IFC and BNI Madagascar Partner to Boost Local Currency Financing for MSMEs

The $30 million equivalent loan in Malagasy Ariary will focus on empowering smaller businesses, with at least 30 percent of the proceeds allocated to women-led enterprises.

The International Finance Corporation (IFC) and BNI Madagascar have announced a landmark partnership aimed at expanding access to local currency financing for micro, small, and medium-sized enterprises (MSMEs) in Madagascar. The $30 million equivalent loan in Malagasy Ariary will focus on empowering smaller businesses, with at least 30 percent of the proceeds allocated to women-led enterprises.

This partnership is expected to bolster the growth of Madagascar’s informal micro-entrepreneurs and formal MSMEs, addressing a critical financing gap that has long hindered their growth and job creation potential.

Targeting Financial Inclusion

Despite owning an estimated 37 percent of MSMEs, women entrepreneurs in Madagascar face significant challenges in accessing finance. According to IFC, women-led businesses account for about 44 percent of the country's MSME financing gap, which is currently estimated at 24 percent of GDP. This gap is notably higher than the sub-Saharan Africa average of 19 percent.

Driving Growth through Local Currency Lending

“IFC’s local currency loan will enable BNI Madagascar to expand financial access to underserved businesses, including women-led enterprises,” said Alexandre Mey, CEO of BNI Madagascar. “With a dedicated MSME department and the KRED brand, BNI will play a pivotal role in fostering financial inclusion and promoting economic resilience.”

BNI Madagascar has established itself as one of the leading financial service providers in the country, with targeted initiatives to cater to the needs of smaller businesses. Through this partnership, BNI aims to enhance its on-lending capabilities, particularly for informal entrepreneurs who often lack access to formal credit channels.

Boosting Women Entrepreneurs and MSMEs

“This collaboration with BNI Madagascar underscores IFC’s commitment to strengthening financial inclusion and promoting gender equity in Madagascar,” said Mehita Fanny, IFC's Country Manager for Madagascar. “By prioritizing women entrepreneurs, this initiative will help thousands of businesses access the local currency capital needed to thrive, create jobs, and drive economic activity.”

The project aligns with IFC’s broader mission of supporting private sector development in emerging markets, with a focus on businesses recovering from the economic impacts of the COVID-19 pandemic.

IDA PSW Support and MSME Finance Base of the Pyramid Platform

IFC’s investment is backed by the International Development Association (IDA) Private Sector Window (PSW) Blended Finance Facility, which provides a pooled first-loss guarantee for the investment. The IDA PSW Local Currency Facility further enhances the project’s impact by reducing currency risks for local borrowers.

This initiative is part of IFC’s MSME Finance Base of the Pyramid (BOP) Platform, which aims to enable financial institutions to extend lending to smaller businesses in underserved markets. By addressing systemic barriers, the platform helps MSMEs recover and grow in the wake of the COVID-19 pandemic and other challenges.

Impact on Madagascar’s Economy

The partnership is expected to create a ripple effect throughout Madagascar’s economy, strengthening MSMEs’ contribution to GDP and enhancing their role as a vital source of employment. By improving access to local currency financing, the initiative will reduce the vulnerability of small businesses to foreign exchange risks, ensuring more sustainable growth.

A Vision for Inclusive Development

The IFC-BNI Madagascar partnership reflects a shared commitment to inclusive economic development. By focusing on women entrepreneurs and underserved communities, this initiative not only addresses Madagascar’s pressing financing gaps but also paves the way for a more resilient and equitable economy.

Key Highlights:

• Loan Amount: $30 million in Malagasy Ariary.
• Focus Areas: Women-led enterprises, MSMEs, informal entrepreneurs.
• Partners: IFC, BNI Madagascar, IDA PSW Blended Finance Facility.
• Objective: Strengthen financial inclusion, create jobs, and boost MSME growth.

This innovative approach marks a significant milestone in empowering Madagascar’s entrepreneurs and fostering sustainable economic progress.