CBN, IFC seal $1 billion deal on local currency financing

The International Finance Corporation (IFC) will significantly increase its financing of critical sectors by $1 billion in the coming years.

The partnership deal sealed with the Central Bank of Nigeria (CBN) will allow IFC to manage currency risks and increase its investment in Nigerian naira across priority sectors of the economy, including agriculture, housing, infrastructure, energy, small and medium enterprises and the creative and youth economy.

The specific sectors require local currency financing and IFC’s partnership with the CBN is a key tool in expanding access.

A statement by the apex bank issued yesterday, read: “This pioneering initiative between the IFC and CBN will unlock much-needed long-term local currency financing for private businesses in Nigeria at economically viable rates.”

The CBN governor, Olayemi Cardoso, described the collaboration as significant progress in the CBN’s commitment to deliver innovative development initiatives through reputable third-party service providers, moving beyond traditional intervention programmes.

He added that the agreement will also serve as a catalyst for economic growth and advance the Federal Government’s agenda for economic diversification.

On his part, IFC Managing Director, Makhtar Diop, said: “Expanding access to affordable local currency financing for small businesses in Nigeria is essential for IFC to address the increasing demand for diverse funding options and to better manage currency risk. Our partnership with the Central Bank of Nigeria will enhance lending in Nigerian naira, fostering economic growth and creating jobs across the country.”

IFC currently has an active portfolio of investments in Nigeria of up to $2.13 billion, which is the second highest in Africa with local currency financing as a key priority for IFC.

The World Bank Group member also pledged to continue to leverage innovative financial instruments and strengthen partnerships to meet the growing demand for more local currency financing in emerging markets.