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Vulnerability Assessment I

Interagency Working Group on Monitoring Vulnerability

August 2009

Contributions by

Dorothée Klaus
Arison Andriatsitoaina
Nirina Haja Andrianjaka
Pierre van den Boogaerde
Fara Ravololondramiarana

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I. Executive Summary

The economic outlook remains grim as the combination of the political and economic crisis
has had a major negative impact on the fiscal revenue. A shortfall of USD 155 million in
revenue was registered compared to pre-crisis projections. The freezing of international donor
support of over USD 300 million has further impacted on the public sector financing. An
overall 30% cut in the public budget has been announced. While the financing of salaries and
debt has been sustained up-to-date, the investment budget has seriously suffered. A total of
86% of foreign aid was directly or indirectly contributing to the public service sector, much of
it was directed at supporting the investment budget. The expectations for 2010 are even more
worrying as significant losses racked up by enterprises in 2009 will result in significantly
lower income taxes in the coming year. While the economic crisis has affected some
employment sectors, an estimated 74% of the population relying on agriculture as income
source is expected to remain untouched from the crisis due to a very good harvest and stable if
not decreasing retail prices. However, investment and planting decisions for the counter-
season in July may have been negatively affected the Government‘s ill-fated subsidization of
prices in times of excess supply and elimination of tariffs and Value Added Tax on import
rice. While urban populations remain vulnerable to the losses in employment opportunities,
rural populations have remained untouched but could become vulnerable as a consequence of
price subsidization (such as that on rice that decreases their purchasing power and is
essentially targeted to favour the urban poor.

At least 40% of the population is estimated to be unable to seek health consultations in case of
illness, mainly for economic reasons. Any potential deterioration of the health service
provision would leave a large proportion of the population untouched. An assessment of the
functioning of health services has shown that – so far – and apart from issues endemic to the
health system, the situation is underway to recover. There has been a period of confusion over
payment modalities that resulted in occasional delayed financing for the supply of medicines
and vaccines in the past weeks. However, there is a foreseen serious shortage of funds for
basic medicines, petrol and electricity by the end of the year/beginning 2010 that must be
monitored. This would affect critical interventions such as the maintenance of the cold chain.

A second major concern is the running out of donor funds for major initiatives - such as the
procurement of delivery and emergency obstetric care kits. Given that donors contributed
20% to the health sector health sector budget in 2007, the loss of finances for projects aimed
at accelerating the achievement of the MDGs will probably be significant. It somehow
remains an irony to have international aid agencies monitoring the impact of the freezing of
their own resources. A highly politicized debate over any attribution of responsibility for
negative humanitarian outcomes would always be an inevitable consequence.

The donor community will need to strike a balance between using the freeze of assistance to
government as a means of political regulation and punishment and the fact that the reduction
in aid will inevitably harm public services and the development process in Madagascar with
possibly serious consequences in the short and long-term for its population. It possibly will

2
need to define priority fields of intervention where the aid restriction policies do not apply
including cooperation with the government administration. This could even imply special
audit arrangements for any funds transversing the government.

As budgets may be revised (downwards) during the course of the year in parallel to new
information on revenue levels, it is hoped for that these changes are communicated clearly
and transparently from the central level so that regions and districts have time to adjust. The
system itself must be prepared to address the chronic shortage of funds with increased crisis
management capacities.

An inter-agency multi-cluster rapid assessment (McRAM) carried out in May 2009 to assess
the impact of the crises in the Capital found that overall the food security has improved
compared to November 2008. This is despite reported loss of revenue due to unemployment
among many households. About half of the households previously determined food insecure
is relying on agriculture as main input. This proportion has been benefiting from the good
harvest season in May while it was suffering from the lean season in November. This and
overall stable food prices have contributed to the satisfying situation, but the situation needs
to be continuously monitored.

Vulnerability to environmental and climatic shocks has a different face in every region or
province. Given that the majority of the population relies on agriculture and given that the
majority of these are living under the poverty line, attention to the risks posed on their
livelihoods still remain a priority when attempting to reduce poverty – and vulnerability - in
Madagascar.

The high poverty levels in Madagascar (68.7%) mask that a total of 8.3 million persons or
44% of the population in Madagascar live in extreme poverty. They are unable to cover
necessary expenditures for a minimum food basket requirement leave alone any other
expenses. This proportion of the population lives in a situation of chronic emergency.

Addressing poverty and extreme poverty in Madagascar will need to consider some of its key
determinants identified. Some of those contributing to a decrease in vulnerability are:
secondary and higher education, literacy, access to electricity, communication and safe water
and low input-high return activities such as fishing. Determinants increasing vulnerability
appear to be: high dependency levels, large number of household members, children under the
age of 5 years and traditional marital arrangements.

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II. Background

Context

The political crisis that has engulfed Madagascar since January 2009 led to the military
backed overthrow of the Ravalomanana government and the consequent establishment of an
interim de facto government (Haute Autorité pour la Transition or ―HAT‖) on March 16, 2009.
The transitional government is not recognized by the international community (UN, European
Union, African Union and Southern African Development Community). The UN launched a
Flash Appeal in April 2009 requesting humanitarian assistance to the multiple crises in
Madagascar: the cyclone affected West, the drought affected South and the anticipated
consequences of the political crisis on the population. The Flash Appeal has received was
funded by 33%, however, mainly for the drought in the South. A Regional Directors‘ Team
(RDT) headed by UNOCHA visited Madagascar in May 2009 to review the situation, needs
and appropriate fundraising tools. As part of its recommendations, the RDT suggested
carrying out a vulnerability analysis to determine the impact of the political and economic
developments on the country. This recommendation was approved by the UNCT and the RC
informed the UNCT on May 28, 2009 that an interagency group had been formed to

1) review the definition and concepts of vulnerable groups of the population in


Madagascar;
2) ensure that systems to monitor vulnerability are in place;
3) produce regular vulnerability monitoring reports.

The working group met for the first time on June 2 with the participation of UNDP, UNFPA,
WFP, WHO, UN-Habitat, RCO and under the chairmanship of UNICEF. The working group
agreed on a process to produce a first report according to the following objectives.

Objectives of the Vulnerability Assessment Report

The vulnerability assessment report will aim at providing an initial attempt to further analyse
existing data on poverty and vulnerability that can then be related to the identified risks posed
by the current political and economic crises in order to better understand potential impacts to
be expected. This should support the anticipation of possible interventions to mitigate any
effects on those most vulnerable.
The vulnerability assessment will be structured within an analytic framework that relates
vulnerability to specific risks. This requires determining vulnerability associated with
identified risks in relation to those parts of the population that have minimal or insufficient
coping mechanisms to face these risks.

This first vulnerability assessment report will consider the specific risks posed by the current
political and economic crisis primarily.1 The assumption has been that the key risks are (1) a

1
Subsequent analyses may then concentrate on risks and vulnerabilities related to (a) the frequent natural
disasters affecting Madagascar and those (b) faced by the majority of the population relying on agricultural
production.

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deterioration of the economy due to various factors eventually resulting in reduced economic
turnover, tightening of fiscal space in the public and private fiscal domain and increased
under-employment and unemployment; (2) a significant loss of public revenues leading the
under-funding of the public service sector. The latter is compounded by international donor
institutions having announced the freezing of about USD 300 million that includes direct
budget support2.

The World Bank has estimated an accumulated shortfall of revenues of over 200 billion MGA
or about USD 103 million since the beginning of the year. 3 The Ministry of Finance has
already announced a general cut in financing of 30% in relation to the planned budget for
2009.4 The economic recession affecting Madagascar is also a reflection of the slow-down of
the global economy and has led to the loss of several thousands of jobs since the beginning of
the year.5

Given the intertwined effects of the Malagasy political crisis and the global
financial/economic crisis, the proposed assessment will not attempt to differentiate between
the respective impact where it relates to factors such as the investment environment and the
trade export balance for example.

More specifically, the assessment wants to look into the impact of the political and economic
crises in relation to the (1) the macroeconomic situation (2) the ability of the public service
sector to uphold its service delivery under conditions of reduced funding, (3) chronic
vulnerability existing in the country. The latter is important as the impact of any crisis or
emergency in Madagascar has to be seen in the context of extremely high poverty levels
(67.8% of the population or a total of 13 million people live below the poverty line6).

With respect to (3) the analysis will identify those population groups that appear to be
particularly ―vulnerable‖ towards the identified risks, i.e. those who have no or limited
mechanisms of insuring and protecting themselves and will have to retreat to adopting coping
mechanisms that further deplete their resources, with potentially long-term effects on their
social standing and development.

With respect to (2) it was originally decided to concentrate on two basic service sectors:
education and health. These sectors have been defined as key in ensuring the continued well-
being and development of the population. This approach also ties into the work already
ongoing by related other interagency working groups to assess the impact of the crises.
However, it was found that an investigation into the functioning of the education sector would
be pertinent only with the start of the new school year in October when the new
administration will have to prove that it is able to manage the manifold tasks to ensure timely
payments and instructions during the transition period. Until such time, no major impact on
the functioning of the sector has yet been foreseen. Thus, this report will only cover an

2
Julien Chevillard, Analyse préliminaire de l‘impact de la crise institutionnelle et politique, Avril 2009, UNDP
3
World Bank Economic Update – May 19, 2009
4
Interview with DG Finance and Budget, June 4, 2009
5
World Bank Economic Update – May 19, 2009
6
Enquete Périodique Auprès des Ménages, INSTAT, 2005

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analysis of the functioning of the health sector under the conditions of the current political
crisis and transition period.

With respect to (1) it was foreseen to include an overview of the situation in the employment
sector, however, no reliable information was received by the group.

In short, the assessment will determine key risks and identify vulnerable groups most affected
by the current political and economic crisis, but will also provide an insight into the character
of chronic vulnerability in Madagascar. The assessment will provide information to guide
adequate responses, either through direct implementation or advocacy and dialogue.

