By Colleen Goko and Rodrigo Campos
April 14 (Reuters) – The World Bank Group’s private-sector arm, the International Finance Corporation, and U.S. bank Citigroup have signed a new 1.6 billion rand ($98 million) borrowing facility aimed at expanding local-currency financing in South Africa, the IFC and Citigroup said on Tuesday.
The facility is designed to strengthen the IFC’s ability to provide rand funding to private-sector borrowers, part of a broader push by development finance institutions to reduce currency mismatch risks in emerging markets.
Local-currency borrowing is often seen as critical in developing economies, where companies and projects earn revenue in domestic currency but frequently struggle to access long-term funding without taking on foreign-exchange risk.
The new facility has already supported IFC’s anchor investment into the Cape Water outcome-based bond issued by South Africa’s FirstRand Bank.
“Local currency financing is extremely important in this day and age … we are living in a very volatile world,” said Jorge Familiar, vice president and World Bank Group treasurer.
He said companies that earn revenue in local currency can face significant challenges when borrowing in hard currency, making local-currency funding an important risk-management tool.
The transaction builds on a similar facility in Kenyan shillings that IFC and Citi signed in 2024.
“You could call that (Kenya facility) the pilot,” Familiar said, calling this new facility “proof that something that we piloted and has worked well can be replicated elsewhere.”
Familiar said that last fiscal year 30% of all of the World Bank’s own-account lending was done in local currency, describing the rand facility as part of the IFC’s broader push to help its clients manage currency risk.
Over the last decade, IFC has committed more than $33 billion in local-currency financing across 71 local currencies, the statement said.
(Reporting by Colleen Goko and Rodrigo Campos; Editing by Rod Nickel)
