WASHINGTON, June 19, 2021—The World Bank approved a $150 million International Development Association (IDA)* credit to help increase the growth of small and medium enterprises (SMEs) in target regions in Madagascar. The Economic Diversification for Inclusive Growth Project will provide direct support to SMEs and entrepreneurs, invest in infrastructure (including small works in roads, water and electricity), and finance technical assistance and capacity building to the government and other institutions, including those in the private sector. In addition to promoting job creation and increasing revenue growth in SMEs, this project aims to increase the resilience of these firms, especially given the impact of the COVID-19 pandemic.
“Already structurally constrained by a lack of access to finance and quality business development and support services, SMEs in Madagascar were hit hard by the COVID-19-related economic crisis”, said Marie-Chantal Uwanyiligira, World Bank Country Manager for Madagascar. “This project will not only help SMEs get back on their feet but will also boost the government’s efforts to spur economic recovery and contribute to implementing the government’s development strategy (PEM).”
This project is the first in a series of projects that will initially aim to stimulate economic recovery from the COVID-19 pandemic with an emphasis on supporting the private sector in agribusiness, tourism, and digital development. The following phases will move beyond recovery and focus on increasing private sector investments in the country, scaling up successful pilot interventions, and further strengthening the growth of SMEs by promoting value addition through green innovations and technology transfer.
“This project will expand the growth poles and corridors model to new regions and sectors, while helping the government significantly increase its support to start-ups and the country’s entrepreneurial support system,” noted Justine White and Cristian Quijada Torres, Task Team Leaders for the project.
Project activities will take place in the following regions: Diana, Anosy, Atsimo-Andrefana, the island of Sainte-Marie, and Analamanga. A phased geographic expansion along the east coast (including along the canal des Pangalanes) has been agreed with the government.
*The World Bank’s International Development Association, 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 76 poorest countries, 39 of which are in Africa. Resources from IDA bring positive change to the 1.6 billion people who live in IDA countries. Since 1960, IDA has supported development work in 113 countries. Annual commitments have increased steadily and averaged about $21 billion over the last three years, with about 61% going to Africa.