III. The crisis in Madagascar—Macroeconomic and fiscal impacts

Impact on growth and employment

A segment of the economy, already battered by the decline in demand in international markets
due to the slowdown of the global economy, has been seriously affected by the uncertainty
resulting from the domestic political crisis. Particularly hard hit have been the tourism sector
(decline of 50 to 80% in occupancy rates depending on location and customer profile), the
textile exporting sector (decline estimated at 25% in value terms), the shrimp sector (due to
structural issues), and the construction and public works sector (due to quasi-paralysis of
public investment on account of a decline in donor funding). This has led to the loss of several
thousands jobs since the beginning of the year in the formal sector, and to an increase in
underemployment in the rest of the economy. 7 The negative impacts are significant and
visible, affecting particularly the middle class in urban areas, but difficult to quantify in the
absence of detailed information on the ground and in the national accounts.

Nonetheless, a large fraction of the Madagascar economy has been isolated from the current
turmoil. The agricultural sector, which employs about 75 percent of the population, depends
on climatic conditions and factors that are not directly linked to international markets nor the
domestic political climate. Market indicators for the spring harvest are favourable. Notably,
the volume of domestic rice being sold is up on the previous year, indicating that Madagascar
could be close to achieving self-sufficiency for rice. As a result, retail prices are falling—in
some major markets they are now even below the market prices of the same period last year—
and low enough to relieve some pressures on consumers.

This being said, the next challenge is already around the corner: investment and planting
decisions for the counter-season have to be taken in June-July, at a time when lower producer
prices (paddy prices went down from 600 Ar/kg in June 2008 to 450 Ar/kg in June 2009)
might reduce rice intensification efforts by small commercial producers. This risk is
exacerbated by the Government‘s ill-fated subsidization of prices (at times of excess supply)
and elimination of tariffs and Value Added Tax on imported rice (notwithstanding rapidly
declining international prices) that have favored imports at the expense of local production.
There is an urgent need to review those policies and send clear messages to local producers.
7
Madagascar Economic Update – Economic crisis? Not yet but almost there. World Bank, May 19, 2009

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Impact on public finances

The transition authorities so far took an explicit decision to privilege short-term financial
stability over profligacy, and adopted a strict fiscal policy.

The domestic political crisis combined with the fall-out from the global financial/economic
crisis had a major negative impact on fiscal revenue. The cumulative shortfall since the
beginning of the year exceeded Ariary 300 billion (US$155 million) compared to the pre-
crisis projections (Table 1). More worrisome, revenue performance has worsened over time.
Domestic tax revenue collection was close to projected levels early in the year (reflecting the
good economic performance in 2008), but was already 33.5 percent below target in May.
Reflecting the decline in imports including oil, customs revenue performance declined from
36 percent below target in the first quarter of 2009, to only half of the monthly objective in
May. Prospects are alarming because the impact of lower activities on tax payments will
increase over time (taxes are paid with a lag), noting also that traditionally Madagascar
collects two thirds of its revenue in the first semester of the year.

Table 1: Revenue shortfall in 2009


In billion of Ariary Jan-May 2009 (cumulative)
Actual Target Gap Gap (%)
Domestic tax revenue 422.6 531.4 -108.8 -20.5 %
Customs revenue 262.8 457.4 -194.6 - 42.5 %
Total 685.4 988.8 -303.4 -30.7 %
Source: Ministry of Finance (provisional figures)

The transition government curtailed expenditure in response to the revenue shortfall and has
already announced an overall budget cut of around 30 percent in relation to the 2009 budget.
The budgetary cuts will be applied to a lesser degree with respect to the sectors of education,
health, justice and defense in comparison to all others.8 The cumulative overall spending rate
was only 17 percent at the end of May 2009, compared to over 30 percent in May 2008.9 In a
nutshell, essentially wages and debt service were paid, whereas non-priority current
expenditures and domestically financed public investment were almost entirely cut. As a
result, the public service sector has been severely under funded. The latter is compounded by
international donor institutions having announced the freezing of about US$300 million,
including budget support.

Looking ahead, this hardly sustainable situation might be further exacerbated in 2010, even
with a resolution of the political crisis later this year. The significant losses racked up by
many enterprises this year will result in significantly lower income taxes next year. Also,
many donors will scale down their assistance for next year, in particular regarding project
assistance. A careful budget preparation will be needed to try to minimize the impact on
social outlays.

8
Interview with DG Finance and Budget, June 4, 2009
9
Economic Update: A transition…but challenges are coming soon. World Bank, June 19, 2009

7
The World Bank economic update from June 19 summarises the situation as follows:

―The global economic slowdown and domestic political crisis resulted in a deterioration of several
key sectors such as textile, construction and tourism. These sectors are likely to remain in distress due
to the lag between the political climate and investment/order decisions, leading possibly to further job
losses in urban centers. These might contribute to growing economic and social tensions in the coming
months. In parallel, the revenue shortfall and absence of external financing will continue to put public
finances under a tight budgetary constraint. The Government has so far refrained from domestic
monetary financing but such commitment will be tested in the near future. Significant expenditure
tightening might not be sustainable, including at the beginning of the next school year (mid-September)
when teachers might have to be paid without the recourse to external assistance, which was expected
to cover 1/3 of teachers’ salaries.‖10

Foreign Aid

Madagascar has been receiving significant amounts of foreign aid over the past few years
reaching a situation whereby foreign aid contributes with 75% to the total public investment
budget. A reaction of the international community to the transition government has been the
freezing of aid packages to Madagascar.11 For 2009, this has resulted in a decrease of foreign
aid by 40% down from an initially expected USD 740 million to USD 433 million.12 The
frozen aid includes a total of USD 170 million in direct budget support. The decrease in
available budget affects primarily the public sector financing, since 86% of foreign aid to
Madagascar is destined to support - directly or indirectly - public sector services. Compared to
the level of total public expenditures in 2007, a total of 24% of the then allocated budget has
been lost. For the education sector, the loss of foreign aid means a budget reduced by 16%
compared to 2007 education public expenditure levels and for the health sector a budget
decreased by 20% compared to expenditure levels in 2007.

Table 2: Anticipated public sector financial losses 2009 - education and health
Sector Public Estimated losses foreign Losses in relation to
expenditures development grants 2009 total budget
2007 in USD in USD million** expenditures 2007
million*
Total public 1,253.9 300 24 %
expenditures
Health 73.6 15 20 %
Education 189.6 29.8 16 %
*Source: MoF
**Source: UNDP, UNICEF

10
Ibid.
11
The European Community announced freezing of aid already in late 2008 as irregularities in spending of direct
budget support by the previous government were registered.
12
UNDP Madagascar

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Financial losses for other public service sectors in 2009 are13:
- public works and transport (USD 40 million)
- private sector/microfinance (USD 40 million)
- environment (15 million)
- governance and political administration (USD 15 million)
- water and sanitation (USD 6 million)
- agriculture (16 million)
(These figures are in relation to what has been originally committed for 2009.)

As said, the government has practically stopped all investment to secure salary payments,
recurrent costs and debt services. It will have to be monitored how this all affects the quality
of basic services provided. With a growth rate estimated at 0.7% growth expected for 200914
as of end June 2009, the government has already reduced its forecasts downwards from
beginning June where the growth rate was still estimated at 2.1%15

Bi- and multilateral donors have been cautious to react with a radical freezing of aid and have
adopted various strategies. For example, the Government of Norway has stopped with
immediate effect all disbursements; the US that has withdrawn its development support
including funding for the Millennium Challenge Account but commits to humanitarian aid;
the EC that continues with its ongoing programmes but does not consider new projects; and
the Government of France continues if not increasess its support to the country. Future donor
behaviour is expected to be defined in relation to the type of political arrangement that is
being established for the transition period until the time of new elections.

13
Julien Chevillard, Analyse préliminaire de l‘impact de la crise institutionnelle et politique a Madagascar: Profil
de l‘APD et éléments de réflexion sur la relation gouvernement-partenaires
14
Unofficial communication government official
15
Interview with DG Finance and Budget, June 4, 2009

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Map 1: Madagascar – 22 Regions

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III. Functioning of the Health System16

Since this part of the assessment will predominantly concentrate on the supply side of the
health system, namely the ability of the health system to continue operating within its regular
parameters, we nevertheless wanted to present a brief overview of the profile of health service
seekers, and those, that do not access health care for various reasons. This is to determine the
potential proportion of the population that does not access health care and thus remains
untouched by any changes in the health care system, as well as the proportion of the
population that would be affected by any deterioration of the ability to provide consultations.

Overall, the percentage of persons that were sick and that consulted any type of health
services was 40% in 2005. In urban areas, a total of 44% that were sick consulted a medical
service as opposed to 39% in rural areas. The percentage is particularly low for the rural parts
of the regions of Atsimo Atsinana (28%), Sava (26.3%), Alaotra Mangoro (25%), Amaron‘I
Mania (20.5%) and Melaky (15%).

Consultations with regards to sick children under the age of 4 years of age are on average
48%, however, the percentage of sick children taken for consultation is particularly low in
Vatovavy Fitovinany (28%), Atsimo Andrefana (27.5%), Sofia (20%) and Sava (11%). The
consultation rate is considerably high for the region of Analamanga with 74%.

While these figures are certainly only relevant for the period concerned (two weeks), we
nevertheless are inclined to extrapolate the estimations in the sense of getting an idea about
health seeking behaviour of households in general.

When looking at reasons for non-consultation were particularly low, one finds the following
response rates for the above mentioned regions.

Table 3: Reasons for non-consultation of health services – selected regions


Not Financial Distance Not Did not Other Total
serious problem useful want
Vatovavy 32.1 44.3 11.5 2.7 2.1 7.3 100
Fitovinany
Sofia 43.9 20.2 24.1 1.0 10.8 - 100
Atsimo 49.8 22.3 12.2 8.8 5.0 2.0 100
Andrefanana
Sava 53.2 37.9 3.6 0.9 2.2 1.9 99.7
Madagascar 54.9 22.9 9.0 4.5 4.8 3.8 99.7
Source: EPM 2005

16
All statistics in this report, unless otherwise cited, have been taken from the Enquête Périodique Auprès des
Ménages, INSTAT, 2005. This national survey constitutes a key resource for monitoring poverty levels but also
information on various other sectors.

11
At 23% of the population in Madagascar does not access medical services for consultations
because of financial problems and another 9% does not do so because of issues of distance
(that are also indirectly related to financial problems). This means that more than one third of
the population does not access health care when considered necessary because of economic
constraints and distance to services. In several regions the quality of health services seems to
be a determining factor in populations not seeking health care, namely in Menabe and Anosy
where 13% of households indicated that uselessness was a reason for not seeking
consultations. In total, it can be argued that around 40% of the population that considers an
illness serious enough to seek a health consultation, nevertheless does not access any form of
health care. This is the proportion of the population that possibly would remain untouched by
any changes in the quality and access to health services. However, this also means that on
average 60% of the population would suffer directly from a deterioration of public health
services; not to mention those that could potentially benefit from health services if access was
consistently expanded.

Given the above argumentation, it remains unclear whether parts of the households that
indicated that the illness was not serious and consequently no consultation was sought, have
done this because this was actually the case or because of lack of knowledge about its
seriousness. It has to be noted that 66% of urban households with an incidence of
fever/suspicion of malaria did not think that the illness was serious (64% in rural areas). A
total of 61% of urban households with a member coughing more than 3 weeks (41% in rural
areas) did not consider this serious. Similarly, 59% of households with a diarrhea case
considered this to be too irrelevant to seek a health consultation (56% rural). Potentially, all of
these illnesses can be life-threatening for very young children. If looking at the incidence of
these illnesses per age group, one finds that these are, as expected, the principal illnesses
affecting young children. Thus it has to be assumed that in many cases the judgment of the
household that an illness is ―not serious‖ is misplaced and hiding issues such as unawareness
or even economic reasons or distance. This would imply that the actual proportion of the
population not inclined to seek health care when it actually would be required is much higher
than the 40% estimated above.

The health system‘s ability to address potential ignorance of parents in these cases remains
limited. Outreach communication services are limited and in general not provided by the
public health system at large scale, with the notable exception of the child health weeks
(Semaines de la Santé de la Mère et de l‘Enfant (SSME)) that are carried out twice a year.

With respect to maternal health care, the percentage of households delivering in a public
health facility is 30%. The vast majority of deliveries takes place at home (66%).
Complications during delivery for the latter proportion of deliveries may thus not be
addressed in time or not at all, thus leading to potentially life threatening situations for mother
and child. Only 8.5% of deliveries are assisted by a medical doctor, 43% by a midwife or
nurse, and 37% by traditional birth attendants. A total of 57% of women do not seek postnatal
care. These figures certainly explain the high maternal mortality rate in Madagascar, but also
show that a minority of women actually rely on the public health facilities for perinatal and
postnatal care.17
17
Enquête Démographique et de Santé Madagascar, 2003-04

12
The type of health facility most frequently visited for consultations are the CSB 2 (49%). A
total of 14% of the population visits the CSB 1 and 8% frequent public hospitals. A total of
16% of the population is frequenting private sector medical doctors. Only a total 5.5% of the
population has reported to be frequenting paramedics (healers, informal doctors and others).

The three regions in which are located those districts that have been covered by our
assessment reported the following distribution of consultations:

Table 4: Locations of health consultations frequented


Analamanga Androy Boeny
Hospital 14.8 4.9 3.0
CSB 1 1.9 45.7 17.6
CSB 2 33.2 38.2 45.6
Private clinic 2.8 0.4 4.8
Private doctor 33.7 4.8 21.8
Health organisation 2.4 N/A 0.9
Pharmacy N/A N/A 1.5
Informal doctor N/A 0.6 N/A
NGO or association 5.2 N/A N/A
Healer N/A N/A N/A
Other 4.2 3.9 3.3
No response 1.9 1.6 1.4
Total 100 100 100
Source: EPM 2005

Field assessment of functioning of health facilities

Together with the health partner‘s sub-group monitoring the impact of the crisis on the health
system, it was decided to send a team into three regions (Analamanga, Boeny, Ambovombe-
Androy) to collect information on key indicators regarding the functioning of the health
system. A combination of former and current Director Generals was engaged to assess the
situation in the selected three regions at different levels of the health system. The selection of
the DGs as consultants for this purpose was expected to facilitate access to information
without problems, their expertise and understanding of the health system pre-crises would
ensure that any information collected is placed into context. The assessment took place
between June 29 and July 3, 2009.

Table 5: Institutions visited by region


REGIONS DRS SSD CHRR CHD2 CHD1 CSB

13
ANALAMANGA 1 3 - - 1 11

ANDROY 1 1 1 - - 7

BOENY 1 2 1 - - 8
TOTAL 3 6 2 - 1 26

Key findings – Budget engagement levels

With respect to the engagement level of the recurrent budget, it was found that the region of
Boeny had engaged amounts at the rate expected by the time of the assessment (40.7%). The
two other regions performed to a lower extent: Androy at 31.6% and Analamanga at 27.3%.

Table 6: Recurrent budget engagement by region


RUBRIQUES Région Région Androy Région Boeny
Analamanga
Budget de l’Etat
Fonctionnement

Crédits initiaux
(LF) 2 331 563 000 379 900 000 1 849 380 000
Crédits modifiés 1 624 754 100 256 930 000 1 594 566 000

Crédits engagés 444 748 256 84 185 688 528 121 881
(27,3%) (31,6%) (40,7%)
Crédits liquidés 325 084 726 84 145 688 411 599 912
(20%) (31,6%) (31,8%)

The recurrent budget reduction is evident from the data provided (table 6). It is particularly
severe in the Analamanga region (reduced by 70%) but seems to correspond to the low
engagement level. The low engagement level in the Analamanga region (which includes
Antananarivo) was partially explained by the low motivation encountered among health
personnel in all levels. It was reported that many health staff had either participated political
demonstrations and strikes on behalf of either of the two political opponents, and have
continued with frequent absenteeism ever since.

The engagement level of the investment budget is practically zero in all three regions. The
overall allocations are extremely low but have now been further reduced significantly given
the overall budget reduction (the investment budget in the health sector has been notoriously
very low). The reason for non-execution here are that regional chiefs need to authorize all
payments regarding the investment budget. Regional Chiefs have been replaced, yet this
process has taken some time and is still to be completed.

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Table 7: Investment budget engagement level by region
RUBRIQUES Région Région Androy Région Boeny
Analamanga
Budget de l’Etat
PIP
Crédits initiaux
(LF) 202 800 000 193 300 000 241 300 000

Crédits modifiés 121 680 000 135 310 000 168 910 000

Crédits engagés 0 1 000 000 (0,5%) 0

Crédits liquidés 0 1 000 000 (0,5%) 0

Health facilities in the assessed regions are continuing to provide services. The major
impediment encountered has been due to delays in releasing financial resources. This has
been due to the release of several financial circulars that appeared to be confusing and the
absence of staff responsible for authorization of releases and receipts.

As budgets may have to be revised during the course of the year in parallel to new
information on (further reduced) revenue levels, it is hoped for that these changes are
communicated in a timely, clearly and transparently manner from the central level so that
regions and districts have time to adjust. The health system itself must be prepared to address
the chronic shortage of funds with increased crisis management capacities and the ability to
decide about priorities and communicate these.

Meanwhile, the thereby created shortages of funds, particularly for running costs such as for
transportation and cold chains where run by petrol, have created bottlenecks. While hospitals
have managed to secure necessary resources, constraints have been mainly registered at the
CSB 1 and 2 levels which are frequented by the majority of the population with the exception
of the region of Analamanga. However, where shortfalls of financing to secure electricity and
petrol were registered, mayors, communities and even health individuals stepped in. If the
situation continues or becomes recurrent, it is not clear whether these mechanisms are able to
maintain service levels in the medium and lober-term.

It remains to be monitored whether the funding made available for basic medicines and petrol
is sufficient until the end of the year. In previous years, health institutions would be stocking
petrol starting November to cover for the period December-January-February when the new
budget is being released. If the budget lines for consumables are already very tight for 2009,

15
there is a probability that these purchases cannot be made at the end of the year and a serious
shortage in the ability to buy petrol will be registered. This will affect parts of the cold chain
that is fed by petrol, but certainly also all travel required by the health system. The same is
also true for stocks of medicines.

While the government has proclaimed that no savings will be made in respect to medicines,
foods and contraceptives, this does not guarantee the safeguarding of funds required for
maintenance, distribution and communication.

A second major concern is the running out of donor funds for major initiatives such as the
procurement of delivery and emergency obstetric care kits that have been much appreciated
by women. The budget for provision of emergency obstetric care kits is being financed to
60% by donors. The government is unable to cover for the lost expenses and the situation
risks to seriously deteriorate towards the third quarter when those regions covered by donor
stocks have run out of available materials. So far, rates of delivery at health facilities have
remained stable (national average is 30% of women delivering in health facilities). Given that
donors contributed 20% to the health sector health sector budget in 2007, the loss of finances
for projects aimed at accelerating the achievement of the MDGs will probably be significant.

In Analamanga, the main issue seems to be the work morale that has significantly deteriorated
since the onset of the political crisis. Teams have taken politically opposing sides and
disintegrated spiritually. The latter is also true for health institution teams in the two other
regions although the work morale seems to have not been affected at the same degree.

