Financial education in Madagascar: A woman entrepreneur’s journey

This English version of the blog is a translation of the original text written in French. Click here here to read the French version. (Cette version en anglais du blog est une traduction du texte original rédigé en français. Cliquez ici pour lire la version française.)

By Hery Njaka Rakotoarimanana, Treasury Inspector and Solofo Rakotomavo, Head of Information and Communication at the National Financial Coordination unit of the General Directorate of Treasury at the Ministry of Economy and Finance, Madagascar.

Joëline Ranaivoarivololona is a 49-year-old, single mother and sewing entrepreneur in Madagascar. She started doing small embroidery jobs when she was forced to leave high school in 1996. That same year, Joëline secured her first formal post as Quality Controller at a local textile factory, earning 27,200 Malagasy Ariary (around 6 euros) per month. Having proved her worth, she was later promoted to Method Agent, supporting the company’s daily production activities for a monthly wage of 150,000 Malagasy Ariary (32 euros). But the challenging rhythm and working conditions at the factory encouraged Joëline to take a leap of faith and to consider setting up her very own sewing business. However, at the time she lacked the funding, business know-how, and confidence needed to pursue her dream. This is when she first heard about the Agency for Private Enterprise Credit (ACEP) Madagascar. 

Launched a decade ago, ACEP Madagascar is a microfinance institution specializing in the financing of small urban enterprises in communities excluded from the traditional banking system. Joëline began with a personal ACEP loan of 300,000 Malagasy Ariary (65 euros) for consumer credit, using her household equipment as collateral.

ACEP’s support, combined with the closing of the textile factory where she used to work, finally provided Joëline with the motivation to give her small sewing business a chance. After partnering with her sister, she invested her savings in a second-hand industrial sewing machine, and together they started producing girls’ leggings and shirts to sell at the weekly market in the capital. Despite a slow start, Joëline’s business has since taken off, acquiring two new sewing machines with the help of an additional loan from ACEP.

Joëline Ranaivoarivololona

The FINEDUC program: An opportunity for Joëline

Convinced of the importance of financial education for both the institution and its clients, ACEP Madagascar introduced the FINEDUC (“Financial Education”) in 2016 – a program that provided free training sessions in financial education to micro and small business clients. The training spanned over fifteen months and covered various topics including financial education, accounting, business management and planning, as well as guidance on the process of business formalization.

“FINEDUC beneficiaries saw their activities flourish. We found that they acquired or regained self-confidence and developed their entrepreneurial spirit. They now dare to take risks in their business activities”, stressed Mahefa Edouard Randriamiarisoa, Managing Director of ACEP Madagascar.

Joëline was one of fifty beneficiaries of the FINEDUC program. “With FINEDUC, I learned a lot of things in managing my small business. I was able to develop and expand my activities and I even hired two employees to be able to fulfill customer orders. I regained my confidence”, she explained.

Madagascar’s financial education initiatives

Supervised by the Ministry of Economy and Finance, the country’s financial education initiatives are implemented by stakeholders divided into three levels, namely macro (ministries and the country’s central bank, Banky Foiben’i Madagascar), mezzo (a Financial Education Working Group consisting of relevant ministries, the central bank, professional associations, digital financial institutions, and financial education actors), and micro (the final beneficiaries).

Madagascar started its financial education journey in 2012 in partnership with the Professional Association of Microfinance Institutions (APIMF) and the Consultative Group for Assistance to the Poor (CGAP). Financial education initiatives for children, young people, and adults in urban and rural areas grew across the country.

In the past decade, these initiatives have gained significant ground. In 2016, Madagascar participated in Global Money Week (GMW) for the first time. This gave way to a spike in the country’s GMW activities which subsequently reached nearly 50,000 children and young people directly, and up to three million indirectly in schools and universities across the country. Thanks to its enthusiastic efforts, Madagascar also made it to the final of the 2017 Global Inclusion Awards and walked away with first prize at the 2018 Child and Youth Finance International Country Awards for Africa. 

Development of Madagascar’s national financial education program 

It is well-known that financial inclusion and financial education are inseparable. Therefore, the 2018-2022 National Financial Inclusion Strategy of Madagascar action plan first and foremost included the integration of financial education into the national schooling curriculum. The ongoing first phase of this approach initially kicked off in 2020 and has since been implemented in up to a hundred schools countrywide.

Furthermore, following a remarkably dedicated effort, Madagascar will launch its national financial education program this year. The process started with recommendations derived from the 2019 national diagnostic study on the state of the country’s financial education, which then gave way to the development of the Madagascar Financial Education Framework/Strategy Document (2021) and the Madagascar National Financial Education Program (2022), both of which are based partly on the National Financial Education Strategy Toolkit produced by AFI member institutions in 2021. The publication and implementation of these newly developed documents is scheduled to be completed by 2027.

From strategy to beneficiaries

Building well-informed financial education strategies and efficiently aligning them with market activities are crucial to leveraging mutually beneficial synergies between supply and demand, especially during times of crisis.

“The COVID-19 crisis has caused turnover to drop from one million (about 227 euros) to 200,000 Malagasy Ariary (45 euros) per week. FINEDUC taught me to take calculated risks in my decision-making. I have invested in raising a hundred hens to diversify my activities, and I also plan to produce artisanal soap after having recently completed a training course in soap making”, Joëline explained

Joëline’s collaboration with the financial services and financial education provider ACEP Madagascar has allowed her business to grow. But she also provides regular feedback as a client, having recently recommended the introduction of more advantageous credit rates for loyal ACEP customers to allow entrepreneurs to better prepare for and react to unexpected challenges like the COVID-19 pandemic.

“You should never be discouraged in what you undertake, have perseverance, and set one or more objectives. For now, I have inherited a house, but my biggest goal is to be able to build my own house, and I am convinced that I will achieve it”, Joëline said smiling.

AFI’s National Financial Education Strategy Toolkit and complementary Guideline Note provide practical steps, tips, examples, and checklists to guide key stakeholders through the four stages of creating a National Financial Education Strategy: Pre-formulation, formulation, implementation, and monitoring and evaluation.

The original version of this blog is written in French. Click here to read the french version.