimension into regional, municipaland local developmentplans: - - capacityof localagentsstrengthened; integratedsustainabledevelopmentapproaches initiatedby and betweencommunes. 4- Promotinginnovativehazardpreventionrules: pollutionmanagementpolicyandstrategydrawn upandtested; textson industrialpollutionmadeofficialandapplied; standardization texts (waste water, exhaust fumes, drainage oil, hydrocarbons...) drawn up andapplied; substancesdepletingthe ozone layerseliminatedgradually, system for combatingoilspillsat sea implemented. The expected impact and results of agricultural development as well as environmental conservationandsustainable naturalresource managementduringthe periodare the following: -- underfedpopulationratereducedto25 percentin2005from40 percentin2002; annualgrowth rate of livestockupfrom 2 percent in2003to 5 percent in2006for cattle,from 10percent in2003 to 30 percent in2006for sheep andgoat, from 10percent in2003to 100 percentin2006for poultry; 100 - livestockmorbidity ratereducedfrom 3 percentin2002to 1.25 percentin2006 for cattle,from 67percent in2002 to 25 percent in2006 for pigsandfrom 50 percentin2002to30 percent in 2006for poultry; - Viestock mortalityrate reducedfrom 0.7 percent in2002 to 0.5 percent in2006 for the cattle, from 60 percent in2002to 20 percent in2006 for the pgs and from 45 percent in 2002 to 25 percentin2006for poultry; - growthrateof exportableproducts upfrom 30percent in 2003 to 100percent in2005; - ruralinvestmentrate upfrom 5 percentin2002to 20 percentin2005; - financingnetworkpenetrationrate up from 20 percent in 2002 to 25 percent in 2003 and the numberof operatingfunds from 364to 390; -- - sevenenterprisesprivatizedduringthe periodand 12transfers of management; reforestedarea upfrom 12,000hain2002to 21,000 hain2006; - bumedarea reducedto50,000 hain2006from891,000 ha in2002; deforestedlandreducedto 1,000hain2006 from 9,000 ha in2002, 52.7 DEVELOPMH INCREASEDDENSITYOFSTRUCTURINGINFRASTRUCTURES AND Inadequate economic infrastructure diminishes performance in terms of economic growth, resourceallocation, and poverty reduction. Recentsurveys and studies demonstratedthe existenceof a relatively close correlation betweenthe poverty index and inadequate road infrastructurein the six provinces of Madagascar. Also, the establishment and development of economic infrastructureis the country's top priority. As the strategy is implemented, the state will withdraw from all productive activities in the sector and will encourage both the nationaland foreign private sector to invest in this area, 52.7.1 Roads,transport, landdevelopment,meteorology Actions will be taken on all the links in the chain of transport services beginning with the physical improvement of the infrastructure (repair, rehabilitationof the existing infrastructure, current and periodical maintenance), efficient management and use, ease of use with increasedsafety and comfort. Such actionsconcernall modes of transport: road, rail, sea, riverand air. Coordination of the various modes will be strengthened locally within an economic region or an entire province and they will be developedthroughout the entire territory in a balancedway. Particularemphasis will be placedon road infrastructuresat the levelof the structuring network as well as at the level of the networks of rural roads. These two networks will be interconnectedin order to ensure a smoothtraffic between country and town and to totally disenclave ruralpopulations, whose means of transport referred to as "intermediarf-carts or cycles-will be improved and developed. Morespecifically these actionsare aimed at: i) Planninganddevelopingat the levelof the provinces,coordinatingthe interventionsof technical andfinancialpartnersusing.anapproachbasedon budgetsupport; ii) Building managementcapacity and good govemance of infrastructureprograms and prqects bythe administration; iii) Efficiency in development, rehabilitation and maintenanceworks on infrastructure in general androadsinparticularthrough: a) enhancementof an appropriate public-privatepartnership; 101 b) intensificationof humanresource training inboth the private and publicsectors; c) observanceof standards. iv) Improvingthe productivrtyand the efficiency of operatingthe transport system through greater participationbythe privatesector initsoperation; v) Reducing the adverse and destructive effects of natural disasters by an improvement of the weather forecastandnationalwaming systems; vi) Reducingpollutioninurbancentersand improvingthe sanitationsystems:and, moregenerally, vii) Protectingthe environment. Restructuring and capacrty building of the administration to fulfill its missions of (i) designing and drafting policyand strategies, (ii) coordinating and planning investments,and (iii) controlling and regulating the diverse economic activities Gillbecarriedout andshouldbe completedby 2006. Duringthis period,the Govemment will be graduallycommitted to withdrawingfrom its productiveactivities.The Govemmentwill delegate some of its functions as principal contractor to the executing agencies to be created at the subsectorallevel,while ensuringthatthe policy it definedwill beproperlyexecuted. Consequently, the following agencies in the sub-sectors will be set up and become operational from 2003, followingthe example of the agency in charge of civilaviationwhich isalready operating: i) Road Agencies (AGR), central as well as provincial, will be in charge as delegatedprincipal contractorofthe construction, rehabilitationandperiodicalmaintenanceof roads: ii) a Port, Marine and WaterwaysAgency (APMF), whose articles of incorporationhave already beenvoted; iii) a LandTransportAgency (AT),whosefeasibilitysurveyisinprogress;and lastly 'N) a NationalMeteorologyAgency, whose establishmentisunder study. In addition to the steps taken to establish these agencies, some capacity building actions are scheduledduringthe first years of operation, for instance: -- implementation of a computerized management system of Madagascar's civil aviation support inthe formof donationsof materialand logisticalresourcesmeanstoAGRs; - authority(ACM); implementationof staff trainingplansforthe ACM andAPMF. At the levelof the administration itself, a new organization will be put in place. It will be mainly based on the missions devolved to it: program planning, supervision of the execution of the operations, monitoring and evaluation. The supervision missions will be strengthened by an intemal audit designedto review budget execution and the application of government contracting procedures. Onthe planning and planningplane, actions will be undertakenfrom the year 2003, namely: - the draftingof a NationalTransport Plan(to achievebythe endof 2003): - - thestudyof the RoadTransport Policy; audit comming the facilitating of transportand intemationaltrade; - the draftingof Trip Planswithinthe majortowns of Madagascarbetween2003 and2005; The Road Charter and the Law on the Road Maintenance Funds have been established in order to define the division of responsibilitiesamong the various principal contractors (government, provinces, and communes) for infrastructuremanagementand responsibilitiesthat might be devotved to the private sector. Nevertheless, in the actual implementation of those two laws, actions aimed at clarrjling and raisingawareness will still be necessary in order to specify the areas of intervention and/or competence of each entity concerned. It would also be advisable to make the central, provincial and communal authoritiesmore accountable for supervision and monitoringof the projects 102 to be implemented. In addition, it is indispensable to build the technical and financial capacity of the provincesand the communesand actorsother thanthe administration. 5.2.7.1.1 Roadinfrastructureandtransport The total length of the Malagasy road network is 31,999 km. It can be said that it is rather small in view of the size of the territory and the services provided (0.05km /km2),particularly in view of the fact that a part of the network is passable only during part of the year because of the bad state of the roads and roads are cut off every rainy season. But, the existence of permanent roads is a prerequisitefor the economicand social development of a country. Taking no account of the quality of the roads, the road infrastructure in Madagascar is still insignificantand will still entail considerable financial cost during the development process. In spite of Madagascar`s lag and the efforts to be made interms of roads,things will have to be done steadily, in coordination with the economic activities of the country, in order to achieve balanceddevelopment. 5.2.7.1.2 Roadinfrastructure The development, rehabilitation, periodical maintenance and current upkeep of road infrastructureconstitute are a priorityfor the Government. Thus, - 14,000 km of primary and secondarynationalroadsconnectingthe capitalto the main cities of the provincesor the regionsmustbe rehabilitatedin2008; - from 21303 to 2006, about 2,000 km per year of rural access and service roads in the six provincesof Madagascar, andservingmorethan 75 percentof the population, will haveto be developedor rehabilitated; - a programof newarterialroadbuildingwill be drawn up andcarriedout onthe basis of socio. economicneeds. i) The Road Maintenance Funds (FER) will be strengthened in terms of management,and its financial resources will be revised upwards annually as the length in laof roads to maintain increase along with the number of hrehabilitated, subject to periodic maintenance,or newly developed. Inthe medium term, the RoadMaintenanceFundshouldbecapableof fully funding periodicmaintenanceprograms.The Govemmentwill be responsiblefor bettercommunicating the objectives of the FER to the different beneficiariesin order to optimize its use. It will also take responsibilityfor ensuringstrictobservanceof the targetof the creditsallocated ii) As regards planning, the directorates in charge of roads in the provinces will be expectedto play an important role in the identifying, planning and monitoring the execution of road rehabilitationand maintenanceprograms. Heads of these directorateswill receive appropriate training from 2003 on and will take charge of planning actions to e taken during 2004. The provincialroaddirectorateswill receiveaidincarryingouttheirtasksfromthe"Road Agencies". iii) In terms of execution, a genuine publc+rbate partnershipwill be promotedand developed. Action will be taken to build the capacity of small and medium-sized enterprises in the construction and public woks sector to facilitate their inclusion in local and international tendering.Actionsstartingin2003 will berelatedto: a- the training of human resources working within these SMEs in maintenance works techniques and labor-intensive techniques of ruralroad rehabilitationand upkeep; b- assistance in acquiring public works equipment that will no longer be used by the Provincial Roads Directorates andtheir subdivisions; c- negotiationsto be heldwith commercial banksto obtainvarious guarantees. iv) Staff of nationalconsultingfirms will receivetraining intheirfields. 103 v) Actions will be carried out to attract large enterprises to invest and set up business in Madagascar,consideringthe importanceof the infrastructuresto be developed or rehabilitated within a shortperiodin orderto ensurerapid development.Suchactionswill be translated intoa distributionof works inbatchesamountingto about USD50 millions. 5.2.7.1.3 Roadtransport In orderto improvethe quality of service as well as the levelof safetyof roadtransport, specific activitiesare programmedfor the period2003-2006, including: i) implementationof a vast roadsecurii program covering the whole territory and targeting the publicingeneral,schoolchildrenandcarriers inparticular; ii) support for enhancing the professionalism of carriers through a training program targeting differentcategoriesof operators,suchas roadtransportcompanymanagersandtruckdriers; iii) reductionof the impact of road transport on the environmentthrough the implementationof a regulationandacontrolsystem; iv) development and buildingof related infrastructure, such as multi-modalplatforms, goods and passengersstations,parkingandrestareas; v) improvedtax conditionswith aviewto havingcarriersrenewtheir fleet of vehicles;. vi) promotionof the IntermediaryMeansof Transport (MIT) suchas carts and bicycles inthe rural areasfor easierandmoreeconomicaltransportationfor the needy; vii) revisionandapplicationof the regulatorytexts governingimportedvehicles; viii) improvedtax conditionsfor the acquisitionand maintenanceof intermediarymeansof transport. 5.2.7.1.4 TerritorialdeveloDmentand town Dlanninq Regionaldevelopment plans will be drawn up for 12 regions between 2003 and 2006. Urban development master plans for provincialcapitals and major towns and summary urban development plans for at least 50 percent of the communes starting in 2004, developed urban infrastructure and basicservices, areas with high potential,and at-riskareas, suchas anti-flooddevelopments. In the towns, improved urban migration and the expansion of market infrastructure will be undertakenin the six major cities and secondarytowns. Sanitationsystems will be reviewed in about 30 towns and about thirty districts will be restructured. Along with these actions, the human resource, technical and financial capacity of the communes will be strengthened, through considerable efforts by Government or the provinces, or throughthe promotionof decentralizedcooperation. 5.2.7.1.5 Railtransport From 2003 to 2006 all the rail infrastructure in Madagascar will be rehabilitatedand functional: tracks, bridges and drainage.The feasibility studies of new railway lines and the upgrading of those servingAntananarivo-Mahajanga andthe miningvalley (northandsouth) will be carriedout. Such rehabilitationoperations will not only make it possibleto increasethe transport of various goods, heavy loads, or hydrocarbons but also and above all give access to areas which are not serviced by roads. In this way after the rehabilitationof the TCE (Antananarivo- East Coast, between Moramanga and Brickaville) and FCE (Fianarantsoa - East Coast, between Fianarantsoa and Manakara), over 1.5 million rural people living along the railway route will again have access to 104 transport services for marketing their products (only source of income) and to basic social services (health, education and water supply). Railroad operation will be contracted out. The contractor for the northern network (TCE) has been designated and the line will soon be reopened. In the same way, FCE operation will soon be contracted out. In2006, the TCE and the FCEwill be completelyoperational. As regardthe facilitationof internationaltransport and development of industrialactivities in the big towns serviced by the railways, complementarity with sea and road transport will receive special attention and related developments, such as container terminals at the Toamasina Harbor, in Antananarivo and in Antsirabe will be undertaken. 5.2.7.1.6 Portsand marinetransport Given the importance of marine transport in the economic development and opening up of the coastal regions an effortto develop and rehabilitatemain and secondary ports will be made, basedon economic priorities. The main ports of Toamasina, Antsiranana Mahajanga and Toliara will also be the recipients of major investments over the period 2003-2006. In connection with these actions, the Government will provide incentives for participation by the private sector, mainly the local sector, to strengthen the system of Public-PrivatePartnership. Some of the activities relatingto port use, such as stevedoring will be offered to the private sector. In that connection, the Government will also encourage development of the momentum of the regions in term of regional planning,following the example of the Anosy Region,which took advantageof the QITFER project (Taolagnaro). In the same way, taking into account their respective roles in regional development, the secondary ports of Manakaraand of Morondavawill be rehabilitated as a sectoral priority, The effectiveness of the port system aiso depends on ease of access to the ports as well as the existence of an efficient system for regulating and monitoring the safety of navigation. Lighthouses and buoys will be rehabilitatedduring2003-2005. Efficient handlingequipment is envisaged. Similarly, the wreckage found in near the Antsiranana, Manakara and Taolagnaro harbors (Wellborn since 1994) will be removed. A study on the removal of all wrecks (35 of them have been recorded)with an estimate of the corresponding costswill be carriedout inthe period2003-2006. Under the heading of development of tourism activities,which are potential sources of income and hard currency for the country, the development of about ten leisure ports in Antsiranana, Mahajanga,Toliara and Toamasina provinces is scheduled to start in 2004. The actions to be taken will be accompanied by measuresto ensure the safety and controlmovements of persons. Regarding river transport, the Sofia and Tsiribihina rivers will be developed in 2003 and will be used as pilot projects for the development of other large and small rivers. In view of the results of these pilot experiments, works to develop some ten rivers will be studied between 2004 and 2006 under the heading of Rural Transport Development. These investments have been identified and given priority in addition to the roadaccessprograms. 5.2.7.1.7 Aimortsandair transmrt The institutional reform of the airport system (Government's divestiture of airport management and operation, incentives for competition on intercontinental, regional and national routes) will be continued. Government prioritiesfor airport investments relate to: 105 - improvement of air traffic securrty conditions: night flights, beacons, telecommunication --systems; improvedsecurrty inintemationalairportsbysetting upan entryiexitmonitoringsystem; development, rehabiiiiation and extension of airport infrastructure according to the levels of traffic envisaged, relative to economic needs and disenclavement. Such works will be financedby public andprivateresourceswithin the framework of the outsourcingsystemto be established. 5.2.7.1.8 Meteoroloay In 2004, there are plans to build domestic capacity in meteorology by defining and implementing the new institutional and legal framework. This measure will be accompanied by the improvement of the system of observation, collection, processingand disseminationof meteorological data on the acquisition of new modernequipment, and by contributions from andlor strengthening of the communesfor certain tasks. The effort to rehabilitate national meteorologicalfacilities, with a view to improving the services rendered to the public, international and regional cooperation will continue. Rehabilitation will be carriedout inaccordancewith internationalstandards. In keeping with the sustainable development objective, the areas of intervention and scope of the meteorologicalservices will also be extended to: -- promotingsynergy between nationalsectoralprogramsandthe meteorologicalactivities; improvedmanagement andpreventionof the risk of naturaldisasters incollaborationwiththe - NationalRescueCouncil; sustainablemanagementof naturalresources(biologicaland water resources,etc.). 52.72 ENERGY The Government's energy sector policy is to help the poor directly by providinga sustainable and qualitysupply of energy at affordableprices. The important factors in implementationof the strategies are: -- - restructuringof the sector; participationof the priiatesector inconjunctionwiththe Govemment,; increasedeffectivenessandcompetitivenessofthe energySectorbyamarketthatwill make it possibleto meet demandat any tine usingthe best possiblemeans of productioninterms of security,stability, andprice. For the hydrocarbon sector, the objectives are to equip the country with an efficient supply system for petroleum products. For the electricity sub-sector, efforts will be geared towards (i) providing a supply of electricity to the country under the best conditions of security and pricing; (ii) increasing the rate of urban and rural electrification. As for other sources of energy, the goal is to encouragethe development of alternative energies (solar, wind, hydraulic, biogas, and biomass), and managewood fuel resourcesrationally. Inorder to improvethe population's access to energy and support economic growth, actions will involve: Hvdrocarbonsub-sector - liberalization of activities relating to the importation, refining and marketing as well as the - eliminationof anyformof protectionor subsidyonthe whole chainof petroleumactivity; standardizationof the taxesonpetroleumproducts; 106 - promotionof gas and paraffinoil for cooking and lighting in rural countries as a substituteto firewood. Hectricitv sub-sector - accelerationof the implementation of the electrification program with the support of (i) the Development Agency for RuralElectrification(ADER), (ii)the NationalElectricityFund(FNE) and withthe participationof beneficiarycommunitiesandthe priiatesector; establishment ofthe ElectricityRegulationOffice(ORE); -- -- improvementof the managementof JlRAMA3 to enhance itsperformance; promotionof renewableenergysources namelysolar,wind andhydraulic; development of operations to priiately produce hydraulic electriirty (IPPs formula) as - substitutesfor thermalenergy; development ofthe programfor rationaluseof energy. - Woodeneravsector betteruse, processingandmarketingof wood energy which is still energy source usedbythe poor, in Mder to reduce heaith risks, deforestation, erosion, the greenhouse effect, and the - cost of energy inthe householdbudget: taking actions to control energy properly (extension of the Integrated Pilot Program of Mahajanga(PPIM) andthe NationalWood EconomyProgram(PNEBE) inthe otherfaritany. impact and outcomesexpected are: - specific energy consumption increases from 0.3 TEP/capWyear 39 (2002) to 0.5 -- TEP/capita/year(2006); rateof access toelectricityincreasesfrom 22percentin2002to 26 percentin2006; 150villages electrifiedeveryyear, which representsan investmentof USD15millionperyear; - number of subscribersconnectedperyear: 15,000to 20,000 subscribers; ---- - additionalcapacityof 110MWfor the period; increaseinthe numberof privateinvestingoperatorsinthe sector; legalandregulatoryframeworkattractiveandsecurefor private investment; performingJIRAMA; share of wood energyinenergy supply:downfrom75 percentin2003to 65percent in2006. 