Debt in Madagascar

Madagascar has formal and informal ways to borrow. Banks, licensed microfinance institutions and digital microfinance services provide formal credit. Microfinance institutions are supervised or licensed through the Commission de Supervision Bancaire et Financière, known as CSBF. A lender normally assesses repayment capacity, checks available credit information and records the agreement in writing in Malagasy and/or French. The lender should provide a traceable written acceptance or refusal. Digital channels may operate through agents as well as online services. Informal borrowing includes loans from family or friends and savings-and-credit groups. VOAMAMI, also called an AVEC, is a savings group model in which around 15 to 25 members often save weekly and provide small loans from a common fund over a cycle of about one year. The Fonds d'Intervention pour le Développement has documented about 600 AVEC groups in its intervention areas since 2018. Lakile telo is a savings-group term documented in Analanjirofo and should not be treated as a nationwide name. Informal groups follow their own rules and do not provide the consumer protection framework of a CSBF-regulated lender. A missed contribution or repayment can therefore create social or group liability in addition to the financial debt. Clients of regulated microfinance institutions have rights to suitable products based on repayment capacity, informed choice, fair treatment, clear prices and contract terms, complaint transparency and data confidentiality. They can request access to and correction of inaccurate credit information. For digital credit, a customer generally has eight hours to reconsider and seven days to withdraw without charge apart from agreed expenses; real-time digital offers are an exception. Complaints may be made orally or in writing. The customer should obtain proof of the complaint and may send a copy to CSBF. Complaints are generally free, and the rules do not establish a separate retaliation claim. The Banky Foiben'i Madagasikara, or BFM, operates the Centrale des Risques, abbreviated CdR. Lenders report loans, collateral and monthly outstanding balances to it. Credit information bureaux operate under Law 2017-045, which requires consent, confidentiality, access, correction and updating of data. CRIF Madagascar currently indicates one free solvency report per year. A borrower should check the report before applying for new credit and correct errors promptly. When repayment becomes difficult, early written contact with the lender can support a negotiated payment deferral, refinancing or settlement. Contractual late-payment periods and charges depend on the product and agreement. Delay may lead to reminders, collection, negative credit information, enforcement against collateral or court proceedings. Madagascar does not have an evidenced nationwide public debt-counselling or debt-regulation service, so a borrower should keep the contract, payment records, complaint evidence and credit-data correspondence together. Business debt follows a different legal path from ordinary private consumer debt. Law 2003-042, amended by Law 2007-018, provides preventive settlement before payment suspension, judicial restructuring and liquidation of assets through the Tribunal de commerce. These procedures cover commercial individuals and legal entities, certain private non-commercial legal entities and specified public enterprises. The available framework does not establish a general private consumer insolvency or debt-discharge procedure; personal insolvency consequences are mainly connected with business and management contexts. OHADA insolvency rules should not be treated as Madagascar's direct local law because Madagascar is not on the official list of the 17 OHADA member states. Public debt is separate from household and company debt. A Ministry of Economy and Finance report for the end of 2024 recorded public debt of MGA 31,109.45 billion, with 83.19% external debt and 16.81% domestic debt. The 2024 IMF and World Bank debt-sustainability assessment classified the risk of external and overall debt distress as moderate. It used 90 days as a threshold for domestic arrears and recorded end-2023 domestic arrears of about MGA 762 billion, approximately 1.08% of GDP. These national figures do not determine whether an individual borrower qualifies for credit or faces collection.