In the South, the impact of the food security and drought crisis seems to have a more serious
impact on the service sector as many health staff have been reported absent as they are
looking for additional income sources to ensure their food security. Seasonality and the
impact of climatic effects still seem to be predominating the picture in the South, but also in
the urban areas. While, these dynamics show the impact of seasonality on the functioning of
basic services, they are not related to the political crisis itself and the situation is expected to
ameliorate later this year when the harvest that is currently being planted, is reaped.

Salaries of health staff have been paid, however, non-payments or underpayments were
registered at the level of dispensary staff and guards.

Budgetary preparations for the coming year are usually made in May of the preceding year.
No efforts in this respect have been made as of now. This presumably will lead to a situation
where an ad hoc budget will be finalized based on estimations for the current year.

Conclusions

Overall, the health system, following a period of confusion, is returning to its routine pace.
Many of the shortcomings found by the assessment are related to personal and individual
circumstances and are endemic to the health system. The hiccups with the payment
procedures that have delayed delivery of supplies are expected to be overcome within a short
time. However, the anticipated shortage of funds towards the end of the year (and until the

16
new budget is released in February/March of the following year) for essential running costs
such as water, electricity and petrol but also for medicines need to be monitored in order to
establish their impact on the functioning of vital health services at the non-hospital levels.
This may also have non-negligible effects on the staff morale and the ability to supervise,
monitor, report and audit which contributes to the efficacy of the health system.

Health partners may opt to determine the areas where they would consider continued
investment essential to prevent a deterioration of service delivery, presumably in those areas
where investment has already been made such as safe delivery, immunization, prevention of
communicable diseases. The contribution of partners in these areas has been significant in the
past – the state budget is certainly unable to make available the lacking resources itself under
current circumstances. The assessment has shown that the health system can continue to be
relied on, albeit with some reductions.

III. Vulnerability at Household Level18

Poverty and vulnerability are not necessarily interlinked. A person can be vulnerable to all
types of risks without necessarily being poor or becoming poor after being affected. However,
there is a strong correlation between poverty and vulnerability. The poor are more vulnerable
because their way of living exposes them to a much higher extent to risks compared to those
that are well off and have the means to protect themselves against risks. The poor are
compelled to drink from unsafe water sources, have insufficient housing, are less exposed to
information about hygiene practices, engage in high-risk labour etc. They are unlikely to have
access to any type of insurance and limited if no resources to fall back upon when needed,
their access to justice is notoriously limited.

In Madagascar, a total of 68.7% of the population (or 13 million people) were living under the
national poverty line in 2005, defined as the requirement to meet 2,133 kcal per capita per day,
which in monetary terms translates into MGA 305,300 per capita per year. The large majority
of households can thus be considered to be highly vulnerable to economic, climatic, health or
any other types of risks.

In particular the rural population is vulnerable to the climatic shocks that regularly affect the
country such as droughts and cyclones. Between 1990 and 2004 alone there have been 50
hurricanes in the category 4-5 registered. 19 Equally, the cyclic political crises that are
accompanied by economic crises have had their impact on the population, in particular the
urban populations.

It is notable that the average national poverty level has remained practically unchanged over
the past 15 years between 1993 and 2005. The proportion of the population living below the
national poverty line has been 70% in 1993, 73.3% in 1997, 71.3% in 1999 and 68.7% in
2005. While key human development indicators have improved – there has for example been

18
All data in the following section has been taken from the Enquête Périodique Auprès des Ménages 2005 unless
otherwise indicated.
19
Food Security in Madagascar: a qualitative assessment. CARE International, June 2009

17
a reduction in the child and infant mortality rates 20 and an increase in primary school
enrolment21, any positive development over the past two decades has not translated into a
reduction in the average national poverty rates.

This suggests that while investment into basic infrastructure has paid off, particularly in the
education sector, but also in terms of access to health care and immunization, the large
majority of households continues to be trapped in poverty at the same time. It remains to be
seen whether any transformation of some of the gains made in human development can
promote poverty reduction as well.

Until then, a large part of the population remains at risk of loosing what has been gained
every time the household is affected by a shock. In order to recover, it most it does not have
the necessary means or it requires a significant time span during which negative coping
mechanisms may have to be adopted that in return have negative long-term effects on
development efforts.

The exposure to risk and the lack of means to mitigate their impact appropriately not only
means that vulnerability and poverty are amplified, but that ―the poor become risk averse and
unwilling (or unable) to engage in risky but higher return activities.‖ 22 This aspect is
important to note when necessary changes in terms of livelihood patterns seem to be advisable
that require a certain amount of risk taking (such as the change in cultivation of crops from
low-return subsistence types to higher return cash crops for example) on behalf of households
that have no means to mitigate any negative turn-out. These dynamics are important to
understand when implementing programmes designed to engineer a change in livelihoods in
view of poverty reduction goals – if they do not come along with reliable social protection or
social risk management measures they are unlikely to be received positively by communities.

Vulnerability to Shocks

The Enquête Périodique Auprès des Ménages23 has looked at the proportion of households
that have been affected by 5 different types of shocks: (i) climate and environment (54% of
households experienced this type of shock in the preceding year; (ii) problems of insecurity
(19% of households); (iii) health problems (13% of households); (iv) economic problems
(83%); (v) any others problems (1.7% of households).

A significant 4/5th of the population have experienced problems in improving or maintaining


their economic basis. Urban households have a slightly higher probability of being affected by
economic problems (89%) than rural households (82%). More than half of the households are
exposed to shocks related to climate and environment. This is more likely to affect rural
households (59% of rural households) than urban households (35% of all urban households).

20
The under-5 mortality rate declined from 166/1,000 LB in 1990 to 94/1,000 LB in 2003/04; the infant
mortality rated declined from 98/1,000 LB in 1990 to 58 in 2003/04 (source: INSTAT and DHS 2003/04).
21
Primary net school enrolment rate increased from 64.9% in 2000 to 83.3% in 2005 (source: EPM).
22
A Guide to the Analysis of Risk, Vulnerability and Vulnerable Groups. Hoogeveen, J. et.al., World Bank
paper
23
EPM, INSTAT, 2005

18
Health problems are reported as a shock to the household at a higher level compared to rural
areas (15% urban, 21% rural) while issues of insecurity are near equally distributed between
rural and urban areas (13%). However, it has to be assumed that all types of shocks reported
have a direct economic effect on the situation of the households.

The average time for households to recover from any of these shocks experienced is
considerable. Only 6% of households recover within less than one month, 19% of households
recover within 1-6 months, 23% of households take 6-12 months and over half (53%) take
over one year to recover. This shows at the same time the significance of shocks regularly
experienced as well as the very limited ability of households to wheather these shocks and
return to a pre-shock situation of living standards within a relatively short time period.

Vulnerability to environmental and climatic shocks

Urban Areas: Cyclones appear to be the most significant climatic risk to households in urban
areas (11% of households affected) compared to other types of climatic/environmental risks.
The percentage of urban households affected by cyclones is particularly high for the province
of Tulear (44%). While this province is more known to be affected by drought, it seems that it
is less protected against the problems of severe rainfall than others when it eventually rains.

Flooding affects 19% of urban households in Fianarantsoa and 15% of households in


Mahajanga province. The relatively high percentage of households relying on agriculture
reflects in the responses of 27.5% of households in Tulear that indicate delayed rain to being a
problem in Tulear. Similarly, 17% of the urban population in the province of Tamatave
indicated that disease of livestock has been a problem. In total, 8% of urban households
indicated that diseases affecting seedlings is a problem.

Rural Areas: In rural areas, the disease of livestock is the overall main problem affecting 17%
of households. It is highest in the Province of Tamatave (29%) and lowest in Antananarivo
(6.5%). Rural households in the Province of Tulear are affected by multiple problems at
comparatively high rates: 50% are affected by cyclones, but equally 36% are affected by
drought, 35% by disease of seedlings and 22% by the disease of cattle and 19% by delayed
rainfall. Not surprisingly, rural Tulear has the second highest level of poverty with 77% of
households living under the poverty line compared to other provinces and the highest overall
provincial percentage of population living below the poverty line with 75% (rural and urban).

In contrast, rural Fianarantsoa, which has the highest rural poverty rate with 79% is suffering
from drought (22% of rural households), disease of livestock (21.5%) and disease of seedlings
(17.7%).

Overall there is no similar pattern visible across the rural areas of the provinces and each
province has a particular vulnerability profile in relation to climate/environment depending on
its geographical location and the profile of its agricultural production.

Coping with climatic and environmental shocks

19
As a result of the climatic and environmental shocks experienced, 77% of households
indicated that they reduced overall consumption levels, one third indicated that they had to
reduce the amount of food consumed, 54% experienced that they were consuming less
nutritional foods, 53% indicated that they experienced a reduction in household revenues. A
total of 41% of households indicated that they worked harder.

Impact of economic and political crises

Economic crises, usually accompanied by political crises, have reflected in the (temporary)
increase of poverty levels in Madagascar.

The comparison of the incidence rates of poverty show that the country has reacted strongly to
the political cum economic crisis of 2002. The incidence of poverty has risen from 69.6 per
cent in 2001 (43.9 per cent urban; 77.2 per cent rural) to 80.7 per cent in 2002 (61.6 per cent
urban; 86.4 per cent rural) and has come down again to 53.7 per cent in 2005 (53.7 per cent
urban; 77.3 per cent rural). Thus, while the overall levels of poverty appear to remain
consistent over time with only marginal changes in the incidence of poverty between 1993
and 2005, times of crisis precipitate significant increases in the incidence of poverty.24

It is these latter, mainly urban based sectors where the impact of the economic and the global
financial crisis needs to be carefully monitored given the high proportionality of households
being employed in these sectors appearing to be very vulnerable. The comparative analysis of
poverty levels 1993, 1997 and 1999 has shown that the urban areas are extremely vulnerable
to changes in macro-economic indicators. Thus urban poverty levels have increased by 13
percentage points between 1993 and 1997 (from 50 per cent to 63 per cent) but have dropped
again to 50 per cent in 1999 when the situation improved. The urban area most sensitive to
changes in the macro economic environment proved to be the capital city Antananarivo.25

The United Nations decided to carry out an assessment on the impact of the political and
economic crisis in selected city quarters (―fokontanys‖) of Antananarivo in May 2009. The
fokontanys chosen were covered by a WFP food security assessment carried out in November
2008 which allowed for a comparison with regards to the development of the situation. The
overall results showed that the percentage of households being food insecure is 63% in May
2009 as opposed to 71% of households being food insecure in November 2009. The
percentage of households being severely food insecure has remained unchanged with 45%.

This can be explained by several factors. Firstly, the price of basic staple food such as rice has
remained stable, even depreciated slightly in comparison to November 2008. Secondly, a
significant proportion of households in the capital are engaged in urban agriculture (16% of
total households surveyed by the McRAM). Nearly 50% of those households that were
assessed as severely food insecure in November ‘08 are engaged in agriculture production.
While November is characterized by the lean season (‗soudure‘), the McRAM in May 2009
took place during the harvest season, with the harvest being reported to have been very good.
This means that households previously assessed as severely food insecure have entered into a

24
Evolution de la Pauvreté a Madagascar: 1993-1999, INSTAT, 2001
25
Evolution de la Pauvreté, INSTAT and World Bank, 2001

20
situation where they have access to food through auto-consumption of their products, but also
have access to increased revenues through sale of these products. Overall, this has affected the
food security situation in the Capital significantly and has out crowded any overall effects of
the economic and socio-political crisis.

However, when looking at the details of the development at the level of the assessed
fokontanys, a somewhat more complex picture presents itself. While several fokontanys have
improved their status from being severely food insecure, the status of others has deteriorated
radically from being food secure to severely food insecure. This shows that households have
been affected in the period since November despite stable food prices because of loss of
employment and revenue despite stable food prices. Continued trends will have to be
established through repeat McRAM surveys in order to determine the impact of the economic
and socio-political crises over the coming months.

Little impact of the crisis was registered by the McRAM in the sectors health, water and
sanitation, education at household level, although there has been evidence that during the
height of the political crisis in March and April, many households were struggling to maintain
access to these services.

Map 2: Food security in selected fokontanys of Antananarivo

November 2008 May 2009

Source: WFP urban food security assessment November 2008 and McRAM May 2009

Red: severely food insecure


Yellow: moderately food insecure
Orange: at risk
Green: food secure

21
Consumption patterns

Again following data from the Enquête Périodique Auprès des Ménages 2005, the total
proportion of food in the consumption pattern of households makes up 70% on average. In
urban areas, this is 57% compared to rural areas with 76%. Households in urban areas are able
to spend more on none-food items reflecting access to money and markets, compared to the
rural areas, however, urban households remain vulnerable to any changes reducing their
purchasing power given the still relatively high proportion being spent on food items.

The high dependency of households on subsistence agricultural production is reflected in the


proportion of agricultural product auto-consumption. On average, the proportion of auto-
consumption of agricultural goods makes up 30% of the overall consumption (food and non-
food) in Madagascar. This proportion is at similar levels for the poorest 4 quintiles (between
36% and 39 %) and differs only for the richest quintile (22%). Similarly, the proportion that
the different consumption items take up in relation to the total consumption of the quintile is
rather similar.26 This suggests that across the lower 4 wealth quintiles the overall consumption
patterns are similar, with the lower quintiles spending less in terms of quality and quantity.
Expectedly exceptional is the behaviour of the top wealth quintile that invests more into
sustainable goods of value.

The data further suggests that households with a main income source based on small-scale
agriculture are more severely affected by the lean season or failed harvests as they have less
agricultural products to sell which also deprives them of the necessary monetary resources to
eventually supplement the fall-out in products available for auto-consumption.

This compares to urban areas where an increase in food prices reduces the ability of
households to maintain living standards as a significant proportion of consumption sees
investments into habitat and combustibles, transport costs and sustainable goods of value
which would then need to be reduced. Equally, a loss of revenues due to unemployment or a
sluggish economy affecting local markets has an impact on the urban household situation.

In rural areas, a combination of a failed harvest and weak access to markets are critical for the
food and economic household security. In urban areas, the loss of purchasing power is
particularly problematic such as caused through a combination of high food prices combined
with a weak labour market (and possibly inflation).

Agriculture and Rice

A total of 38% of households are cultivating rice (18% in urban areas; 44% in rural areas).
The percentage is particularly high for Sofia (85%), Bongolava (67%) and Menabe (69%). It
is particularly low for Androy and Analamanga (7% both). According to the EPM, a total of
42% of the rice production is produced for sale while 37% on average are for self-
consumption. The percentage of the population that cultivates rice and that is poor is high: a
total of 72.4 percent of rice producers are living below the poverty line. This shows that the

26
For details please see EPM 2005, pp. 171-175

22
amount produced by the majority of rice producing households is not sufficient to produce an
adequate income basis.

An increase in the rice price may be affecting positively the 38% of households cultivating
rice while affecting the remaining 62% negatively as far as they are rice consumers – and as
long as the poor households do not also have to buy additional rice to supplement the amount
available for auto-consumption.

Employment sector

Urban households have a much lesser likelihood of being poor with regards to all employment
sectors compared to rural households engaged in the same sector. This holds true with the
exception of urban households engaged in agricultural production. This seems to point
towards a situation of lesser remuneration levels per sector in rural areas compared to urban
areas, or towards increased opportunities to increase incomes in urban areas even within the
same employment sector or both.

The likelihood to be poor is highest for those employed in the small-scale agriculture sector
where a total of 73% of households are employed. A total of 78% relying on this type of
employment are poor. This compares to 22% of households with main employment in the
medium-scale agriculture sector (of which 72% are poor) and 4.5% of households relying on
large-scale agriculture production (of which still 60% are poor).

Household size

The likelihood of a household being poor increases significantly with the household size.
Only 16% of households with a single person are poor compared to households with 2-4
persons where 50% of households are living below the poverty line. A total of 88% of
households with 8-10 persons are poor and a total 92% of households with more than 11
persons are living below the poverty line. This compares to a quarter of households in
Madagascar comprising 8 and more persons. The average level of household revenues is
unable to support large family sizes and correlates with increased levels of poverty.

Table 8: Incidence of poverty and household size


Household size Percentage HH living below poverty line
1 15,71
2 30,03
3 46,39
4 57,99
5 65,49
6 70,48
7 78,74
8 87,18
9 87,06

23
10 92,27
11 93,98
12 83,65
13 90,37
14 98,32
15 83,18
Source: EPM 2005 – our calculations

If one compares the relation between numbers of household members the incidence of poverty
and extreme poverty, one finds that all persons living in households with 16 members and
more fall into the category of being extremely poor, which means they are unable to even
secure the necessary means to purchase a basic food basket to secure the minimum 2,133
kcal/day.

Graph 1: Number of persons in household and poverty incidence rate (poor and extreme
poor)
100
90
80
70
60
50
40
30
20
10
0
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16
Pauvreté Pauvreté extrême

Source: EPM 2005 – our calculations

The age of the household head corresponds with below average poverty levels only until the
age of 29 years – presumably before the number of children has increased to the extent that
the household income cannot support the family size sufficiently anymore.

Table 9: Age of household and poverty incidence


Extrême
Âge du chef de ménage Pauvres Total
pauvreté

Moins de 20 ans Effectifs (en milliers) 65 355 96 322 154 987


Taux de pauvreté (P0) 42,2 62,2 100,0
% par rapport au total des pauvres 0,8 0,7 0,8

24
20 à 29 ans Effectifs (en milliers) 904 1 516 2 372
Taux de pauvreté (P0) 38,1 63,9 100,0
% par rapport au total des pauvres 10,9 11,7 12,6
30 à 39 ans Effectifs (en milliers) 2 391 3 733 5 310
Taux de pauvreté (P0) 45,0 70,3 100,0
% par rapport au total des pauvres 28,7 28,8 28,2
40 à 49 ans Effectifs (en milliers) 2 550 3 873 5 386
Taux de pauvreté (P0) 47,4 71,9 100,0
% par rapport au total des pauvres 30,6 29,9 28,6
50 à 59 ans Effectifs (en milliers) 1 506 2 327 3 479
Taux de pauvreté (P0) 43,3 66,9 100,0
% par rapport au total des pauvres 18,1 18,0 18,5
60 à 69 ans Effectifs (en milliers) 618 955 1 406
Taux de pauvreté (P0) 43,9 67,9 100,0
% par rapport au total des pauvres 7,4 7,4 7,5
70 ans ou plus Effectifs (en milliers) 295 456 746
Taux de pauvreté (P0) 39,5 61,1 100,0
% par rapport au total des pauvres 3,5 3,5 4,0
Madagascar Effectifs (en milliers) 8 329 12 956 18 853
Taux de pauvreté (P0) 44,2 68,7 100,0
% par rapport au total des pauvres 100,0 100,0 100,0
Notes: Les effectifs sont en milliers
L'incidence est grisée et en gras italique
Source: Nos propres calculs à partir de l'EPM 2005

Possessions

Type and quantity of possessions found in households do not only indicate the level of wealth
acquired, but also constitute a reservoir of items that could be sold or bartered in times of
extreme need.

