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.