59.73 PostalServices,Telecommunications,Communications The general policy of the Government is based on the access of ali regions to the telecommunicationsand postalsystems, and on broadening the range of services to meet the needs of the population. At the postalservices level, the objective is to make of the PostalCheckingAccount (CCP) an instrument sensitizing farmers about playing a greater part in savings and investment, From that perspective, the integration of CCP in the banking system is an essential element of an overall developmentstrategy. As far as telecommunications are concerned, the objective is to provide the 600 communes with telephonehnternet connectivity, and to provide the entire country with high speed connections. The widespread use of telecommunications resourceswill be achievedin partnershipwith the private 38Nationale/ecbk@and wafercompany 39TEP/kap~dyear:metrk ton equivalentper capitaper year sector using advanced technology (VSAT, DOMSAT, NlCT etc), to give the poor segment of the populationaccess to low-cost,fast, andeffective means of communication. Particular effortswill be devoted to the disseminationof ICT which must be used as the driving force in the process of rapid development and in the fight against poverty in enterprises, the administration, education,the community and individuals. Moreover,centers of excellencefor training, research and productionare to becreated. To achieve these objectives, an important place will be resewedfor public-private or national- internationalpartnerships by strengthening the Government's contribution to the promotion of ICTs and notablythrougha tax incentivefor equipment acquisitions and expansion. 5.3 PROGRAMSDESIGNEDTO ACHIEVE THE OBJECTIVES OF STRATEGICFOCUS NO. 3 53.1 EDUCATION The Government's policy is based on making primary education universal, which consists of increasing the rate of access to primary education, reducing the dropout rate and completion of the level. Conscious of the importance of access to education for developing the country and redressing the effects of the 2002 crisis, the Government awarded a special subsidy in the amount of FMG 20 billion as its contribution to registration fees. As a result, the pupils in the primary schools were exemptedfrom the payment of their registration fees for the 2002-2003schoolyear. The gradual establishment of nine years of basic education is one of the strong points of the present reform of the Malagasy educational system. The main aspects of the reformare the creation of a basic education level including primary school and the first cycle of secondary education. Therefore the new structure of this level wili include: basic education I (primary education), basic education II (the first cycle of secondary education). Regardingtechnical and occupationaleducation, the reformwill consistof replacingthe current technical and occupational educationwith technical and occupational training. As for higher education, the reform will make it possible to set up the Regional University Institutes and turn the Training and Research Units into Training, Research, Experimentationand ProductionUnits. The Program to improve education and training, following the new guidelines, is aimed at universal basic education I with a graduation rateof 100percentin 2015. The Programalso aims at improving apprenticeship and the quality of teaching, gradually reinforcing the growth and improvement of basic education H with a view to establishing nine years of basic education. Higher education will be modernized and providetrainingfor the employment market. However, in order to better steer the actions to be taken and to efficiently identify schools, zones or localities to target, it is necessary to have the appropriatetools to provide maximum and coherent coverage of the whole country. Widespread use of the school map, which is a tool available to policy-makersto help them in their decision-making, will, for instance, facilitate good management and better planning of new schoolopenings over several years. Education must also play a major role in developing a sense of community responsibility. The ideamust also be marketedto parentsso that they see the needto invest in education. In addition, it is important to make parents aware that it is essentialto registertheir children at birth in order to obtain a birthcertificateso that they can attendschool. To this end the Government is 108 determined to strengthen management of the sector by decentralizing decisions and responsibilities to the provinces, schooldistricts and schools. The availability of education will be examined, teaching methods adapted, and school organizationreviewedso as to provide programs that address the constraints on and needs of pupils' parents, giving priorityto the vulnerable groups by setting up an equitable systemof aid. Consonant with the efforts which will be made in the fist cycle of basic education and in order to achieve the goal of nine years of basic education, it may be useful to reformulate the program and work in partnership with the private sector to build capacity to receive students as well as the technical training of teachers. In order to execute this program, the Government will allocate sufficient resources to the education system while maintaining,during 2004-2006,the current portionof education expenditure in operating expenditure (on- and off-balancesheet), i.e., at around 25 percent. 5.3.1.1 Equalityof accesstoeducation It is particularly important to reduce social and geographic inequalities of access to the first cycle of basic education. Consequently, priority must be given to the allocation of resources to the regions with the lowest indicators in terms of access to and success in school, as well as to geographic areas where the poorest populations live. The actionsto be taken are: - building and equipping new classrooms in rural areas at the rate of 2,300 classrooms per --year, for primaryschools; useof theschoolmapto identifyareasof intervention; recruiting and training of new secondary and primary school teachers, who will be assigned - ona rationalbasis; study to improvethe system of transferstofamilies: payment of registrationfees, provisionof schoolsupplies,distributionof nutritionalsupplements, establishmentof schoolcanteens. The participationof the private sector is very importantthrough the development of partnerships with private schools in order to encourage them to invest more in the priority areas. Incentives such as increasedsubsidieswill be proposedto this end. 5.3.1.1.1 Reducinathe rewtitionrate inthe first cvcle of basiceducation Iprimarv)andwork to ensurethat all Malaaasv peoDlecompletethis g!& The structural changes brought about by the reform must be accompanied by the following actions: , - recourse to mukkgrade classes in rural areas, particularly in remote localities, building and - equippingof classroomsinthefirst cycleof basiceducation; multiplicationof schoolsthat m e r acompletecycle. As regards teachers, skills will be strengthened, with teacher training in the handling of multi- grade classes being a priority. In that connection, initialteacher training programsand mastery of the Malagasyand French languageswill be intensified. Several other activitiesmust also be undertaken in order to achieve those strategic objectives. They are, inter alia, the development of strategies so as to facilitate access to textbooks and other teaching materials by establishing a schoolpublishingpolicy. And lastly, it was considerednecessary 109 to conduct awarenessactivities inthe communrtyand to enhancethe skills of the localcommunitiesto enablethem to participate in school life. 5.3.1.1.2 Graduallvestablishinaaualitvnine-vear basiceducation The gradual establishment of nine years of basic education requires a gradual increase in the admission capacity of high schools and an improvement of the whole school curriculum in order to connect the different cycles of education. The important role partnershipwith the privatesector plays in achieving this objective is worth noting. 5.3.1.1.3 5 needsat the nationaland reaionallevels It will be necessary to develop strategies to match supply to demand: the analysis of the employment situation and the determination of major trends is also indispensable. Nevertheless, strengthened Information-Education-Training will be used to raise awareness and sensitize partners and the work force. At the levelof the provinces andthe regions, it would be advisable to readjustandlor orient the targetedtraining sectors and programs in line with the socio-economic development of the regions. The setup of a system to monitor and evaluate curricula will complement the activities to be undertakenwith regardtothis strategic objective. 5.3.1.1-4 DeveloDina the DrOdUCtiOnandworkinacaDacitvof the laborforce in 1 1 The traditionaland artisanalbasic productionsectors still play an importantrole indevelopment. It is therefore necessary to strengthen them by establishing a permanent relationship between the establishments and the actors concerned through Technical and Occupational Training, by adopting regionaldevelopmentstrategies. The training and education of young people according to socioeconomic needs directly related to the externalefficiencyof the education system. Infact, the education system should be aimed at a balancedeconomy, labormarket and school system through participation by the communities and economic agents in defining the content of education. It will be necessary to move away from a modelof school organizationaimed at obtaining a certificate to one which should respondto a professional context leadingto integrationinto the labor and employment market. The actions to be taken will be: - establishment of a single system of labor analysis to adjust the supply of technical and occupationaltrainingand highereducationintermsof priorandin-servicetraining; - matchingoccupationalandtechnicaltrainingtothe needsofthe labormarket; - organizationof thetrainingprogramsaroundthe acquisitionof skills; ---setupofthesystemof validationof acquiredskills; reinforcementof the privateoccupationalandtechnicaltrainingsector; raisingstudents' awarenessof occupationalandtechnicaltraining. 53.12 Improvinghighereducation - planningthe expansionof higher educationand researchinthe priorityareas for nationaland regionaldevelopment,andtesting, researchandtraining underrealconditions: 110 - redefining the university map accordingto the economic,social and cultural conlextaswell as - the labor market; developing in-service training, partnership contracts in research, and training in professionalism, including the transfomation of Training and Research Units (UFR) into - Training,Research,Testingand Production Units(UFREP); exploratory research in economic,technological and cultural development to promote self- creationof micro-enterprises: -- - developing and consolidatingNICT; strengtheningrelations withforeigninstitutions; setting up asurvey on slottinggraduates intojobs. 5.3.13 Improvingthequalityof educationandtrainingatall levels The improvement of the quality of instruction and training at all levels will be assured by: - Improving internalefficiencythrough: development of strategies for facilitatingaccess to textbooks and other teaching materials; rationalization of the managementof the teachingand non-teaching stae improvement and reinforcement of the initial and continued teacher trainingprograms; harmonizationof programs for a better transition from one cycle of education to the next; standardization of career coaching by training and recruiting an additional number of teachers/researchers; - Improvingexternalefficiencythrough: developmentof continuedtraining and research contracts in partnership; introduction of the notion of skillsin the education and trainingsystemas well as the introductionof new informationand communicationtechnologies (NICT)in training andapprenticeship; balanced economy,labor market andschoolsystem through rhe actual participation of communitiesand economic agents in definingthe contentof education. - Improvingthe managementof thesystem, inparticularby meansof: . establishmentof a managementsystembasedon good governance; continued deconcentrationand decentralization; managementby results along withthestrengtheningthemonitoringand evaluation system; establishment of rigorouscareer coaching; new focus of therole of the ceniralauthorities:establishmentof costplus incentive fee contractsbetween the central and other deconcentrated authorities; settingup a steering committee for Occupationaland Technical Training, developmentof partnerships with the variousactors in thesystem with increased accountability of local communities; implementation of an information-communications program among the various partners; definitionof clear, transparentcriteriafor theallocationof financialresources; redeploymentof personnel trainedin educationplanning and general administrationin the central and deconcentratedoffices of the MlNESEB to better match profiles to jobs: setting up the National Council for Human Resource Development; setringup the National Council on Higher Education It is necessaryto curtailexpensesthrough strict, highly motivatedmanagement of flows through the schools and universities and through the management of teaching and non-teachingpersonnel resources centered on their presence in the classroom. The point will be to change from a policy of transmittingknowledgeto obtain a diploma to a policy of acquisition of skills neededfor employment and usefulon the labor market. It will also be necessary to give though to producinggraduates whose decrees meetthe requirements of the labor market. Concerning higher education in particular, in order to ensure that all the components of higher education and research are reliable and that the programs, personneland infrastructure are of good quality and compliant with the Institutional Development Program (PDI), the following must be supplied: explicit guidelines/proceduresas well as examples of good practices regarding the use of the resources by defining the roles and responsibilities of each actor involved. It is also important to harmonizethe system of financing higher education so as to improve financial management, develop capacity in information and communication technologies, and maintain and ensure the quality of infrastructure as well as the environment for the studies, trainingand research. In brief, in order to ensure the quality of education at all levels, in addition to the measures already taken into consideration such as the building of classrooms, the training of teachers, the availability of textbooks, etc., the aim is to provide Malagasy youth with knowledge and the economy with human capital. Such a measure will consist in producing basic knowledge and the necessary know how for the economic, social, cultural development of the country, and promoting a knowledge of how to be and how to become. It will also consist in disseminating knowledge to the different segments of the Malagasy population, notably to the young and the have-nots, ensuring better conditionsfor research and training and a betterenvironment for studies. The outcomesexpectedwill be reflectedby: - an increaseinthe number of schoolchildren respectivelyby 2.1 percentper year for the first - cycleof basiceducationandby6.8 percentperyear for the secondcycle; reduction in the percentage of repeaters from 30.2 percent in 2001 to 12percent in 2006 for - the first cycle,andfrom 17.5 percentin2001 to 11percentin2006for the secondcycle: reductioninthe percentageof repeaters insecondaryschoolfrom 19.3 percent in2001 to 11 - percentin2006; recruitment and training of 950 primary school teachers in 2003 as well as the training of 1,700 primaryschoolteachers in2004for the first academic cycle; - recruitmentand training, in 2004, 2005 and 2006 of 1,170 teachers per year for the second - academic cycle: availability on the labor market of a workforce of 13,000 qualified workers per year (needs identifiedat the level of 300 rural and urbancommunes and/or enterprises in2004 and 600 - communes in2005). implementationin RegionalUniversity Units by 2006 of 12 localtraining and research areas basedonthe growthareas definedinthe PRSP; - increaseinthe ratioof students per 100,000inhabitantsfrom 187to 205 by2015; - reversalofthe ratiostudentsto administrativeandtechnicalpersonnelfrom 0,4 to 3 by 2015; 112 - enhancementanddisseminationof 18technologiesby2006. 5.3.1.4 Culturaldiversity The Malagasy population, particularly the youth, have problems of social integration, cultural identity and involvement in the development of the country. Culturally speaking, Malagasyyouth have lost their bearings: some of them are no longer rooted in Malagasy culture, yet they have not become integrated into the Western culture that has invaded their environment. The majority are in danger of delinquency, criminality, drug addiction and STDdAIDS. These different problems seriously jeopardize the full development of the youth and have negative effects on the development of Madagascar. Inview of this rather disastrous situation, the Government is taking up the challenge by using cultural diversity as a key vector for the restoration of a well-governed society, thereby creating a source of nationalpridethat motivatesthe population. The intervention strategy consists of developing sporting activities and promoting culture both inside and outside the country. 5.3.1-4.1 Culture The actions to be taken consist of: i) building seven operational cultural centers; ii) setting up a National Cultural Council; iii) drawing up the Cultural Charter; iv) staging an advocacy campaign to raise awareness of cultural elements in economic activities; v) developing a synergy between actors in the private and public culturalworlds; vi) preservingcultural heritage; vii) using the mass media to disseminate the artistic andculturalwealth; viii) developing culturalindustries; and ix) creating an area for Art and Culture in all the Madagascar's chambers, and in Malagasy embassies and consulates abroad. Impact and outcomes expected are: - the six provinceshave operationalhousesof culture; - NationalCultural Council, artists' statutes, six musk schools, 15 librariesand 15 art galleries operational; oneculturalsite renovatedand 12museumopened; -- --150agentsand40 guidetrainerstrained; decreaseinthe rateof piracyof artisticproductsto 60percent; --increase inthe readingrate of Malagasypeople; increaseindocumentaryheriiageby60percent; creationof Art andCulturecomersinMalagasyEmbassiesandConsulatesabroad. 5.3.1.42 S~orts and leisure The actions to be taken relate to the promotion of mass sports, traditionalsports and especially the development of high-level athletes. In terms of leisure, priorities include the design and implementationof the leisureprojectsaccompaniedby the correspondingactions 532 HEALTH The objective of the Five-Year Plan 2002-2006 of the Ministry of Health is to improve the access of Malagasy people, especially the poor, to healthservices and to protectthem from diseases by: (i)immunizing all children; (ii) improvingthe access of women to prenatal care and to assisted 113 childbirth; (iii) combating health hazards and public health problems; (iv) securing access to medical care and to medicine; (v) andseeking performanceand financial viability of the healthsystem. Effortshave been made in implementing the reform envisaged in the five-year plan. However, their impact on the health of the population remains limited'. The program of action in the health sector will be focused during 2003-2005 mainly on the following: -- promotionof motherandchildhealth; intensfcationof the fight against malnutriion; -- reinforcementof the fight against transmissiblediseases; reinforcementof the fght against nontransmissiblediseases. 5.32.1 Promotionofmotherandchild health The actionswill cover: i) strengtheningvaccination activities (expanded program of immunization-EPI), for which the procurementand dispatchof vaccines,equipmentandconsumableitemsto the recipientBasic Healthfacilities(CSB)will be lefttothe care of the Government withthe support of international partners.Those responsiblefor the districtswill be equippedwith rollingstock (motorcycles) so that they can supervise the activities. Immunization actions are also supported by intensive awareness campaignsthroughthe massmedia. An evaluationof the vaccine managementand the refrigeration chain will be performed in 2003, and so will operational research on new vaccinesincollaborationwith the Pasteur Institute; ii) reinforcementof emergencyobstetrics care by the standardizationof technical platforms, the training of tradiional midwives in areas that are difficult to access, the actual collaboration betweentraditionalmidwivesand qualifiedheatth personnel, making expectantmothersaware that they must havefour prenataldoctors'visits andgive birth in heatthfacilities with the helpof skilled personnel, raising the awareness of communities, including teenagers, about STDdAIDS, family planning and Teenager Reproductive Heaith in order to reduce maternal mortality; iii) applicationof the strategyfor Integratedcoverageof the Children'sdiseases (PCIME)with its threecmponents-clinical, institutional,co"unrty--so asto reducethe infantmwtalftyrate; iv) applicationof ROLLBACK Malariareducethe incidenceof the disease; V) establishment of "Health Schools" in education establishments and health facilities. Welcome centersfor childrenandyoung peoplewill be openedinthe six provincialcapitals,school health facilities in main cities of health districts. In the communes and fokontany, school health activities are integrated with those of the health facilities. These activities call for some constructionand renovationof healthfacilities andtheir outfiiingwith equipment andmaterials, and especially an institutional framework to handle steering, coordination, and advocacy activities; andfinally vi) the fght against sexual and domestic violence will be intensifiedso as to lower the number of victims ofviolenceto 50 percent inthe targetedareas. impactand expected outcomesare: - coverage rate of routine vaccinationactivities up from 80 percent in 2002 to 100 percent in 2005; 114 -- maternalmortaltyrate downfrom488 in2002to285in2005 per100,000livebirths; infant mortality rate down from 96 in 2002 to 72 in 2005 per 1000live births and infant-child mortalityrate downfrom 156in2002 to 111in2005for 1000livebirths; contraceptivecoverageupfrom 12percentin2002to 25 percentin2005; ---- -- 462 community agentstrainedoverthe perii2003 2005; - 5070 healthagentstrainedinreproductivehealthoverthe period2003-2005; 2000 healthfacilitiesequippedOverthe period2003-2005; 58 healthfacilities refurbishedoverthe period2003-2005; 50 percentof schools transformedintoheatthschoolsover the period2003-2005; - 2500 community PCIMEsitesset up overthe period2003-2005. 