On Wednesday 28 October the African Development Bank approved support for Madagascar's industrial and financial sectors with a loan of €14.52 million (12.08 million UA) through the African Development Fund, Bank's concessional-rate loan arm.
The Industrialization and Financial Sector Support Project (PAISF) will bolster Madagascar's industrial sector, with the aim of reducing poverty by creating decent employment and promoting investment.
The project will also support the financial sector and help small and medium-sized enterprises (SMEs) more closely integrate into the industrial value chain.
"This project is a great fit with other Bank operations underway in Madagascar, especially the Project to Develop Corridors and Facilitate Trade, and the Agro-industrial Processing Zone Development Project in the southwest region of Madagascar," said Mr. Mohamed Cherif, the Bank's country manager for Madagascar.
The loan approval comes in the context of the COVID‑19 crisis, which has hit African economies hard, providing a sharp reminder of the urgent issue of food security in African countries. The PAISF will support the post-pandemic recovery plan developed by the government of Madagascar, highlighting the importance of an industrial strategy that prioritises meeting domestic food demand.
Following implementation, PAISF is expected to create a better environment for private investment in Madagascar's manufacturing sector, especially in industries where the Indian Ocean island nation has a comparative advantage, such as textiles and food.
It will help to accelerate the development of so-called Industrial Emergence Zones that will leverage these comparative advantages and enable better integration into the African Continental Free Trade Area and attract international investors.
In its approach, PAISF will support regional industrialization using the "one district, one factory", model that has already been rolled out in Ghana. The project will support creation of a long-term public-private partnership (PPP) to encourage private‑sector involvement in infrastructure development. In addition, through the country's National Industrial Development Fund (FNDI), the project will provide a financial boost to SMEs to support their integration into the value chain.
State institutions in Madagascar will be the main beneficiary of PAISF, through the capacity building of bodies responsible for promoting industrial development and private investment, including those in charge of PPPs.
PAISF is aligned with the Bank's country strategy (DSP 2017-2021) for Madagascar, and particularly with its Pillar 2 (Support for Agricultural Transformation and Industrial Development) as well as the Bank's Industrialize Africa High-5 priority.
Contact:
Amadou Mansour Diouf, Communication and External Relations Department, African Development Bank; a.diouf@afdb.org
