AfDB Approves $20 Million Trade Finance Guarantee Facility for Madagascar

A major focus of the facility will be supporting imports of industrial machinery, production inputs and telecommunications equipment needed to expand manufacturing capacity.

The African Development Bank Group has approved a $20 million trade finance guarantee facility for Banque Malgache de l'Océan Indien (BMOI), a move designed to strengthen Madagascar's industrial development and improve access to essential imports for businesses across the country.

The three-year facility, approved on 29 May 2026, will help local companies secure financing for imports that are critical to expanding production and supporting economic growth. The initiative is expected to benefit both large enterprises and small and medium-sized businesses operating in key sectors of the economy. Officials believe the financing will play an important role in addressing trade finance constraints that often limit the ability of businesses to access equipment, machinery and production materials from international markets.

The programme forms part of the African Development Bank's broader efforts to support private sector development and strengthen economic resilience in Madagascar.

Funding to Boost Manufacturing and Agribusiness

A major focus of the facility will be supporting imports of industrial machinery, production inputs and telecommunications equipment needed to expand manufacturing capacity. Agribusiness and manufacturing have been identified as the primary sectors expected to benefit from the financing. These industries play a crucial role in job creation, value addition and economic diversification, making them central to Madagascar's long-term development plans.

Improved access to machinery and modern production equipment could help businesses increase productivity, enhance competitiveness and expand operations. For manufacturers, the facility may also reduce some of the barriers associated with importing essential equipment from overseas suppliers. The initiative is also expected to contribute to food and nutritional security. By facilitating imports of essential goods and production inputs, the programme aims to support supply chains that are important for both businesses and consumers.

Trade Guarantees to Improve Access to International Markets

According to Lamin Drammeh, Head of the Trade Finance Division at the African Development Bank Group, the facility will allow the Bank to provide payment guarantees covering up to 100 percent of eligible transactions. These guarantees will support confirming banks in accepting letters of credit and other trade finance instruments issued by BMOI. Such arrangements help reduce risk in international transactions and make it easier for local businesses to engage with foreign suppliers.

For many companies, especially smaller enterprises, access to trade finance can be a significant challenge. The guarantee mechanism is expected to improve confidence among international financial institutions while creating new opportunities for Malagasy businesses to participate in global trade. By strengthening access to financing tools, the programme seeks to encourage greater investment and support business expansion across a range of productive sectors.

Women-Led Businesses and Sustainable Projects Prioritized

The facility has been designed to support a diverse group of beneficiaries, including large corporations, small and medium-sized enterprises and women-led businesses. Priority will be given to projects that demonstrate lower vulnerability to climate-related risks and produce relatively low greenhouse gas emissions. This reflects the African Development Bank's commitment to supporting economic growth while promoting environmental sustainability.

African Development Bank Country Manager for Madagascar Adam Amoumoun said the initiative is strategically important because it directly supports the development of the agro-industry and manufacturing sectors. He noted that the operation aligns closely with the Bank's 2022–2026 Country Strategy for Madagascar, which places strong emphasis on agricultural transformation and industrial development.

As Madagascar continues efforts to diversify its economy and expand local production capacity, the new trade finance facility is expected to provide businesses with greater access to international markets, strengthen industrial activity and create opportunities for sustainable economic growth.