5.322 Combatingmalnutrition To improve the coverage of malnourished mothers and children, the following actions are envisaged: i) each District Hospital Center that has not been equipped so far will be provided with an IntensiveNutritionalEducationand Recovery Center (CRENI); ii) the existingCRENlswill be revitalized; iii) basic health facilities located in high risk areas for malnutriitionwill be provided with Day NutritionalEducationand RecoveryCenter, centerswhich were notfunctionalwillbe revived; iv) Out-patientNutritionalEducationand RecoveryCenterswillbeset up inthe communes; v) the various healthfacilities will be providedwith medicine,while sensitizationcampaignswill be organizedtofight againstmicro-nutrientdeficiency; vi) BreastFeedingOnly and BebeKangouroumoduleswill beset up; vii) managersof baby-friendlyhospitalsandbaby-friendlyworkplaceswill betrained; viil) Women's NutritionalEducationTeams (EFEN) will be revitalized; ix) the National Food and Nutrition Policy will be updatedwith a view to drawing up a National NutritionPolicy; x) the membersof the IntersectoralNutftionAction Group (GAIN) will receive periodicalrefresher courses; xi) afoodsecuritystock (exampleBP5)will beestablishedto copewith possibledisasters;. xi) adata usesystem will beset up at alllevelsthecommunitystructure. Impact and expected outcomes are: - the percentageof malnourishedchildren aged 0 to 3 reducedfrom 48 percent in2000 to 36 percent in2005; - hospitalmortality due to severe malnutrition down from 26 percent in 2002 to 15 percent in 2005; the 111districtcenters equippedwith CRENIfunctional in2005; --- 100percentof CRENlswill neverrunout of stock in2005; -- 90percentof childrenaged6 monthsto59 monthswillhavereceivedvitaminA by2005; 75 DistrictHealthServices(SSDs)equippedwith ateam of trainersin2005; 96 baby-friendlyhospitalsfunctioningin2005. 115 5.32.3 Strengtheningthefightagainsttransmissiblediseases,namelyHNinfection Consistent with the strategic focus to reduce the socioeconomic burden of the main transmissible diseases, including emerging and reemerging diseases, the program provides for the following actions: 5.3.2.3.1 LeDrosvand lvmphaticfilariasis i) reinforcingpreventionactionsat the community levelthroughmasstreatment,which itself will besupportedby large-scalesocialawareness andmobilizationcampaigns; ii) traininghealthworkerstoimprovecase handlingandregularsupervisionof activities; iii) securingthe regularsupplyof healthunitswith medicineandmanagement support; iv) establishing a map showing the classification of districts according to the level of endemic lymphaticfilariasis. 5.3.2.3.2 Concerning controlof the spread of HIV/AIDS,the willingness of the nationalauthorities to step up HIV/AIDS controlin Madagascar concretely reflected in an operationalNational Strategic Plan. To that end, the chosen option is for local intervention, underpinned by a participative and multi-sectoral approach centered on the commune, the basic administrative unit of the Malagasy institutional hierarchy. This, indeed, appears to be the as the most logical and the most prudent approach to development and therefore to HIV/AIDScontrol in Madagascar. Inthis way, the approach controllingthe spread of HIWAIDS must combine the two dimensions, namelythe sectoral one (multisectoral and multidisciplinary) andthe spatialone (extensive coverage). From this perspective, the best approach in low-incidence countries like Madagascar would be to differentiate types of intervention according to the risk to the population in a given geographic area (areas with a high risk of HIV/AIDSspread: areas with a high concentration of young and mobile men separatedfrom their usual sexual partners, areas through which professional groups pass, economic development program areas), and the risk to a particular population group (HIV/AIDS high-risk groups, such as sex workers andsex workers' clients). In the various areas identified as high-risk for the spread of HIV/AIDS, actions will have to be carried out aimed at: (i) strengthening the coverage of STDs (syndrome treatment); (ii) social marketing of condoms (accessibility at less than half an hour's walk); (iii) preventive education, messages on changing behaviors involving all sectors engaged in the fight; (iv) safe blood transfusions; (v) prevention of infection in a health care environment; (vi) counseling and voluntary testing; (vii) handling of opportunistic diseases, including the supply of antiretroviral drugs; (viii)support for infectedpersons and their affectedfamiliedchildren(psychosocial care). For the rest of the country, interventions aimed at creating awareness and limitingthe risks of dehumanization and discriminationagainst infected people will be carried out. They will focus on: (i)Information-EducationGommunication/Advocacy, withthe mainobjective of publicizingthe modes of HIV transmissionand modes of preventionas well as arguments explaining the dangers of the HIV epidemic to the individual, the family, the community and the nation; (ii) preventionof infections in hospitals; and (iii) combating STDs with free treatment of syphilis in pregnant women who visit the doctor andtheir partners. Particular attention will be paid to evaluating of the coordinationprocess which aims at making multi-sectoral strategies operational: (i) coordination of development partners; (ii) coordination between the different public sectors (health, education, labor, ...); and (iii) coordinationbetween the 116 Government and civil society. The same can be said of the degree of involvement of the private sector and civil society in localresponses. The localization of culturalfactors of specific risk as well as specific places of risk, such as prisons,will be envisaged. 117 -ORGANIZATIONOF BOX 6: THE FIGHTAGAINST HIV/AIDS IN MADAGASCAR Madagascar has some fifteen years of experience in fighting against HIV/AIDS. To consolidate these achievements and to carry out its international commitmentsby ratifying the declaration of the United Nations General Assembly Special Session (UNGASS),two important measures have been taken, namely: - adoption of decree 2000-1156 of October 39, 2002 on the status and organization of the fight against HIV/AIDSin Madagascar; - drafting of a multi-sectoral strategic plan to combat HIV/AIDS, which is the reference documentfor all interventionsinthe context of this fight. These measures are informedby principles that are subject intemationalconsensus, namely, the commitment of the highest authorities to the fight against HIWAIDS and the multi-sectoraland multi-disciplinary aspectsof the fight. The first principle is met by attaching the NationalCommittee to Combat HIV/AIDS(CLNS)to the Officeof the President of the Republic,with the technicalsupport of an ExecutiveSecretariat. This Committee is in charge of, among other functions, defining the political and strategic guidelines for the actions against HWAIDS. The Committee will be represented in the six provinces and in all the communesof Madagascar. As for the Executive Secretariat, it will have localbranches inthe provincialcapitals, which are called Provincial CoordinationOffices As for the second principle, its first component, the multisectoralone, is guaranteed by this incorporation into the Office of President of the Republic, which is the only institutionauthorizedto mobilize all the existing sectors-public, private, community or religious, for instance. The multidisciplinary aspect is represented in the composition of the National Committee to Combat HIV/AIDS, on which allthe country's stakeholdersare represented. The Ministry of Health, which initially controls the operational decentralized units for carrying out technical activities, will work in collaboration with other sectors. To this end, a General Directorateof to Combat HIV/AIDS has been set up in the Ministry. This structureprovidestechnical leadership in monitoringtreatment and prevention. The Executive Secretary of the National Committee to Combat HIV/AIDS chairs the multisectoral technical committee against HIV/AIDS, a structure that is in charge of the technical coordinationof anti-HIV/AIDS interventions, by the Ministry departments and the operationalpartner entities inthe field. The financial and technical partners come together in a forum to ensure synergies between their actions andthe national priorities as defined inthe NationalStrategicPlanto Combat HIVIAIDS They meet periodically with their Malagasy counterparts and supply input for database at the ExecutiveSecretariat the CNLS. 118 552.4 Endemicdiseases(malaria,tuberculosis,bilharziasis(bloodflukes)andcysticercosis (W=wor" Effortsaremadeto: i) build stocks of medicine (anti-malaria,anti-tuberculosis, anti-bilharziasis,anti-cysticercosis) in healthfacilities; ii) trainhealthworkers; iii) set upasystem of epidemiologicalsurveillance; w quickdetectionto controlepidemics; v) operationalstudiesandresearch(surveys,impactandCOstassessments). 5.3.2.4.1 Malaria i) ensurethe sustainabilityof the householdfumigation campaign,inthe areaswhere malariahas notbeenstabilizedinthe prwinceslfaritanyof FianarantsoaandAntananarivo; ii) popularizewidespreaduseof mosquitonetsimpregnatedwith insecticide; iii) advocacy work with partners involvedin the fight against malaria and support for community activities. 5.3.2.4.2 Bilharziasisandcvsticercosis i) intensifythe fight against the intermediaryhostof thedisease; ii) strengthenthe campaignof sensitiiationand communicationinhyperendemicareas; iii) proceedwith masschemicaltreatmentsinhyperendemicareas. 5.3.2.4.3 Emerainaand reemerainadiseases(olaaue, cholera,dvsenterv, influenza...) i) intensifyvector preventionoperations; ii) supplyinsecticides; iii) strengthensensitizationandcommunicationactiviies; w furthertrainingof heatlhworkers; VI guaranteefreeaccessof the populationto medicineand insecticides; vi) set up asystemof epidemiologicalsurveillanceat hotpointsand inlargeurbancenters; vii) performpefiodicalassessmentsandoperationalresearch. Finally a "country coordination authority" has beenestablished(CCM)to managethe world fund for AIDS, tuberculosis and malariacontrol. The reduction in outbreaks of those endemiclepidemicdiseases will have a positive impact on household incomes. Impactandexpectedoutcomes are: -- 1.5 millionsinhabitantsto beprotectedagainstmalariaeveryyear ; 550,000insecticide-impregnatedmosquitonetsonthe marketeveryyear, 119 - the proponion of children among new cases of leprosy reduced to 0 percent from -- 14.15percentin2002; HIWAIDSprevalenceratestabilizedat lessthan 1percent; STD prevalence rate among pregnant m e n decreasing from 11 percent in 2002 to --- 5 percent in2005; coverage rateof endemicdisease preventionactionsup25 percentto 80 percent; percentageof WelCstockedtreatmentcentersup50 percent in2002 to 100percent in2005; 850CSBswithfunctionalmaterialrelatingto the fight against transmissiblediseases, 5.328 Strengtheningthefightagainstnontransmissiblediseases Concerning the fight against nontransmissible diseases, coordination units of the main nontransmissible diseases have been set up within the Directorate of the Medical Services and Support for Decentralization and Research on Health. The actions envisaged under the strategy consist of: i) improvingthe oraland dental heatthof the populationthroughfluoridation,mainlyof the school populationby the restoring and refurbishingthe existing dental offices, enhancing the skills of dentists and intensifyingthe Information-Education-Communicationcampaigns for behavioral change; ii) reinforcing the detection and the treatment of cancer by establishing a network of centers, trainingandspecializationof doctors; iii) developing treatment for diabetes and cardiovascular diseases by setting up a program to combat them; iv) providingsocialsecuriityfor elderlypeoplethroughfreemedicalcareandtreatment; v) strengthening the fight against disabling conditions and diseases by the community handling physical, sensory and psychomotor handicaps, diagnosis and treatment of congenital deficiencies and of early damage to the brain, and by improving access to medical care and treatment; vi) developingthe preventionandfight againstblindnessby conductingprevalencesurveysandby buildingandorby rehabilitatingophthalmologyunits; vii) reinforcing the prevention and fght against drug addiction and mental diseases by training mental health professionals and conducting research on the biological and psychosocial aspectsof mentalheatth. Impactand expected outcomes are: -- 17,700cataractcaseswill undergooperationsoverthe period20032005; - 12CHD2will beequippedwith ophthalmologycenters; 1347communes will benefitfrom havingapreventiveoralanddental program; - 444dentist'sofficesareto be broughtupto operatingandqualitystandards; --- functionalof cancer registersinthesix farifanyatthe CSBs; NationalPolicyto Combat CardiovascularDiseasesprepared; 70 percentof target populationsknowledgeableaboutthe damagingeffects of drug addiction in2005as opposedto 20percentin2002. 5.32.6 Organizationof the healthsector For optimal implementation of all the plans, health sector financing will be normalized and decision-makingdecentralized in the healthdistricts.The planningof the provisionaloperatingbudget will be standardizedand finalizedduring an annual reviewfor betterdistributionof budget allocations. Such planning tools as the national health fund will be created. Financial management, supplies managementand public expendituretracking of will be computerized. 120 To improve the efficiency and the performance of the District Health Services (SSD) a District Development Plan (PDD) 2004-2005 will be drafted. Moreover, an institutional framework for the provincial level will be defined. To improve access by the population to health facilities, new construction and renovations will be undertaken. To improvethe coverage of enclaves Mobile Health Teams will be set up. The availability and accessibility of consumable and essential drugs will be guaranteed at the levelof basic healthcenter (CSB). The minimum resourcepackage will be updated to make the CSBs functional. Moreover, the enclaved CSBs will be equipped with communication material (BLU). Regarding cost-sharing, the suspension of the PFU has been a test period. It needs to be reinstated but with a human face, reducing the number of people excluded to the minimum. A study has been launchedin order to devise a newversion of the PFU. Inmanyplaces, a numberof community structures have beencreated in an ad hoc manner and have proved to be efficient and functional. They will be regarded as an integral part of the health system and will therefore be institutionalized. An intervention coordinationcommittee on community healthwill be set up inthe district. 5.33 DRINKINGWATERANDSANITATION 5.3.3.1 Drinkingwater The national policy on management, control and conservation of water resources, the national policy on sanitation and the strategy implemented are based on the principles defined in the Water Code. The Government has already taken some steps in that direction by drawing up a legal framework targeting organizational reformfor more effective participationof the private sector, NGOs and above all, beneficiaries, establishment of the National Water and Sanitation Authority, and preparation of the regulatory instrumentsof the Water Code. As for the water sector, the objectives set by the Govemment are to cover 80 percent of rural areas and 100percent of urban areas by 2015. The overall objective is to augment the proportionof the population having access to efficient and sustainable services as regards drinking water and sanitation.Concemingdrinking water, in the short term, the goal is to raise the service rate4'to 48 percent at the national level, Le., 37 percent in rural areas and 92 percent in urban areas, and to increase the rate of access to waste disposal infrastructure to 57 percent in 2003, 58 percent in 2005, and 60 percent in2005 in rural areas and to 93 percent in2003,95 percent in2004, and 97 percent in 2005 in urbanareas. The water and sanitationsector contributes to poverty reductionthrough: - Control of water for the AEP, agricuiture, hydrBelectricity, industryand all the other uses of water withaviewto economic development; - - sustainabilrtyandconservationof water resourcesto ensurethefuture of Madagascar; contributionto desertificationcontrol, inconditionsof goodhealthandeconomicproductivity; - erosioncontrol. 41Proportionof the populationhaving accesstod rinkingwater. 121 To this end, it is necessary to ensure the functionality and periodic upgrading of the existing infrastructure, particularly in urban areas, which are to be efficient and adaptedto the local reality and to increasenew infrastructurewith the involvementof ongoing or planned,such as: --the DrinkingWater andHygienePilot ProjectinRuralAreas (PAEPAR); secondcycle2001-2003of the Sanitation, DrinkingWater, EnvironmentPrimaryCare Project (AEPSPE); ---- - secondphaseof the undergroundwaters developmentprojectinthe Menaberegion; activiies of the AES inthe south; water supplyprojectinMahajanga; projectsrelatingtothe supplyof drinkingwater to NosyBe HellVille and Mandriisara; reinforcementworks relatingto the drinkingwater supply distribution network in Antananarivo - andAntsirabe; drinking water supply (AEP) mini-projects and wells implemented by ANAE in rural areas within the framework of environmentalprograms. In urbanarea, the objective of the Governmentin the mediumterm is also to provide access to drinking water and sanitation (AEPA).The service is to be affordable, reliable and viable. For an affordable service, actions focus on increased community participationinthe preparation of projects,review of technical criteria for the projects, encouraging initiatives by small entrepreneurs operating in the poordistricts, and introduction of a system of rates. For a reliable service, actions involve refurbishing equipment that has not been maintained in districts where the demand for connections and fountains is not satisfied; particular attention will be paidto the development of low-costsanitationsystems indistrictswhere cholera is endemic. For viable service in the long term, functions of the principal contractor and operator must be specified. There are also plans to pass on to users the responsibility for paying for the water consumed at public water fountains, and to establish a rate to meet financial obligations, promote direct access to the network, and discourage excessive consumption in centers where production costs are high. These actions will be complemented by institutional provisions that envisage Information- Education-Communicationactions and community mobilization actions for a better management of water supply facilities. 5.332 Sanitation The process of establishing a national policy on sanitationwas started in 2002. A day after the Johannesburg Summit, the WASH initiative was officially launched. The objective of this vision is to sensitize the populationto makea positivechange intheir behavior as regards hygiene. The actions will focus on implementing the sanitation and hygiene education program. Measures for waste water monitoring and treatment will be taken to give priority to actions to create access to drinking water and sanitation in the vulnerable areas. Such actions will be carried out in close collaborationwith the communities, the NGOs andthe privatesector. Impactand expected outcomes over the period 2003-2005are as follows: Conceming drinking water supply infrastructure: -- 900wells drilledandequippedwith handpumps: 161aqueducts; -- 714 paidwater fountains; 17 upgradedcentersmanagedbyJIRAMA; 122 - 1812managementcommitteesset up in2003-2005. Concerningsanitationinfrastructure: - 6,000 MadagascarEcologicalMovement (MEM)and NGOlatrinesin2003-2005, 123 53.4 SOCIALANDCULTURALACTIONS 5.3.4.1 Reductionof socialexclusion;social protection The great majority of the Malagasy population (nearly 95%) have no social protectionsystem. Consequently they are exposedto all mannerof risks (social, economic andlor natural). The government has includedthe reductionof social exclusion among its objectives in order to improve participationof the population in the attainment of its rapid and sustainable development objectives. The social protection programs therefore include three types of actions: mitigation actions, curative actionsand preventiveactions. 