03/26/2024 | Press release | Distributed by Public on 03/26/2024 15:15
Madagascar's cities are the powerhouse of its economy, contributing three-quarters of the national GDP, with the capital, Antananarivo, alone accounting for 44%. Yet, this urban economic might is not translating into effective poverty reduction or inclusive growth. Despite having a faster rate of urbanization than other countries in sub-Saharan Africa, the country has a lower GDP per capita than those countries. Value-added in the services sector - which is one of the main economic activities in cities - has been stagnant since 1990 as a share of GDP. Most alarmingly, poverty in Malagasy cities has increased substantially in the past decade, especially in secondary cities where the share of people living in poverty increased from 46% to 61%. These trends are worrying because more than half the country's population is expected to live in cities by 2036.
A new World Bank report,Leveraging Cities as Drivers of Growth and Structural Transformation highlights the challenges and constraints facing Madagascar's cities and proposes a roadmap of priority actions that the country can take to stimulate growth and help reduce poverty in the country.
What are the various interlinked factors that hinder productive urbanization in Madagascar?
Rapid urbanization in the country is occurring without sufficient planning, financing, and coordination to accommodate the rising demand for quality jobs, housing, and basic infrastructure and services in cities, resulting in acute service delivery challenges and high levels of informality in jobs and housing. As cities have grown, infrastructure has fallen behind increasing needs. For example, over 60% of urban citizens live in informal and unplanned settlements with a dearth of basic services, often located in hazard-prone and high-risk areas. Less than 20% of people living in medium and small cities have access to direct drinking water supply. Over half the solid waste generated in cities is dumped in drainage canals, causing public health hazards and severe flooding by clogging and overwhelming drainage systems in the city.
The situation is made worse by the increasing frequency of natural disasters and impacts of climate change. Malagasy cities face multiple hazards including floods, cyclones, sea level rise and coastal erosion, that lead to economic and physical losses and can result in the reversal of developmental gains. The number of disaster-related events impacting the country has tripled over the last 20 years. In a business-as-usual scenario that does not promote climate-resilient development in cities, economic losses and the vulnerability of the urban poor will increase with recurring natural disasters driven by climate change.
Cities also have limited fiscal resources, weak mandates, and capacity to deliver services. Fiscal transfers from the central government account for less than one-tenth of cities' revenues while own-source revenue collection such as property tax is also well below potential, with the result that cities spend less than one-tenth of their budgets on capital investments.
How to better tap into the urbanization potential in Madagascar?
Without urgent action, Malagasy cities will continue to grow informally with negative economic, environmental, and social outcomes. The report proposes four pillars of intervention for tapping the urbanization potential in the country: