FMO, the Dutch entrepreneurial development bank; IFC (the World Bank’s private sector development bank) and Proparco (the French development finance institution), signed the first-ever green bond in Madagascar to Société Générale Madagascar for USD 37 mln, with each DFI contributing as anchor investor and c. USD 3mln subscribed by local investors. The funding is to be directed to qualifying sustainability-linked projects.
Société Générale Madagascar is the largest bank in Madagascar. A universal bank and subsidiary of the global Société Générale S.A., SGM supports its clients by leveraging the group’s global reach and wide range of products and services to individuals, SMEs, and corporates. SGM is the leader in renewable energy financing in Madagascar, having provided financing for both the first private hydroelectric and solar plant in the country. Furthermore, the bank has strong ESG standards and an excellent CSR focus, undergoing initiatives such as reforestation, mangrove preservation, and education funding. They also provide workshops and trainings to entrepreneurs to help them strengthen ESG standards, and business plans, amongst other things.
To further support SGM’s ambitions in the sustainability space, the DFIs signed the first Sustainability-linked bond ever in Madagascar, provided entirely in local currency. FMO’s USD 10 mln contribution provided through MASSIF, the financial inclusion fund FMO manages on behalf of the Dutch government[SP1] . This transaction functions as a stamp of approval for Madagascar, a country where few DFIs and commercial parties have exposure in.
The wider Sustainability-linked bond and the Renewable energy portion in particular will play a significant role in diversifying Madagascar’s energy portfolio, which is currently dominated by fossil fuels. Madagascar is one of the poorest countries in the world, with poverty rates over 80%. As such, the limited underinvestment in the renewable energy sector has significantly impeded social development, underscoring the need for the involvement of the private sector to help improve access to clean and affordable energy, creating local jobs, and contribute to overall social development.
Angelica Ortiz de Haas, Manager Financial Institutions Africa at FMO, said, “We are thrilled to have signed this groundbreaking first-of-its-kind Green Bond in Madagascar with our new client Société Générale Madagascar. This sustainability-linked bond has the potential to provide tremendous impact potential to Madagascar, and we are pleased to have partner with an upstanding local partner such as SGM, given their strong focus on corporate social responsibility and ESG standards. We look forward to the joint impact we will create together across the country.”