53.42 Mitigationactions These aim at decreasingthe negative effects ofthe various shocks onthe populations, especially the underprivilegedones, andthereby avoiding a socialimplosion.They consistof emergency measures:i) the extension of safety nets to the underprivilegedand vulnerable groups in ruralas well as urbanareas (thejobless, handicappedpeople, the aged, the homeless, small farmers, etc.) includingthe SEECALINEprogram; ii) assistance to underprivilegedfamiliesandCISCOs; and iii) the programs against natural risksusingthe Labor Intensive system (HIMO) and the VCT andlor Cash for Work approaches. 5.3.4.2.1 SEECALlNElSecuritv net Droaram Thisprogram,financedfrom HlFCresources,will havetwocomponents: - The CommunityWorks component. It mobilizesthe leastprivilegedstrata of the population in urban areas, to engage in activities designed to create, rehabilitateand maintain basic infrastructuresin poorneighborhoods;it aims at improvingthe incomesof the poorest householdsand improvingtheir livingenvironment. - The SocialCenters Support component.The long-termobjective of this componentisto supportthe educational and productive activities of the NGOs and social centers that care for needy children, youthandadults. 5.3.4.2.2 HIM0 Proarams These programsare mainly focusedon temporary job creation inthe implementation and executionof public infrastructures inthe urban environment in general, the planningand 124 implementation of micro-projects and the implementationof community infrastructures.The principle targets are populationswhose children suffer from malnutrition, pregnant woman whose husbands belongto prioritygroups, widows, the jobless, the newly poor andthe unemployed. 5.3.4.2.3 Proaramsaaainstnaturaldisasters These programs are supported by a policy of mitigation of the consequences of natural disasters, through the implementationof a NationalStrategy for the Management of Natural Risksand Disasters, including vulnerability studies. The National Relief Council (CNS) was established along with the Limited InterventionCommittee in the Event of Cataclysm (CRIC) and specializedbodies like the National Anti-locust Committee (CAN), the National Water and Hygiene Committee (CNEA) and the Anti-Cholera Coordinationand Control Group (GCALC). The impactsand results expectedare: temporaryjob creation, reductionof malnutrition, a better coverage of the indigent and the victims of natural risks and disasters and the establishment of communal immediate relief funds. The synergy between the various participants (safety net programs, Ministry of Population, National Relief Council, Municipalities NGOs and Civil Society) and a greater integration of the programs aimed at the reduction of social exclusion, are necessary for the gathering of reliable information, managementand monitoring tools, and improvedimpacts on the beneficiarypopulations. The mitigationactions are no doubt necessary but they are not sufficient. A bridgeis necessary, consistingof curative actions. 53.43 Curativeactions The aim of these actions is to improvethe livingconditions of the underprivilegedand vulnerable groups by providingthem with the minimumfor subsistence,suchas lodging, a stable incomeandaccess to basic socialservices, notablyby: Relocatingthe homelessofthe majorcitiesof Madagascar: Enhancingtheviabilityof dwellingsof vulnerablehouseholds: Creation of a soci~economicsupport system such the development of agricultural short-cycle activities as well as accessory activities; supporting minor occupations contributing to social insertion;establishmentof a supportingmechanismfor the AGRs; Establishmentof municipaljob awardingsystems (minoroccupations); Supportfor theorganizationof assmiations in bothruralandurbanareas: Restoringhandicappedpeople'sdignityona cmmunity basis: Creationof a nationalsolidaritysystem(funds,"greencardsfor the aged," etc.); 125 Supportfor mechanismsgearedto facingsocialshocks (mutualaid, donations, loans). To implement social security actions requires supervision that is adequate, efficient and ongoing, which in turn necessitates enhanced capacity-building by both the government and Madagascar's partners (civil society, including NGOs, communities, etc.) as well as analytical and monitoringtools. The implementationof capacity-building iscarried out, especially through: Strengtheningofthe socialdevelopment fund; Standardizationofthe NGOsector; Creationof community resourceandinitiativecenters; Establishmentof acommunebasedsystem for targetingunderprivilegedgroups; CreationaCenterfor analysisandforecastingof development inMadagascar. Public information campaigns have been initiated to induce civil society to take part in social security projects, particularly the private sector, in accordance with the principles chosen by the government for implementingthe national recovery program. The results and impacts expectedare: --- At least 400 homelessfamiliesrelocatedeach year; Rehabilitated dwellings for least 3,000 urban householdseachyear; At least 3,000 urbanhouseholdswith a stable source of income. In addition to the actions mentioned above, a certain number of programs have also been initiated. Their implementation, however, requires greater integration with a view to achieving the commonobjectives of social protectionand reductionof socialexclusion. 53.4.4 Microfinancing The microfinancingpolicytargets households excludedfrom ordinary bankingsystems, providingthem with Mutualist Microfinancing (IFM) and FinancialNon-Mutualist Microfinancing Institutions (INMF). The targeting system contemplated, however, needs a revisioninorder to improvethe impact on poverty reduction. 53.45 The CommunityDevelopmentProject(PDC) The PDC, runby the developmentinterventionfund (FID), anonprofit organization, operatesonthe basisof aparticipativeapproachby the community and the communes, which select, develop, manageand maintaintheir infrastructure.Ithas four components: The "CommunityProjecf'component 126 The "DirectFinancingof Communes"component The "Strengthening of capacitiesthroughTraining"component The "SocialProtection"component launchedin2002 as apilotproject. At its completion (inaround2005-2006) the project will have financed investments and activities in Madagascar's 1,385 communes (not including the 6 provincial capitals and Antsirabe); 300 communes will have obtained direct financing. These communes will have benefited, directly or indirectly, from the Training and Information-Education-CommunicationPrograms. A transition period is provided for in the course of the first year of the implementation of the Project (2001) for the Community Projects (PCs); indeed, in the course of that period, the PCs will be initiatedon the basis of the beneficiaries' requests. Subsequently, the implementation of the project will proceed from the training performed in a commune on the one hand, andfrom the existence of a Communal Development Plan (PCD). Finally, a commune may lay claim to bothCommunity Projects and directfinancing of its priorities. In any event, the selection criteria of the communes themselves are applied. 5.3.4.6 The Nutritionprogram(SEECALINE) The purpose of this program is to improvethe nutritionalcondition of childrenunder three years of age: primary school children, and expectant and nursing mothers living in the project's target areas. It also aims at ensuring durability of the nutritional results by improving quantitatively and qualitatively the nutritionof children inevery home. The specific objectives of developmentout to 2003 are: -- To reduceby 30%the rate of childrenunderthree years of age who havea weight deficiency; To reduceby 30% the rateof childrenunderthree and nursingmothers with vitamin A deficiencies,and by25% the rate of primary school pupilssuffering from anemia due to iron deficiency. Theseobjectiveswillbeattainedby implementingthefollowing actions: Communitv " W o n Prosram: i) supervision of the growth of children under three; ii) food supplements for malnutrition-affectedchildren under three and pregnant women; iii) Vitamin A supplementsfor children under three and nursing mothers; iv) parasite control in children under three and expectant mothers; v) Information, Education, and Communication (IEC) and community mobilization; vi) community activity promotionaimed at improvingnutrition,hygiene and sanitationin the villages; and vii) training community nutrition agents and coordinators; training and capacity- building for NGOs. School nurrifion Prooram:i) irordfolate supplementsto primary school children; ii) parasite control for children going to school or not, aged from three to fourteen; iii) Information-Education- 127 Communication and promotion of nutritionand hygiene at school; iv) monitoringof salt iodation: v) promotion of school activities to improve nutrition and hygiene in the school environment: vi) and training of schoolteachers in nutritionand hygiene Inter-sectoral activities: i) in the health sector, contribution to Integrated Coverage of Children's Diseases (PCIME);and ii) inthe agricultural sector, support to designing and disseminating technical guidance aimed at improving diversification of food and agriculturalcrops as well as their preservation. Information-Education-Communication:training and management of the project; two new programssupplementthose describedabove. lntewention Pfogfam Against Cycrones and Drought (PES): this is the equivalent of the Community Nutrition Program in the regions which were not targeted in the initial project but which should have beentargeted at the beginning of 2000, on account of the effectsof drought inthe South and the three cyclones Gloria, Hudahand Elineinthe rest of the country. 53.4.7 Preventionmeasures These actions are given concrete expression in programs whose aim is to reduce the vulnerability of the risk populations:they consist in: - Socialand educationalsupervision of marginalized,vulnerable and underprivileged groups (literacy education and informaleducation in all itsformsand at all levels) andvocational - training: Creation of an institutionaland legalenvironmentthat will guarantee the rightsof the groups - mentionedabove; Institutionalstrengthening of the department in charge of implementing socialprotection strategies. 5.3.4.7.1 LiteracvDrOaramand adult education(informal) The overall objective is to extend and improveaccess to education while at the same time improvingthe context andconditions for successinthe learning processes for illiterateyouth and adults, interalia, in Madagascar; use of the new IntensiveFunctional Laeracy Education (AFI) approachand with particularattention given to the ruralareas andzonesof great povertyinthe country. The impactsand resultsexpected are: 128 increaseinthe numberof literatepeople by500,000 each year, including40%women; Trainingor retrainingof 14,000literacyeducators and 120literacysupervisors percampaignandper year, integratingthemes relatedto education,family life, (parenteducation,familyplanning,etc.); Implementationof policiesandprograms inthefieldsof literacyeducation,adulteducation,andfamily andparent education. 5.3.4.7.2 Vocationaltraininq The impacts and resultsexpected are: Accesstoemploymentfor handicappedpeople; Traininginsimplifiedmanagement(AGR)and inorganizationof associationsfor the aged: Supportto civilsociety trainingcenters ((includingthose run by NGOs); Establishment of a national institute for social workers, to be in charge of training specialized workers,among other objectives. 5.3.4.7.3 Aaed Dersons A national policy on the condition of the aged is contemplated; the desired outcome is the improvementof their quality of life. The results expectedare: i) Creationof meetingand leisurecentersfor the aged: ii) Supportfor the restorationofsocialcentersfor the aged; iii) Accessfor theagedto basicsocialservices. 5.3.4.7.4 Promotionof intearateddeVel0P"It of vouna children (DIJE) The impactsand resultsexpected are: i) Greaterawarenessastothe importanceof DIJE; ii) Strengtheningof legal instruments,and a clearer definition of the groundsfor intervention on behalf of the socialprotectionof the child (nationalpolicy for the protectionof the child, actin plan on sexual violence, retroactive national program for registering births, access for handicappedchildrento specializededucationservices,etc.); iii) Improvedassumptionof responsibilityfor preschool-agechildren (laws on early childhood and preschooleducation,trainingof educators). 5.3.4.7.5 Promotionof thefamilv The impacts and results expected are: 129 i) Puttinginplaceof a mechanism for caringfor orphans at community level; ii) Strengtheningof the lawsandproceduresrelatedto internationaladoption; iii) Reformofthe standardizationframeworkof the Malagasyfamily codificationsystem; iv) Creationof amechanismfor supportingincome-generatingactivities. 5.3.4.7.6 Intearationof the PoPulation/c?enderdimensions The impacts and results expected are: i) Implementationof the actionplanconceminggender and extensionto the nationalas well and regionalplanes; ii) Broaderparticipationof the populationindevelopment; iii) Strengtheningtechnicalcapactyfor integration; iv) Updating of the National Population Policy for Economic and Social Development (PNPDES)and implementationof a realisticNationalPolicy. 5.3.4.7.7 Dissemination of Familvplanninq The impactaimed at is an increase inthe rate of contraceptive use; inthis connection, the results expected are: i) Total coverage of the areas where knowledgeabout contraceptive methods is insufficient throughenergeticsocialmobilizationand retrainingor trainingof extensionworkers; ii) Strengtheningof the family planninginformationandmanagementsystem. The implementationof the strategy for poverty reduction impliesthe mobilizationand effective use of localand/or extemal resources, already available and/or to befound. The greater part of the government budget, in both operations and investment, isto be devotedtothe fight against poverty. To reducethe rate of poverty by half in ten years, (poverty rate = 34.2% in 2013versus 71.6% in 2002 and 68.5% in 2003), the macro-economic framework shows that the resources in public investment needed will be MGF 16,042 billion (that is approximately US$2.5 billion) over the period 2003-2006; additional resources needed amount to US1 billion over the period 2004-2006. These amountscorrespondto the estimatedpriority financing. Madagascar will see to it that these resources are mobilizedand the corresponding programs implementedfully. The totality of the resources from the HlPC initiative is also earmarked for the financing of the programs that support the strategy. These internal resources are supplemented by external financing through the various development and poverty control projects as well as the direct support from the govemment budget. The possible shorlfall (gap) will be negotiated with Madagascar's technical and financial partners. The Table 18, below, gives an estimate of the cost of implementingthe listed programs for the next three years. The sectoralbreakdown based onthe budget nomenclatureof the public investment program is provided inTable 10of Annex 111. 131 Table 18. Madagascar:Cost of the strategyand funding needs (in billions of MGF) STRATREGIC PROGRAM FOCUS 2003 2004 2005 2006 TOTAL Resfore the rule of 1.1 Governance and fight against 184 272 310 350 1,116 law and a we// corruption governedsociety 1.2 Governance and respect for pm pm Pm Pm Pm democracy 1.3 Governanceand ruleof law 148 226 247 269 880 1.4 Localgovernance 74 78 128 128 408 2.1 Macroeconomic stability and Pm pm pm pm Pm growth Foster and promote 2.2 Developmentof strongsectors 8 72 61 40 180 economic growth on 2.3 Ruraldevelopment 336 523 597 675 2,132 a very broad social basis 2.4 Development and densification of 1,057 1,704 1,961 2,265 6,987 structuringinfrastructure 2.5 Development and enhancement of 21 31 34 3% 124 the dynamismof the private sector 2.6 Opening upto world competition Pm pm Pm pm Pm Foster and promote 3.1 Education 188 314 361 427 1,207 greater material and 3.2Health,water and sanitation 195 322 370 436 1,323 human security and gmatly expanded 3.3 Reduction of social exclusion; 160 260 299 353 1,072 soda/ protection social protection systems 3.4 Culturaldiversity Pm pm pm pm Pm I I I I I HlPC 124 124 132 142 522 GENERALSUMMARY,2003-2006 2003 2004 2005 2006 TOTAL (inbillionsof MGF) (inbillionrI (in 1 of MGF) millionsof Total 2,496 3,924 4,502 5,120 16,042 2.46 8 132 Granted' 2,498 2,485 2,591 2,386 9,958 Needed 1,439 1,910 2,734 6,083 1,532 936 ('granted = projectsinprogress andor with agreement in principle) USE OF HlPCINITIATIVE RESOURCES Madagascar reachedthe HlPCldecision point in December2000, which enabled the country to benefit from a 50 percent reductionindebt-servicing starting in2001:this representsavailable resourcesamountingto about US$50billion per year in the interim period untilthe completionpoint, to be reachedafter one year of implementationof the strategy set forth inthe present document. The alleviation of Madagascar's debt will then relate to inventoryso as to represent, when convertedto net presentvalue, only 150%of annual export receipts. The currentpoverty reductionprogram isambitious but realistic, and its implementation requires improved utilization capacity, especially in priority sectors such as education, health, drinking water and rural roads. Research has been conducted along these lines within the administration, and measures have been taken to reconcile the need for accelerated use of resources using flexible procedures, with rigorous standards of control. An indicative breakdownof HlPCl resource use was presentedin PRSP-I. Generally speaking, for the next three years the government proposes to allot about 60% of the HIPCI resources to operating expenses in the priority sectors; the remaining 40% will be allotted to accompanying investment expensesfor an efficient implementationof the strategy. Inorder to measurethe impact of the use of these additionalresources onthe poor, an evaluation involvingall the programbeneficiariesis planned, to be carriedout startingat end of the first year. It will then be possible either to strengthen the programs whose impact on poverty is significant or to reorient the ones whose results are rather disappointing. Inorder to facilitate such an evaluation,the HIPC1resourceswill be postedunder specific but individualizedlines of credit, althoughthey are an integralpart of government expenditures. 133 BOX No. 7:PROGRESSOF THE REFORMSLINKEDTO THE IPPTE PROCEDURE All the regulationsgoverning the control bodies have been subjected to an in-depth study by the Internal Reform Committee (CRI); the latter brings together representatives of the Department Heads of the Ministry of Finance, and was enlarged to include other participants, includingthe control bodies themselves, the Ministry of Civil Service and universities, especially to makethe appropriate amendments. Ordinance No. 2001 -004 of November 18, 2001, reorganized the Supreme Court which is composed of three courts, i.e. the Court of Appeals, the Council of State, and the General Accounting Office. The GeneralAccounting Office should be set up at the same time as the two other courts. The draft organic law on the procedure to be applied to the new Supreme Court is inthe final stages of preparationby the Ministry of Justice. Law No. 021 of August 3, 2001 was adopted to set up the administrative and financial tribunals. The buildings intended to house these tribunals are already available in Mahajanga, Tulear and Toamasia; in Antsiranana and Fianarantsoa these tribunals are temporarily housed in buildings lent by the administration while awaiting construction of new buildings, planned for 2005. In December 2003, at the National School of Judges and Clerks (ENMG) training of the first class of administrative and financial judges will end: this group includes 4 administrative judges and 4 financial judges. These judges will therefore be active at the beginning of 2004. Since a court can only sit with a minimum of 4 judges, only one tribunal will be working, and it is expectedthat itwill bethe one inToamasina, at the beginning of 2004. Since December 2001, a consolidation unit has been operating effectively through the creation of an "accounts consolidation" division in the Treasury`s Accounting Agency. It is mandatedto centralize and consolidatethe accounts of the Principal Treasuries, and to write the documents annexedto the settlement law. The current status of the laws on budget settlement is as follows: - Settlement law for fiscal 1999: as planned, in December 2002, a draft law with appended documentstransmittedfor examination bythe Chamber of Accounts. - Settlementlawsfor 2000 and2001: they are scheduledto be drawn up during 2003. The Departments of the ministries concerned (Budget,Treasury) are busy preparing work in accordancewith the following schedule: . Settlementlawfor 2000: - February-March2003: checkingand controlof the documents produced; - April-June2003: finalization of the work with the elaborationof a draft settlement law with 134 supporting documents; - July 2003: transmissionto the Chamber of Accounts. Settlement law for 2001: - April2003: noticeis dispatched relatedto preparationof the documents; - July-September2003: checking and control of the documentsproduced; - December2003: transmissionto the Chamber of Accounts. The six ministries that will be monitored financially and physically starting in 2003, have been identified: Health, Education, Agriculture, Water and Forestry, Public Works, Justice. These ministries are presently identifying their concrete achievement indicators. Periodic productionof reports on the execution of the budget continues: Articles 611 to 613 and 621 for operations, not including personnel,from all sources. The complete PSRP draft was approved by the govemment and the cabinet on May 14, 2003. The recommendations made by the national workshop held March 24 and 25, 2003, in Antananarivo, as well as the observations made by the donors, were taken into account. The final document was transmitted to the technical and financial partnersonJune 10,2003, and will be submittedto the NationalAssembly inearlyJuly2003. 