KEY POINTS
- The partnership targets $1 billion in naira investments.
- IFC’s funding will span agriculture, energy, and SMEs.
- Reducing currency risk helps stabilize Nigerian businesses.
To decrease reliance on foreign currencies and minimise exchange rate risk, the Central Bank of Nigeria and the International Finance Corp. signed an agreement on Monday to increase local currency financing options for Nigerian firms.
IFC partnership aims to scale up naira financing
IFC, a member of the World Bank Group, stated that it intends to “significantly scale up” its financial involvement in Nigeria and hopes to contribute more than $1 billion over the coming years. The IFC wants to give Nigerian companies more reliable access to capital by enabling more local currency lending. This will improve prospects in industries such as small and medium-sized businesses (SMEs), housing, energy, infrastructure, agriculture, and the creative sector.
According to the IFC, each of these sectors has specific needs that would be satisfied by dependable, low-risk access to naira-based funding.
The IFC stated in the joint statement that “the partnership between the IFC and the Central Bank of Nigeria is a key tool in expanding access to local currency financing, which is necessary for many of these sectors.
Local currency loans to reduce forex risks
By directly addressing currency risk, the agreement enables the IFC to take advantage of Nigerian capital markets and offer financing options that meet the needs of local businesses and entrepreneurs. Nigeria’s economic stability and resilience are anticipated to be greatly enhanced by the central bank’s partnership with the IFC.
This program is in line with the IFC’s overarching objectives to promote economic growth in developing nations and lessen reliance on foreign exchange loans, which frequently subject companies to exchange rate swings and unstable finances. The IFC has actively pursued partnerships in important African nations as a member of the World Bank Group, and this deal demonstrates its dedication to Nigeria, one of the continent’s biggest markets.
According to Reuters, the Central Bank of Nigeria and IFC intend to expand this collaboration to establish a more resilient financial system that promotes sustainable economic expansion and helps Nigerian companies satisfy the demands of both the local and international markets.
