Madagascar EITI 2020 work plan.
With a USD 527 GDP per capita in 2018, Madagascar's population is amongst the world's poorest. Yet it holds extensive deposits of minerals. Industrial mining activities in Madagascar include the production of chromium, cobalt, ilmenite, and nickel. Ambatovy operates the largest industrial nickel and cobalt mine. Artisanal and small-scale mining operations employ over 500,000 people across the country and concern mainly gold, precious and semi-precious stones. However, Madagascar is said to be losing millions of dollars annually to illicit trade from its ASM sector. The country is considered to be a new frontier for oil and gas prospecting, but oil exploration remains limited, both on and off-shore. In addition to the share of the extractive revenues transferred to local communities, the population is concerned by the environmental impact of the sector on the island's unique biodiversity.
EITI implementation started in 2008 to shed light on revenues collected by the government. Ten years later and despite a three-year suspension due to political instability, the process has had a meaningful impact on the governance of the extractive sector through its targeted work on license allocation and subnational transfers. The EITI process also provided visibility on the mining sector, including estimates of much government revenue might be lost through illicit gold exports. In June 2018, the EITI Board announced that Madagascar had made meaningful progress in implementing the 2016 EITI Standard. The country's 2018 EITI Report provides unique publicly-accessible data about the sector, including on beneficial ownership. Going forward, Madagascar EITI aims to strenghten environmental reporting, data certification, and transparency around the state's participation in the sector. The Madagascar EITI adopted the Board approved measures related to flexible reporting for its upcoming 2018-2020 EITI Report.
The 1999 Mining Code was modified in 2015 by Law n.2005-021. It encompasses nearly all mining companies operating in Madagascar. QIT Madagascar Minerals S.A., of which Rio Tinto holds 80% and the government holds 20% through the Office of National Mining and Strategic Resources (OMNIS), is governed by a unique "Convention d'Établissement" promulgated in February 1999. All mining companies whose investment surpasses USD 16 million are subject to the Law on Large Investments from October 2002. The Ambatovy project is the only one to date covered by that particular fiscal regime for large investors.
The upstream oil sector is governed by the Petroleum Code and by a 1997 decree, as well as by oil contracts signed between OMNIS, the state-owned agency responsible for managing, developing and promoting Madagascar’s petroleum and mineral resources, and oil and gas companies. In the petroleum sector, a one-time withholding tax of three other taxes is applied during the production phase. During exploration, the fiscal regime is that of common law, stipulated by the General Tax Code.
There have been extensive consultations about the potential reform of the mining and petroleum codes between 2015 and 2017, but the process seems to have stalled in 2018.
EITI reporting has shed light on the statutory process for the award of extractive licenses, particularly in the mining sector. A moratorium on the award of new mining licenses was introduced in 2011 and led to confusion about the assessment of pending demands. Madagascar EITI commissioned a targeted study on the management of mining licenses and the Mining Cadaster Office's role in 2015, with an updated study in 2017. It contributed to improving the online mining cadastre, which includes an interactive map and searchable database. EITI reporting has also extensively described the award and transfer of mining rights in the artisanal and small-scale sector, given the latter's relevance for the country. The 2016 EITI Report included a comprehensive list of all license holders as of 31 December 2016, both in the mining and oil sectors.
The government does not have a legal framework incentivising the disclosure of contracts. Standard off-shore and on-shore PSC are available on the OMNIS website.
Madagascar’s EITI published a report on beneficial ownership in March 2018, highlighting the importance of knowing who Madagascar is doing business with and ensuring that revenues benefit the country. Prior to the Opening Up Ownership: Africa conference held in Dakar in October 2018, the multi-stakeholder group set up a committee to implement its beneficial ownership roadmap, including setting up a public beneficial ownership register. The 2016 EITI Report presented the outcome of a national workshop on the issue held in February 2018, where different definitions were discussed. The Report disclosed the legal owners of 31 companies and the beneficial owners of 11 companies.
The local communities’ anger was often directed towards the mining companies. After the publication of the EITI Reports, people began to realise that the management of their resources is a shared responsibility between companies, the central and local governments. When people saw how much companies paid to the central government in taxes and royalties in 2010 for example, they began to ask questions about how this money is used and who is benefiting from it.
