The government of Madagascar announced in a statement on June 17 that it will soon be offering close to a million small businesses secure loans at below market rates to help deal with the impact of the Covid-19 pandemic.
President Andry Rajoelina rolled out a total of 280 billion Ariary ($73 million) in three loan tranches with interest rates ranging from 4.97% to 9% and repayment periods of 6-24 months, the government said in a statement late on Wednesday.
“Over 980,000 businesses including small farmers, agricultural distributors, and those in the tourism, commerce, crafts and manufacturing sectors will be beneficiaries of the loan,” the government said.
The new strategy is expected to alleviate the burden stemming from the pandemic on the private sector, which has been particularly hard hit. Targeting small farmers and agricultural distributors, as well as businesses in the tourism, trade, handicrafts and manufacturing sectors.
The loans that will be granted through three different mechanisms will have interest rates below 10% with repayment periods of 6 to 24 months.
The new plan will rely mainly on microfinance institutions that finance businesses at lower costs than commercial banks, whose interest rates are currently estimated at between 20 and 40%.