Houses are owned by 86% of households in rural areas, but only by 61% in urban areas. This
means that a large proportion of households in urban areas are paying rent, which makes them
vulnerable to any type of loss of monetary income source. (In total, 80% of the population
owns a house.) Basic items such as beds are found in 77% of households, sleeping mats in
71%, traditional petrol lamps in 80% of households. However, furniture other than tables
(57%) and chairs (51%) are only found in 22% of households. A total of 34% of households
own a radio, television is owned by 11% (36% urban, 4% rural). Although radios serve more
than one household in a neighborhood, it does mean that a significant proportion of the
population is excluded from daily public discourse and information. A total of 18% of the
population own a bicycle. All items that require electrification, telephones, cars, even gas
cookers are owned by only a small minority of households. The vast majority of households
has been able to acquire only what is basically necessary and does not dispose of additional

25
items of value that could be sold in times of crisis without seriously endangering the very
basic circumstances of livelihoods (such as selling the cooking pots).

Extreme Poverty

As said, a total of 68.7% of the total population of Madagascar (13 million people) are living
below the national poverty line in 2005, which is defined as the requirement to meet 2,133
kcal per capita per day, which in monetary terms translates into MGA 305,300 per capita per
year.

We wanted to know more about the segment that lives in extreme poverty which we have
defined as those persons living at a level of being able to only ensure access to the minimum
food basket that ensures the intake of 2,133 kcal/day (or even less than this), which translates
into MGA 214,350 per capita per year This part of the population lives in a situation of
constant emergency and extreme vulnerability.27

A total of 8.3 million persons in Madagascar live in extreme poverty. This corresponds to a
total of 44.2% of the total population. The largest number of extreme poor is found in the
province of Fianarantsoa with over 2.3 million, followed by the province of Antananarivo (1.8
million), Tulear (1.4 million), Tamatave (1.37 million), Mahajanga (0.95 million) and
Antsiranana (0.4 million).

In terms of proportion, Antananarivo has the lowest proportion of extreme poor with 32.2%.
The highest proportion of extreme poor is found in Fianarantsoa (52.1%) immediately
followed by Tulear (51.4%).

Table 10: Incidence of poverty and extreme poverty by Province


Extrême
Province Pauvres Total
pauvreté

Antananarivo Effectifs (en milliers) 1 842 3 290 5 713


Taux de pauvreté (P0) 32,2 57,6 100,0
% par rapport au total des pauvres 22,1 25,4 30,3
Fianarantsoa Effectifs (en milliers) 2 331 3 472 4 477
Taux de pauvreté (P0) 52,1 77,6 100,0
% par rapport au total des pauvres 28,0 26,8 23,8
Toamasina Effectifs (en milliers) 1 366 1 997 2 776
Taux de pauvreté (P0) 49,2 71,9 100,0
% par rapport au total des pauvres 16,4 15,4 14,7
Mahajanga Effectifs (en milliers) 951 1 498 2 134
Taux de pauvreté (P0) 44,6 70,2 100,0
% par rapport au total des pauvres 11,4 11,6 11,3

27
All figures provided have been calculated on the basis of extrapolations applied to data made available by the
Enquete Periodique Aupres des Ménages, INSTAT, 2005

26
Toliara Effectifs (en milliers) 1 401 2 039 2 727
Taux de pauvreté (P0) 51,4 74,8 100,0
% par rapport au total des pauvres 16,8 15,7 14,5
Antsiranana Effectifs (en milliers) 438 660 1 028
Taux de pauvreté (P0) 42,6 64,2 100,0
% par rapport au total des pauvres 5,3 5,1 5,5
Madagascar Effectifs (en milliers) 8 329 12 956 18 853
Taux de pauvreté (P0) 44,2 68,7 100,0
% par rapport au total des pauvres 100,0 100,0 100,0
Notes: Les effectifs sont en milliers
L'incidence est grisée et en gras italique
Source: Nos propres calculs à partir de l'EPM 2005

Graph 2: Incidence of poverty and extreme poverty by region

Source : EPM 2005 and our calculations

Sex of household head

A total of 42.1% of extremely poor people live in a household headed by a woman. In total
13.7% of extreme poor or 1.14 million people are living in female headed households.

Table 11: Incidence of poverty and extreme poverty by sex of household head
Extrême
Genre du chef de ménage Pauvres Total
pauvreté

Masculin Effectifs (en milliers) 7 190 11 127 16 145


Taux de pauvreté (P0) 44,5 68,9 100,0
% par rapport au total des pauvres 86,3 85,9 85,6
Féminin Effectifs (en milliers) 1 140 1 829 2 709

27
Taux de pauvreté (P0) 42,1 67,5 100,0
% par rapport au total des pauvres 13,7 14,1 14,4
Madagascar Effectifs (en milliers) 8 329 12 956 18 853
Taux de pauvreté (P0) 44,2 68,7 100,0
% par rapport au total des pauvres 100,0 100,0 100,0
Notes: Les effectifs sont en milliers
L'incidence est grisée et en gras italique
Source: Nos propres calculs à partir de l'EPM 2005

Education of household head

It is not evident, that having completed primary education or even secondary education
excludes from falling into extreme poverty. A total of 60.4% of extremely poor people live in
households with a household head that has completed primary education, and this is also the
case for 8.1% of all those where the household head has completed secondary education.
Surprisingly, only 30.7% of extremely poor live in a household where the household head has
no education. This compares to 27.7% of poor living in a household with the head having no
education and 61% of poor living in a household where the head has completed primary
education. Having completed primary education does not exclude from being poor or extreme
poor.

Table 12: Household head education and poverty incidence


Pauvreté
Niveau d'éducation du chef de ménage Pauvreté Total
extrême
Sans éducation Effectifs (en milliers) 3 587 2 557 4 407
Taux de pauvreté (P0) 30,7 27,7 23,4
% par rapport au total des pauvres
Primaire Effectifs (en milliers) 7 904 5 028 11 011
Taux de pauvreté (P0) 60,4 61,0 58,4
% par rapport au total des pauvres
Secondaire Effectifs (en milliers) 1 275 673 2 606
Taux de pauvreté (P0) 8,1 9,8 13,8
% par rapport au total des pauvres
Université Effectifs (en milliers) 190 72 830
Taux de pauvreté (P0) 0,9 1,5 4,4
% par rapport au total des pauvres
Total Effectifs (en milliers) 12 956 8 329 18 853
Taux de pauvreté (P0) 100,0 100,0 100,0
% par rapport au total des pauvres
Notes: Les effectifs sont en milliers
L'incidence est grisée et en gras italique
Source: Nos propres calculs à partir de l'EPM 2005

Employment sector

28
The likelihood of being extreme poor is highest where the household head is engaged in
small-scale agriculture. A total of 52% of people living in households where the head is
working in this field are extremely poor. This is nearly equal to the proportion of people
where sthe household head is working as labourer (51%). Still a total of 47% of people where
the household head is engaged in medium-scale agriculture are poor.

Table 13: Poverty and extreme poverty by household head employment type
Pauvreté
Activités des chef de ménage Pauvreté Total
extrême
Cadre supérieur Effectifs (en milliers) 4 24 98
Taux de pauvreté (P0) 3,8 24,1 100,0
% par rapport au total des pauvres 0,0 0,2 0,5
Cadre moyen ou agent Effectifs (en milliers) 54 96 293
Taux de pauvreté (P0) 18,5 32,7 100,0
% par rapport au total des pauvres 0,7 0,7 1,6
Ouvrier ou salarié qu Effectifs (en milliers) 262 470 1 229
Taux de pauvreté (P0) 21,3 38,3 100,0
% par rapport au total des pauvres 3,1 3,6 6,5
Ouvrier non qualifié Effectifs (en milliers) 392 665 1 052
Taux de pauvreté (P0) 37,3 63,2 100,0
% par rapport au total des pauvres 4,7 5,1 5,6
Main d'oeuvre Effectifs (en milliers) 339 500 662
Taux de pauvreté (P0) 51,2 75,6 100,0
% par rapport au total des pauvres 4,1 3,9 3,5
Stagiaire rémunéré Effectifs (en milliers) 8 14 26
Taux de pauvreté (P0) 30,4 52,4 100,0
% par rapport au total des pauvres 0,1 0,1 0,1
Indépendant Effectifs (en milliers) 478 842 1 504
Taux de pauvreté (P0) 31,8 56,0 100,0
% par rapport au total des pauvres 5,7 6,5 8,0
Chômeur Effectifs (en milliers) 74 121 232
Taux de pauvreté (P0) 32,1 52,1 100,0
% par rapport au total des pauvres 0,9 0,9 1,2
Inactif Effectifs (en milliers) 169 236 419
Taux de pauvreté (P0) 40,5 56,4 100,0
% par rapport au total des pauvres 2,0 1,8 2,2
Petit exploitant agricole Effectifs (en milliers) 4 839 7 273 9 293
Taux de pauvreté (P0) 52,1 78,3 100,0
% par rapport au total des pauvres 58,1 56,1 49,3
Moyen exploitant agricole Effectifs (en milliers) 1 486 2 277 3 153
Taux de pauvreté (P0) 47,1 72,2 100,0

29
% par rapport au total des pauvres 17,8 17,6 16,7
Grand exploitant agricole Effectifs (en milliers) 211 401 668
Taux de pauvreté (P0) 31,7 60,0 100,0
% par rapport au total des pauvres 2,5 3,1 3,5
Pêcheur Effectifs (en milliers) 8 29 214
Taux de pauvreté (P0) 3,7 13,5 100,0
% par rapport au total des pauvres 0,1 0,2 1,1
Autre Effectifs (en milliers) 4 9 11
Taux de pauvreté (P0) 36,8 78,0 100,0
% par rapport au total des pauvres 0,1 0,1 0,1
Madagascar Effectifs (en milliers) 8 329 12 956 18 853
Taux de pauvreté (P0) 44,2 68,7 100,0
% par rapport au total des pauvres 100,0 100,0 100,0

Notes: Les effectifs sont en milliers


L'incidence est grisée et en gras italique
Source: Nos propres calculs à partir de l'EPM 2005

Discerning poverty profiles: extreme poor and poor

When comparing the profile of individuals living in extreme poverty with the average profile
of households living below the poverty line, the statistical profile between the two groups
does not necessarily present a differentiated picture.

