Miga has issued two guarantees totalling €2.6mn to Dagris to cover its equity investment in, and shareholder loan to, Hasy Malagasy (Hasyma), an enterprise engaged in cotton ginning and providing technical and financial assistance to Malagasy cotton growers.

Miga’s guarantee is for a period of up to eight years and covers against the risks of currency transfer restriction, expropriation, and war and civil disturbance.

In Madagascar, Dagris’s project involves the privatisation of Hasyma, the majority state-owned cotton monopoly. Its ultimate aim is to create sustainable growth in the cotton sector.

The project is expected to contribute towards the expansion of the cotton industry in Madagascar by modernising and expanding the cotton ginning capacity of Hasyma and by providing technical advice, assistance, and incentives to local cotton producers and selected domestic private investors.

Hasyma will promote the production of cotton seed; purchase and gin seed cotton; and market cotton fibre, seeds, and by-products on the local and international markets. The project is expected to create new permanent jobs, in addition to stimulating local businesses that supply goods to the cotton industry. The project is expected to provide livelihoods for around 35,000 farm families.

Miga’s guarantees complement Madagascar’s Country Assistance Strategy, which focuses on promoting broad-based growth by encouraging private sector growth in the country. Miga’s participation in the project is also aligned with the agency’s aim to improve access to financing options for local SMEs.

Hasyma was underwritten through Miga’s Small Investment Program (SIP), which makes it quicker and easier for small and medium-sized investors to apply for a standardised package of risk coverages.