Less than two years after launching in Madagascar, IFC's program to increase financial services for the country’s smallest businesses and entrepreneurs is yielding strong results.
Two microfinance institutions established with IFC's support have already extended more than 17,000 loans to the country's smallest businesses, helping entrepreneurs develop their businesses, improve their livelihoods, and support Madagascar's economic growth.
Small businesses are a major source of employment in Madagascar and other developing countries. But the smallest businesses rarely have access to the savings, credit, and payment services provided by banks. The result is that most entrepreneurs operate on a cash-only basis, making growth and long-term planning almost impossible.
In 2007, IFC invested about $670,000 in the equity of MicroCred Madagascar and $1.5 million in AccèsBanque Madagascar. IFC is also advising the institutions on issues ranging from how to better reach Madagascar’s smallest businesses and implementing strong management techniques. With IFC’s support, the two institutions aim to extend more than $50 million in loans to reach the country’s smallest businesses over the next three years.
"Microfinance institutions provide valuable support to small businesses in developing countries, as well as help create jobs and reduce poverty," says Michel Iams, CEO of MicroCred Madagascar. “Our partnership with IFC will make it easier for many low-income Malagasy entrepreneurs to grow their businesses and boost their incomes."
GIVE PEOPLE A CHANCE
IFC's Microfinance Program for Africa aims to increase the number of commercially viable microfinance institutions in the region, focus on countries affected by conflict and where the private sector is at the very early stages of development. The goal is to create financial institutions that give people a real chance to lift themselves and their families out of poverty.
Working with development partners, IFC aims to establish 15 new microfinance institutions by 2011, reaching approximately 400,000 new borrowers. In addition to investments, IFC provides advisory services to help new institutions become commercially viable as soon as possible.
As part of its support for commercial microfinance, IFC is working closely with clients such as AccésBanque and MicroCred, development finance institutions, and other partners to develop a set of responsible microfinance practices.
These principles would include defining a set of prohibited practices, such as the use of violence to force people to repay debts; a commitment to educating borrowers about the terms of their loans; and guidelines for disclosure and transparency, enabling borrowers to more easily compare interest rates.
For more information contact:
Houtan Bassiri
Communications Officer
Johannesburg, South Africa
Tel: +27 11 731 3179
Email: hbassiri@ifc.org
