Climate finance challenges and investment gaps: the case of Madagascar

Josué, ANDRIANADY (2025): Climate finance challenges and investment gaps: the case of Madagascar.

Abstract

Madagascar, highly vulnerable to climate change, faces a significant climate finance deficit, securing only USD 385 million in 2022 against the USD 13.4 billion needed by 2030, as outlined in its Second Nationally Determined Contribution (NDC2). This study examines the barriers limiting Madagascar’s access to global climate finance, including weak institutional and technical capacities, a global bias favoring mitigation over adaptation, and heavy reliance on multilateral donors like the World Bank, which contributed 55\% of 2022 funding. Analysis of financial flows from 2015–2022 reveals volatile funding patterns, with peaks driven by large-scale projects and troughs reflecting institutional constraints. The energy sector dominates allocations, marginalizing critical adaptation needs in agriculture and water management. To bridge this gap, the paper proposes strengthening institutional capacity through centralized coordination, advocating for equitable global finance at forums like COP, and scaling innovative mechanisms such as local-currency green bonds and partnerships with PROGREEN and PROBLUE. Enhanced regulatory frameworks and transparency are critical to attract private investment and ensure equitable resource distribution. These systemic reforms, combining domestic action and international cooperation, are essential for Madagascar to achieve resilient, sustainable development amidst escalating climate risks.

• Item Type: MPRA Paper
• Language: English
• Keywords: Climate finance, Madagascar, Adaptation, Mitigation, Institutional capacity, Funding gap, Multilateral donors, World Bank, Green bonds, Public-private partnerships, Transparency, Regulatory frameworks, Vulnerability, Resilience, NDC2, COP26, Energy sector, Agriculture
• Subjects: G - Financial Economics > G0 - General > G00 - General; G - Financial Economics > G3 - Corporate Finance and Governance > G32 - Financing Policy ; Financial Risk and Risk Management ; Capital and Ownership Structure ; Value of Firms ; Goodwill; Q - Agricultural and Natural Resource Economics ; Environmental and Ecological Economics > Q5 - Environmental Economics; Q - Agricultural and Natural Resource Economics ; Environmental and Ecological Economics > Q5 - Environmental Economics > Q54 - Climate ; Natural Disasters and Their Management ; Global Warming

References

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