(Ecofin Agency) – The financing is part of Proparco’s strategy to encourage the development of SMEs in emerging markets.
Proparco and the European Union recently approved a €5 million line of credit for AccèsBanque Madagascar (ABM), the Malagasy subsidiary of the German investment company AccessHolding. The line of credit will be granted in Ariary, the local currency of Madagascar, and guaranteed by the European Fund for Sustainable Development (FEDD). To eliminate exchange risks, the line of credit will be covered by Currency Exchange Fund NV, we learn.
“The goal [of this financing] is to support businesses in Madagascar and increase investment for development,“, explains the European Union delegation to Madagascar.
The operation is part of Proparco’s strategy to support SMEs in emerging countries and promote the development of local economic fabrics.
According to the World Bank, only 29% of Malagasy households have access to formal financial services and 3% to bank loans. The covid-19 which has affected the economy of the country has further reduced these percentages and has strongly affected business activity. With the financing thus provided, the EU and Proparco will improve access to credit in the country.