WASHINGTON, February 28 - The World Bank approved today a $45 million International Development Association (IDA)* credit to promote the financial inclusion of individuals and micro, small and medium-sized enterprises in Madagascar.
Madagascar Financial Inclusion project will specifically target women and women-owned enterprises, to reduce disparities in access to finance for women. The direct beneficiaries of the project will include teachers, students and taxpayers that will have the option to receive and make government payments through an e-money transaction account. Among other direct beneficiaries are also the microfinance institutions customers, particularly in rural areas. Mobile money operators will benefit from increased use of their e-money services as well as expansion of their agent network.
“With the expansion of telecom services across Madagascar, the country has a chance to expand financial services through the greater use of mobile money to people who had been under-served until then, be it the teacher who had to be absent from school to go and collect her salary or the farmer needing credit to buy seeds and fertilizer,” said Coralie Gevers, World Bank Country Manager for Madagascar. “The World Bank is proud to support the efforts of the authorities, the Central Bank of Madagascar, and financial services providers to promote a more inclusive access to finance.”
A 2016 Finscope survey found that 41 percent of adults in Madagascar are fully financially excluded (equally, 41 percent of females), without access to formal or informal financial services. According to the World Economic Forum Executive Opinion Survey 2017, access to finance was ranked second most problematic factor for doing business in Madagascar (after political instability). Madagascar ranks at 133th place out of 190 countries in terms of “Getting Credit” in the 2018 World Bank Doing Business.
This project also supports banks and Microfinance Institutions to supply credit to micro, small and medium-sized enterprises through a credit guarantee scheme and the application of financial technology (Fintech) innovations. Moreover, it encourages credit demand by productive enterprises through business development services for entrepreneurs and Microfinance Institutions branch expansions into underserved areas.
* The World Bank’s International Development Association (IDA), established in 1960, helps the world’s poorest countries by providing grants and low to zero-interest loans for projects and programs that boost economic growth, reduce poverty, and improve poor people’s lives. IDA is one of the largest sources of assistance for the world’s 75 poorest countries, 39 of which are in Africa. Resources from IDA bring positive change to the 1.5 billion people who live in IDA countries. Since 1960, IDA has supported development work in 113 countries. Annual commitments have averaged about $18 billion over the last three years, with about 54 percent going to Africa.