IFC is supporting the growth of small businesses in Madagascar, an island nation that is embracing private-sector led growth and emerging from years of economic stagnation.
On a bustling street in Antananarivo, Madagascar’s teeming capital of about 1.5 million people, husband and wife team Stephen and Miudantsoa run a tiny 'epicerie'. They sell a variety of school supplies, soaps, household items, and a selection of sweet cakes and drinks.
When the couple wanted to expand their business and attract more customers by adding a range of new stock, they turned to AccesBanque, an IFC partner that specializes in microfinance.
"We took a loan of 2 million ariary (about $ 1100) over a period of 8 months," said Stephen Raheriarimanda, standing behind his shop’s counter. "A lot of customers were asking for different products that we didn’t have and we thought we had to get them or we might lose business."
With the loan, one of more than 3,000 AccesBanque has made since launching in Madagascar in early 2007, Stephen and Miudantsoa purchased a large quantity of toiletries and other products. "Business is good and our shelves are full," Stephen said.
IFC is working in several African countries supporting the expansion of microfinance, especially in places where small businesses have traditionally struggled to access credit and other basic banking services. Small businesses employ the bulk of the working population in Africa and their success often underpins the strength of the wider economy.
IFC'S PARTNERS
In Madagascar, IFC is working with several partners, including AccesBanque, Business Partners and Microcred, to tailor products for entrepreneurs like Stephen and Miudantsoa.
IFC has invested more than $7 million in microfinance institutions on the island. These lenders typically make loans from 200,000 to 50 million ariary ($110 to $27,000) to businesses in the trade, service, transport, agricultural, construction, and other sectors. They are supporting a range of businesses from small shops to makers of window and door frames, and mosquito repellent.
IFC provides a comprehensive advisory services package to AccesBanque and to its other financial partners in Madagascar. This includes supporting the development of technical systems, training and helping the institutions build a strong, home-grown management team.
"IFC is very interested in empowering people, in giving the market a chance…It has been a pleasure to work with IFC staff because they know the market and environment here in Madagascar very well," said AccesBanque General Manager Martin Spahr.
HUMAN DEVELOPMENT INDEX
Madagascar is blessed with an abundance of natural resources, unique wildlife and natural beauty, yet the country’s per capita income tumbled from US$473 in 1970 to only US$290 in 2005.
Isolation and a lack of infrastructure have contributed to the income decline. Madagascar was ranked a lowly 143 of 177 in the United Nations’ 2007/8 Human Development Index.
But prospects for the future are beginning to overshadow the problems of the past. Recently-adopted policies are encouraging a more open economy and expanded trade. According to the International Monetary Fund, the economy is expected to grow at a healthy 7.3 percent in 2008, a number fuelled in part by an incipient mining boom.
IFC is supporting growth on the island with a variety of investment and advisory services packages. The country's leasing, export, and tourism industries are all benefiting from IFC’s expertise. IFC is also helping to introduce regulatory reforms in licensing, taxation, and cross-border trading.
An SME Solutions Center launched in Madagascar in 2004 provides a ‘one stop shop’ for small businesses on the island, offering skills development, access to finance and access to market information.
"Providing access to finance for small businesses contributes to private sector-led growth, which is a major objective of our support to Madagascar," said IFC Madagascar Country Manager Henri Rabarijohn. "At the end of 2007 our strong portfolio on the island, which includes supporting small businesses and developing the financial sector, totaled $57.6 million. This has grown from $7.0 million in 2003."
Stephen and Miudantsoa’s epicerie has enjoyed a boost in business since they took the loan from Access Banque. The couple has also recently bought a small bus to start a transport business, a move that reflects the entrepreneurial spirit helping feed the growth of Madagascar’s wider economy.
For More Information Contact:
Jason Hopps
Jhopps@ifc.org
