Is the World Bank about to seriously damaging the growing solar sector in Madagascar?

It cannot be said that the island state of Madagascar is at the centre of the international off-grid industry’s attention. However, a lively off-grid sector has been developing here for several years. It is therefore important to realise that the World Bank is currently causing serious damage to this local solar industry.

Of the country’s 26 million inhabitants, only 34% have access to electricity, and only 14% in rural areas. In recent years, several initiatives have been launched to improve this situation. In addition to IFC’s Scaling Solar programme, there are also programmes from various other international development organisations:

  • The German GIZ is supporting the Government of Madagascar and the private sector in improving the framework conditions for public and private investment.
  • Madagascar also was one of two initial countries where the Universal Energy Facility (UEF) of SEforAll began offering results-based grants to help expand electricity connections via mini-grids.
  • Power Africa and USAID bridged the financing gap for the implementation of new mini-grid projects with a recently completed project.
  • The WeLight project, supported by the European Investment Bank (EIB), aims in a similar direction

Common to all programmes is the desire to use the grants not only to electrify households but also to strengthen the private sector. This is because only a stable and economically viable local solar industry can guarantee the long-term success of the funds invested.

The government of Madagascar supported the local solar industry through the LEAD project (Least-Cost Electricity Access Development Project) financed by the World Bank, as part of which the Off-Grid Market Development Fund (OMDF) was launched in 2020. OMDF offers two packages for distributors: (i) a grant in the form of results-based financing; and (ii) a working capital loan.


A burgeoning solar sector

There are now 17 companies in Madagascar listed in Sun-Connect’s company database, which create numerous jobs and are of growing importance for off-grid electrification in rural regions. Many of them sell solar home systems in particular using end customer loans (PAYGO). The local company Baobab+ wrote an interesting report on the experiences and difficulties in this area a few years ago.

The Digital and Energy Connectivity for Inclusion in Madagascar Project (DECIM), initiated by the World Bank in 2023, also aimed to increase the distribution of solar kits and simultaneously promote the local solar industry. The linking of the energy issue with internet access is particularly interesting. This is a clever connection, as energy access and internet access are often interrelated and mutually dependent.

DECIM should help to double energy access in Madagascar from 33.7 % to 67 % and gain 3.4 million additional internet users in order to promote socio-economic integration. The plan was to involve local solar companies and promote the solar systems by means of Result-Based Financing: By reducing the upfront costs of electric appliances, the gap should be closed between costs of service provision and affordability levels of target population.

So far so good.


But then the programme was changed significantly:

The Solar Kits sold with performance-based grants

became Social Solar Kits, given away as a free gift.

A total of up to 1,200,000 solar kits (!) are now being given away free of charge, financed by funds from the LEAD and DECIM projects, which were originally designated for results-based financing. At same time the budget for result-based financing was reduced dramatically.

This fundamental change will of course have serious consequences for all 17 solar companies in Madagascar if they are selling solar kits: Their business will collapse, jobs will be lost.

However, it also has consequences for the projects of GIZ, USAID, EIB and SEforAll: their solar partners, who are necessary for the realisation of mini-grids, could find themselves in considerable economic difficulties if they are also active in the sale of solar kits.

Ultimately, this giving away of up to 1.2 million solar kits will damage the solar market in Madagascar for many years to come.


This development raises a number of questions:

  • Why is the World Bank carrying out this modification of the LEAD and DECIM programme? Does the World Bank realise what consequences this will have for the local solar sector? And if so, how much in grants does the World Bank plan to provide over the next 5-10 years in order to rebuild the solar market to some extent?
  • What do the other international organisations (GIZ, USAID, EIB, SEforAll) have to say about the fact that their local solar partners may be so badly damaged by the World Bank’s actions that their current and planned projects can only be implemented under very difficult conditions?
  • What is the position of the industry association GOGLA on this development? The development of a stable, sustainable and fair off-grid industry is at the heart of GOGLA’s activities. Is GOGLA aware of this critical situation in Madagascar?


These are urgent and necessary questions that need to be answered if we are concerned about the solar sector in Madagascar. Even if the island state is not at the centre of the off-grid industry’s attention.

If you want to find out more about the current dangerous situation for the solar sector in Madagascar, you can download the following documents: