Fifty-four-year-old Bruno Randriamialijaona has created the first and, to date, the only laundry in Nosy Be, Madagascar’s most important tourist area. The area welcomes 60,000 tourists every year. In February 2006, Bruno, who also opened a restaurant with his wife Brigitte in 2004, decided to take early retirement from the bank where he worked for 33 years and create a laundry called “Classic Clean”.
According to Elma Ross, president of Nosy B’s Tourism Board, the idea was a great one.
“The expansion of international tourism creates real business opportunities in Nosy Be, and international-standard hotels and restaurants definitely need professional laundry services,” said Ross.
Challenges to Starting a Business
Access to commercial loans is not usually explored as an option for micro, small and medium-scale enterprises in Madagascar due to guarantee requests and high interest rates. Beyond that, a cultural reticence exists among some Malagasy people to take loans with commercial banks. They are more inclined to talk to usurers, especially in the rural areas.
In Randriamialijaona’s case, the cultural aspect was not a barrier, as he had been a bank director before. But conditionalities in getting a commercial credit were not affordable for him. In 2006, out of 175 countries ranked by the World Bank’s Doing Business report, Madagascar was ranked 149 th in terms of the ease of doing business, and 159th in access to credit.
The World Bank Group’s Involvement
In 2005, the Malagasy Government set-up the Integrated Growth Poles project (IGP), with $129.8 million financing from the World Bank. This project is working in three sites across Madagascar, with growth sectors chosen to drive development: Tolagnaro (tourism and mining), Antsirabe (agri-business, information technology) and Nosy Be (tourism). The project aims to provide the adequate business environment to stimulate and lead economic growth in these selected poles, and to allow Malagasy firms to play a greater role in the economy.
“The efficiency and the quality of the results of this project were the reasons why this project received in June 2007 an Africa regional Excellence Award delivered by the World Bank” said Robert Blake, the World Bank Country Manager for Madagascar.
As part of its activities in Nosy Be, the IGP project set-up the Partial Portfolio Guaranteeprogram, or PPG, in collaboration with the International Finance Corporation and two local banks. This process supports 50 percent of the guarantee needed for a loan from the banks. In the project’s three sites, 700 credits have been accepted, for a total amount of 19 billion Ariary (figures dated August 2007).
The Benefits for Classic Clean
As one of the beneficiaries in Nosy Be, Randriamialijaona took out two loans through the PPG program. The first, a 20 million Ariary credit to be reimbursed in 36 months, was used to purchase the required equipment: a professional dryer and some irons. The second, a 17 million Ariary credit to be reimbursed in 24 months was used to cover the working capital. The loans were needed to bolster Randriamialijaona’s capital stock, an amount of 40 million Ariary accumulated by he and his wife through their restaurant revenues.
Classic Clean now employs 13 people, and takes care of 1,000 pieces of laundry each day. The business provides professional-standard services to three of the biggest hotels in Nosy Be and to some restaurants, among others clients.
“I am really proud to show that small-scale formal Malagasy enterprises can take risks to build their capacity in providing professional services,” Randriamialijaona said.
Learn more about the IGP project by clicking here.
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