135 The monitoringand evaluation of the actions carried out inthe framework of the PRSP require strengtheningof the participatoryprocess.The objective isto be able to possess in realtime pertinent and efficient data on the povertyreductionprograms implementedand, onthat basis, makethe necessaryadjustments. 7,l IN-DEPTH KNOWLEDGEOF POVERTY The strategy for the reduction of poverty requiresfirst of all a more accurate identificationof the determinants of poverty. Inthis respect, efforts have beenmadewithinthe framework of various studies and surveys conductedmainly by the lnstitut Nationalde la Statistique (INSTAT) in collaborationwith various localandforeign partners such as: Analytic work on rural development,agriculture and the environment in collaborationwith FOFIFA, CornellUniversty,WorM Bank (%yearstudy): Inventoryof statisticalstudiesofpoverty(UNDP-INSTAT); Ongoingsurveyof households (1997) and PriorrtySurveyof Households(1999); Various NationalReportson HumanDevelopment(UNDP-INSTAT); The resultsof the enquiry on urbanjobs (INSTAT); The OrganizationalChart of Society(PNUD, INSTAT); Various studies conducted by INSTAT within the context of the 110 Project in collaboration with Comell Universty: Health and Education in Madagascar; Use and determinants of demand; Evolution of poverty from 1993 to 1999; Trend in access to public services; Poverty in Fianarantsoa,etc. Studyon decentralizedpublicmanagement (BAD): Studiescarriedout by IMATEP. The monitoringsystem contemplatedwould build onthe studies and surveys already completed and would callfor newones to be undertaken,so hasto have at the government's disposalafull set of reliable data onthe standardof livingof the populationand on the economy. These data would makepossible: Having an idea about the initial situation (a period used by PRSP as a reference) of the level of povertyas reflectedinthevarioussocialandmacrOeconOmicindicators; 136 Following the evolution of the various indicators over a fixed period (improve and enhance the reliability of the data-gathering arrangements, fix the periodicity of their collection, etc.), concomitantlywiththe implementationof the varioussocieeconomicmeasures Meeting (should the occasion arise) the specific needs andor the urgent needs of not only the Malagasygovernment but also of the other participants indevelopment (regions, priiate sector, NGOs,etc.);and Havingat handregularlyindicatorsof astructuralcharacter. 137 72.1 PRINCIPLES Inorder to measurethe efficiency of the strategy for controlling poverty as it impactsthe living standard of the population,and particularlythat of the poor, the guiding principles relate to: Effectiveness of the private-public partnership: the actions carried out will be subject to a system of monitoring-evaluation which will associate all the partners of the government under the coordination of the Technical Cell in charge of the drawing up of the poverty reductionstrategy. Inthe action plan, the Ministry of the Economy, Finance and Budget will play a major role through STA, INSTAT, the General Directorate of the Economy and the General Directorate of Planning. The Govemment will use the results of consultations with its partners in order to redirect, if necessary, the ongoing programstowards higherefficiency in itsdealings with beneficiaries. Objective and rigorous diagnosis: the indicators used will conform to livingconditions in the best possible way, and must be representative of the economic and social situation of the households, notably those of the poorest, be sensitive to the evolution of the situationin the medium and longterms, and infegrate without too much difficulty into the existingstatisticalsystem. These key indicators, composite or comprehensive,are formulated by INSTAT in accordance with the indicators of sectoral business plans and accordingto the strategic focuses andthe sectoralactionplans. These indicatorstake account of the: Objectives of a major reduction in poverty and rapid and sustainable development of the Malagasy economy; Objectivesof developmentfor the Millenniumtowhich Madagascarhassubscribed; Objectives of the various financial partners, notably the United Nations, the World Bank, the European Union,the lntemationalMonetaryFund,the AfricanBankfor Development,etc. Objectives of regional cooperation and integration, intemational agreements such as WTO, IOC, COMESAandNEPAD. Connection between the PRSP monitoring-evaluation and the national information system: the mechanism offers an opportunity to revive coordination of the national statistical informationsystem. This is an integratedsystem whichhas to the following objectives: Informthe governmentonthe state of povertyanditsevolution inrealtime; Assess the impactof the strategyfor reducingpoverty; Assess the effectivenessof the policiesandsuggest adjuments; Provide all the development participants with accessible, significant and reliable information, necessaryfor the processesof decisionmaking, supervisionandevaluation. 138 722 INSTlTWIONALSTRUCTUREOFTHEPRSPIMPLEMENTATIONMONNORING SYSTEM Institutional framework The institutionalstructure proposedwill ensure thatthe various tasks to be performedby every party concernedwill be clarified. To that end, steering and coordination bodies and sectoraladvisory groups will be set up. Technical Cell in charge of the drafting and monitoringof the PRSP The technicalCell gives recommendationsandstrategic orientations. It is composedof elected officials (Deputies),Administration officials, representatives of civilsociety andthe privatesector. The officeof Chairmanof the TechnicalCellis heldbythe Vice-Prime Ministerincharge of Economic Programs, PublicWorks, Transportation and TerritorialDevelopment, joined by the Ministerof the Economy,Financeand Budget and the Chief of Staff of the President's Office. Small Cell placedwithin STA A small body will be set up within STA for the coordination of the monitoring, the processing of the results, and the synthesis and analysis of the indicators. This body willwork in closecollaboration with INSTAT,wbichwill playa pivotalrole inthe gathering of information, andthe Directoratein charge of the Monitoring-Evaluationof the General Directorate of Planning. Thematic advisory groups Sectoraladvisorygroups under the aegis of STA will also be established, includingtechnical representativesof the ministries, research centers, universities,civil society, NGOs, etc. These groups will be composedfor the most part of members of TechnicalCommitteeswho have taken part in the drafting of the Poverty Reduction Strategy Document (PRSP). The thematic advisorygroups 139 will analyze informationcoming from the ministries, INSTATand the Directorateincharge of Monitoring-Evaluationinthe sectors. They will meet periodically(everymonthor every quarter) for the processingof sectoral information. Ministries and technical institutions Ministries andtechnical institutions supply the information relatingto the use of the resources allocatedandthe indicators relatedto the sectors as well asthe monitoring of the concreterealized projectsof the various programs. The Adjustment Technical Secretariat (STA) STA coordinates ina technical sense the poverty monitoringand evaluation activitiesand ensures: Verificationofthe appropriatenessandcoherenceof the objectives; Measurement of theefficiencyofthe programsandactivitiesinrelationtothe results; Recommendations astothe strategicguide linesandbudgetappropriations; Organizationandsupervisionof thematicadvisorygroupsandparticipatoryworkshops. INSTAT INSTAT is in chargeof: Inquiriesandsurveysof householdsconcemingthe major indicatorsof well-being; Monitoringof the results,inparticularvarious indicatorsof: Standard of living (well-being) Poverty and human development Macro-economy Impacts on the beneficiaries. Monitoring, if necessary,with the GeneralDirectorateof Planningthe various indicatorsof: 140 Products generated Services generated Financialindicators Physicalindicators Human indicators Coordinationof informationincollaborationwiththe Directorateinchargeof Monitoring-Evaluation Undertaking of an impact survey system related to the implementation of the PRSP with a componentonmonitoring, andanother onthe HIPC initiative. The General Directorate of Planning Throughthe system of monitoring-evaluationbasedonthe logicalframework method and the reporting system already operationalwithin its department,the General Directorate of Planning (DCSEand DPG) will bring its actions to bear onthe monitoring and evaluationof resources, activities and results of the programsandprojects.To that end, it will draft periodical reports according to a three-month, six-monthand annual schedule. Itwill provideinformationfor redirectingthe allocation of resources and information about sectoral policies. 723 PURVIEWOFTHEMONITORINGSYSTEM The system ensures the monitoringof inputs, programsand resultsas well as the evaluation of the impacts. 723.1 Monitoringthe inputs The monitoringactivities relatedto the of inputsconsistinmonitoringthe allocationof resources to the offices andthe programs whose object isto reduce poverty through financialauditing operations onthe budgetary andfinancial accounts. 7232 Monitoringtheprograms The monitoring of the programs isrelatedto the monitoringof the implementationof the sectoralplans contemplated. It consists in operationsof controlof physicalimplementationssuch as the building of schools,healthcenters, ruraltracks, public fountains, etc., on the basis of administrative documents from the ministriesand institutionsconcerned. 141 7233 Monitoringtheresults This activity will enable determinationof the populationgroups that have accessto the programsand projects aimed at reducing poverty, andwill allow measurementofthe extentto which their needs aremet. Suchmonitoringwill be based on the various inquiries usingthe major indicators of well-being. 723.4 Evaluationofthe impacts The evaluationof the impacts of the poverty reductionstrategy meansthe evaluation of the overall effects of the measurestaken as regardswell-being and poverty inthe varioussectors, using: nationalaccounts, householdsurveys, census taking, etc. The approachconsists in combining the evaluation by the beneficiaries with the studies of socio-economic impacts. 72.4 COORDINATIONOFFOREIGNASSISTANCE Inthe framework of the monitoringof the programs, particular attentionis givento foreign assistance coordination. Portfolio reviewswill be appliedsystematically to all the donors. For each interventionsector, sectoral platforms will be set up in order to coordinatethe various activitiesmore effectively. The coordinationof foreign assistancewill be the responsibility of the Ministryof the Economy, Financeand Budget, working with the Directorate of the Coordination of External Assistanceand the General Directorateof Planning. 725 PARTICIPATORYMETHODOFMONITORING Strengthening of the participative processwill be carriedon inthe framework of monitoringthe implementationof the action plans of the PRSP, and evaluationof the impacts of the strategyon the levelof poverty. The thematic advisory groups will periodicallywork on analysis of informationon the monitoring of the results and the monitoringof the impacts. 142 Participativeworkshops on monitoring will be organizedby STA twice ayear ineach of the provincialcapitals,and sectoral impact analysiswill be undertakenas well. These workshops will enjoy the participation of all the participants who took part in the draftingof the strategy during the consultation phases, and the resultswill be disseminatedamong the partners. Concomitantly,sectoral analysiswill be carriedout every quarter. Table 19. Madagascar: Summary of monitoringactivities Descripti Information Contrlbut on Activities Questions sources ors Monitoring the Are !he Budgetary and Ministries Monitoring resourcesallocated to resources allocated to financial accounts inputs agencies and the scheduled DGDP, programs whose programs and used STA, DSE object is to reduce according to the poverty. objectivesset? (Financial control operation: examination of public expenditures, monitoring of human and material resourcesavailable) Monitoring the Are the Administrative Regulator Monitoring performance of the activities related to documents Y ministry programs sectoral plans poverty reduction concerned designed to reduce functioning according Externalsources poverty (oversight of to plan? lntemal statistics Civil concrete projects from the ministries society completed: schools STA, built, health centers, DSE, DGE rural tracks, public fountains, etc.). Monitoring of macroeconomic programs Determining the Do the poor Research on the INSTAT, Monitoring population segments have better access to major indicators of well- STA, results that have access to such services and being; Beneficiaries the programs and programs? projects aimed at Civil reducing poverty; Organization of society extent to which they Do they use the thematic working use the services latter? groups; offered by those programs and projects, and the Do the Participative extent to which the programs satisfy the monitoring of poverty latter meet their needs of the poor? (twiceyearly) needs. 144 Descripti information Contribut on Activities Questions sources ors Evaluating the Have there National accounts INSTAT, Evaluating the overall impact of been any and macreeconomic STA, DGE, impact measures taken improvements in the indicators; household DSE concerning well-being various sectors budgets, price statistics; and the levels of (health, education, Civil poverty (regarding etc.) stemming from society, socio-economic the programs? Inquiries with the beneficiaries groups) households; Census Thematic working groups Participative evaluation of poverty (yearly) Organizing Have objectives Repons on STA, Coordinating periodical reviews of set been achieved in monitoring DCAE, DGP, external the assistedprograms terms of ministries, assistance disbursements, and physical Donors achievement? Institutionalchart TECHNICALCELL IN CHARGEOF DRAFTINGAND MONITORING THE POVERTY REDUCTIONSTRATEGY TECHNICALSECRETARIATFOR ADJUSTMENT (STA) - Verify the appropriateness and consistencyof the initialobjectives ADVISORY GROUPS (Technicalgroups, donors,NGOs, government, civilsociety, etc.) -- Thematic studies Processingand analysis of the results so GOVERNANCE -. .. RURAL MACRO ~ GENERAL INSTAT DIRECTORATE MlNlSTRlE - Analysis of OF PLANNING GENERAL S AND poverty and DIRECTORATE TECHNlCAL - Monitoring economicanalysis; OFTHE INSTITUTIONS and evaluation of - Collecting of ECONOMY resources, actiities data (inquiries, and results; includes surveys, etc.); Macroeconomic Collecting a reportingsystem; - framework; and processing of Choice of m....-.J:-...:-.. monitoring of information 146 72.6 THEMAININDICATORSINRELATIONTOTHESTRAiEGlCFOCUSES There are 31 monitoring indicators, classified according to the priority focuses. Budgetary aspects of monitoring activities are treated inTable 22 below. Table 20. Madagascar: Main monitoring indicators N Fore Fo F umber Indicators cast 2003 recast orecas Sources 2004 t 2006 Povertyindicators and social indicators 1 Rate of poverty (as 72 6 5 EPM % of the poor population 7 8 (INSTAT) /population) 2 Number of telephone 15. 1 1 OMERTAN connections (fixed or 0 6.5 8.0 STAT mobile) per 1,000 inhabitants 3 Mortality of children 14 1 1 EDS aged under five (per 1,000 1 31 20.0 (INSTAT) children under 5) AIDS prevalence <1 < < Ministry of rate among pregnant 1 1 Health, PNPS women Net public and 79. 8 8 MINESEB/I private school attendance 5 2.5 5.0 NSTAT rate (pupils 6-11 years/ school age population) 6 TDC3 vaccination 8 0 1 8 1 9 1 Ministry of rate (infants under 1 year) as % 7 Completion of 44 4 5 MINESEBA primaryeducation, as Yo 9 8 NSTAT 8 Literacy rate (% of 54. 5 5 INSTAT persons aged 15 years 0 5.O 6.0 and above who can read and write) 9 Medical prescriptions 90 9 9 Ministryof filled in the CSBs (as %) 3 5 Health 1 Percentage of the 0 2opulation having 3ermanent access to a source of drinking water 147 I 7.2.5.1.1 Infrastructuresindicators 11 Kilometers of roads 4 8 1 VPM ------6,9002 improvedand/or renovated ,000 ,200 12 Isolationrate (%) 3 3 VPM 5 1 2 13 Percentage of 5 1 2 VPM/INSTAT transportation fees 0.3 6.2 reduced 14 Number of 5 5 5 Ministryof inhabitants for one ,771 ,726 ,656 HealtWlNSTAT operational CSBl and CSB2 15 Number of children 1 9 8 MINESEWIN of school age (6 to 10) per 05 5 1 STAT operatingprimaryschool 16 Number of latrines 4 5 5 INSTAT 9.3 1 5 17 Number of electrified 1 1 1 MEM/JIRAMA villages 50 50 50 Time needed to 3 3 C establisha business days days or=2 (SARL) days 20 One-stop C days 1 shop 5 days or=2 (S days A) 3 days C 6 or=2 days (El) days Tax burden rate 10. 1 1 DGVINSTAT (%) 3 1.2 2.1 Budget deficit (as DGE/INSTAT % Of GDP) 3.3 5.9 4.6 Number of 2,o 1 1 MSP/INSTAT inhabitants Per 00 ,960 ,702 policeman 148 Number Per MIN gendarme 1 2 1 DEFANSTAT 60 ,200 ,100 I 22 Number of 0 i Ministryof corruption cases against Justice/CNLC (1) which legal action has beentaken Number of delayed Ministryof 23 Itrials (%) 1 lo 1 I '1 Justice 7.25.1.3 Primarvsector indicators 24 Intensity of 10 1 1 Ministryof agricultural production 0 14 30 Agriculture (Paddy)base 100=2003 25 Reforested area 10 1 1 Ministry of the (base 100 =2003) 0 10 40 EnvironmenVONE 26 Value of the 10 3 9 MEM investments in mining 0 45 ,895 sector (base 100=2003) 27 Total expenditures 10 1 1 MINESEB for education (base 100 0 32 47 =2003) 28 Total expenditures 10 1 1 MINSANTE for health (base 100 = 0 20 72 2003) 29 GDP (growth rate 6 7 8 INSTAT in%) 30 Inflation rate (CPI 6.6 6 L INSTAT period average, yearly .o ess change) Yo than 5 31 Exports (base 100 10 1 1 INSTAT/DGD =2003) 0.0 39.0 57.0 149 HYPOTHESES 150 ase index 100=20 151 No.I Indicatofs Technical note public andprivate 6 I1VaccinationrateinDTC3 (infants I Ratiobetweenthe numberof infants under 1thathavebeen under 1year) as apercentage) vaccinatedandthe totalnumberof infantsunder 1, multipliedby 100 andreinforcementof coldchainsinCSB [sic] 7 Rateofprimary education Ratio between thenumberof studentsnotrepeatingayear inthe completion seventhgradeandthe numberof 10year oldchildren as apercentage 8 Literacy rate (percentageof Ratiobetweenthe literatepopulationage 15 andabove andthe total individuals 15andabove able to number ofpersonsage 15 andabove, multipliedby 100. Literateis readandwrite) takento meanthose who knowhow to readand write and do simple sumor thosewho havereachedthe Gfth year ofprimary schoolor higher andhave attendedschoolfor at leastfour years 9 Rate of filling medical Ratiobetweenthe numberof medicalprescriptionsfilled at the CSB prescriptionsinthe CSB (as levelandthe total numberofmdicalprescriptionsatthe CSB level percentage) 10 Rate of accessto drinking water Percentage of householdswith reliable accessto water incontrolled - 11 Numberof kilometersofroads Cumulative numberofallroads (nationalprimaryand secondary, maintainedand/or repaired linking the capital with the provincialcapitalsor the regionsamong themselves) andruralroads to relieve isolation or serviceroads, maintainedand/or repaired Isolation rate Ratiobetweenthe numberof isolatedcommunes andthe total number ofcommunesinMadagascar Percentage ofreduction in Changefromthe previousyear's transportationcost situationfor transportationcosts 50kg of rice froma Commune's adminismtive center to the closest major urbancenter (6 provincial administrativecenters, Antsirabe, Morondava, andTaolanaro) Numberof inhabitantsfor a CSBl Ratio betweenthe total numberof inhabitantsandthe total number and CSB2 of CSBl and CSB2 Number ofchildren (age 6-10) able Ratio betweenthe total number of children age 6-10 who can attend to attend school&r EPP schooland the total numberofEPP Madagascar installations) ~- Numberof villages with electricityI Numberof villageswith access to electricity supplyperyear 152 courts 23 Numberof delayedcourtcases [loo-Rate ofprocessingcases] (Rate ofprocessingcases: ratio betweenthe numberof casesprocessedand the total numberof dossiersrecorded) Primary sector indicators 24 Intensivenessof agricultural Ratiobetweenthe areaunderintensivecultivationinthe current year production (Paddy rice), baseindex and in the base year, multiplied by 100 100=2003 25 Reforestedarea Ratio betweenthe areareforestedinthe cuxrent year andinthe base (Baseindex 100=xx2003) year, multipliedby 100 26 Value ofinvestmentsinthe mining Ratio between the value of investmentinthe sectorinthe current sector (base index 100=2003 year andthe value ofinvestmentin the base year, multiplied by 100 Macroeconomicindicators 21 Total educationbudget Ratiobetweenthe total educationbudgetfor the current year andthe (base index 100=2003) total educationbudgetfor the base year, multipliedby 100 I28 , Total healthbudget , Ratiobetweenthe total healthbudget for the currentyear andthe , (base index 100=2fi03) total healthbudgetfor the ba& year, multipliedby 100 30I1 Inflationrate (average CPI for 1Isumof values addedtogether andthe total amountofindirect taxes) Changehaverageannual ConsumerPrice Indices (el)(average period, annual change) as CPIfor period,annualchange) as apercentage percentage 31 Exports (base index 100=2003) Ratiobetweenthe total value of exportsinconstant francs for the currentyear andthe total value ofexportsinconstantfrancs for the base year 153 0 8 Y 154 B c 155 8 LI .c 3 0 5 v) E h 9 c0 4 0 x > 156 - c 3 n L 157 w 0 a -I----- 158 s E a E a E 159 160 I.A.I.SHORT-TERMACTIONPROGRAM TABLE OF CONTENTS A. SHORT-TERMACTIONPROGRAMS DEPARTMENTOFAGRICULTURE 21 MINISTRYOFAGRICULTURE, LIVESTOCK AND FISHING 22 DEPARTMENTOFAGRICULTURE 22 DEPARTMENTOFLIVESTOCK 22 1 nFPARTMENTTOURISM OFFISHING 23 MINISTRY OF I24 A-I- I DEPUTY PRIME MINISTER'S OFFICE, MINISTRY OF TRANSPORT, PUBLIC WORKSAND REGIONAL DEVELOPMENT 11. DEPARTMENTOFTRANSPORT A. STRATEGIC ACTIONS FOCUSES 1.Goodgovernance -1.01 transport policy: Roadtransport -- Road studycompleted Landtransport agency: studycompleted Training strategy: study completed 1.02 Railtransport - Concessionfor NorthemNetwork: - Concessionfor granted