Latest EITI reporting showed the volumes and value of production by company, commodity and location, for a total estimated value of USD 647,4 million. Ilmenite, nickel and cobalt were produced at industrial scale by the Ambatovy and the QMM mines. The artisanal and small-scale mining sector represents an important source of employment in the island nation. These operations concern mainly gold, and precious and semi-precious stones, Madagascar being known for its high quality rubies and sapphire. The 2016 EITI Report listed the main buying houses and intermediaries in the gold supply chain. It showed the sharp increase in government revenues following the formalisation of the sector, which in turn had an impact on shares of mining royalties for government agencies and local communities. Madagascar EITI has been partnering with the GIZ and others to improve data collection on the ASM sector.
The 2016 EITI Report revealed that Madagascar received USD 44,7 million from extractive industry taxation. Estimates showed that the sector contributed to 4,6% of the country's GDP, a significant increase over only three years, from 2,1% in 2013. The start of production by Ambatovy and QMM strongly contributed to the increase. The sector also contributed to almost a quarter of total exports and a fifth of total employment.
Material revenues are collected primarily by seven government agencies: the Bureau du Cadastre Minier de Madagascar (BCMM), the Caisse Nationale de Prévoyance Sociale (CNaPS), the Direction Générale des Douanes (DGD), the Direction Générale des Impôts (DGI), the Direction Générale des Mines (DGM), the Office National de l'Environnement (ONE) and the Office des Mines Nationales et des Industries Stratégiques (OMNIS).
Companies pay taxes both at the central and local levels. In the Tamatave and Fort Dauphin municipalities, for example, mining companies are the largest taxpayers. EITI data about effective transfers to local governments has been used by citizens through participatory budgeting, to have a say in how mining revenues are allocated. The 2013 EITI Report for example showed that these funds were used to pay salaries of the local staff at the commune and finance infrastructure developments for local communities, such as schools, road repairs and water supply.
The 2016 EITI Report also included a description of the budget-making process, including preparation, approval and execution. It highlighted that the current fiscal nomenclature did not identify the taxpayer's sector of activity, making it impossible to track the use of revenues from the extractive sector at the central level. The websites of the Ministry of Finance and Budget and the Public Treasury also provide useful information about revenue allocation, including the upcoming finance law for the year 2017 or the country's debt repayment strategy. Madagascar also underwent a Public Financial Management Performance (PEFA) assessment in 2018, which pointed out weaknesses related to the weak credibility of the budget and the absence of participation from the Parliament to the budgetary process.
The EITI encourages multi-stakeholder groups to explore innovative approaches to make the EITI more relevant and useful.
Madagascar EITI signed an agreement with the Supreme Audit Institution in December 2018 to improve the certification of data from government reporting entities on the extractive sector.
Madagascar EITI published three guides in March 2018: one to help companies contribute to the EITI process, one to advise parliamentarians on how to monitor the sector, and one to help citizens understand EITI Reports.
EITI reporting has influenced the government’s decision to implement reforms to formalise the gold sector and increase government revenues.
Outstanding payments due to local communities are disclosed in the EITI reports. These are used by local communities to request payments from central authorities, as documented in the EITI in Africa publication. To clarify contradictions in the disbursement of payments to local communities, Madagascar EITI carried out a study on subnational payments and transfers in the mining and oil sectors.
Citizens in the municipalities, where mining activities take place, are given a say in how revenues from their natural resources are used through participatory budgeting.
Madagascar EITI conducted a study on mining titles at the Mining Cadaster office of Madagascar in 2015. Concrete recommendations from the study led to the nomination of a new director and the official publication by the Ministry of Mines of criteria for assessing bids of approximately 4000 pending permits. The study was updated in 2017.
Madagascar EITI conducted a study on the management of geological information in 2015 to take stock of the existing geological data and institutional framework.
- EITI Reports have included information on both mandatory and voluntary social payments since 2013.
Madagascar joined the EITI in 2008. It published its 2017 and 2018 EITI Reports in December 2019. MSG activities aim to document and strengthen the impact of the extractive sector on the national economy and at the local level.
