Press Releases

IFC Supports Madagascar’s SME Sector with First-of-Its-Kind Investment

In Washington, D.C.:
Lucie Giraud
Phone: +1(202) 458-4662

In Antananarivo:                                
Jocelyn Rafidinarivo
Phone: +(261) 33 12 087 77

Antananarivo, Madagascar / Washington, D.C., June 13, 2006—The International Finance Corporation, the private sector arm of the World Bank Group, will provide joint risk-sharing with the Republic of Madagascar and two local banks to make loans available to owners of small and medium enterprises. This is the first joint investment under the International Development Association/IFC Pilot Program for Micro, Small, and Medium Enterprises in Sub-Saharan Africa.

Henri Rabarijohn, IFC’s Country Manager for Madagascar, said, “This groundbreaking collaboration between IFC and IDA is a model for mobilizing local currency financing in some of the poorest countries in Sub-Saharan Africa.  It will benefit smaller businesses that typically cannot secure loans from local banks.”

James Bond, the World Bank’s Country Director, said, “The IDA/IFC joint risk-sharing structure is promising, because it encourages local banks to prudently assume greater SME lending exposure.  This is critical in Madagascar, where small business owners rely on family, friends, or their own limited resources for most of their funding needs.”

According to Benjamin Davidson Andriamparany, Madagascar’s Minister of Economy, Finance, and Budget, “The risk-sharing agreement we signed today demonstrates the parties’ strong and long-term commitment to reduce poverty and boost economic growth in Madagascar by strengthening the private sector and giving it the means to develop. I believe that with this new partnership we will lift one of the main barriers to private sector financing: insufficient guarantees. Through our risk-sharing agreement, IFC, IDA, and the government of Madagascar will jointly invest $12.5 million to cover 50 percent of loan and cash credit guarantees.”

Michel Wormser, IDA’s Africa Director for Finance, Private Sector, and Infrastructure, said, “This initiative is part of an innovative team effort with IFC that will foster access to finance, facilitate the emergence of small and medium enterprises, and contribute to  private sector-led growth—a major objective of our support to Madagascar.”

Under two risk-sharing agreements, IFC will provide the local currency equivalent of $6 million for credit risk coverage on the portfolios of new SME loans to be developed by BFV-Société Générale and BNI-Crédit Lyonnais Madagascar, two local commercial banks. The International Development Association, the part of the World Bank Group that provides concessionary lending to governments of the poorest countries, will fund the government of Madagascar’s share of the risk coverage through an IDA credit.  This credit will be provided under the Madagascar Integrated Growth Poles Project, a project aimed at fostering broad-based economic growth in Antananarivo-Antsirabe, Nosy Be, and Taolagnaro. IFC and IDA together will provide 50 percent of the risk coverage; the local banks will be responsible for the other 50 percent.

Under the IDA/IFC Madagascar pilot, the country’s government will use other funding from the IDA credit to support technical assistance programs. The banks will receive advice on their SME lending operations, and business owners will receive training in preparing loan applications and financial concepts.

Eric Rakoto Andriantsilavo, National Secretary of the Growth Poles Project in Madagascar’s Ministry of the Economy, said, ”Access to finance, particularly for small and medium enterprises, is one of the main barriers to development. We expect the IDA/IFC program will give banks greater flexibility to lend to SMEs.”

Marcel Lenguin, BFV-Société Générale’s President Director General, said, ”We are ready to get started, and we are confident that our collaboration with the IDA Growth Pole Program, IFC, and our technical assistance partner Shorebank will be successful.”

Dominique Tissier, BNI-Crédit Lyonnais’s Administrator-Director General, said, ”The IDA/IFC program is very much in line with BNI-Crédit Lyonnais’s strategy to better meet the needs of Malagasy micro, small, and medium enterprises for financial services.”

Similar IDA/IFC MSME projects are being developed in Burkina Faso, the Democratic Republic of Congo, Ghana, Mali, Senegal, and Tanzania.

IFC has increased its global activity in Sub-Saharan Africa’s capital markets and has set ambitious investment and technical assistance objectives for the next four years. In particular, IFC is targeting SME financing through banking and other intermediaries, trade finance, microfinance, and housing finance.

“We need innovation and partnerships, so that we can tailor solutions that make financing for micro, small, and medium enterprises affordable and more broadly available,“ said Jyrki Koskelo, Director of IFC’s Global Financial Markets Department.

About IFC

The International Finance Corporation is targeting significant volume in investments and technical assistance in financial markets in Sub-Saharan Africa over the next four years.

IFC is the private sector arm of the World Bank Group and is headquartered in Washington, D.C.  IFC coordinates its activities with the other institutions of the World Bank Group but is legally and financially independent.  Its 178 member countries provide its share capital and collectively determine its policies.

The mission of IFC is to promote sustainable private sector investment in developing and transition countries, helping to reduce poverty and improve people’s lives. IFC finances private sector investments in the developing world, mobilizes capital in the international financial markets, helps clients improve social and environmental sustainability, and provides technical assistance and advice to governments and businesses. From its founding in 1956 through FY05, IFC has committed more than $49 billion of its own funds and arranged $24 billion in syndications for 3,319 companies in 140 developing countries. For more information, visit

IFC’s Key Financial Sector Activities in Sub-Saharan Africa

The IDA/IFC MSME Program responds to a call for innovative private sector development programs and IDA-IFC collaboration. It provides an integrated approach to supporting SMEs, drawing on the skills and resources of the World Bank and IFC. The program focuses on access to financial services, business development services, and improvements in the business environment for MSMEs. It has grown to more than $400 million. Visit

The Africa MSME Finance Program is an institution-building initiative to raise the standards and volume of financial institutions’ services to microentrepreneurs and smaller businesses using a combination of technical assistance (resident advisor consultants) and investment (in the form of loans). The program is designed to be scalable, enabling it to grow in response to market demand. Visit

The Global Trade Finance Program supports trade with emerging markets worldwide and promotes flows of goods and services between developing countries. Since operations began in September 2005, the focus has been Sub-Saharan Africa, where IFC guarantees have already supported nearly $160 million in trade to the region. IFC provides guarantees to confirming banks that cover issuing bank risk related to trade transactions.  Guarantees can be issued for up to 100 percent of the eligible instrument, and tenors can be provided for up to three years for private sector transactions with emerging markets. The program also encompasses pre-export financing and technical assistance. Visit

IFC’s Structured Finance Products, such as risk-sharing facilities, are part of IFC’s broader strategy to help develop domestic capital markets and expand financing options for local companies in Africa. These facilities make local currency financing available, which is critical for companies that need to match the currency of their revenues. Since 2001, IFC has been involved in structured debt transactions worth more than $4 billion in the emerging markets.  

The Greenfield microfinance initiative is a partnership between IFC and KfW Development Bank that aims to create seven new microfinance institutions in Sub-Saharan Africa over the next five years. IFC and KfW will be the major investors and providers of technical assistance, along with other donors and investors.