The macroeconomic drivers of electricity consumption in Madagascar: Further insights from index decomposition analysis

We use index decomposition analysis to investigate the macroeconomic drivers of electricity consumption in Madagascar over the 2004-2023 period. We apply an additive Logarithmic Mean Divisia Index (LMDI-I) decomposition across two disaggregated end-use tiers: non-productive (residential household and public lighting) and productive (agriculture, industry, services, and small and medium enterprises). To ensure methodological robustness, baseline LMDI-I estimates are cross-validated against the Mean Rate-of-Change Index (MRCI) and Extended Marshall-Edgeworth index formulations. The findings across four distinct five-year non-overlapping subperiods indicate that electrification access, despite its acute vulnerability during political crises, alongside population growth and non-productive electricity intensity serve as key upward drivers in the non-productive tier. In contrast, productive sector demand is consistently pushed upward across all intervals by economic output scale and structural shifts toward energy-intensive activities, but is severely dampened by a significant decline in capital electricity intensity. These findings provide actionable empirical insights to guide national power sector planning for both demographic and productive needs, investment prioritization, and sustainable energy transition policies in Madagascar.