About the Project
Three-quarters of Madagascar’s population lives in extreme poverty. Though agriculture is critical to the country’s economic development, output is low and often volatile. The poultry sector in Madagascar faces many challenges: Most of the production is carried out by households in their backyards, and so consistently high-quality chicken is largely unavailable domestically. In addition, local agribusiness companies are unable to access affordable long-term capital, as agribusiness in Madagascar is vulnerable to severe climate shocks and is considered high risk by local financial institutions. However, with proper investment and animal husbandry practices, leading domestic industrial operators can achieve efficiencies that would allow them to achieve international standards and compete with imports.
IFC and GAFSP made a joint investment in SMTP Group, one of Madagascar’s leading poultry producers, to provide the required long-term capital to upgrade the company’s production and increase capacity. SMTP is a leading diversified conglomerate of 20 companies and employs 1,200 people. IFC and GAFSP committed a US$3 million A Loan to SMTP, for expanding its poultry and animal feed operations in its subsidiaries, including increasing production of day-old chicks at AGRIFARM; increasing animal feed production at AGRIVAL; and building a new, MABEL, processing plant. The investment allowed the company to double its production of day-old chicks, increase the supply of animal feed, and set up a modern chicken slaughterhouse that supplied over 15,000 tons of chicken meat per year. This investment was also used to double the conglomerate’s day-old chick capacity from 100,000 a week to 200,000 and to provide working capital to increase animal feed production. In addition, the investment increased the capacity of a local slaughterhouse to increase the availability of chicken meat, a valuable source of protein for Madagascar’s most vulnerable populations.
The loan helped SMTP group expand its poultry operations, create jobs, increase food supply and support economic recovery. The company’s expanded operations increased the number of farmers supplying maize and other inputs to the company. SMTP also provided farmers with advice on how to increase their productivity and revenues, and provided them with hands-on assistance, fertilizers and agricultural inputs. SMTP became the first modern chicken slaughterhouse implementing best practice health and safety standards. Investments also contributed to an increase in the availability of food and high-quality animal protein at an affordable price to the local market.