The new facility from AfDB aims to bolster Madagascar’s industrialization and support SMEs through enhanced trade financing.
In a strategic move to bolster Madagascar’s economic development, the African Development Bank (AfDB) has approved a $25 million Trade Finance Transaction Guarantee Facility for Bank of Africa Madagascar (site). This initiative is set to enhance the country’s industrialization efforts and provide critical support to local businesses.
Strengthening Industrial and Agricultural Sectors
The three-year facility is designed to facilitate the importation of essential inputs, production machinery, and telecommunications equipment. By targeting key sectors such as agro-industry and light manufacturing, the initiative aims to improve food and nutritional security while accelerating industrial growth. This aligns with AfDB’s 2022–2026 Country Strategy for Madagascar, which emphasizes agricultural transformation and manufacturing development.
Lamin Drammeh, Head of Trade Finance at the African Development Bank, emphasized the facility’s significance: “This guarantee will enable the Bank to provide up to 100 percent coverage for confirming banks to facilitate the confirmation of Letters of Credit and similar trade finance instruments issued by Bank of Africa Madagascar.”
Empowering SMEs and Women-Led Enterprises
A significant focus of the facility is to support large local businesses and small and medium-sized enterprises (SMEs), including those led by women. By providing up to 100% coverage for confirming banks to facilitate letters of credit and similar trade finance instruments, the guarantee will enable Bank of Africa Madagascar to offer more effective support to companies across the economic landscape.
Promoting Sustainable and Low-Emission Projects
The transaction guarantee supports projects with minimal climate risks and low greenhouse gas emissions. It encompasses a range of financial instruments, including confirmed letters of credit, business loans, irrevocable reimbursement undertakings, endorsed drafts, and promissory notes. This approach ensures that the facility contributes to sustainable economic development while mitigating environmental impact.
Strategic Alignment and Future Outlook
This trade support operation is a testament to the collaborative efforts between AfDB and Bank of Africa Madagascar. By aligning with national strategies and focusing on critical sectors, the facility is poised to play a pivotal role in Madagascar’s economic transformation. It also sets a precedent for future partnerships aimed at fostering inclusive growth and regional integration.
Jamal Ameziane, Managing Director of Bank of Africa Madagascar, highlighted the partnership’s strategic importance: “This facility will enable us to provide more effective support to a number of companies in Madagascar’s economic landscape.”
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