Antananarivo, 10 June 2020 – The Eastern and Southern African Trade and Development Bank (TDB) has extended a USD 10.6 million revolving pre-export structured trade commodity finance facility to EdM to support the country’s exports of Fair Trade vanilla.
EdM is a woman-owned Malagasy family business and a certified Fair Trade trader for vanilla employing more than 1,000 people in peak season, the majority of which are women. The fair trade certification ensures that EdM’s vanilla business puts people and planet at par with profits in terms of priorities, by periodically assessing it against various social, economic, and environmental standards.
Agriculture contributes to approximately one quarter of Madagascar’s GDP and 64% of its total employment – significantly more on average than in Africa and worldwide. The Malagasy vanilla business specifically supports over 80,000 farmer households, 200,000 direct jobs along with seasonal employment and 6,000 intermediaries and is one of the country’s most important sources of forex earnings. As such, it has great bearing on the country’s overall socio-economic situation.
The global share of Malagasy exports of vanilla has been gradually rising once again over the past 10 years. Its share reached 62% in 2018, before losing about 10 points in 2019, when its remarkably high prices and demand started declining again.
“Madagascar became TDB’s 22nd Member State in 2018” says Admassu Tadesse, TDB President and Chief Executive. “Since then, we have been working closely with various Malagasy public and private sector stakeholders to identify key priority areas for TDB to intervene in – in line with the Government’s development agenda. We are therefore pleased that our very first transaction in the country is with an impact-driven Fair Trade business employing many farmers and workers who produce bio vanilla, earn fair wages, while contributing to forex reserves.”
“One of the major challenges faced by Malagasy vanilla exporters is access to pre-export finance. This facility is addressing this challenge by providing EdM with the working capital needed to purchase raw materials and cover processing, storage and transportation costs, thereby enabling it to scale-up its exports, better compete in the global arena, and ultimately contribute to the sustainable development of the country” adds Dr. Mabouba Diagne, TDB Coverage Executive, Franco-Lusophone Africa.
Madagascar’s growth rate has been hovering between 4 and 5% in the past 2 years. Despite the downturn provoked by Covid-19, medium-term macroeconomic projections remain promising. Likewise, prospects for the country’s vanilla business continue to be good. Transactions such as this one have the potential to help unleash greater productivity and income gains along the commodity’s value chain, at the same time as relieving some of the additional liquidity pressures which were more recently brought about by the Covid-19 pandemic.
Established in 1985, the Eastern and Southern African Trade and Development Bank (TDB) is a multilateral, treaty-based, investment-grade development financial institution, with assets of US$6.7bn. The Bank’s mandate is to finance and foster trade, regional economic integration and sustainable development through trade finance and project and infrastructure finance.
Anne-Marie Iskandar, Senior Communications Officer
Corporate Affairs and Investor Relations
Trade and Development Bank