For example, while 93% of poor own land, an equal 93% of extreme poor also own land.
While 20.5% of poor cultivate rice, 21% of the extreme poor cultivate rice. Some differences
can be seen in the sector education: 72% of poor have a household head without formal
education which is the case for 69% of the extreme poor. A total of 34% of poor own a radio
as opposed to 31.5% of extreme poor. A total of 32% of poor have access to a safe water
source as opposed to 31% of extreme poor.

This proximity between poor and extreme poor in terms of profile around key variables or
indicators usually applied to identify most vulnerable households makes it very difficult to
identify the extreme poor through any standard variables other than actual consumption levels
(quantity and quality) - even the consumption patterns are unable to provide sufficient
information on the difference between poor and extreme poor.

Econometric analysis of determining variables of extreme poverty

While standard variable values are not helpful to profile the extreme poor versus the total poor,
we have attempted to look at those determinants that appear to be significant to define poverty
and extreme poverty through the use of econometric analysis models.

30
We wanted to find out whether selected variables had a positive or negative effect on the
probability of being poor for (i) poor households in urban areas; (ii) extreme poor HH in
urban areas; (iii) poor HH in rural areas, and (iv) extreme poor in rural areas. Looking at the
particular variables in isolation, we find the following picture.

Selected determinants decreasing the probability of being poor/extreme poor

The total size of the cultivated land available to the household decreases the probability of
being poor or extreme poor in urban areas, but does not matter in rural areas.

The household being engaged in fishing decreases the probability of being poor for all four
categories.

A significance in relation to the probability of reducing poverty could not be established


where the household head has accomplished primary education.

In contrast, the literacy of the household head is significant in reducing the probability of
poverty and extreme poverty in urban areas.

Completion of secondary education by the household head reduces the probability of being
extreme poor in urban areas and extreme poor in rural areas.

Having a higher education reduces the probability of being poor and extreme poor in both,
urban and rural areas.

The possession of a radio in the household is significant for all four categories.

Access to electricity reduces the probability of being poor in urban areas and poor and
extreme poor in rural areas.

Having a non-agricultural enterprise is significant in reducing the probability of being


extreme poor in rural areas.

Access to safe water decreases the probability of being poor in urban areas. Access to safe
water is especially a problem in cities other than the Capital.

Selected determinants increasing the probability of being poor/extreme poor

Having a child aged 1-5 years increases the probability of being poor in urban areas and poor
and extreme poor in rural areas.

Having an infant in the household increases the probability of being poor in urban areas but
has no significance for the three other categories.

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Where the household head is living in a relation of traditional monogamy (not legally
married), the likelihood of being poor and extreme poor is increased in urban areas.

Traditional polygamy increases the probability of being extreme poor in urban areas.

The household size is significant in increasing the probability of poverty in all four categories
as it increases.

Table 14: Significance of selected variables in decreasing or increasing the probability of


being poor/extreme poor in rural and urban settings
Poor urban Extreme Poor rural Extreme
poor poor rural
urban
Primary education household head 0 0 0 0
Secondary education household 0 - 0 -
head
Higher education household head - - - -
Literacy household head - - 0 0
Radio - - - -
Electricity - 0 - -
Non-agriculture enterprise 0 0 0 -
Safe water - 0 0 0
Household size + + + +
Child 1-5 years + 0 + +
Child < 1 year + 0 0 0
Size of land - - 0 0
Engaged in fishing - - - -
Number of old persons in 0 0 0 0
household
Rice cultivation 0 0 0 0
Ownership of livestock 0 0 0 0
Household head female 0 0 + +
Traditional monogamy + + 0 0

Traditional polygamy 0 + 0 0
Non-married monogamy + 0 0 0
Widowed 0 0 0 0
Single 0 0 0 0
Source: EPM 2005 - our calculations
- : reducing probability of being poor
0 : non-significant
+ : increasing probability of being poor

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Weight of indicators in reducing or increasing poverty and extreme poverty

We have further looked into the extent to which poverty is likely to be higher or lower in
relation to selected reference indicators. Indicators are observed in isolation and no
interrelations are taken into account.

A household engaged in fishing has a reduced probability of being poor by 15% in urban
areas (-20% extreme poor urban; -21% poor rural; -20% extreme poor rural) compared to
households not engaged in fishing. This is an exceptional finding that highlights the
importance of fishing as a revenue source/additional revenue source in decreasing poverty.

Literacy of the household head decreases the probability of being poor by 5% in urban areas
(-9% extreme poor urban) in comparison to individuals living in households where the
household head has no education.

Where household heads have accomplished secondary education this decreases the probability
of being extreme poor by 14% in urban areas and extreme poor by 19% in rural areas. This
highlights the importance of secondary education in reducing extreme poverty.

Individuals living in a household headed by a woman have a 25% increased probability of


being extreme poor in rural areas compared to members living in households headed by a man
(+13% poor rural).

The possession of a radio decreases the probability of being poor by 4% in urban areas (-6%
extreme poor urban; -11% poor rural; -8% extreme poor rural).

Access to electricity significantly decreases the probability of being poor in urban areas by
31%, by as much as 43% in rural areas and extreme poverty by 38% in rural areas.

Access to safe water is significant in reducing the probability of being poor in urban areas by
5%. This is particularly true for cities other than Antananarivo where water fountains are
numerous compared to the rest of the urban areas in the country.

Having an infant in the household increases the probability of being poor by 7% in urban
areas.

Having a child aged 1-5 years increases the probability of being poor by 5% in urban areas
(13% poor rural; 6% extreme poor rural).

Living in traditional polygamy increases the probability of being extreme poor by 19% in
urban areas.

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Table 15: Significance of indicators in determining poverty/extreme poverty
Significativité des variables
Urbain Rural
Variable
pauvreté pauvreté
pauvreté pauvreté
extrême extrême
Problème de santé au cours des 2 dernières semaines 0,104 0,085 -0,225 -0,127
Chef de ménage chômeur -0,277 -0,115 -0,216 -0,214
Surfaces totales cultivées (riz, maïs, manioc, patate) -0,003*** -0,001* 0,000 -0,001
Pratique de la riziculture 0,046 -0,406 -0,180 0,114
Cultivateur de manioc 0,496 -0,114 -0,638 -0,876
Cultivateur de patate 0,816 -0,249 -0,248 -0,675
Possession de terre agricole ou non -0,482 -0,525 0,507 0,348
Pratique de la pêche -0,823*** -0,850*** -0,893** -1,219**
Fianarantsoa 0,301 0,181 0,833** 0,860***
Toamasina 0,065 0,287 0,536 0,996***
Mahajanga 0,182 0,005 -0,301 0,093
Toliara -0,019 -0,216 0,190 0,614*
Antsiranana 0,014 0,292 -1,006** -0,208
Alphabétisation du chef de ménage -0,390* -0,374* -0,186 0,043
Chef de ménage de niveau primaire -0,139 -0,188 -0,542 -0,437
Chef de ménage de niveau secondaire -0,551 -0,558* -0,707 -1,008**
Chef de ménage de niveau universitaire -1,158** -1,238* -1,686*** -1,778***
Ratio de dépendance (nb actifs/ nb inactifs) -0,032 -0,087* 0,024 0,007
Membre d'une mutuelle de crédit -0,255 -0,081 0,355 0,655
Taille du ménage 0,422*** 0,259*** 0,246*** 0,225***
Chef de ménage femme 0,148 -0,245 0,631* 1,055***
Possession de radio -0,272* -0,250* -0,498** -0,372*
Accès à l'électricité -1,496*** -0,782 -1,900*** -2,225***
Accès à l'eau protégée -0,320* -0,190 -0,201 -0,123
Possession d'entreprise non agricole -0,081 -0,200 -0,284 -0,496**
Carré de l'âge du chef de ménage 0,000 0,000 0,001 0,000
Âge du chef de ménage -0,008 -0,051 -0,058 -0,055
Nombre d'enfants dans le ménage -0,233* 0,089 -0,160 0,073
Nombre d'enfants de 1 à 5 ans 0,354** 0,157 0,577*** 0,274*
Nombre d'enfants de 5 à 9 ans 0,219 -0,018 0,279 0,125
Nombre d'enfants de 10 à 14 ans 0,197 -0,110 0,309 -0,031
Nombre d'enfants de moins de 1 an 0,471* 0,225 0,064 -0,314
Nombre de personnes âgées 0,128 0,009 0,043 0,075
Eleveurs de bétail -1,062 0,085 -2,205 -2,743
CM marié(e) coutumièrement monogame 0,533*** 0,604*** 0,432 -0,070
CM marié(e) coutumièrement polygame 0,570 0,842* 0,439 0,275

34
Union libre monogame 0,571* 0,393 0,518 0,088
Divorcé€ -0,590 0,798 -0,418 0,218
Séparé€ 0,563 0,217 0,195 -0,236
Veuf (ve) 0,219 0,539 -0,255 -0,619
Célibataire 0,755 0,441 -0,093 -0,004
Constante 1,187 0,205 2,550 2,174
Source: EPM 2005 – our calculations

Table 16: Weight of indicators in reducing poverty in respect to selected references


