Baobab Banque Madagascar reduces inequalities by promoting micro-entrepreneurs, with the support of Proparco
published on 07 March 2024
Baobab Banque Madagascar has signed a €2 million portfolio guarantee with Proparco. The agreement enables Baobab Banque Madagascar to share the risks associated with its microfinance business. As a result, the bank will be able to step up its financial inclusion efforts among the micro-enterprises that provide a livelihood for the country's vulnerable urban populations.
Baobab Banque Madagascar, established in Madagascar since 2006, is a subsidiary of the Baobab Group, a leading international microfinance group on the African continent. Formerly a microfinance institution under the name Microcred, it obtained its banking license in 2010. The institution's aim is to promote access to sustainable, long-term financial services, particularly for highly vulnerable and at-risk micro-entrepreneurs, working as sole proprietors or as part of family businesses.
In line with this mission and the need to strengthen business activity aimed at this highly vulnerable category of the population, Proparco, a subsidiary of Agence Française de Développement (AFD) dedicated to the private sector, has granted Baobab Banque Madagascar an ARIZ TPE 209 portfolio guarantee of 2 million euros. This guarantee will enable Baobab Banque Madagascar to reduce its risk, allowing it to increase its financing towards these higher-risk clients.
This portfolio guarantee is part of program 209 implemented by the French ministry of Europe and Foreign Affairs on behalf of the French government. Its actions contribute to tackling major global challenges (health, climate, biodiversity, decent employment, financial inclusion, etc.) while focusing the French State's financial efforts on the least developed countries (LDCs). In particular, the 209 program provides 80% risk coverage on the guaranteed loan portfolio.
Baobab Banque Madagascar currently supports over 300,000 customers via a network of 36 branches and 527 "Baobab Spots." The bank has 850 employees, 54% of whom are women. The guarantee project qualifies for the 2 X Challenge. A distinction awarded to organizations whose aim is to advance opportunities for women through business support, leadership and career development, quality employment and products that enhance women's economic participation.
"This partnership with Proparco will strengthen our ability to expand our actions aimed at sustainable development and demonstrates our commitment to promoting equitable access to financial services for fragile and risk-prone micro-enterprises. This collaboration illustrates our ongoing commitment to the financial inclusion of populations excluded from traditional banking services. We are grateful to Proparco for its support, which enables the Bank to broaden its scope of action and thus improve the lives of the communities we serve," says Hugues Bonshe Makalebo, Managing Director of Baobab Banque Madagascar.
"We are proud to support Baobab Banque Madagascar in the development of its activities aimed at micro-entrepreneurs, who play a major role in job creation and economic growth in Madagascar. This project is fully in line with the priorities of Proparco's 2023-2027 strategy, contributing to the reduction of inequalities and investing in a sustainable and resilient economy," adds Steven Gardon, Regional Director for Southern Africa and the Indian Ocean at Proparco.
As this initiative aims to strengthen financial inclusion and the development of MSEs, it contributes directly to MDG n° 8 "Decent work and economic growth".
