IFC and Citigroup Sign South Africa Local Currency Deal

The International Finance Corporation (IFC) and CITIGROUP INC have finalized a 1.6 billion rand borrowing facility aimed at expanding local-currency financing in South Africa. This facility, worth approximately $98 million based on USD/ZAR rates, is designed to strengthen the IFC’s ability to provide rand funding to private-sector borrowers. The initiative is part of a broader push by development finance institutions to reduce currency mismatch risks in emerging markets. Local-currency borrowing is considered critical in developing economies where companies earn revenue in domestic currency but often face challenges accessing long-term funding without taking on foreign-exchange risk. The new facility has already supported the IFC’s anchor investment into the Cape Water outcome-based bond issued by FIRSTRAND LTD. This transaction builds on a similar facility established in Kenya in 2024. > Local currency financing is extremely important in this day and age … we are living in a very volatile world. Jorge Familiar, vice president and World Bank Group treasurer, stated that companies earning revenue in local currency can face significant challenges when borrowing in hard currency, making local-currency funding a vital risk-management tool. He noted that the previous Kenyan facility served as a successful model for this expansion. > You could call that the pilot. Familiar indicated that during the last fiscal year, 30% of all World Bank own-account lending was conducted in local currency. Over the last decade, the IFC has committed more than $33 billion in local-currency financing across 71 local currencies, continuing its efforts to help clients manage currency risk effectively.