SouthernNetwork: call for bidsmade --- Maintenanceconcessionfor 1.03 Sea transport Decreecreatingthe APMF adopted Legislation on status of ports: Cabinet-levelreadingcompleted the -Toliara-Morondavastretch: study completed Concessionfor the port of Toamasina: studycompleted -- Malagasycivilaviationcode 1.04 Air transport drafted Strategy for state divestmentof airport system (Ivato and4 airports): studypendingapproval 3. Roadsprogram 3.01 Railtransport - Northem Network rollingequipmentrehabilitated (2 track motorcars, 1 -sectioncar, and20130 railway cars) Seven locomotivesacquired, including 2 deliveredto the Northem Network - UpkeeponNorthemNetworkequipmentperformed:3 locomotives, 2 lightrailtractors, 1sectioncar 3.02 Maritime transport - Rehabilitationof6portsandexpansion of 2 ports: - Rehabilitationof studies completed Mahajangaquay: work completed 3.03 Air transport ~~ --- ACMcomputerization Rehabilitation of airport buildings (Ambatondrazaka, Manakara) Air terminalconstructionandgeneralaviation (Ivato): work completed andterritorialentry/exit completed A-1-2 DEPUTYPRIMEMINISTER'S OFFICE, MINISTRY OFTRANSPORT, PUBLICWORKS ANDREGIONAL DEVELOPMENT 111. DEPARTMENTOFPUBLICWORKS A. STRATEGIC ACTIONS FOCUSES 1.Goodgovernance 1.01 Technicalandfinancial audit ofthe FERcompleted 3. Roadsprogram 3.01 Roadsresurfaced: 3,200 kmtotal Reconstruction: I 1 - 4 I Surface ISubtotal APS projects completed -- 64 calls for bids 6okm 764 km contracts awarded 1,165 km covering: 341km (2 new construction sites opened) Rehabilitation: - 2 APS pmjects completed - 3 calls for bids 302 km 213 km - 9 contracts awarded covering: 532 km 1,176 km (3 new construction sites opened) - 2 constructionsites finished 129lan Periodic maintenance - 1APS project completed - 7 calls 202km 859 km for bids 657 km 3.02 Roadsanddirt tracks 3 3 7 kmtotal Levelingof majorhighways -- 6 contracts Subtotal 8 calls for bids 1,138 km 1,070 km 2,208 Irm awarded I Repairof ruralroads - 37 contracts awarded 286 km - 22 construction 1,029 Inn sites finished 743 km A-1-3 DEPUTYPRIMEMINISTER'S OFFICE, MINISTRY OFTRANSPORT, PUBLICWORKS andregionaldevelopment B. DEPARTMENTOFREGIONALDEVELOPMENT ,surfacearea:0.18ha;2marketsbuilt, surface 2 busterminals rehabilitated, surface area: 1.08 ha 3.04 Citystreet development:NosyBe, Diego, Fianarantsoa,Toliara, Grand Tana - 17.5 kmrehabilitated 3.05 Urbanrehabilitation:Antananarivo, Fianarantsoa,Toliara, Diego, A m b a t o " k a , NosyBe andAmbilobe - Residential trashcollection: 145 tanks, 4 tractors, 8 two trucks acquired -- Waste 24 toilet facilities, 23 washhouses, 36 standpipes, 1shower constructed water networks built or rehabilitated A-1-4 MINISTRYOFJUSTICE STRATEGICFOCUSES 1.Goodgovernance 1.01StrengtheninspectionandACTIONScontrol missions ofprisonjurisdictions andinstitutionsby the Control Departmentof the Ministry andtraining in controlby the SupremeCourt, on 10 sites 1.02Train50magistratesininspectionandcontrol 1.03Process230 long-detentioncriminal cases I 1.04Train 12magistratesand8 courtclerksfor improvedfunctioning of the CommercialCourts 1.05 Publicpreventionandeducationactions: -- 4 radiobroadcastspermonth 2 televisionbroadcastspermonth - Editingandpublication of 10,000 copies ofjudicial brochures on - the struchue of thejudiciary, the rights and duties of citizens Translationofpenalsentences into Malagasy 1.06 Trainmagistrates, court clerks, subprefectsresponsiblefor monitoring vital statisticsto restore the public records of vital statistics in three jurisdictions: Antsirabe, Fianarantsoa, Antananarivo 1.07 Strengthen securityandimprovementof prisonconditionsin7 penal institutions 1.08 Revivethe activities O f5 penalwork campsleadingto a self- sufficient food supply, andimprovementofnutritionand sanitary conditionsof detainees 1.09Createananticorruption receptionunitinthejurisdiction of Antananarivoto intensify the fight againstcorruption A-1-5 MINISTRYOFTHEINTERIORAND ADMINISTRATIVE REFORM STRATEGICFOCUSES ACTIONS 1.Goodgovernance 1.01Fightagainst corruption:studies oncomputerizationofpersonnel management, monitoring of foreignersand6registration centers -1.02Devolution: creatinganddefining state administrativedistricts - Draftlegislation legislation Draft delimiting the powers ofheads of state administrative districts - Draft legislation settingforth the terms of compensation, benefits and -privileges granted to headsof state administrativedistricts Establishmentof 15,331 Fokontany and61,324 Fokonolona 1.03 Publishregulationsrelatedto communalelections 1.04 Prepareandorganizecommunal elections 1.05 Rehabilitatepublicrecordkeeping:organizationof 13regional training sessions for 22 Prefects, 22 Assistant Prefects, 89 deputies, and31 lower courtjudges --- Rehabilitationof 1.06 Strengthenadministrativeresources: Constructionand rehabilitation ofcentraladministrativebuildings offices of 2prefecturesand3 subprefectures Acquisition of 25 typewritersand21computers 2. Security 2.01 Civilprotection: - Establishmentof the legal framework andoperationalstatus of the national(CNS), regional (6 CRSs) andlocal agenciesresponsiblefor risk managementand disaster relief - Training of 50 volunteerrescueworkers andprovision of minor rescue equipment, fire truck andtwo powerpumpsto fire fightersinMahajanga - Provision of a fire truck andtwo mobile pumpingtrucksto Mahajanga fire fighters 2.02 Civildefense: - Implementationofthe DINApublic safetyconventionsin23 -subprefecturescharacterized as "problem areas" Control of weapons andexplosive substances (complete listing of civilians inpossessionof firearms) A-1-6 MINISTRYOFHIGHEREDUCATIONAND SCIENTIFICRESEARCH C. D. DEPARTMENTOFHIGHEREDUCATION STRATEGIC ACTIONS ~ FOCUSES 1.Goodgovernance 1.01Finalize3 public-privatepmerships 1.02 infrastructurefor university construction 4. Ruraldevelopment 4.01 Produce50,000 shrub acaciaplantsinthe Mid-West region 4.02 Treat 100hawithbiopesticides, dosage: 1.5 x 1,013 5.02 Train 8 mediators 5.03 Train 20databasenetwork administrators 5.04 Installinfrastructurefor 14Intranet/Extranetnetworks in universities, andupgradecomputerhardwareresources 5.05 Establisha Doctoral degree inITusingthe Research/Training/Pmductionmodel. A-1-7 MINISTRY OFHIGHEREDUCATION AND SCIENTIFIC RESEARCH F. DEPARTMENTOFE. SCIENTIFIC RESEARCH I STRATEGZC ACTIONS 1 FOCUSES 1.Good governance 1.01 Createa NationalHumanResourcesDevelopment Observatory (0" 1.02 Develop the Master Plan for Higher Education and Scientific Research(PDESRES) 1.03 Finalizethreenationalandinternational public-private partnerships 5. Education 5.01 Continuingeducation for 150middle school (CEG) teachers(using 5.02 Train8 mediators 5.03 Train 20 databasenetwork administrators 5.04 Installinfrastructure for 14IntraneVExtranet networks inuniversities, andupgrade computer hardware resources 5.05 Establisha Doctoral degreeinITusingthe Research/rraininglProduc tion model. 5.06 Establish 10permanentproductionactivities (cashcrops, livestock, rice growing, etc.) by 100young peasantfarmers from the Beforona region, supervisedby teaching researchersfrom ESSA and 10engineering students II 5.07 Create 5 training and researchunits 5.08 Construct 6 housingunitsfor 180students 4. Ruraldevelopment 4.01 Produce 25,000 acacia s h b s inthe Mid-Westregion 4.02 Establish 1multi-purpose biopesticides laboratory able to treat 100ha with a dosage of: 1.5 x 1,013 4.03 Produce 2,800,000 dosesof veterinary vaccines 4.04 Coverageof60% of ruralcommunesby CVP/TMPnetworks inthe Antananarivo Furitany,to reduce the rate of avian mortality fiom 80% to 5%. 4.05 Vaccinate 70% of cattle of the Antsalova AEBA, to reduce from40% to 7% the prevalence o f clostridia invaccinated sentinel herds 4.06 Produce 10tons ofimprovedrice variety seedswith the objective of A-I-8 boostingyields to 4 tons perhectare throughuse of the technological I packagesissuingfromresearchunits (SRI, SRA, fertilization, etc.) 4.07 Providebasic seeds andpre-basic seeds to seedproducersor farmers' organizations: 3 tons ofirrigatedrice (Makalioka34) 3 tons of irrigatedrice (Mailaka) m 3 tons ofrainfedrice (all varieties) 1ton of maize (Voalasoa, Bakoly, IRAT 200) m 100kg ofbeans (Mahavatsy, Marohavana) I I 4.08 Train 50 wholesale fish farmers andproduce2,000 adult fishusing newgrowth techniques MINISTRYOFPUBLICSECURITY STRATEGIC ACTIONS FOCUSES 1.Goodgovernance 1.01Transparencyinprocessingcases:5 inspectionsof5 casesinthe provinces 1.02 Fightagainst corruption:train2 managers, andconduct 20 spontaneousinspectionsina variety of agencies I I 1.03 Fightagainst administrativeredtape: 5 spot checks incentral and [provincial agencies 1.04 Trainupper-levelmanagerstostreamlineworking methods: 2 trainingsessionsof 30 managerseach 2. security II2.01 Construct3 new PoliceStations II I 2.02 Rehabilitate 3 existingPoliceStations 2.03 Improvecommunicationand interventionresources: 10BLUs and20 Walkie-Talkies, 4 four-wheeldrive vehiclesinthe SAVAregion andinareas with cattletheft (borderingonTulCar-Fianarantsoa) 2.04 Computerizeagencies: 20 computers A-1-9 MINISTRY OFFOREIGNAFFAIRS STRATEGIC ACTIONS FOCUSES 1.Good governance 1.01 Recognitionof theAfricanUnion(AU) 1.02 Acquire 50computersand1Jeep 1.03 Deliver 45 copiesof the PRSPto the 15 offices representing Madagascarabroad 1.04 Publishand send50quarterly reviewsofthe MinistryofForeign Affairs to the 15 offices representing Madagascarabroad 1.05 Publishanddisseminate1,OOO brochuresoneconomic development to the 15 officesrepresenting Madagascarabroad 1.06 Multimedia: -- Intemet: Intranet: intemalnetwork for 14 work stations - Web site: connectionsto 14 work stations 1 2. security 2.01 Grantsof 30 Chinesemilitaryequipment lotsto the Ministryof Defense 4. Ruraldevelopment 4.01 Finalize 2 agreementswiththe RFA - Integrated managementof natural resourcesin Farafanganaand vangaindrano - Institutional supportto forestrypolicy (Polefor n> A-I- 10 MINISTRYOFTHEENVIRONMENT,WATER AND FORESTS 1.Good governance 1.O1Developthe necessaryinstitutionsand regulatory - Sustainable frameworks for protectingnature andthe environment development policyfor Madagascar's coastalandmarine - Development of standardsfor urbantrash and waste Efatsy, Tsaravary, Ambontaka, Mavorano;Mahajanga: Belobaka;Toliara: Amkilivalo, Befotaka - Fightagainstbrushfires: increasedawareness inthe 71problemareas; revivalof committeesto fight wildfues dry, Mahanoro, Sainte Marie, Vavatenina, Fianarantsoa, A-1-11 Plan for enhancedexploitation of raffia, prunus africana, cinnamon, medicinalplants - Permanentmanagementofmarine andcostalresources(7 sites managed, altemative activities for fishermen's wives) - Permanentfinancial support for the NationalNetworkof Protected Areas and development of mechanismsfor lastingfinancing of environmental actions (legal documentsgoverning implementation and structureo f the Trust Funddeveloped andadopted) 5. Education 5.01 Promotionof environmental education and -communication anddissemination o f the regulations implementing the projects Official adoption Environmental Education Policy (PERE) - Environmental module anintegralpart of the school cumculum MINISTRYOFNATIONALDEFENSE I STRATEGIC ACTIONS 2.01 Reduceinsecurity by 50% inthe following zones: 1. - Border of Fianarantsoa-Toliary(cattle theft -VB) -- SAVA (Operation Border of Antananarivo-Mahajanga (cattle theft) vanilla -Ov) 2.02 Improvemeansofcommunicationandintervention (BLU, vehicles, etc.), especially in the SAVA region andinzonesreportingcattle theft: - SAVA: 10BLU(OV) - 1 2trucks Fianarantsoa-Toliara (VB) - 10BLU, 4 trucks Antananarivo-Mahajanga (VB) m 10 BLU, 4 trucks 2.03 Geographicalcoverage: 1advancedpost per Firaisana inthe Droblemareas 2.04 Safety on major highways 80%guaranteed: -- Antananarivo-Mahajanga: 4 motorcycles - Antananarivo-Toamasina: Antananarivo-Fianarantsoa-Toliara: 8 motorcycles 4 motorcycles A-1-12 MINISTRY ATTACHED TO THE OFFICE OFTHEPRESIDENTOFTHEREPUBLIC, RESPOh'SIBLE FORDECENTRALIZATION, DEVELOPMENT OF AUTONOMOUSPROVINCESANI) COMMUNES STRATEGIC ACTIONS FOCUSES 1.Good governance 1.01 Organize6 trainingworkshops for managers inthe 6provincial departments 1.02 Train 180communalofficials (on the basis of 10communesper provinceand 2 personspercommune) 1.03 Finalize3 legaldocumentsregardingthe status of publicrecording secretaries, the suspensionof mayorsandthe nationalprinting office 1 I 1.04 Controlandfollow-up the 60pilot communes I1.05 Promotecreationof 2 CommunalSolidarity Funds I 1.06 Identify13 communesfor extensionof the HIMO-Urban projectto Fort-Dauphin 5. Education 5.01 Controlandfollow-up of the use of funds allocatedto EPPsof60 communes CrvILSERVICEMINISTRY STRATEGIC ACTIONS FOCUSES 1.Goodgovernance 1.01The officials responsible for humanresourcesmanagementinthe 22 ministries are informed regardingthe transparentpublic administrationas itimpactsend-usersof services 1.02 Eachof the 22ministries isinformed about, andapplies the govemment's Circular on processingadministrativecases within 72 workingdays. 1.03 Eachof the 22 ministries implementsthe govemment's Circular No. 002-2003-PWSGGdatedFebruary25,2003 1.04 Eachof the 22 ministries implementsthe govemment's Circular requiring the postingof the following information (inMalagasyand -French)of service inplaceseasily seenbythe end-usersofthe services: --- Timerequiredfor Hours Servicefree ofcharge (where applicable) Feesfor services (legaldocuments) processingservicerequests I 1.05 Eachof the 22 ministries implementsthe govemment'sCircular A-I- 13 1 requiringprovision of areceptionandinformation areafor the public 5. Education 5.01 FiveTVMtelevisedbroadcastsand 10RNMradiobroadcasts providing information on the obligations of civil servants devisedand broadcastperiodically 5.02 ENAMfunctioning CNFA functioning MINISTRYOFINDUSTRIALIZATION,TRADEAND PRIVATESECTOR DEVELOPMENT G. DEPARTMENTOF INDUSTRY STRATEGIC ACTIONS 1.Goodgovernance -- Implementationofprotectivemeasures 1.01 RehabilitateSIDEMA Audit and strategic recoveryplan 1.02DraftlegislationonIndustrialTax FreeZoneregulations 1.03 Threeartisanalproductpromotionunits(EPA)inthe 6provincial capitals 1.04RehabilitateSIRAMA 2. -Preliminary work and start of negotiationswith a privatepartnerfor lease-management of SlRAMA 1.05 Finalizethe processesof withdrawal andnegotiationbetweenthe state andHASYMA MINISTRYOFINDUSTRIALIZATION,TRADEAND PRIVATESECTOR DEVELOPMENT H. DEPARTMENTOFTRADE STRATEGIC ACTZONS FOCUSES 1.Goodgovernance -1.01Restorevanillaproduction - Drafton revision of regulatory documents Establishmentof aprofessionalvanilla production organization 2. Security 2.01 Commercialreform ImplementationinTamataveandAntananarivoof regulationsrelatedto noncompliantproducts A-I- 14 MINISTRYOFINDUSTRIALIZATION,TRADEAND PRIVATE SECTOR DEVELOPMENT I.DEPARTMENTOFPRIVATESECTORDEVELOPMENT STRATEGIC ACTIONS ~ FOCUSES 1.Goodgovernance -- Six 1.01StrengthenthePPPthrough improvedfunctioning of CAPE: Operational Technical Secretariat, with ofice and Executive Secretary regional CAPEantennas operational inprovincial capitals 1.02 Six Guidesto the Establishmentof a Businessinthe 6provincial caDitals MINISTRYOFENERGYANDMINES STRATEGIC ACTIONS FOCUSES 4. Ruraldevelopment 4.01 Improveaccessto drinkingwater andsanitary facilities 3. - MidongyAtsimo: 1,483 inhabitantsinvolved, 21new standpipes, 1public washhouse - Antanimbary: 2,000 inhabitants impacted, 15 new standpipes, 6,100 meters of pipe to be installed - Morondava: 4,500 inhabitants without service, 350individual connections, 5 standpipes - Tolagnaro: 4,500 inhabitants involved, 350individualconnections, 5 new standpipes - Ambositra: 4,000 inhabitantsinvolved, 300individualconnections,5 new standpipes Tsiroanomandidy: 4,000 personsinvolved, 200 individual connections, 5 new standpipes 4.02 Support local managementofmineralresourcesinthe regions of Sakaraha, Ilakaka and Vatomandry -- Anticipated Awareness achieved in3 communes miningroyalties: 120Mperzone --Increase inpermits andAERPs granted, from50to4.00 AIDS awarenesscampaign reaching2,000 personsperzone 4.03 Improve access to electricalpower inrural and suburban ---- Three areas Two electrified communes 128suburbanvillages connected to the power grid 758 new subscribersconnected to the SWER network villages equippedwith solar-powered kits A-I-15 MINISTRYOFHEALTH 1.07 Distribute2,500 private-sectormanagementguides to physiciansin I privatepractice 2. Security 2.01 Fifteendistrict hospitalcenters suppliedwith singlesidebandradios 2.02 86constructionsites and 3 rehabilitation sites for 59 CSB2sand30 CSBls:T[191; D[10]; F[18]; M[7];A[9]; U[26], completedandequipped 2.03 70healthfacilities constructed(52) or rehabilitated(18): T[3]; D[6]; FW1;ME21;-4401; VI61 2.04 12mobilehealthunits (2perprovince) installedandoperating 2.05 15 intensivenutritional recuperationcentersbuilt andoperating, costingMGF 330,000,000 perfacility 4. Ruraldevelopment 4.01 4,100 familylatrinesof sanplat type and55 double-trenchlatrineson schoolcompoundsinthe provincesofToamasina, Antsiranma and Antananarivo 4.02 300drinking water supply systems (50 perprovince) identified (in CSBs) 4.03 300incinerators(50perprovince) builtinCHDs and CSBs 5. Education 5.015 Healthschoolsestablished(3 inAntananarivoand2 in Fianarantsna) A-I-16 MINISTRYOF CULTURE I STRATEGIC ACTIONS 1.01 Improvemanagementofhumanresourcesandfinancial management 4. - Trainexecutives (ManagingDirectors, Directors, Ministryof culture) - Train ministerial managers 1.02 Developandimplement -- Artists' -- Documentonculturalpolicy Decreeonthe NationalCouncil on the Arts andCulture (CNAC) Generalmeetingof the CNAC code -- Training sessionsfor movie theater owners 1.03 Launchthe "ART MADA" project for culturaloperators - Training ofstage Training actors 2. Education 2.OlRehabilitate -- Rovad'hbohimanga -- Anahidranomuseumbuilding ~ Mahajangacity cultural center Arcades of RovaManjakamiadana(support+protection) I 2.02 Construct -- Manjakamiadanaroyalhut (BESAKANA) 6 traditional hutsinthe 6 provincial cultural centers 2.03 Establishandstart up - L i b w --- Libraries: in Museim:CulturalCenterof Ste Marie Art Gallery provincial arts andcultural centers -Museums 2.04 Organizeculturalevents ---- Regional RegionalfestivalsinMahajanga RegionalfestivalsinToamasina festivalsinAntananarivo RegionalfestivalsinFianarantsoa - Intemationalfestival inTan2 - Intemationalcontemporarydance competition -- Audio-visual 2.05 Culturalidentityawarenessandmasseducation Brochure on learning the Malagasylanguage instructional aids A-I- 17 MINISTRY OF POPULATION FOCUSES 1. Goodgovernance 1.01 Web site of the Ministry of Populationconnected to the network 1.02 Five regulatory documents on intemational adoption revised and made available at welcome centers and at Pupilles de laNation 1.03 Twelve regional councils ofNGOs, 12NGO approval committees in operation and 522 NGOs approved; 200 directories o f certified NGOs drawn up 4. Rural development 4.01 Thirty-three women's associations supported as AGRs and 3 community centers created inAndroy 4.02 Twenty intervention agents and 100persons connected to a network for protection against violence and sexual exploitation o fchildren 4.03 One thousandhouseholds (6,000 individuals) transferred to new housingand integrated into 5 new production zones (homeless, unemployedinrural and depressed urban neighborhoods) 4.04 One thousand marginal households introduced to income-generating activities 4.05 Five Kere sites inthe south introduced to income-generating activities (fishingassociations: farmers' associations) 5. Education 5.01 Fourthousand reading and calculation manuals produced 5.02 One thousand three hundred persons taught to read and write 5.03 Fourthousand nine hundrednew leamers at 140new sites I5.04 Updatedskills for 40 instructors inFamily and Children's Centers MINISTRY OFYOUTH, SPORTSANDLEISURE STRATEGIC ACTIONS FOCUSES 1. Goodgovernance 1.01 National colloquiumfor youth on the National youth program (PNJ) (resolution, adoption) 1.02 Organize4 awareness workshops in4 cities targeting the fight against AIDS 11.03 Participationin2 games competitions(Island Games, African A-I-18 5.06 Rehabilitationwork on 8 stadiums 5.07 Rehabilitationof 3 buildings 5.08 Rehabilitationof 3 youth centers 5.09 Rehabilitationof4 SRA sites MINISTRYOFSECONDARYANDBASICEDUCATION STRATEGIC ACTIONS FOCUSES 1.Goodgovernance 1.01Finalizethe centralMINESEBInstitutionalDevelopmentPlan 5. Education 5.01Roundtablewith financial partners to secure their formal agreement on the contentof the strategic reformplanandtheir contribution to its implementation 5.02 EPT request sent to the SecretariatofIMOA-EFT 5.03 EPTrequest discussedat the G8 meeting 5.04 Provideschoolkitto 2,700,000 pupils,andprovide 60,760 teachers with teachingkits - Govemmenprocurementcontractsignedwith the successfulbidder - Distributeschoolkitsandteachingkits with cooperationofFAFand FRAM I5.05 EPT fundingincludedinthe 2004budget (including HIPCinitiative) I 5.06 Schoolfundprovided to 19,181primaryandpublicschools - School - SchoolfunddepositedinFAFs fundtransferred to the accountsof CISCOs 5.07 Schoolbooksprovidedto 2,700,000 publicandprivateprimary school pupils,and60,760 public and private schoolteachers trainedin use A-I- 19 of the books 5.08 Partial statefunding of8,000 substituteteachers andFRAM 5.09 Recruit 1,658 new teachers 5.10 Newclassroomsbuilt andclassroomsinpoor condition rehabilitated in707primaryschools MINISTRYOFLABORANDSOCIALLEGISLATION STRATEGIC ACTIONS FOCUSES 1.Goodgovernance -1.01Finalizethe law governingthe Labor Code - Presentto Submit to the government Parliament r -1.02 Draftlaw regulating OSIESpresentedto the Cabinet Inspection andcontrol of EPZenterprises 9 Five enterprisesper week 9 - Inspection andcontrol of enterprisesunder ordinarylaw One Hundredtwenty enterprisesin6 months 9 Tenenterprisesper week 9 Two hundred forty enterprisesin6 months 1.03 Establish a one-stopshopfor work permitauthorization -Processingof procedures work permit requests 8 Twenty-five requestsprocessedper week 9 Sevenhundred twenty requestsprocessedin6 months MINISTRYOFPOSTALSERVICES, TELECOMMUNICATIONSAND COMMUNICATIONS r STRATEGIC ACTIONS FOCUSES 1. Goodgovernance 1.01PrivatizeTELMA 1.02 Twenty public-accesstelephone centers, to improve accessto information andcommunications 2. Security 2.01 Provideaccessto ruralareas: 5 isolatedareaslackingtelephones connectedby satellite A-1-20 MINISTRY OFECONOMY,FINANCEAND BUDGET STRATEGIC ACTIONS FOCUSES 1.Goodgovernance -1.01 Financialmanagement - Establishacommitteetoandlegaldocumentsrelatedto monitor reformmeasures Finalizethe organiclaw budget management --- Finalizeregulationsonestablishment Finalizethe new GovemmentContractingCode ofIGF Treasury audit --- Reduce 1.02 Customs Service Ratereformfor 2004 (integrateinBudgetLaw) time to clear customsinairports (24hours) Reduce time to processcontainers(48hours) MINISTRYOFAGRICULTURE,LIVESTOCKANDFISHING J. DEPARTMENTOFAGRICULTURE STRATEGIC ACTIONS FOCUSES 1.Goodgovernance t 1.01 Perform 10audits I I 1.02 Create 3 regionalchambers,30 departmentalchambers and 500 t I I 1.03Strengthenthe assets of the interprofessionalplatforms for rice growers 1.04 Distribute2,000 planters' maps and2,000 dibbers(with GES) I 3.RoadsDrOSalYl I Rehabilitate78 kmof RIPand65 kmof intercommunal roadsinthe 1 I . . II 3.01 South (Upper basinofMadrare) I 3.02 Rehabilitate35 kmofaccessmadsinthe SAVAregion 3.03 Restore2 landing strips (inMandritsaraandSoadona) 4. Ruraldevelopment 4.01 Supportthe 6 biodiversity activities within the framework of the 4.02 Train6 teams onenvironmentalimpact, with 180agentstrained 4.03 Undertakeerosioncontrol measures in9 communes 4.04 Undertake2 limitedagricultural surveys for the purpose ofinstalling the information svstem A-1-21 4.05 Finalize a 30-yearlandtenure plan 4.06 Distribute 23,000 landtitles 4.07 Restore 16,330 haofimgatedland, including980 hainthe South, 750 hainthe SAVA region, 500hainBe Mangoky, 2,100 hainthe cyclone damage restorationprogram,and 12,000haby the PSDR 4.08 Improve functioning of imgationcanalsover 25,500 ha (Dabara, Marovoay, Alaotra) II I 4.09 Maintain210 kmofirrigation canals in the Southeast 1 4.10 Sell4,500 piecesoffarmequipmentin the framework of small farm equipmentoperations 4.11 Finance543 agricultural subprojectsand 83 crop storageunitsinthe 6 umvinces 4.12 Create 1,500 demonstrationplotsfor a variety ofcrops 4.13 Organizefarming competitionsat the nationalandregionallevel 4.14 Treat 80%of landinfestedwith locusts 4.15 Finance60 transformationunits and 191undernon-farmprojectsby the PSDR c 1I4.16 Construct 10wells inthe South (upperbasinof Man-) 4.17 Establisha systemto facilitate accessto fertilizers in3 pilotareas (VOUCHER) 4.24 Submit a billon a maintenance fund for imgationnetworks 4.25 Draw up200 communaldevelopmentplans A-1-22 14.26 Prune780,000 coffee plantsinthe easternregions 4.27 Distribute220,000 robustacoffee plants, 100,000 arabicaplants, 6,000 clove plants,20,000 pepperplants, and8,000 lychee plants 5. Primaryeducation 5.01 Construct 11schools, including 10inthe South (upperbasin of Mandrare)and 1inthe Midwest 5.02 Teach970 personsinthe upperbasin of Mandrare project to read andwrite MINISTRYOFAGRICULTURE,LIVESTOCKANDFISHING K. DEPARTMENTOFLIVESTOCK STRATEGIC I ACTIONS I FOCUSES 2. Security 2.01 Create1,100,000 identity cardsfor cattle I 2.02 I Equip 10animalmarkets I 3. Roadsprogram 3.01 Rehabilitate225 kmof diary farmroadsin the region of Vakinakaratra A-1-23 MINISTRYOFAGRICULTURE,LIVESTOCKANDFISHING L. DEPARTMENTOFFISHING STRATEGIC ACTIONS FOCUSES 1. Goodgovernance 1.01 Establish2 zones for intensiveplanning:ZAC (Bay of Ambaro and Morondava) 1.02 Draw upandpublishatypical protocol,compliantwith the existing legislativeframework 1.03 Organize aworkshopon recoveryof the lobster industryinthe South (GOLDS) 2. Security 2.01 Undertake240 monitoring missions I 4. Ruraldevelopment I4.01 Transfer managementof 30 waterresourcesor othernaturalresources 4.02 Restock 30 lakes (Alaotra, Itasy, Konkony) 4.03 Launchaproject to inventory fishing resourcesto serve as the basis of along-term managementplan I II 4.04 Finance 99 fish farming infrastructuresinthe 6 provinces(PSDR) 4.05 Emance 190fishing subprojectsin the 6 provinces(PSDR) I 4.06 Produce 6 millionfries I ~ ~~ A-1-24 MINISTRYOFTOURISM STRATEGIC ACTIONS FOCUSES 1.Goodgovernance 1.01 Improvepassengerreceptionininternationalandregional -Identify airports problemsandpropose solutions - Implementsolutionsin3 major airports 1.02 Improveproceduresfor grantingvisasfor businesstravelers and expatriate workers -- Implementchanges Reviewvisa grantingprocedures 1.03 Opensky policyfor airtransport -- Identify Reviewthe air transportliberalizationcode incentivesfor privatecompaniesoffering intemalflights -1.04 hotelsfully or partially ownedby the state. Priorities: Zahamotel, Privatizegovernment-ownedhotels Audit Betty Plage, Hilton,H6teldesThermes -- Developprivatization outline(s) Draw upand submitto discussion alegal framework goveming management,leasing, operationand sale of hotels - Implementandensure complianceof state-ownedhotels with current legislation 2.Security 2.01 -Identifynew types of activitiesrelatedto tourism that might serve as altemativeemploymentand/or supplementary employmentfor peasant farmers inthe provinceof Antananarivo -Implement 1pilotproject inthe provinceofAntananarivo 3. Roadsprogram 3.01Enhancetourismsites - Inventory sitesandprioritize inline with the roadsprogram (sites located alongRN1 (Antananarivo-Tsiroanomandidy)and RN43 (Analavory- -Sambaina) Createaccess to sites andenhance their tourism value eitherby making 4. Ruraldevelopment 4.01 PromoteinvestmentintheToursim LandReserves(RFTs) created - Studycreationof 3 FUTs by decree anddraw updevelopmentplans --(Cirquerouge,RFTs Morondava andManambato) Fence off 3 RFTs created(Ankarana, Andavadoakaand Manombo) Make the 3 availableto investors(Isalo, AnkaranaandMontage d'Ambre) 5. Education 5.01 Popularizethe conceptof ecotourism Action 1:Education/trainingin3 localities A-II. ACTIONPLANFOR2004 ACCORDING TO THETHREESTRATEGIC FOCUSES As is true for the overall PRSP, programming andbudgetingfor the activities are the resultof a lengthy participative process. This annex providesthe planof budgetedactivities prepared by the sectoralministries for 2004. The budgetingof sectoralactionplansinconnectionwith the Public InvestmentProgramis consistentwiththe macroeconomicframework, which are basedon assumptionsof substantialeconomicgrowth driven by a major increaseinpublic andprivate investment, andpertainsessentiallyto priority actions. SUMMARYA-11. ACTION PLANFOR2004 ACCORDING TO THETHREESTRATEGICFOCUSES SUMMARY OFBUDGETPROJECTIONSFORTHE 2004 ACTIONPLANS Page STRATEGICFOCUS 1:Restorethe ruleoflawanda well governedsociety A-11-0 PUBLIC AUTHORITIES: Presidency, Senate, NationalAssembly, Constitutional A-II-1 HighCourt, PrimeMinister's Office, ForeignAffairs, Justice SOVEREIGNTY:NationalDefense,Public Security A-II-2 ECONOMYAND FINANCE:Economy, Finance, Budget A-II-3 GENERALGOVERNMENT: Administrative reform A-II-4 GENERALGOVERNMENT: CivilService A-II-5 GENERALGOVERNMENT: Decentralization, Developmentof Autonomous A-11-6 Provinces and Communes STRATEGICFOCUS2: Fosterandpromoteeconomicgrowththroughincreased A-II-7 effective investmentand openingupto the world economy TOURISM A-II-8 ENERGY; MINING; WATER AND SANITATION A-II-9 RURALDEVELOPMENT:Agriculture, Livestock, Fishing A-11-10 RURALDEVELOPMENT:Environment;Water andForests A-II-11 DEVELOPMENTAND INCREASEDDENSITY OFSTRUCTURING INFRASTRUCTURE A-II-12 POSTALSERVICES, TELECOMMUNICATIONSAND COMMUNICATIONS A-II-13 INDUSTRY,TRADE, AND DEVELOPMENTOFTHE PRIVATESECTOR STRATEGICFOCUS3: Fosterandpromotesystemsfor establishinghumanand A-II-14 material securityand broader social protection HIGHEREDUCATIONAND SCIENTIFICRESEARCH A-11-15 BASICEDUCATIONAND OCCUPATIONALTRAINING A-II-16 HEALTH A-II-17 SOCIALAND CULTURAL ACTIVITIES A-II-18 PUBLICINVESTMENTPROGRAM Summary of BudgetProjectionsfor 2004 Action Plans PUBLICAUTHORITIES GRAND TOTAL 155.2 RAISED 120.3 TOBERAISED 34.9 SOVEREIGNTY 1IIGRANDTOTAL 70.5 RAISED I 70.5 TO BE RAISED 0.0 FINANCE GRAND TOTAL 271.7 RAISED 197.7 TO BERAISED 74.0 INTERIOR GRAND TOTAL 113 RAISED 10.0 TO BERAISED 1.3 FOP GRANDTOTAL 9.0 RAISED 8.0 TO BERAISED 1.o DECENTRALIZATION GRANDTOTAL 573 RAISED 50.7 TO BERAISED 6.6 RAISED 1.9 TO BERAISED 6.8 MINISTRY OFENERGYAND MINES(MEM) GRAND TOTAL 346.0 RAISED 122.8 TO BERAISED 223.2 AGRICULTURE GRAND TOTAL 311.5 RAISED 310.5 TO BERAISED 1.o ENVIRONMENT GRAND TOTAL 181.7 RAISED 181.7 TO BERAISED 0.0 INFRASTRUCTURE GRAND TOTAL 1409.4 RAISED 849.0 TO BERAISED 560.4 POSTALSERVICESAND TELECOMMUMCATIONS (PTT) GRAND TOTAL 9.7 RAISED 8.1 TO BERAISED 1.6 MINISTRY OFINDUSTRY,TRADE, AND PRIVATE SECTOR GRAND TOTAL 31.1 DEVELOPMENT(MICDSP) RAISED 19.1 TO BE RAISED 12.0 MINISTRY OFSECONDARY AND BASIC EDUCATION(MINESEB) GRAND TOTAL 220.0 RAISED 196.2 TO BERAISED 23.8 HIGHEREDUCATION GRANDTOTAL 93.9 RAISED 64.5 TO BERAISED 29.4 HEALTH GRANDTOTAL 328.8 RAISED 157.5 TO BERAISED 171.3 SOCIALWELFARE GRANDTOTAL 260.1 RAISED 116.4 I I TO BE RAISED 143.7 OVERALL GRANDTOTAL 3775.9 A-11-0 TO BERAISED 1292.0 HIPCINITIATIVE 123.7 FRAMEWORK GRANDTOTAL 3 924.2 RAISED 2 484.9 TO BERAISED 1439.3 A-11-1 A-11-2 e5e,B 1 ? ? - o! A-11-3 A-11-4 A-11-5 ? 3 2 ." 0 c d A-11-6 I A-11-7 rl 00 u 0 A-11-8 T r- 2 3 A-11-9 A-11-10 A-11-11 I ru 0 C A-11-12 I .- Y g % i="cc' E A-11-13 3 sd m 2P CI C .f sw c Y G 0 A-11-14 .C A-11-15 m E m d m .-bo E 0 a 2i 9 0 Y E -r( A-11- 16 i r A-11-17 1 X I A-11-18 1 M c .d A-11-19 x A-11-20 ki A-11-2I A-111- MACROECONOMIC FRAMEWORK MACROECONOMICFRAMEWORK Annex 3 aves two growth scenarios: - FirstScenario: asustainedeconomicgrowth rateof 6 percentperyearin2003 and an 8 percent averagefor 2004-2006, which i s inline with the poverty reduction targetsinthis PRSP. - Second Scenario: an economic growth rate of 6 percentin2003, but arelatively weak 4.5 percent averagefor 2004-2006. This scenarioi s based, on the onehand, on the conservativehypothesisthat the trendwill continue from previous years and, on the other hand, onfailure to meet the targetsfor mobilizing the necessary resources (fundsneeded), and also onfailure to implementthe mainreforms and measuresplanned. LIST OFTABLES Table 1.Madagascar: SelectedEconomic and FinancialIndicators, 2001-06 Table 2. Madagascar: Supply andUseof Resources, 2001-06 (inFMGbillions unlessotherwiseindicated) Table 3. Madagascar: Growth Rate by Sector of Activity (annual changeinpercent) Table 3bis. Madagascar: Availability andUse of Resourcesat 1984 Constant Prices (inFMGbillions at 1984prices) Table 4. Madagascar: Central Government Accounts, 2001-06 (inFMGbillions) Table 5. Madagascar: Central Government Accounts, 2001-06 (as apercentageof GDP) Table 6.(inmillions Madagascar: Balance of Payments, 2001-06 of SDRs) Table 7. Madagascar: Balance of Payments, 2001-06 (as apercentageof GDP) Table 8. Madagascar: Macroeconomic Hypotheses, Public RevenueandExpenditure, 2001-06 Table 9. Madagascar: Breakdown of InvestmentBudgetbyProgram, 2003-06 (Scenario 1) (inFMGbillions) Table 10. Madagascar: Possible Breakdowns of Investment Budget by Sector, 2003-06 (Scenario 1) (inFMGbillionsand annualchangeinpercent) Table 11.Madagascar: Grouping of Institutions andMinistries(and Projects) By Sector (based on Public Investment ProgramClassification) A-111-1 Table 1.Madagascar:SelectedEconomi mdFinancialIndicators, 101-06 Scenario 1 Scenario2 2001 2002 2003 2004 2005 2006 2003 2004 2005 2006 (Annualchangeinpercent,unlessotherwise - - indicated) NationalAccounts and Prices RealGDP at marketprices 6.0 -12.7 6.0 7.0 7.5 8.0 6.0 4.0 4.5 5.0 GDP Deflator 7.3 15.4 6.6 6.0 4.9 4.4 6.6 7.0 6.5 6.0 ConsumerPrice Index Average 7.4 15.8 8.0 6.0 4.9 4.4 8.0 7.0 6.5 6.0 Endof Period 4.8 13.5 7.0 6.0 4.9 4.4 7.0 7.0 6.5 6.0 ExternalSector (inSDRs) Exports, f.0.b. 47.6 -50.5 56.0 16.1 19.7 19.7 56.0 11.5 14.4 12.9 Imports, c.i.f. 29.1 -37.6 45.0 7.6 20.2 15.1 45.0 5.0 13.7 10.0 (Percentage of GDPt NationalAccounts GrossDomesticInvestment 18.5 14.3 17.5 21.4 22.5 23.2 17.5 15.4 16.1 20.2 Public Sector 7.3 4.8 7.3 10.2 10.4 10.5 7.3 7.4 7.9 8.4 PrivateSector 11.2 9.4 10.2 11.2 12.1 12.7 10.2 8.0 8.2 11.8 GrossNational Savings 17.2 8.3 12.9 17.3 18.0 19.2 12.9 11.2 12.0 16.6 Public Sector 0.5 -1.5 2.8 2.1 2.9 3.7 2.8 0.9 1.5 2.5 PrivateSector 16.7 9.8 10.1 15.2 15.0 15.5 10.1 10.3 10.5 14.1 Goa. FinancialOperations TotalRevenue 10.1 8.0 10.6 11.5 12.0 12.5 10.6 10.3 10.6 11.3 Of which tuxes 9.7 7.7 10.3 11.2 11.6 12.1 10.3 10.0 10.2 10.9 TotalExpenditwe 17.6 15.7 18.2 20.2 20.2 19.9 18.2 17.5 17.8 18.0 InterestDue 2.0 2.2 1.8 1.3 1.2 1.1 1.8 1.3 1.2 1.1 CUT.Expenditureexcl. Interest 8.1 7.1 8.4 8.6 8.5 8.3 8.4 8.6 8.5 8.3 CapitalExpenditure 7.3 4.8 7.3 10.2 10.4 10.5 7.3 7.4 7.9 8.4 Overall Balance(oncommitments basis, beforestructuralreforms) Incl.Grants -3.6 -5.5 -3.2 -5.8 -5.3 -4.6 -3.2 -4.1 -4.1 -3.6 Excl. Grants -7.5 -7.7 -7.6 -8.7 -8.2 -7.4 -7.6 -7.2 -7.2 -6.7 Net Balanceof StructuralReforms -0.7 0.0 -0.1 -0.1 0.0 0.0 -0.1 -0.1 0.0 0.0 OverallBalance(OnCommitment Basis, Incl. [text missing]) -4.3 -5.5 -3.3 -5.9 -5.3 -4.6 -3.3 -4.2 -4.1 -3.6 OverallBalance(on cashbasis) -4.4 -6.2 -4.3 -5.9 -5.3 -4.6 -4.3 -4.2 -4.1 -3.6 IPercentaeeof GDP) ExternalC-urrent Accounts Excl. OfficialTransfers -2.0 -6.1 -7.3 -5.1 -5.5 -4.8 -7.3 -5.2 -5.2 -4.6 Incl. Current Official Transfers -1.3 -5.9 -4.6 -4.1 -4.5 -3.9 -4.6 -4.2 -4.2 -3.6 Incl. Current andCapitalTransfers3.7 -2.7 -1.1 0.3 -0.2 0.3 -1.1 0.3 0.4 1.0 [Inthe UnitsIndicated) Gross OfficialReserves(In Millionsof [...I) 317.5 266.6 324.0 477.7 612.5 780.4 324.0 466.5 570.2 697.5 InweeksofNonFactor Goods andServicesImports 14.4 17.9 15.2 20.8 22.9 25.6 15.2 20.8 22.9 25.6 ExchangeRate(PeriodAverage) MalagasyFrancslSDR 8,391 8,774 9,308 9,659 9,992 10,279 9,308 9,750 10,241 10,696 MalagasyFrancs/US$ 6,485 6,425 6,873 7,147 7,393 7,606 6,873 7,214 7,578 7,914 VominalGDPat MarketPrices (in FMGbillions) 29,843 30,058 33,978 38,538 43,453 48,997 33,978 37,811 42,081 46,836 'er CapitaGDP(US Dollars) 302 299 307 326.0 345.7 368.7 307 316.9 326.6 338.7 A-111-2 Table2. Madagascar:SupplyandUse ofResources, 2001-06 (inFMG bill: IS, unless otherwise indicated) Scenario 1 ~ 2002 200: Scenario 2 2003 2004 2005 2006 2003 2004 2005 2006 InFMGbillions GDPat Market Prices 29,843 30,051 33,978 38,538 43,453 48,997 33,978 37,811 42,081 46,836 Net Importsof Goods and Services 959 1,972 Importsof Goods and Services 9,637 6,781 2,568 2,360 2,872 2,962 2,568 2,387 2,683 2,767 Goods(J0.b.) 6,262 4,084 10,315 11,515 13,924 16,262 10,315 11,351 13,285 15,125 Non Factor Services 3,375 2,695 6,283 7,016 8,724 10,328 6,283 6,910 8,254 9,482 ExportsofGoods and [Services] 8,678 4,805 4,032 4,499 5,200 5,934 4,032 4,441 5,032 5,642 Goods (f0.b.) 6,360 3,29C 7,747 9,154 11,053 13,300 1,747 8,964 10,602 12,357 Non Factor Services 2,318 1,519 5,445 6,557 8,121 9,999 5,445 6,359 7,641 9,010 2,302 2,597 2,932 3,301 2,302 2,605 2,962 3,348 TotalAvailable Resources 30,802 32,030 36,546 40,899 46,325 51,958 36,546 40,198 44,764 49,603 Consumption 25,281 27,745 Government 2,490 2,450 30,600 32,655 36,553 40,615 30,600 34,375 37.975 40,122 Private 22,791 25,296 2,943 3,363 3,743 4,117 2,943 3,295 3,623 3,944 27,657 29,291 32,810 36,498 27,657 31,080 34,352 36,178 Investment 5,521 4,285 Government 2,181 1,446 5,946 8,244 9,772 11,344 5,946 5,823 6,789 9,481 Private 3,340 2.839 2,496 3,924 4,502 5,120 2,496 2,803 3,331 3,943 3,450 4,320 5,270 6,223 3,450 3.020 3,458 5,539 Gross DomesticSavings 4,562 2,312 Government -276 -701 3,378 5,883 6,900 8,382 3,378 3,436 4,106 6,714 Private 4,838 3,013 55 524 958 1,489 55 53 317 818 3,323 5,359 5,942 6,893 3,323 3,383 3,789 5.896 3xternalCurrentAccounts (ExcL Grants) -598 -1,840 (IncL Grants) -389 -1,786 -2,485 -1,948 -2,370 -2,359 -2,485 -1,971 -2,171 -2,148 -1,569 -1,567 -1,957 -1,915 -1,569 -1,586 -1,748 -1,686 GrossNationalSavings 5,132 2,499 (ExcL Grants) 152 -451 4,377 6,677 7,815 9,429 4,377 4,237 5,040 7,795 (IncL Grants) 4,980 2,950 935 814 1,276 1,836 935 345 642 1,179 3,442 5,863 6,539 7,593 3.442 3,892 4,398 6,617 Ls a percentage of GDP GDP at Market Prices 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 Net Importsof Goods and Services 3.2 6.6 7.6 6.1 6.6 6.0 7.6 6.3 6.4 5.9 Importsof Goodsand Services 32.3 22.6 30.4 29.9 32.0 33.2 30.4 30.0 31.6 32.3 Exportsof Goods andServices 29.1 16.0 22.8 23.8 25.4 27.1 22.8 23.7 25.2 26.4 TotalAvailable Resources 103.2 106.6 107.6 106.1 106.6 106.0 107.6 106.3 106.4 105.9 Consumption 84.7 92.3 90.1 84.7 84.1 82.9 90.1 90.9 90.2 85.1 Government 8.3 8.2 8.7 8.7 8.6 8.4 8.7 8.7 8.6 8.4 Private 76.4 84.2 81.4 76.0 75.5 74.5 81.4 82.2 81.6 77.2 Investment 18.5 14.3 17.5 21.4 22.5 23.2 17.5 15.4 16.1 20.2 Government 7.3 4.8 7.3 10.2 10.4 10.5 7.3 7.4 7.9 8.4 Private 11.2 9.4 10.2 11.2 12.1 12.7 10.2 8.0 8.2 11.8 GrossDomesticSavings 15.3 7.7 9.9 15.3 15.9 17.1 9.9 9.1 9.8 14.3 Govern" -0.9 -2.3 0.2 1.4 2.2 3.0 0.2 0.1 0.8 1.7 Private 16.2 10.0 9.8 13.9 13.7 14.1 9.8 8.9 9.0 12.6 kternalCurrent Accounts (Ex1Grants) -2.0 -6.1 -7.3 -5.1 -5.5 -4.8 -7.3 -5.2 -5.2 -4.6 (IncL Grants) -1.3 -5.9 -4.6 -4.1 -4.5 -3.9 -4.6 -4.2 -4.2 -3.6 GrossNationalSavings 17.2 8.3 12.9 17.3 18.0 19.2 12.9 11.2 12.0 16.6 (Excl Grants) 0.5 -1.5 2.8 2.1 2.9 3.7 2.8 0.9 1.5 2.5 (Incl Grants) 16.7 9.8 10.1 15.2 15.0 15.5 10.1 10.3 10.5 14.1 A-111-3 Table3. Madagascar: GrowthRateper Sector of Activity (annualchangeinpercent) Scenario 1 Scenario 2 ~ ~~ 2001 2002 2003 2004 2005 2006 2003 2004 2005 2006 Primary Sector 4.0 -1.3 -1.8 4.5 4.8 5.0 -1.8 23 2.5 2.8 Agriculhlre 5.5 0.8 1.1 3.5 3.5 3.5 1.1 2.0 2.0 2.0 Livestock andFishing 3.1 2.6 1.0 5.5 6.0 6.5 1.0 2.5 3.0 3.5 Forestry 2.1 -20.0 -25.0 4.5 5.0 5.5 -25.0 2.5 3.0 3.5 Secondary Sector 7.6 -21.0 17.0 8.4 9.0 9.7 17.0 4.9 5.6 6 3 Excl. EPZ 4.8 -18.8 19.8 7.4 7.9 8.5 19.8 4.4 5.0 5.6 AgriculturalInd. -5.4 5.7 5.0 1.0 1.0 1.0 5.O 0.0 0.0 0.0 ExtractiveInd. 0.3 -34.0 36.5 9.0 9.5 10.0 36.5 5.0 5.0 5.0 Energy -6.3 -31.1 7.3 8.0 9.0 10.0 7.3 5.0 5.5 6.0 FoodInd. 4.3 -10.3 15.0 9.0 9.5 10.0 15.0 5.0 6.0 7.0 BeverageInd. 7.1 -13.2 10.0 9.0 9.5 10.5 10.0 5.0 6.0 7.0 Tobacco Ind. 5.8 -7.3 5.7 75 7.5 1.5 5.7 5.0 5.0 5.0 FatsandOils Ind. -1.8 -25.7 46.8 5.0 5.0 5.0 46.8 4.0 4.0 4.0 Pharmaceutical 12.6 -12.0 8.5 4.0 4.0 4.0 8.5 2.0 3.0 3.0 Textile Ind. -3.5 -52.3 70.0 8.0 8.5 9.0 70.0 5.5 6.0 6.5 LeatherInd. -14.7 -23.8 -41.0 5.0 5.0 5.0 -41.0 2.5 3.0 3.5 WoodInd. 2.1 -34.6 37.1 4.5 5.0 5.5 37.1 2.5 3.0 3.5 ConstructionMaterial 6.2 -36.3 5.9 9.5 10.0 10.5 5.9 6.0 6.5 7.0 Metal Lnd. 36.4 -11.8 22.5 8.0 8.5 9.0 22.5 5.0 6.0 6.5 TransportMaterial 0.0 -10.0 8.2 1.0 1.0 1.0 8.2 0.0 0.0 0.0 Elec. Equipment 29.4 -28.6 23.2 5.0 5.0 5.0 23.2 3.5 3.5 4.0 PaperInd. -1.1 -20.4 -1.8 3.5 3.5 3.5 -1.8 2.0 2.5 2.5 Other 11.3 11.3 8.2 6.0 6.0 6.0 8.2 3.5 3.5 4.0 ExportProcessing Zone (EPZ) 40.0 40.0 50.0 17.0 18.0 19.0 50.0 10.0 11.0 12.0 rertiary Sector 6.1 -15.1 9.4 7.6 8.2 8.7 9.4 4.6 5.2 5.7 PublicWorks 13.5 -15.1 20.0 20.0 20.0 20.0 20.0 12.5 13.0 14.0 GoodsTransport 5.7 -21.3 11.5 8.5 9.0 9.5 11.5 5.0 5.5 6.5 PassengerTransport 5.9 -35.4 10.0 7.5 8.0 8.5 10.0 4.0 4.5 5.0 Aux. Transport 5.7 -21.3 10.0 8.0 8.5 9.0 10.5 4.5 5.0 5.5 Telecommunications 5.5 -5.7 10.5 12.0 12.0 12.0 10.5 4.0 4.0 4.0 Trade 4.3 -7.4 10.1 6.0 6.5 7.0 10.1 4.5 5.0 5.5 Bank 8.1 5.0 10.0 7.0 7.0 7.0 10.0 4.0 4.0 4.0 Insurance 7.5 -15.0 8.2 6.0 6.0 6.0 8.2 3.5 3.5 3.5 Servicesrend. Bus. & Household 8.7 -19.3 8.2 8.0 9.0 9.5 8.2 5.0 6.0 6.5 Management 2.0 2.0 2.0 2.0 2.0 2.0 2.0 0.5 0.5 0.5 Mix.BankServices 8.1 -12.5 10.0 7.0 7.0 7.0 10.0 4.0 4.0 4.0 jDPatFactorCost 5.5 -11.5 6.0 6.6 7.1 7.6 6.0 3.8 4.3 4.8 ndirectTaxes 10.5 -23.6 6.6 11.2 11.4 11.4 6.6 6.1 6.5 6.8 ;DP at MarketPrices 6.0 -12.7 6.0 7.0 7.5 8.0 6.0 4.0 4.5 5.0 A-111-4 Table 3 bis. Madagascar: Availability and Use of Resourcesat 1984 ConstantPrices nFMGbillionsat 1984 prices Scenario 1 Scenario 2 2001 200; 2003 2004 2005 2006 750.3 767.3 7 ~ 808.9 2003 2004 2005 2006 Primary Sector 774.3 764.: 750.3 784.0 8213 862.7 a Agriculture 343.9 346.t 350.5 362.7 375.4 388.6 350.5 357.5 364.6 371.9 Livestock andFishing 324.6 333.c 336.4 354.9 376.2 400.6 336.4 344.8 355.1 367.6 Forestry 105.8 84.; 63.5 66.3 69.7 73.5 63.5 65.1 67.0 69.4 Secondary Sector 304.0 240.1 281.0 304.6 331.9 364.1 281.0 294.9 311.6 3313 See. Sect. excl. EPZ 272.7 221.? 252.8 271.5 292.9 317.7 252.8 263.9 277.1 292.7 Agricultural Ind. 8.1 8.5 9.0 9.0 9.1 9.2 9.0 9.0 9.0 9.0 ExtractiveInd. 7.3 4.8 6.6 7.2 7.8 8.6 6.6 6.9 7.2 7.6 Energy 45.2 31.1 33.4 36.1 39.3 43.3 33.4 35.1 37.0 39.2 FoodInd. 51.9 46.6 53.6 58.4 64.0 70.3 53.6 56.3 59.6 63.8 BeverageInd. 55.0 47.7 52.5 57.2 62.7 69.3 52.5 55.1 58.4 62.5 Tobacco Ind. 17.8 16.5 17.4 18.7 20.1 21.6 17.4 18.3 19.2 20.2 Fatsand Oils Ind. 8.9 6.6 9.7 10.2 10.7 11.2 9.7 10.1 10.5 10.9 Pharmaceuticals 10.7 9.5 10.3 10.7 11.1 11.5 10.3 10.5 10.8 11.1 Textile Ind. 6.8 3.3 5.5 6.0 6.5 7.1 5.5 5.9 6.2 6.6 Leather Ind. 1.2 0.9 0.6 0.6 0.6 0.6 0.6 0.6 0.6 0.6 WoodInd. 8.4 5.5 7.6 7.9 8.3 8.7 7.6 7.7 8.0 8.3 ConstructionMat. 9.O 5.7 6.1 6.7 7.3 8.1 6.1 6,4 6.9 7.3 MetalInd. 11.3 10.0 12.3 13.2 14.4 15.7 12.3 12.9 13.6 14.5 Goods Transport 4.5 4.1 4.4 4.4 4.5 4.5 4.4 4.4 4.4 4.4 Elec.Equipment 20.0 14.3 17.6 18.5 19.4 20.4 17.6 18.2 18.8 19.6 PaperInd. 