Madagascar Banking Regulations Compliance on the Rise
In July 2020, Madagascar’s Parliament passed new banking and insurance laws, marking a significant shift in the country’s financial landscape. The new regulations aim to provide greater customer protection by mandating transparency, securing IT systems, and detecting money laundering and terrorist financing.
Concentrated Banking Sector with Low Penetration Rate
Madagascar’s banking sector is highly concentrated, with four main banks holding 86% of loans. Despite this, the banking penetration rate remains one of the lowest in sub-Saharan Africa, standing at around 18%. As of December 2020, the assets of all eleven commercial banks operating in Madagascar totaled approximately $3.83 billion or 28% of GDP.
New Laws to Provide Clearer Legal Framework
The new laws aim to provide a more clearly defined legal framework for banking and insurance activities, paving the way for investment opportunities in areas such as:
- Financial technology
- Insurance services
- Investment services
- Leasing services
- Private equity
- Cash-transfer technologies for the informal sector
Impact on Economy and Growth
The Ministry of Economy and Finance has hailed the new regulations as a major step forward in promoting financial stability and transparency in Madagascar. The government hopes that the new laws will:
- Attract more foreign investors
- Stimulate economic growth by providing a secure and regulated environment for businesses to operate
Positive Impact on Economic Development and Citizens’ Well-being
As Madagascar’s economy continues to grow, the need for robust banking regulations compliance becomes increasingly important. With the new laws in place, Madagascar is poised to become a more attractive destination for investors seeking opportunities in the financial sector. The government is optimistic that the changes will have a positive impact on the country’s economic development and improve the overall well-being of its citizens.