Local Development
UNCDF activity in Madagascar in support of the decentralization process comprises the following elements:
- Integration of UNCDF into the agencies of the United Nations system in support of the implementation of the UNDAF
The United Nations system, in cooperation with the Malagasy Government, had initially defined a common framework programme for the period 2005-2009. This programme had specified the following areas of activity:
- Security;
- Good governance and economic growth;
- Education;
- Health (including nutrition, water and sanitation);
- Preventing and combating HIV/AIDS (taking into account the cross-cutting themes of gender equality, environment and human rights).
Subsequently, in the light of the orientations of the action plan, the agencies of the United Nations system decided to revise the existing UNDAF document in order to take into account the difficulties associated with governance, in particular challenge No. 6 of the commitment, “Governance and solidarity.” According to the plan of action, the objective is to give the regions “sufficient power and resources to deal with local regional affairs” and play “an important role in the participatory process”. The objective is also for the regions to have “management plans to establish priorities in the development zones and allocation of resources among the sectors”. In these areas, UNCDF has acquired a large amount of experience, especially in strengthening regional development plans, developing the capabilities of regions and communes to face local and regional challenges, and improving the political and legal powers of regions and communes in problem-solving, decision-making and execution.
- Technical support of UNCDF for requests from the Ministry of Decentralization and Physical Planning (MDAT)
UNCDF should be able to give a positive response to any formal request from MDAT regarding possible technical (and in part financial) support for the current analysis of the implementation of the national policy of the National Decentralization and Devolution Programme (PN2D) and its financial mechanism, the local development fund (FDL) in relation to the following elements:
At the macroeconomic level : Better linkage of the “2D” policy with the review of the FDL and the measures relating to the reform of public finance .
At the local level: “Pilot” application of the major principles of this policy of developing mutually compatible political, financial and fiscal tools, along with a definition of the competence of each territorial community (above all in relation to defining the level of power of the region, which should link national and local policies in the interest of coherent spatial management).
At the community level: Support the synergies between local communities at the level of both the communities (by strengthening the approach based on the public agencies for intercommunal cooperation and the technical mechanism of the common support centres) and the regions (through appropriate measures).
At the level of devolution: Support the role and status of the devolved technical services by integrating them more fully into a configuration which also makes provision for the commune support centres, and eventually for true regional support centres. This will meet a very important need in Madagascar , namely to palliate the absence of a true framework for coordinating sectoral policies by promoting synergy and coherence of the activities conducted in the various sectors.
At the level of the grass-roots communities: Support the positioning of the fokontany, the grass-roots community level, in relation to decentralized local development and contribute to a better definition of the functional links that exist between the commune and its fokontany. In other words, contribute to a better positioning of community development as practised by many NGOs in the context of decentralized development. With respect to planning, programming, execution, financing and review of the various initiatives, at all levels, the responsibility for project management of local development rests with the elected local authorities.
- Assist the MDAT in implementing a learning process (in one or more regions) to verify the challenges, respond to the problems and test the technical and financial mechanisms of the PN2D + FDL before they are applied at the national level
UNCDF could give a positive response to any formal request from MDAT regarding possible technical and financial support for the implementation of the joint PN2D + FDL approach. In the current political context, this would in no way mean the adoption by UNCDF of a traditional project approach (for example through a separate project team or a specific investment fund), but rather assisting in the operations both of the coordination and follow-up unit of PN2D at the central level and within each sectoral department and of the future local development fund management unit.
Inclusive finance
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PROGRAMME PROFILE
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Project/Programme Title
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National microfinance strategy support programme (PA/SNMF)
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Status & Cycle
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Ongoing (2005-2009)
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Total Costs/Funding (in US$)
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Funding sources
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JOINT PROJECT RESOURCES
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PARALLEL
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UNCDF
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UNDP |
TOTAL |
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UNCDF
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1 625 800
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1 625 800
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UNDP
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2 455 000
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2 455 000
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Government
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1 100 000
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TOTAL
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1 625 800
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2 455 000
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4 080 800
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Project Description
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In June 2004 the authorities approved the national microfinance strategy document (SNMF) for the period 2004-2009. The aim of this strategy is to establish a microfinance sector that is viable over time, private, integrated into the national financial market, diversified in terms of institutional form and supply of products and services, innovative, ensuring satisfactory geographical coverage of demand for microfinance products and services and operating in an adapted and favourable political, legal, regulatory and tax framework.
The present programme is consistent with the approach of this national strategy, and aims at contributing to poverty reduction and the attainment of the Millennium Development Goals (MDGs). Its overall objective is to promote access by poor or low-income households and micro-businessmen to microfinance services that are viable over time, provided by viable microfinance institutions incorporated into the national financial market. This requires support for the attainment of the following components of the national microfinance strategy: (strategic approach 2) viable and growing supply of adapted and diversified products and services, particularly in areas not yet covered by established microfinance institutions and (strategic approach 3) organization of the institutional framework so as to permit efficient structuring and effective coordination of the sector and efficient application of the strategy.
It is envisaged that the national microfinance strategy will achieve in 2009: number of savers (1 per household) about 592,000; number of borrowers (1 per household) of the order of 295,500; loans of about 603 Malagasy francs1, or about half of projected needs for 2009, and savings of about 236 billion Malagasy francs.
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Context, Strategy & Opportunities
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- In the next programming cycle (2005-2009) of the United Nations Development Assistance Framework (UNDAF), the improvement of food security for disadvantaged populations is one of the priority components. UNDP has incorporated microfinance into its future poverty reduction programme as one of its areas of intervention in parallel with governance and HIV/AIDS.
- The present Government, with the support of the development partners, is making every effort to remedy the situation and to take appropriate measures aimed at rapid and sustainable development with the objective of reducing poverty by half by the year 2013. This economic recovery is consistent with the poverty reduction strategy document (DSRP), completed in March 2003, in which microfinance figures as a preferential tool for reducing poverty.
- Although the impact of microfinance remains limited overall, impact studies and positive experience derived from practical measures show that it constitutes an important tool for reducing poverty that must feature as one of the strategies aimed at attaining the objectives of the Millennium Development Goals (MDGs), inter alia reducing poverty by half by the year 2015. The Advisory Group on Assistance to the Poor (CGAP) recently showed that microfinance contributes, through the sustainable financial services it provides to the poor, to the attainment of these goals.
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Institutional Framework and Responsibilities
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- The legal and regulatory framework for microfinance institutions in Madagascar forms part of the overall mechanism applicable to banks and financial establishments. Established under the Banks Act, the Banking and Financial Supervisor Commission (CSBF) is an independent agency whose mandate is to ensure the proper functioning of credit institutions, ensure that they comply with the provisions applicable to them and penalize failure to do so.
- The sector has a national microfinance coordinating mechanism which has been operational since December 2003. The microfinancing institutions are grouped into two professional associations, the Professional Association of Mutualist Financial Institutions (APIFM) and the Association of Non-Mutualist Microfinance Institutions (AIM).
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Local Area & Coverage
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Reviews & Evaluations |
- A review and evaluation mechanism will be established under the programme. It will make it possible to measure and improve performance and attain the results specified in chapter II of the strategy. The accent will be placed on evaluating the contributions of the various factors aimed at achieving the above-mentioned impact. These factors will be products, partnership, advocacy and promoting awareness of the best microfinance practices.
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Main Policy Impact & Other Achievements to Date
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N/A
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Main Challenges
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N/A
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Key Next Steps
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1. 1 US dollar = 2 049.8 Malagasy Ariary (UNDP rate in October 2005) and 1 Malagasy Ariary = 5 Malagasy francs.
UNCDF Contacts for Madagascar
Mr. Comlan Fofo Houenou
Resident Adviser for Microfinance
Mr. Trevor Kalinowsky
Programme Officer
trevor.kalinowsky@undp.org
Regional Office for West and Central Africa
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UNCDF in Madagascar
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