3.0 2.4 2.4 2.4 2.5 2.6 2.4 2.4 2.5 2.5 Other 3.4 3.8 4.1 4.3 4.6 4.9 4.1 4.2 4.4 4.6 Zxport Processing Zones (EFT) 31.4 18.8 28.2 33.0 39.0 46.4 28.2 31.0 34.5 38.6 fertiary Sector 1,196.3 1.015.5 1,111.1 1,195.5 1,293.6 1,406.3 1,111.1 1,162.0 1,221.9 1,292.1 PublicWorks 46.9 39.8 47.8 57.3 68.8 82.5 47.8 53.7 60.7 69.2 GoodsTransport 244.4 192.4 214.5 232.7 253.7 277.8 214.5 225.2 237.6 253.1 PassengerTransport 88.4 57.0 62.8 67.5 72.9 79.0 62.8 65.3 68.2 71.6 Aux. Transport 65.8 51.8 57.0 61.5 66.7 72.7 57.0 59.5 62.5 65.9 Telecommunications 39.1 36.9 40.7 45.6 51.1 57.2 40.7 42.4 44.1 45.8 Trade 258.1 238.9 263.1 278.9 297.0 317.8 263.1 275.0 288.7 304.6 Banking 37.4 39.3 43.2 46.3 49.5 53.0 43.2 45.0 46.8 48.6 Insurance 0.9 0.8 0.9 0.9 1.0 1.0 0.9 0.9 0.9 1.0 BusinessandHousehold Services 305.0 246.1 266.4 287.7 313.6 343.3 266.4 279.7 296.5 315.7 Management 110.3 112.5 114.8 117.1 119.4 121.8 114.8 115.3 115.9 116.5 Misc.Charges 46.6 -48.9 -53.8 -57.6 -61.6 -65.9 -53.8 -56.0 -58.2 -60.5 ;DP at FactorCost at 1984 Prices 2,228.1 1,971.0 2,088.6 2,226.4 2,385.2 2,567.2 2,088.6 2,168.3 2,262.0 2,371.7 IndirectTaxes 243.3 186.O 198.2 220.5 245.6 273.7 198.2 210.3 224.0 239.2 ;DP at 1984Prices 2,471.4 2,157.0 2,286.9 2,446.9 2,630.8 2,840.9 2,286.9 2,378.6 2,486.0 2,610.9 A-111-5 Table 4. Madagascar:CentralGovernment Accounts, 2001-06 (InbillionsofMalagasyfrancs) 2001 2002 2003 2004 2005Scenario 1 Scenario 2 2006 2003 2004 2005 2006 TotalRevenue andGrants 4,190.6 3,053.2 5,091.9 5,572.7 6,465.4 7,488.7 5,091.9 5,046.1 5,742.7 6,712.0 TotalRevenue 3,029.0 2,403.1 3,611.0 4,431.9 5,214.4 6,124.6 3,617.0 3,894.5 4,460.6 5,292.5 FiscalRevenue 3,029.0 2,403.1 3,617.0 4,431.9 5,214.4 6,124.6 3,617.0 3,894.5 4,460.6 5,292.5 Ofwhich tuxes 2,906.4 2,304.2 3,509.0 4,316.3 5,040.6 5,928.6 3,509.0 3,781.1 4,292.2 5,105.1 Grants 1,161.6 650.1 1,474.9 1,140.8 1,251.0 1,364.1 1,474.9 1,151.6 1,282.2 1,419.5 CurrentGrants 427.7 249.6 879.7 289.8 317.7 346.5 879.7 292.5 325.1 360.5 CapitalGrants 733.9 400.5 595.2 851.1 933.2 1.017.6 595.2 859.1 956.5 1.059.0 I (Projects) Total Expenditure 5,262.6 4,709.6 6,187.0 7,791.7 8,757.9 9,755.7 6,187.0 6,605.0 7,474.9 8,417.2 CurrentExpenditure 3,081.7 3,109.4 3,544.6 3,867.5 4,256.3 4,635.5 3,544.6 3,802.0 4,143.8 4,474.5 Budget Expendim 3,001.O 2,781.2 3,441.4 3,819.5 4,208.3 4,587.5 3,441.4 3,754.0 4,095.8 4,426.5 OfStaff which: 1,337.6 1,380.0 1,815.9 1,965.5 2,172.6 2,351.7 1,815.9 1,925.6 2,102.9 2,252.9 Operating Costs 1,071.5 741.7 1,024.3 1,349.9 1,522.4 1,717.1 1,024.3 1,321.5 1,472.1 1,642.9 ForeignDebt InterestDue 349.1 407.7 399.4 296.2 299.2 298.1 399.4 299.0 306.7 310.2 Public Debt InterestDue 242.8 251.8 201.8 207.9 214.1 220.5 201.8 207.9 214.1 220.5 TreasuryOperations 54.3 202.1 65.0 45.0 45.0 45.0 65.0 45.0 45.0 45.0 EmergencyExpenditure 25.0 122.2 35.0 0.0 0.0 0.0 35.0 0.0 0.0 0.0 FCVOperaMg Costs 1.4 3.9 3.2 3.0 3.0 3.0 3.2 3.0 3.0 3.0 CapitalExpenditure (incl. HIPC) 2,180.9 1,445.8 2,496.3 3,924.2 4,501.5 5,120.2 2,496.3 2,803.0 3,331.0 3,942.7 Domestic Resources 942.3 559.1 800.0 1,224.4 1,435.1 1,663.3 800.0 874.6 1,062.0 1,280.8 ExtemalResources (icl. HIPC) 1,238.6 886.2 1,696.3 2,699.7 3,066.4 3,456.9 1,696.3 1,928.4 2,269.1 2,661.9 Onlending 154.4 146.1 146.1 NetCostsof StructuralReforms -223.1 5.8 -17.1 -40.0 0.0 0.0 -17.1 -40.0 0.0 0.0 structural Reform Revenue 11.5 5.8 10.0 10.0 0.0 0.0 10.0 10.0 0.0 0.0 structuralReform Expenditure 234.6 0.0 27.1 50.0 0.0 0.0 27.1 50.0 0.0 0.0 OverallBalance(on commitments basis after smctural reform) OverallBalanceincl. Grants -1,295.1 -1,650.6 -1,112.2 -2,259.0 -2,292.5 -2,267.0 -1,112.2 -1,598.9 -1,732.1 -1,705.2 OverallBalanceexcl. GEUltS -2,456.7 -2,300.8 -2,587.1 -3,399.8 -3343.5 -3,631.1 -2,587.1 -2,750.5 -3,014.3 -3,124.7 ChangesinDomArrears -27.0 -212.6 -341.6 0.0 0.0 0.0 -341.6 0.0 0.0 0.C OverallBalance(on cashbasis) -1,322.1 -1,863.2 -1,453.7 -2,259.0 -2,292.5 -2,267.0 -1,453.7 -1,598.9 -1,732.1 -1,705.2 A-111-6 Table 5. Madagascar: Central Government Accounts, 2001-06 Scenario 1 Scenario2 2001 2001 2003 2004 2005 2006 2003 2004 2005 2006 TotalRevenueand Grants 14.0 10.2 15.0 14.5 14.9 15.3 15.0 13.3 13.6 14.3 TotalRevenue 10.1 8.0 10.6 11.5 12.0 12.5 10.6 10.3 10.6 11.3 FiscalRevenue 10.1 8.0 10.6 11.5 12.0 12.5 Ofwhichfiscal 10.6 10.3 10.6 11.3 9.7 7.7 10.3 11.2 11.6 12.1 10.3 10.0 10.2 10.9 Grants 3.9 2.2 4.3 3.0 2.9 2.8 4.3 3.0 3.0 3.0 C m n t Grants 1.4 0.8 2.6 0.8 0.7 0.7 2.6 0.8 0.8 0.8 CapitalGrants (Projects) 2.5 1.3 1.8 2.2 2.1 2.1 1.8 2.3 2.3 2.3 TotalExpenditure 17.6 15.7 18.2 20.2 20.2 19.9 18.2 17.5 17.8 18.0 C m n t Expenditure 10.3 10.3 10.4 10.0 9.8 9.5 10.4 10.1 9.8 9.6 BudgetExpenditure 10.1 9.3 10.1 9.9 9.7 9.4 10.1 9.9 9.7 9.5 Ofwhich: Staff 4.5 4.6 5.3 5.1 5.0 4.8 5.3 5.1 5.0 4.8 operating 3.6 2.5 3.0 3.5 3.5 3.5 3.0 3.5 3.5 3.5 ForeignDebt InterestDue 1.2 1.4 1.2 0.8 0.7 0.6 1.2 0.8 0.7 0.7 PublicDebt InterestDue 0.8 0.8 0.6 0.5 0.5 0.5 0.6 0.5 0.5 0.5 TreasuryOps. 0.2 0.7 0.2 0.1 0.1 0.1 0.2 0.1 0.1 0.1 Emergency Expenditure 0.1 0.4 0.1 0.0 0.0 0.0 0.1 0.0 0.0 0.0 FCV Op. Costs 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 ClapitalExpenditure (incl. HIPC) 7.3 4.8 7.3 10.2 10.4 10.5 7.3 7.4 7.9 8.4 Domestic Resources 3.2 1.9 2.4 3.2 3.3 3.4 2.4 2.3 2.5 2.7 ExtemalResources (incl. HIPC) 4.2 2.9 5.0 7.0 7.1 7.1 5.0 5.1 5.4 5.7 Onlending 0.o 0.5 0.4 0.0 0.0 0.0 0.4 0.0 0.0 0.0 Vet Costs of Structural Reform -0.7 0.0 -0.1 -0.1 0.0 0.0 -0.1 -0.1 0.0 0.0 Smctural ReformRevenue 0.o 0.o 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 StructuralReformExpenditure 0.8 0.0 0.1 0.1 0.0 0.0 0.1 0.1 0.0 0.0 3verallBalance (on commitments m i s after structural refom) lvemllBalance (incl. grants) -4.3 -5.5 -3.3 -5.9 -5.3 -4.6 -3.3 4.2 4.1 -3.6 3verallBalance (excl. grants) -8.2 -7.7 -7.6 -8.8 -8.2 -7.4 -7.6 -7.3 -7.2 -6.7 Zhanges inDomArrears -0.1 -0.7 -1.0 0.0 0.0 0.0 -1.0 0.0 0.0 0.0 h e r a l l Balance(cash basis) 4.4 -6.2 4.3 -5.9 -5.3 -4.6 4.3 4.2 4.1 -3.6 A-111-7 Table6. Ma& inmillionsof SDRs) Scenario 1 Scenario2 2001 2002 2003 2004 2005 2006 2003 2004 2005 2006 CurrentBalance -46.4 -203.5 -168.6 -162.2 -195.9 -186.3 -168.6 -162.7 -170.7 -157.6 Goods and Services -114.3 -224.8 -275.9 -244.4 -287.4 -288.2 -275.9 -244.9 -262.0 -258.7 Trade Balance 11.6 -90.5 -90.1 47.5 -60.4 -32.0 -90.1 -56.6 -59.8 -44.2 Exports 757.9 375.0 584.9 678.9 812.8 972.8 584.9 652.2 746.1 842.3 Imports -746.3 -465.5 -675.0 -726.4 -873.1 -1,0043 -675.0 -708.8 -805.9 -886.5 Net Services -125.9 -134.3 -185.8 -196.9 -227.1 -256.1 -185.8 -188.3 -202.1 -214.5 Services, Receipts 276.3 173.1 247.3 268.9 293.4 321.2 247.3 267.2 289.2 313.0 Services,Payments -402.2 -307.4 433.1 465.8 -520.5 -577.3 433.1 -455.5 -491.3 -527.5 [ncome -46.7 -53.0 -56.4 42.3 42.6 -42.7 -56.4 -42.3 42.8 -43.4 Receipts 18.7 20.1 19.3 19.9 20.7 21.6 19.3 19.9 20.4 20.8 Payments -65.4 -73.1 -75.7 -62.2 -63.3 -64.2 -75.7 -62.2 -63.3 -64.2 3urrentTransfers 114.6 74.2 163.6 124.5 134.1 144.5 163.6 124.5 134.1 144.5 Govemment 24.9 6.2 98.3 39.5 41.3 43.2 98.3 39.5 41.3 43.2 Private 89.7 68.0 65.3 85.0 92.8 101.3 65.3 85.0 92.8 101.3 ZapitalandFinancialAccount 65.9 104.1 168.2 226.8 246.9 261.9 168.2 226.8 246.9 261.9 CapitalTransfers 88.6 44.7 63.9 88.1 93.4 99.0 63.9 88.1 93.4 99.0 Govemment 88.6 44.7 63.9 88.1 93.4 99.0 63.9 88.1 93.4 99.0 PrivateSector 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 ?inancia1Account 107.9 25.5 104.2 138.7 153.5 162.9 104.2 138.7 153.5 162.9 Direct Investment 73.1 6.4 13.1 52.0 60.6 70.6 13.1 52.0 60.6 70.6 Portfolio Investment 0.0 0.0 0.o 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Other 34.8 19.1 91.1 86.7 92.9 92.3 91.1 86.7 92.9 92.3 Govemment 21.5 48.1 96.6 92.0 97.3 97.3 96.6 92.0 97.3 97.3 Drawings 90.2 120.3 167.6 137.7 144.1 150.8 167.6 137.7 144.1 150.8 Repayments -68.7 -72.2 -71.0 45.8 46.8 -53.5 -71.0 -45.8 46.8 -53.5 PrivateSector -7.5 -7.9 -5.4 -5.3 4.4 -5.0 -5.4 -5.3 -4.4 -5.0 Drawing 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Repayments -7.5 -7.9 -5A -5.3 -4.4 -5.0 -5.4 -5.3 4.4 -5.0 Banks,Net 20.7 -21.1 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Other -130.6 33.9 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 IverallBalance 19.5 -99.4 -0.4 64.6 51.0 75.6 -0.4 64.1 76.2 104.3 Tinancing -19.5 99.4 0.4 -84.0 -84.9 -115.8 0.4 -72.8 -53.7 -75.2 Jet ForeignAssets (increase) -76.9 40.0 -40.1 -136.4 -140.2 -173.3 -40.1 -125.2 -109.1 -132.7 UseofIMFCredit(net) 21.4 8.6 17.3 17.3 -5.4 -5.4 17.3 17.3 -5.4 -5.4 Purchases 22.7 11.4 22.7 22.7 0.0 0.0 22.7 22.7 0.0 0.0 Repurchases -13 -2.7 -5.4 -5.4 -5.4 -5.4 -5.4 -5.4 -5.4 -5.4 Other Assets(BCMReserves) -98.3 31.4 -57.4 -153.7 -134.8 -167.9 -57.4 -142.5 -103.7 -127.3 Jet Change inArrears (excl. BCM) 1.6 1.5 -9.5 0.0 0.0 0.0 -9.5 0.0 0.0 0.0 DebtRelief andCancellation 55.8 57.9 50.0 ... ... ... 50.0 ... ... ... ... ... ... Maturity 55.8 57.9 50.0 ... ... ... ... 50.0 Arrears 0.0 0.o 0.0 ... ... 0.0 ... .*. ... A-111-8 Table 7. Madagascar: BalanceofPayments,2001-06 - a percentageof GDP) 2001 2002 2003Scenario 2005 2006 1 2004 2003Scenario 2005 2006 2 2004 CurrentAccount Balance -1.3 -5.9 4.6 4.1 -4.5 -3.9 4.6 4.2 4.2 -3.6 Goods and Services -3.2 -6.6 -7.6 -6.1 -6.6 -6.0 -7.6 -6.3 -6.4 -5.9 TradeBalance 0.3 -2.6 -2.5 -1.2 -1.4 -0.7 -2.5 -1.5 -1.5 -1.0 Exports 21.3 10.9 16.0 17.0 18.7 20.4 16.0 16.8 18.2 19.2 Imports -21.0 -13.6 -18.5 -18.2 -20.1 -21.1 -18.5 -18.3 -19.6 -20.2 Net Services -3.5 -3.9 -5.1 4.9 -5.2 -5.4 -5.1 4.9 4.9 -4.9 Services, Receipts 7.8 5.1 6.8 6.7 6.7 6.7 6.8 6.9 7.0 7.1 Services, Payments -11.3 -9.0 -11.9 -11.7 -12.0 -12.1 -11.9 -11.7 -12.0 -12.0 Income -1.3 -1.5 -1.5 -1.1 -1.0 -0.9 -1.5 -1.1 -1.0 -1.0 Receipts 0.5 0.6 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 Payments -1.8 -2.1 -2.1 -1.6 -1.5 -1.3 -2.1 -1.6 -1.5 -1.5 ZurrentTransfers 3.2 2.2 4.5 3.1 3.1 3.0 4.5 3.2 3.3 3.3 Govemment 0.7 0.2 2.7 1.0 0.9 0.9 2.7 1.0 1.0 1.0 private 2.5 2.0 1.8 2.1 2.1 2.1 1.8 2.2 2.3 2.3 ZapitalandFinancialAccount 1.9 3.0 4.6 5.7 5.7 5.5 4.6 5.8 6.0 6.0 ZapitalTransfers 2.5 1.3 1.8 2.2 2.1 2.1 1.8 2.3 2.3 2.3 Govemment 2.5 1.3 1.8 2.2 2.1 2.1 1.8 2.3 2.3 2.3 PrivateSector 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 ?inancia1Accounts 3.0 0.7 2.9 3.5 3.5 3.4 2.9 3.6 3.7 3.7 DirectInvestment 2.1 0.2 0.4 1.3 1.4 1.5 0.4 1.3 1.5 1.6 Portfolio Investment 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Other 1.0 0.6 2.5 2.2 2.1 1.9 2.5 2.2 2.3 2.1 Govemment 0.6 1.4 2.6 2.3 2.2 2.0 2.6 2.4 2.4 2.2 Drawings 2.5 3.5 4.6 3.5 3.3 3.2 4.6 3.6 3.5 3.4 Repayments -1.9 -2.1 -1.9 -1.1 -1.1 -1.1 -1.9 -1.2 -1.1 -1.2 PrivateSector -0.2 -0.2 -0.1 -0.1 -0.1 -0.1 -0.1 -0.1 -0.1 -0.1 Drawing 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Repayments -0.2 -0.2 -0.1 -0.1 -0.1 -0.1 -0.1 -0.1 -0.1 -0.1 Banks,Net 0.6 -0.6 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Other -3.7 1.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 herall Balance 0.5 -2.9 0.0 1.6 1.2 1.6 0.0 1.7 1.9 2.4 ;inancing -0.5 2.9 0.0 -2.1 -2.0 -2.4 0.0 -1.9 -1.3 -1.7 NetForeignAssets (increase) -2.2 1.2 -1.1 -3.4 -3.2 -3.6 -1.1 -3.2 -2.7 -3.0 UseofIMFCredit (net) 0.6 0.3 0.5 0.4 -0.1 -0.1 0.5 0.4 -0.1 -0.1 Purchases 0.6 0.3 0.6 0.6 0.0 0.0 0.6 0.6 0.0 0.0 Repurchases 0.0 -0.1 -0.1 -0.1 -0.1 -0.1 -0.1 -0.1 -0.1 -0.1 Other Assets (BCM Reserves), Net -2.8 0.9 -1.6 -3.9 -3.1 -3.5 -1.6 -3.7 -2.5 -2.9 NetChange inArrears(Excl. BCM) 0.0 0.0 -0.3 0.0 0.0 0.0 -0.3 0.0 0.0 0.0 DebtReliefandCancellation 1.6 1.7 1.4 ... ... ... 1.4 ... ... ... Maturity 1.6 1.7 1.4 ... ... ... 1.4 ... ... ... Arrears 0.0 0.0 0.0 ... ... ... 0.0 ... ... ... 3,556.5 3,425.7 3,650.3 3,990.0 4,348.9 4,766.8 3,650.3 3,878.2 4,109.0 4,378.8 A-111-9 Table 8. Madagascar: Macroeconomic Hypotheses, Public Revenue and Expenditure, 2001-06 Scenario 1 Scenario 2 Unit 2001 2002 2003 2004 2005 2006 2003 2004 2005 2006 Economic Growth Rate change in % 6.0 -12.7 6.0 7.0 7.5 8.0 6.0 4.0 4.5 5.0 Inflation change in% 7.3 15.4 6.6 6.0 4.9 4.4 6.6 7.0 6.5 6.0 Nominal GDP FMGbillions 29,843 30,058 33,978 38,538 43,453 48,997 33,978 37,811 42,081 46,836 Total Investment % of GDP 18.5 14.3 17.5 21.4 22.5 23.2 17.5 15.4 16.1 20.2 Public % o f GDP 7.3 4.8 1.3 10.2 10.4 10.5 7.3 7.4 7.9 8.4 Private %ofGDP 11.2 9.4 10.2 11.2 12.1 12.7 10.2 8.0 8.2 11.8 Public Expenditure 9'0 of GDP 15.4 11.9 15.7 18.8 18.9 18.8 15.7 16.0 16.4 16.7 operating % of GDP 8.1 7.1 8.4 8.6 8.5 8.3 8.4 8.6 8.5 8.3 Investment 7.3 4.8 of which: % of GDP 7.3 10.2 10.4 10.5 7.3 7.4 7.9 8.4 Domestic Fin. % of GDP 3.2 1.9 2.4 3.2 3.3 3.4 2.4 2.3 2.5 2.7 Extemal Fin. % of GDP 4.2 2.9 5.0 7.0 7.1 7.1 5.0 5.1 5.4 5.7 Public Expenditure FMGbillions 4,590 3,568 5,337 7,240 8,197 9,189 5,337 6,050 6,906 7,838 Operating FMGbillions 2,409 2,122 2,840 3,315 3,695 4,069 2,840 3,247 3,575 3,896 Investment FMGbillions 2,181 1,446 2,496 3,924 4,502 5,120 2,496 2,803 3,331 3,943 Public Expendime Annualchangein% -22.3% 49.6% -11.6% 13.2% 12.1% 49.6% 20.4% 14.1% 13.5% Operating Annualchangein% -11.9% 33.9% -14.5% 11.4% 10.1% 33.9% 23.0% 10.1% 9.0% Investment Annualchange in% -33.7% 72.7% -8.9% 14.7% 13.7% 72.7% 17.5% 18.8% 18.4% NB TaxRevenue FMGbillions 2,906 2,304 3,509 4,316 5,041 5,929 3,509 3,781 4,292 5,105 TaxRatio % of GDP 9.7 7.7 10.3 11.2 11.6 12.1 10.3 10.0 10.2 10.9 Public Deficit (on commitmentsbasis) % o f GDP 4.4 -6.2 -4.3 -5.9 -5.3 -4.6 -4.3 -4.2 4.1 -3.6 A-111-I O 1 STRATEGY 1 PROGRAMMING 2003 2004 I 2005 12006 I TOTAL inFMGbillions (inUS$millions) 2,4% 3,924 4,502 5,120 16,042 2,468 Total 2,496 2,485 2,591 2,386 9,958 1,532 Raised 1,439 1,910 2,734 6,083 936 Tobe raised A-111-11 Table 10. Madagascar: PossibleBreakdowns of Investment Budget bySector, 2003-06 (Scenario 1) (InFM( )illionsandannualchange 1percent) InFMGbillions Annualchange inpercent 200: 2004 2005 2006 2004 2005 2006 TOTAL 2,495.: 3.924.2 4,501.5 5.120.2 57.2% 14.7% 13.7% Raised 2.484.9 2.591.5 2386.3 To beRaised 1.439.3 1.910.1 2.733.9 Productive Sectors - 365.1 625.8 692.1 753.0 71.4% 10.6% 8.8% Raised 576.8 586.6 503.5 To be Raised 49.8 105.6 249.6 Agric./Livestk./Fish. 1993 310.5 355.6 404.5 55.8% 14.5% 13.7% Raised 310.5 347.7 289.7 To beRaised 0.0 7.9 114.8 Industry 21.0 31.0 34.2 37.6 47.6% 10.0% 10.0% Raised 19.1 5.4 2.6 To beRaised 12.0 28.7 35.0 Mining 0.5 63.0 50.9 29.5 12,584% -19.1% -42.1% Raised 63.0 50.9 29.5 TobeRaised 0.0 0.0 0.0 Tourism 7.7 8.7 9.6 10.6 14.3% 10.0% 10.0% Raised 1.9 0.9 0.0 To beRaised 6.9 8.7 10.6 Environment 136.7 212.6 241.8 270.9 55.5% 13.8% 12.O% Raised 181.7 181.7 181.7 To beRaised 30.9 60.2 89.2 [nfrastructure 1.057.4 1,703.6 1,960.9 2365.1 61.1% 15.1% 15.5% Raised 916.3 1.057.5 1.061.0 To be Raised 787.2 '903.5 1i204.1 rranspon, Public Works and Planning 864.7 1,410.8 1,631.7 1,894.5 63.2% 15.7% 16.1% Raised 849.0 1,000.0 1,013.0 To beRaised 561.8 631.7 881.5 relecommunications 8.1 9.7 10.7 11.8 20.5% 10.0% 11.O% Raised 8.1 8.1 8.1 To beRaised 1.7 2.6 3.8 hergy 78.3 117.7 1295 143.7 50.3% 10.0% 11.O% Raised 0.0 0.0 0.0 Tobe Raised 117.7 129.5 143.7 Nater 106.3 165.3 189.1 215.0 55.5% 14.4% 13.7% Raised 59.3 49.4 40.0 Tobe Raised 106.1 139.7 175.1 Q& - 542.6 896.1 1.030.5 1.213.0 65.1% 15.0% 17.7% Raised 534.6 345.7 285.0 To be Raised 361.5 684.8 928.0 A-111-12 EducationandTraining 187.6 313.9 361.0 424.5 67.3% 15.0% 17.6% Raised 260.7 66.7 0.0 Tobe Raised 53.2 294.4 424.5 Health 195.0 322.1 370.5 435.6 65.2% 15.0% 17.6% Raised 157.5 162.7 168.6 Tobe Raised 164.6 207.8 267.0 SocialandCulturalActions 160.0 260.0 299.0 352.9 62.5% 15.0% 18.0% Raised 116.4 116.4 116.4 Tobe Raised 143.7 182.7 236.5 Administration -406.8 575.0 685.6 746.7 413% 19.2% 8.9% Raised 457.1 601.7 536.9 To be Raised 117.9 83.9 209.8 Govemment 120.3 155.2 1723 189.6 29.0% 11.O% 10.0% Raised 120.3 120.3 120.3 Tobe Raised 34.9 52.0 69.3 Sovereignty 27.8 70.5 75.0 79.5 153.8% 6.5% 6.0% Raised 70.5 75.0 79.5 Tobe Raised 0.0 0.0 0.0 EconomyandFinance 184.4 271.7 3105 349.8 47.3% 14.3% 12.7% Raised 197.7 278.6 267.7 TobeRaised 74.0 31.9 82.1 GeneralAdministration 74.3 77.6 127.9 127.9 4.5% 64.7% 0.0% Raised 68.7 127.9 69.4 TobeRaised 8.9 0.0 58.5 HIPC Initiative 123.7 123.7 1323 142.4 0.0% 7.0% 7.6% A-111-13 Table 10(cont.). Madagascar: PossibleBreakdownsof Investment Budgetby Sector, 2003-06 (asa percentageof total investmentexpenditure) As a Percentageof Total PIP 2003 2004 2005 2006 LF T O T A L 100.0% 100.0% 100.0% 100.0% Productive Sectors - 14.6% 15.9% 15.4% 14.7% Agnc./Livestk./Fish. 8.0% 7.9% 7.9% 7.9% Industry 0.8% 0.8% 0.8% 0.7% Mining 0.0% 1.6% 1.1% 0.6% Tourism 0.3% 0.2% 0.2% 0.2% Environment 5.5% 5.4% 5.4% 5.3% [nfrastructure 42.4% --- 43.4% 43.6% 44.2% Transport,Public Works andPlanning - 34.6% 36.0% 362% 37.0% Te1eck"mications 0.3% 0.2% 02% 02% Energy 3.1% 3.0% 2.9% 2.8% Water 4.3% 4.2% 4.2% 4 2 % - Social - 21.7% 22.8% 22.9% 23.7% Educationand Training 7.5% 8.0% 8.0% 8.3% Health 7.8% 8.2% 82% 8.5% Social and Cultural Actions 6.4% 6.6% 6.6% 6.9% hdministration 16.3% - - 14.7% 15.2% 14.6% Govemment 4.8% 4.0% 3.8% 3.7 % Sovereignty 1.1% 1.8% 1.7% 1.6% Economy and Finance 7.4% 6.9% 6.9% 68% General Administration 3.0% 2.0% 2.8% 2.5% HTPC Initiative && 2.9% - 2.8% A-111- 14 Table 11. Madagascar: GroupingofInstitutions and Ministries (andProjects) by Sector (basedon PublicInvestment Programclassification) 1.ProductiveSectors Agriculture, Livestock, Fishing Agriculture, LivestockandFishing Industry,Trade, ForeignTrade Mining Mining Tourism Tourism Environment/water/Forests Environment, Water andForests 2. Infrastructure Transport, PublicWorks andPlanning Transport, PublicWorks andRegionalDevelopment Telecommunications CommunicationandTelecommunications EnergyMining Water Water 3. Social EducationandTraining BasicEducation, SecondaryEducation, Technical Training, Higher Education, ScientificResearch Health Health Social andCulturalActions Population, the Status of Women, Youthand Sport, Culture, DIFProject, SEECALINEProject 4. Administration Government President, Senate, SupremeConstitutionalCourt, Officeof the PrimeMinister, ForeignAffairs, Justice Sovereignty Defense, PublicSecurity EconomyandFinance Economy, Finance, Budget GeneralAdministration Interior,Decentralization, Civil Service A-111-15 LIST OFACRONYMS ACP-EU African, Caribbean, Pacific-EuropeanUnion ADER Development Agency for RuralElectrification AEPA Access to DrinkingWater and Sanitation AESPSE Sanitation, DrinkingWater, EnvironmentalPrimaryCare AGEREF LandReserveManagementAgency AGETIP PublicInfrastructureWorks ExecutingAgency AGOA African GrowthandOpportunity Act AIM Associationof Non-mutualMicrofinanceInstitutions ANAE NationalAssociation for EnvironmentalAction AUE Water Utility Users' Association cc Audit Office [Cowdes Comptesl CCM CentralProcurementCommission CDE CommittedExpenditureControl CGI GeneralTax Code CHD District HospitalCenter CIOV Inter-MinisterialSteeringandValidation Committee CISCO schooldistrict CITES Conventionon IntemationalTrade inEndangeredSpecies CNE NationalElectionsCouncil CNJ NationalCouncil ofJustice CODIS Councilof Discipline COI IndianOceanCommission COMESA CommonMarketfor Eastemand Southern Africa C m A Business Law ReformCommission CRDA [sic] Business Law ReformCommittee CRENI IntensiveNutritionalEducationandRecovery Center CRSP Penal SystemReformCouncil CSB BasicHealthCenter CSM MagistracyHighCouncil CTD DecentralizedLocal Governments DAS Autonomous Security Detachment DDU SingleCustomsDeclaration DEAP EntranceFees to ProtectedAreas DNSP NationalPublicSecurity System DRA RegionalDevelopment Diagnostics DRS Soil ProtectionandRestoration EDSDHS DemographicandHealthSurvey ENAM MalagasyNationalSchoolof Administration ENAP NationalSchoolof PenitentiaryAdministration ENMG NationalSchoolfor Magistratesand Court Clerks EPI[PEVI ExpandedProgramof Immunization EPM PermanentHousehold Survey EPP Permanent SteeringTeam FCV Counterpart ValueFund FDT TelecommunicationsDevelopmentFund FER m RoadMaintenanceFund DevelopmentInterventionFund FNE NationalElectricityFund GCF Forestry Managementby Contractors GCV Village CommunitySilo GDI [ZSDH] Gender-relateddevelopment index GELOSE Securitized LocalManagement GPI LargeInigation Areas GTC CentralThematic Groups GTDR Working Groups for RuralDevelopment HAB Baby-friendlyHospitals HDI[ZDH] HumanDevelopmentIndex HIM0 Labor-intensive HIPCInitiative/ [ZPPTq Heavily IndebtedPoor Countries Initiative IEC Information-Education-Communication IFPB landtaxes on improvedproperty IGE StateInspectorateGeneral IGJ Justice SystemInspectorateGeneral IMATEP Malagasy Technicaland PlanningInstitute IMT [MZr] IntermediateMeans of Transport INSTAT NationalStatistics Institute LNTH NationalHotelSkills Institute JER YoungRuralEntrepreneur MECIE Environmentally-friendly investments MMQ Malagasy Pro-QualityMovement MSR Risk-freematernity MTM MadagascarTourismBoard MTP ProvincialTourismBoards NEU New Unitary Schools NICT NewInformationandCommunicationTechnologies ODOC Collectiveregistrationof landownership OP Farmers' Organization OPA Agricultural Professional Organization ORE Power RegulationAgency ORSEC RescueServices Organization OSF ForestrySectorObservatory PABU UrbanManagementSupport Program PADR Rural Development Support Program PAE EnvironmentalAction Plan PAEPAR Pilot Projectfor SupplyingWater to RuralAreas PAGS Simplified DevelopmentManagement Plan PAGU UrbanManagement Support Project PNQ District Initiative Support Project PCD CommunalDevelopmentPlan PCG GeneralChart of Accounts PCIME IntegratedCoverageof Children's Diseases PDC CommunalDevelopmentPlan PDRAB Ambato-BoCniRegionalDevelopmentProject PFU FinancialParticipationby Users PHAGECOM Community-ManagedPharmacy PICS Anti-Cyclone andDroughtInterventionProgram PLS Local Security Plan PNAE National Program for the Improvement of Education PNEBE Energy, Wood, Environment NationalProgram PNPDES National Population Policy for Economic Development PNSA-PSMC National Program on Airport and Port Security and Marine and Coastal Surveillance PNSP National Private Sector Development Support Program POCI Public Agency for Inter-communal Cooperation PPI Small Irrigation Areas PPP Public-Private Partnership PRDR RegionalRuralDevelopment Program PSDR Sectoral Program for Rural Development PST SectoralTransportation Program PTMR Rural Area Transportation Program PULP Urban Poverty ReductionProgram RCS BusinessCorporationRegister ROR Network of Rural Observatories SAGE EnvironmentalManagement Support Service SEECALINE Monitoring andTraining for Schools and Communes in Food and Expanded Nutrition SEIMAD MadagascarRealEstateDevelopment Company SFI Intermediate LandTenure Security SFO OptimumLandTenure Security SFR RelativeLandTenure Security SGE Large Enterprise Unit SGS SociCttCGCnQale de Surveillance (pre-shipment inspection) S I M Market Information System TAF Administrative and Financial Tribunal TAFB Schedular Taxes on Improved Property TI Import Taxes UNDP UnitedNationsDevelopmentProgram VAT Value Added Tax ZAES Special and Socially-oriented EconomicActivity Zones