(Ecofin Agency) - The financing is in line with Proparco’s strategy to encourage the development of SMEs in emerging markets.
Proparco and the European Union recently approved a €5 million credit line for AccèsBanque Madagascar (ABM), the Malagasy subsidiary of the German investment company AccessHolding. The credit line will be granted in ariary, Madagascar’s local currency, and guaranteed by the European Fund for Sustainable Development (EFSD). To eliminate foreign exchange risks, the credit line will be hedged by Currency Exchange Fund N.V., we learn.
“The objective [of this financing] is to support businesses in Madagascar and to increase investment for development," explains the European Union delegation to Madagascar.
The operation is in line with Proparco’s strategy to support SMEs in emerging countries and encourage 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 credits. The covid-19 that affected the country’s economy further reduced those percentages and greatly affected business activity. With the financing thus provided, the EU and Proparco will enhance credit access in the country.