Employment impact assessment of the Talaky Be project in Madagascar

For a summary of the report and its main findings, please see the Information Brief below.

A key task of the ILO STRENGTHEN2 project is to conduct employment impact assessments of EU-funded investments in sub-Saharan Africa, with the aim of promoting the creation of more and better jobs. The European Union (EU), in partnership with the French Development Agency (Agence française de développement, AFD), has committed a total of €40 million in grants and loans to support the adaptation of agriculture to the challenges of climate change and to strengthen the resilience of rural communities in Anosy, in the south-east of Madagascar.

This report presents an ex-ante Employment Impact Assessment (EmpIA) of the six-year Talaky Be project (2023-2029) to estimate the direct, indirect, and induced employment effects (using the input-output multiplier approach) and an economy-wide response (by taking into account direct, indirect and induced employment effects combined as well as considering supply constraints and price adjustments) through the Structural Model for Sustainable Development (SMSD). Both approaches are calculated/simulated based on the Madagascar 2014 Social Accounting Matrix (SAM) and employment data as published in GTAP version 10.

The results of this ex-ante evaluation, using the input-output multiplier approach, are expressed in terms of employment headcount. It shows that the Talaky Be project can create between 24,000 and 31,000 jobs during the life of the project, an equivalent of between 622 and 802 jobs per €1 million invested. The SMSD, which takes into account supply constraints (production in the agricultural sector being limited to 5 per cent growth in the short term) and price effects, provides much lower employment estimates of between 9,700 and 12,500 jobs. The direct jobs are in the business services category (provision of technical assistance), and are therefore formal and skilled in nature. The jobs created by the project through indirect and induced effects are mainly in the agricultural sector, and are characterized as low-skilled and informal, which is largely explained by the fact that the employment structure in Madagascar is overwhelmingly informal and low-skilled.

In conclusion, the Talaky Be project not only represents an important step in the country’s commitment to fighting climate change, but is also expected to have a significant positive employment impact in Madagascar. This report highlights the high level of informality in Madagascar, which calls for targeted efforts towards formalization through specific activities of the Talaky Be project in collaboration with key stakeholders, i.e., through the creation of a conducive environment to facilitate the transition from the informal to the formal economy in the Anosy region. It should also be noted that the impact of the project itself on employment can be improved by allocating more resources to forest landscape restoration and conservation activities while keeping the overarching goal of the project in mind. The use of a labour-based approach, the formulation for skills development strategy and the promotion of social enterprises could make the Talaky Be project more impactful and sustainable. Addressing the above considerations is essential to optimize the project's impact and ensure inclusive and decent work opportunities for people in the region and if replicated, for the whole country.