MADAGASCAR – Soafiary, an innovative women-led agribusiness from Madagascar, has received €3.5 million (US$3.6m) loan financing from the UN’s International Fund for Agricultural Development (IFAD), to enable its grow sustainably and orient its business model.

The Malagasy company, specializes in the sourcing, processing and commercialization of cereals (maize, rice) and leguminous plants (beans, cape peas, lentils, soybeans) on local and international markets.

The loan is aimed to enable Soafiary increase its direct sourcing from small-scale farmers from 30 to 70 per cent by scaling up its base of suppliers from 1,000 to 5,000 farmers, further boosting its purchase to an estimated 15,000 tons of produce by 2025.

In turn small-scale farmers’ revenues are projected to increase by 30 per cent as Soafiary will engage with them through contract farming, which ensures sales, access to markets and support to their production in various ways.

This assistance is expected to attract a further €4.7 million (US$4.9m) in co-financing, benefitting approximately 20,000 rural people directly over a four-year period (2022-2025).

“SOAFIARY has shown a commitment to working with smallholder farmers to help them improve their livelihoods and communities, as well as creating economic opportunities and jobs for women.

“Agribusinesses like SOAFIARY need this game-changer financial support to make an impact on poverty reduction, food security and rural transformation,” said Thouraya Triki, Director of IFAD’s Sustainable Production, Markets and Institutions division.

Agricultural SMEs are a major source of employment in Madagascar, where 85 per cent of the rural population lives in poverty.

However, they often face an insurmountable obstacle when it comes to financing scale-up operations, as the market does not generally offer SMEs the countercyclical and long-term financial products they need.

“IFAD’s support allows us to go to scale, while providing great support to small-scale farmers and contributing to building sustainable and resilient food markets across the centre south of the island,” said Rabenoro Malala, is the founder of Soafiary.

Under this arrangement, the Malagasy company will provide an all-inclusive service delivery, including the provision of high-quality inputs, training, premium purchase price and marketing support to small producers organized in farmers’ organizations.

Women – and youth – headed households will be prioritized among the small-scale farmers contracted in the provinces of Bongolava, Haute Matsiatra, Ihorombe, Itasy, Menabe and Vakinankaratra.

Further to that, two thousand small-scale farmers will attend specific training on climate-smart agriculture techniques and harvesting methods, as well as to learn how to make efficient use of soil and inputs.

The loan financing is part of IFAD’s efforts to increase private investments to address market gaps in the finance sector in low-income countries.

In Madagascar, for instance, only 14.5 per cent of SMEs have a bank loan or line of credit, compared to 31.4 per cent worldwide, owing to a highly concentrated banking sector characterized by high collateral requirements.

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