Fidiniavo Ravokatra, Minister of Mines and Strategic Resources, chairs the National Committee, which has the mandate to oversee EITI implementation in Madagascar. Eryck Herinarahinjaka Randrianandrasana was selected as the National Coordinator in 2020. The EITI-Madagascar National Committee was created in July 2010, renewed in April 2013 and November 2017. The three constituencies, government, civil society and oil, gas and mining companies are equally represented in the 21 members’ committee. The Ministry of Mines and Strategic Resources, as well as the Ministries of Finance, Economy, Environment and Decentralisation, are represented on the MSG.
Madagascar was found to have achieved meaningful progress in implementing the EITI Standard in June 2018.
Madagascar's second Validation against the 2016 EITI Standard commenced on 29 December 2019. The Board agreed on 9 June 2020 that Madagascar had made meaningful progress in implementing the Standard, with considerable improvements across several requirements. The full text of the Board decision is available online.
Based on the new Validation schedule agreed by the EITI Board, Madagascar's next Validation will start on 1 January 2023.
Ahead of the start of Madagascar's second Validation under the 2016 EITI Standard on 29 December 2019, Madagascar EITI has compiled a database of files documenting EITI implementation and its impact over the period January 2018-December 2019. The table of contents is attached below.
These files provide evidence to help inform the assessment of progress against fifteen corrective measures from Madagascar's first Validation
Rapport 2018 de l'ITIE Madagascar.
Rapport 2017 de l'ITIE Madagascar.
Lists of active mining licenses in Madagascar as of 31 December 2017 and 31 December 2018, in open data format.
Liste des titres miniers valides à Madagascar au 31 décembre 2017 et au 31 décembre 2018, en format données ouvertes.
Systematic disclosures matrix undertaken by Madagascar EITI in 2019.
Cartographie des divulgations systématiques menée par l'ITIE Madagascar en 2019.
Madagascar EITI published its updated 2018-2019 work plan in December 2019, in accordance with Requirement 1.5 of the EITI Standard.
2017 and 2018 audit reports of the National Office for National Mines and Strategic Industries (OMNIS).
Rapports d'audit 2017 et 2018 de l'Office des Mines Nationales et des Industries Stratégiques (OMNIS).
2017 audit report of the mining cadastre in Madagascar.
Rapport d'audit 2017 du Bureau du Cadastre Minier de Madagascar (BCMM).
2017 audit report of the National Agency for the Gold sector in Madagascar (ANOR).
Rapport d'audit 2017 pour l'Agence Nationale de la filière Or Madagascar (ANOR).
Madagascar EITI published a report covering activities carried out in 2017 and 2018 and assessing the impact of EITI implementation. The report is also available on the Madagascar EITI website (here
À l'occasion des dix ans de mise en oeuvre, l'ITIE Madagascar souligne les impacts marquants du processus ITIE, les principales données publiées. Cette brochure inclut aussi les perspectives pour les annéees à venir et des témoignages de parties prenantes.
Cette publication de l'ITIE Madagascar explique les raisons pour lesquelles la divulgation des propriétaires réels dans le secteur extractif est essentielle pour sauvegarder les intérêts du pays. Elle retrace la mise en oeuvre de la propriété réelle à travers le processus ITIE et en rappelle les enjeux et définitions clés.
L'objectif de cette publication de l'ITIE Madagascar est d'aider les citoyens à comprendre les Rapports ITIE, afin que ceux-ci servent de base de discussion, alimentent les connaissances de tous les lecteurs et soient une référence sur l'évolution et la gouvernance du secteur extractif malgache. Il comporte 28 questions clés.
Cette étude commissionnée par l'ITIE Madagascar fait la lumière sur les paiements et tranferts infranationaux dans le secteur extractif. Le paiement des frais d'administration minière et de ristournes minières aux communautés locales représente une question clé pour Madagascar. L'étude montre les contradictions dans le cadre réglementaire et les obstacles aux paiement de ces revenus aux communautés. Elle se base sur les Rapports de réconciliation ITIE des années 2010 à 2014, ainsi que sur des nouvelles données collectées auprès de 11 onze communes et des entités de l'État concernées.