Overview

Despite a difficult local context and the protracted COVID-19-induced business shutdown, Madagascar’s financial sector remains dynamic and resilient.  There are currently eleven commercial banks, of which nine are subsidiaries of foreign banks.  Three are microfinance institutions (MFIs), which have been upgraded and awarded a banking license.  The banking sector is highly concentrated:  the four main banks hold 86 percent of loans.   The banking penetration rate, i.e., access to a bank account or mobile money service for adults is around 18 percent, among the lowest in Sub-Saharan Africa.   There is strong competition among microfinance institutions in urban areas, while rural and remote areas are neglected.

As of December 2020, the assets of all eleven banks totaled approximately $3.83 billion or 28 percent of GDP.  Private sector loans amounted to $2.0 billion or 53.1 percent of total assets and 14.9 percent of GDP. 

In July 2020, Parliament passed new banking and insurance laws.  These laws aim to provide more customer protection by mandating more transparency in the services offered, require companies to secure their IT systems, and provide tools to detect money laundering and terrorism financing.  The new banking law can require banks to set aside funds (to be deposited at the Central Bank) to guarantee deposits (on top of the required reserve ratio).  The new insurance law puts supervision of insurance companies in the hands of the Banking Supervision Committee (CSBF), rather than the Ministry of Economy and Finance to avoid conflicts of interest, as the major insurance companies in Madagascar are state-owned. 

Leading sub-sectors 

• Banking 
• Financial Technology 
• Insurance services  
• Investment services  
• Leasing services 
• Private equity 

Opportunities 

• A more clearly defined legal framework for banking and insurance activities offers opportunities for investment
• Tap into market for cash-transfer technologies for the informal sector 

Resources 

• Ministry of Economy and Finance