Since the crisis started at the beginning of 2020, businesses have been experiencing lower activity levels. The hope of a quick recovery leads them to try, as much as they can, to keep on their employees, favouring part-time work and temporary lay-offs over letting people go entirely.
Employees in the formal private sector have thus seen their incomes fall and have found themselves in fragile or vulnerable positions. Supporting them is a social action and part of the main mission of Madagascar’s National Social Insurance Fund (Caisse nationale de prévoyance sociale – CNaPS). This requires a fairly substantial sum of money, so the Malagasy Government and the CNaPS decided to finance the project by placing part of the CNaPS’s financial reserves with a primary bank.
An interest rate of 7 per cent was negotiated for this sum. This allows the bank to offer zero-interest lending to beneficiaries, as it can recover the difference in its earnings by reinvesting the fund at a rate well above 7 per cent. The support measure consists of a zero-interest loan granted to eligible workers, repayable over 12 months.