Variable Effets marginaux
Urbain Rural Références
pauvreté pauvreté
pauvreté pauvreté
extrême extrême
Problème de santé au cours des 2 dernières semaines 0,015 0,021 -0,051 -0,027 Ne pas avoir
Chef de ménage chômeur -0,043 -0,029 -0,050 -0,044 Ne pas être
Surfaces totales cultivées (riz, maïs, manioc, patate) -0,00037 - 0,00033 0,00005 -0,00022 (Unité : are)
Cultivateur de riz 0,007 -0,101 -0,041 0,025 Ne cultive pas
Cultivateur de manioc 0,060 -0,029 -0,154 -0,155 Ne cultive pas
Cultivateur de patate 0,089 -0,062 -0,058 -0,125 Ne cultive pas
Possession de terre agricole ou non -0,059 -0,126 0,121 0,070 Ne possède pas
Pratique de la pêche -0,146 -0,206 -0,217 -0,200 Ne pratique pas
Fianarantsoa 0,041 0,045 0,169 0,199 Antananarivo
Toamasina 0,009 0,071 0,111 0,236 Antananarivo
Mahajanga 0,025 0,001 -0,070 0,020 Antananarivo
Toliara -0,003 -0,054 0,042 0,141 Antananarivo
Antsiranana 0,002 0,072 -0,245 -0,043 Antananarivo
Alphabétisation du chef de ménage -0,054 -0,093 -0,041 0,009 Analphabète
Chef de ménage de niveau primaire -0,020 -0,047 -0,121 -0,094 Sans éducation
Chef de ménage de niveau secondaire -0,090 -0,138 -0,166 -0,191 Sans éducation
Chef de ménage de niveau universitaire -0,224 -0,285 -0,398 -0,265 Sans éducation
Ratio de dépendance (nb actifs/ nb inactifs) -0,005 -0,022 0,005 0,002
Membre d'une mutuelle de crédit -0,039 -0,020 0,075 0,154 N'est pas membre
Taille du ménage 0,060 0,065 0,055 0,049
Chef de ménage femme 0,020 -0,061 0,129 0,249 CM homme
Possession de radio -0,039 -0,062 -0,114 -0,078 Ne possède pas
Accès à l'électricité -0,307 -0,190 -0,434 -0,388 N'a pas accès
Accès à l'eau protégée -0,048 -0,047 -0,045 -0,027 N'a pas accès
Possession d'entreprise non agricole -0,012 -0,050 -0,065 -0,103 Ne possède pas
Carré de l'âge du chef de ménage 0,000 0,000 0,000 0,000
Âge du chef de ménage -0,001 -0,013 -0,013 -0,012 (Unité : année)
Nombre d'enfants dans le ménage -0,033 0,022 -0,036 0,016
Nombre d'enfants de 1 à 5 ans 0,050 0,039 0,130 0,059

35
Nombre d'enfants de 5 à 9 ans 0,031 -0,004 0,063 0,027
Nombre d'enfants de 10 à 14 ans 0,028 -0,027 0,069 -0,007
Nombre d'enfants de moins de 1 an 0,067 0,056 0,014 -0,068
Nombre de personnes âgées 0,018 0,002 0,010 0,016
Eleveurs de bétail -0,106 0,021 -0,289 -0,564 N'est pas éleveur
CM marié(e) coutumièrement monogame 0,075 0,149 0,096 -0,015 Marié(e) légalement
CM marié(e) coutumièrement polygame 0,067 0,194 0,091 0,062 Marié(e) légalement
Union libre monogame 0,068 0,096 0,106 0,019 Marié (e) légalement
Divorcé€ -0,100 0,185 -0,099 0,049 Marié(e) légalement
Séparé€ 0,067 0,054 0,042 -0,049 Marié(e) légalement
Veuf (ve) 0,029 0,130 -0,059 -0,119 Marié(e) légalement
Célibataire 0,083 0,107 -0,021 -0,001 Marié(e) légalement

Qualités statistiques des modèles


Critère AIC 2 471,740 3 274,770 1 679,240 1 774,640
Critère BIC 2 719,690 3 522,720 1 911,030 2 006,420
Nombre d'observations 2 707 2 707 1 842 1 842
Nombre de paramètres 41 41 41 41
Pseudo-R2 0,180 0,150 0,350 0,320
Chi2 (Wald) 269,850 267,450 312,420 295,050

The statistical picture of poverty and extreme poverty can provide some support in
determining priorities when reducing vulnerabilities and mitigating risk. While interventions
for urban and rural poor will have to be tailored according to the particular living
circumstances and income opportunities, there are some similarities.

Access to electricity is a major factor in reducing poverty. Electricity increases


communication and access to information, connectedness, allows being productive beyond
sunset and facilitates the daily chores through application of electronic devices. More efforts
need to be made to connect the country with affordable electricity.

While cultivation of any staple food (rice, manioc, potato), no matter what the size of land,
has no significance on poverty (in rural areas!), fishing appears to have a major positive effect.
The promotion of producing high value agricultural goods on the basis of low input-high
return as opposed to increasing land acquisitions needs to be a priority in reducing poverty,
particularly in relation to the small-scale farmers.

Family planning remains to be a major challenge but is essential in reducing poverty and
vulnerability. As long as the number of children in the household is not commensurate with
the income level, poverty levels will not be reduced. Households unable to provide for the

36
needs of their children deprive these of their rights to a healthy, safe and happy upbringing.
The data shows that young children in the household are a particular burden and contribute to
the probability of the household being poor, particularly in the urban setting where expenses
are much higher than in rural areas.

It may be a surprise that primary education does not make a difference when addressing
poverty. However, it is a prerequisite for entering secondary education that has a significant
impact on the reduction of poverty. More investment needs to be secured to expand this sector,
and to push education achievements beyond high primary level enrolment rates.

The current economic and political crisis is assumed to affect urban areas more than rural
areas – as has been the case in the past. Loss of unemployment, rising living expenses and
loss of purchasing power all can create a dangerous environment, particularly for the extreme
poor. Reducing their vulnerability is best managed – according to our findings – through
investment into alphabetization, providing opportunities for secondary and higher education
and access to electricity and safe water, i.e. enabling this population to participate in
minimum acceptable standard urban living standards. At the same time, it appears to be
important that traditional union ties are being replaced by legally confirmed acts of marriage
that seem to be providing a more stable framework for household economies (at least
according to data!). Households with children under 5 years of age need particular support as
their expenses and vulnerability levels seem to be particularly high. The dependency ration
has a particular significance in relation to extreme poverty, thus, increasing the income level
or purchasing power of extremely poor households would have a particular impact.

The rural economy has so far not been affected by the crisis. However, the subsidization of
the rice price may have negative effects on the production levels and thus could have delayed
negative repercussions. Risks posed to rural areas are related to environmental and climatic
events, and vulnerability appears to be highly seasonal. Low productivity and low returns for
agricultural products appear to be perpetuating poverty in rural areas and have been stopping
Madagascar from making any progress in poverty reduction.

In order to reduce vulnerability in rural areas, special attention needs to be paid to female
headed households that have a high probability of being poor, presumably because of the
absence of manpower – literally – for the agricultural production. Access to secondary and
higher education, which usually is difficult in rural areas, would nevertheless support poverty.
Other than in the urban areas, alphabetization seems insufficient to have an impact. Like is the
case urban areas, access to electricity would have a significant impact on rural poverty
reduction, and so would the reduction of household size. While infants do not seem to be a
burden on households in rural areas, children aged 1-5 years in households are.

37
IV. Conclusions and Recommendations

1. The severe financial crisis faced by the HAT requires an alert crisis management and a
transparent and clear communication throughout the administrationover adjustment
procedures. Any confusion due to miscommunications, misunderstandings, lack of
transparency are bound to amplify the crisis particularly in relation to the functioning
of basic social services. The crux may be that – even if a political Transition Accord is
struck and donors release funding, the revenue levels have decreased so severely that
the financial capacity of the government remains severely hurt. At the same time, such
an Accord would be unlikely to produce an effective government that is able to jointly
and in a concentrated and joint fashion address the main issues and define priorities.
Instead, any such government would be expected to focus on political gains in the
lead-up to elections, further deepening the crisis and possibly even obliterating the
gains from the renewed flow of international assistance.

2. It is anticipated that the severe financial crisis will result in a limitation, if not
deterioration of services towards the end of the year and the coming year. It will be
paramount for the government system itself to understand the dynamics created by the
cuts to define priorities. At the same time, the international community, ironic as it
may be, needs to support the process of monitoring the impact of the financial crisis to
which it has partially contributed through freezing of aid. The UN should make efforts
to monitor the functioning of key services sectors, in particular education, but also
health with its crucial life saving programmes. This means a repetition of the health
system assessment later in the year, and an assessment of the functioning of the
education system in September when school is restarting. Production and revenue
levels in the rural/agricultural sector need to be monitored as is being done already by
WFP and FAO. It would be helpful if employment dynamics in the formal sector of
urban areas and in high-level employment industries could be monitored. The
McRAM needs to continue on a 2-3 monthly basis to provide regular feed-back in
urban areas of the Capital. The mechanism could be expanded to other cities in the
country.

3. In terms of internationally financed response activities, social protection mechanisms


need to be immediately strengthened as part of preparedness for a humanitarian
response. For urban areas this could mean the initiation of targeted social cash transfer
programmes for the extreme poor and increasing HIMO programmes for the poor
which at the same time could mitigate the impact of the crisis in the public sector.

4. The design of development programmes in Madagascar, particularly those focusing on


rural development, need to be better addressing risk management capacities of
communities regularly affected by disasters. In addition, it may be helpful to explore
options of communal protection frameworks or networks to support communities and
households in the recurrent times of crisis.

5. The donor community will need to strike a balance between using the freeze of
assistance to government as a means of political regulation and punishment and the

38
fact that the reduction in aid will inevitably harm public services and the development
process in Madagascar with possibly serious consequences in the short and long-term
for its population. It possibly will need to define priority fields of intervention where
the aid restriction policies do not apply including cooperation with the government
administration. This could even imply special audit arrangements for any funds
transversing the government.

39