Antananarivo, Madagascar, July 4, 2023—To help expand financial inclusion in Madagascar, IFC today announced a partnership with three leading Malagasy financial service providers to boost access to finance for micro, small, and medium enterprises (MSMEs), build the financial sector's resilience, and help spur economic growth.
IFC will invest up to $27 million equivalent in local currency, long-term financing in Première Agence de Microfinance (PAMF), UNICECAM (CECAM) and BFV - Société Générale Madagasikara (SGM) to help deliver much-needed funding to thousands of Malagasy MSMEs.
The financing is comprised of local currency equivalent loans of $20 million to SGM, $5 million to CECAM, and $2 million to PAMF. The local currency loans, which will reduce the risk of currency fluctuation, are supported by the International Development Association's Private Sector Window (IDA-PSW) Blended Finance Facility and IDA-PSW Local Currency Facility.
"PAMF is pleased to join forces with IFC to support access to finance and enhance the growth of Malagasy MSMEs as they have the potential to grow and diversify the local economy, boost job creation and reduce poverty," said Guy Ratsimbazafy, Chief Executive Officer at PAMF.
"In December 2022, CECAM, the Caisse d'Epargne et de Crédit Agricole Mutuels, obtained a 4-year, $5 million loan from IFC, enabling it to finance, through individual loans, at least 11,000 members working in rural areas and in the agricultural sector," said Serge Rajaonarison, Chief Executive Officer at CECAM.
"Société Générale is thankful to IFC for having put together such an ambitious program that perfectly fits the current needs of Malagasy financial institutions. Our joint efforts to support MSMEs will have a direct impact on the local economy and help create and maintain thousands of jobs," said Thibault Vallet, Directeur des Relations Entreprises et Institutionnelles at SGM.
"Smaller businesses are essential to economic growth and job creation in Madagascar," said Marcelle Ayo, IFC's Country Manager for Madagascar. "IFC's partnership with these three Malagasy financial service providers will help increase critical funding for these businesses and send a signal of our support for the sector to attract more investors."
Madagascar experienced its most severe economic contraction in decades because of the COVID-19 pandemic, which reduced income streams for many smaller businesses. The financing will help expand access to finance for underserved small businesses, especially those affected by the pandemic.
The financing is provided under IFC's base of the pyramid (BOP) initiative, which aims to enable financial service providers to remain viable despite the effects of the pandemic, helping them sustain their operations and continue supporting their MSME clients. The initiative is an expansion of IFC's $8 billion fast-track COVID facility launched in 2020.
IFC will also provide advisory services to help these Malagasy financial service providers mobilize more savings and deposits to strengthen their balance sheets. This includes support to develop deposit mobilization strategies, risk management and internal controls, as well as digital strategies to improve new product development and targeting.
The partnership aims to strengthen financial sector resilience and demonstrate the viability of lending to local and smaller financial service providers. It is designed to help catalyze the market for much needed local financing to crowd-in more investors in support of these lenders.
About IFC
IFC—a member of the World Bank Group—is the largest global development institution focused on the private sector in emerging markets. We work in more than 100 countries, using our capital, expertise, and influence to create markets and opportunities in developing countries. In fiscal year 2022, IFC committed a record $32.8 billion to private companies and financial institutions in developing countries, leveraging the power of the private sector to end extreme poverty and boost shared prosperity as economies grapple with the impacts of global compounding crises. For more information, visit www.ifc.org.
About the IDA Private Sector Window
The International Development Association's (IDA) Private Sector Window was launched in 2017 to catalyze private sector investment in the poorest and most fragile countries. Recognizing the key role of the private sector in achieving IDA's objectives and the World Bank Group's twin goals, the window provides a source of co-investment funding and guarantees to de-risk private investments supported by IFC and the Multilateral Investment Guarantee Agency (MIGA). The IDA PSW is an option when there is no commercial solution, and the World Bank Group's other tools and approaches are insufficient. For more information, visit: http://ida.worldbank.org/psw
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About PAMF
PAMF is a microfinance institution, subsidiary of the Aga Khan Fund for Economic Development (AKFED) and member of the Aga Khan Development Network (AKDN), established in Madagascar since 2006. Authorized by the Central Bank of Madagascar, it is a deposit and credit institution whose mission is to reduce poverty in Madagascar by combating economic and social exclusion through access to quality financial solutions. The institution plays an active role in financial inclusion in Madagascar, offering traditional savings and credit products tailored to the realities of the Malagasy market.
About CECAM
CECAM is recognized as the leader in financial inclusion in rural areas of Madagascar. Under the motto of 'shared success', CECAM's financial intermediation services are based on the values of cooperative spirit, mutualism and professionalism. In its 30 years of existence, CECAM has reached over 300,000 direct members and more than 1,500,000 Malagasies, mainly farmers. CECAM spares no effort to evolve towards financial innovation in all its forms. CECAM's ultimate mission is to reduce poverty and restore human dignity to populations marginalized by the conventional financial system.
About SGM
Société Générale Madagasikara is strengthened by the expertise of Société Générale Group, committed to build day after day, together with its clients, a better and sustainable future through responsible and innovative financial solutions. Through more than 20 years established in Madagascar, the bank provides support to Individual, Institutional and Corporate customers to achieve its ambition of developing solutions that impact positively the economy of Madagascar.
