Madagascar

EITI Status Meaningful progress
Joined EITI in 2008
Latest Data From 2016
Latest Validation 2018
Website EITI Madagascar
Last updated 9 May 2019

Overview

With a USD 449 GDP per capita in 2017, 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 Minerals S.A. operates the largest industrial mine. Artisanal and small-scale mining operations employ over 500,000 people across the country and concern mainly gold, precious and semi-precious stones, largely exported to Sri Lanka and Thailand for processing. 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 sector in total governement revenues, 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 payments and 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. Going forward, Madagascar EITI aims to strenghten environmental reporting, data certification, and transparency around the state's participation in the sector. 

Beneficial ownership disclosure

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.
Daniella Randriafeno, Madagascar EITI National Coordinator

Production

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. 

Revenue collection

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). 

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Reconciled revenues by top 5 companies

Mineral Production

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Revenue allocation

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. 

Impact

​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.

Implementation

Madagascar was temporarily suspended on 1 February 2019 for not published its 2017 annual progress report by 31 December 2018, as per Requirements 8.4 and 8.5 of the 2016 EITI Standard. The suspension was lifted on 8 May 2018 after the 2017-2018 annual progress report was published on 29 April 2019. 

Governance

Mr Henri Rabary-Njak, Minister of Mines and Petroleum, chairs the National Committee, which has the mandate to oversee EITI implementation in Madagascar. Ms Tolotrandry Rajo Daniella Randriafeno, former Minister of Mines, was appointed EITI National Coordinator in December 2014. 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 role, responsibilities and rights of the multi-stakeholder group are defined in its TORs approved by Presidential Decree N°2017-736 of 30 August 2017. 

EITI Reports

Madagascar published its 2015 EITI Report in May 2018 and its 2016 EITI Report in August 2018. 

Timeline

Validation

The country is compliant under the 2011 Rules

Madagascar's Validation against the 2016 EITI Standard commenced on 1 September 2017. Madagascar was found to have achieved meaningful progress in implementing the EITI Standard in June 2018. The Board recognised Madagascar’s efforts to go beyond the requirements of the EITI Standard in providing information on informal extractives activities. The Board encouraged the government to continue discussions on extractives license management, production data and subnational transfers, and to expand them to other salient issues such as transparency of state owned companies (SOEs).

The full text of the Board decision is available online.

Madagascar's progress by requirement

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