To Mitigate Risks, Boost Investments, CBN, IFC Sign $1 billion Deal to Support Local Currency Financing

·    Cardoso: Initiative to unlock long-term financing for private businesses at economically viable rates

James Emejo in Abuja

The Central Bank of Nigeria (CBN) and the International Finance Corporation (IFC), yesterday, signed an agreement to increase local currency financing to enable private businesses in Nigeria to grow and thrive.

The partnership was disclosed in a joint statement signed by CBN’s acting director, Corporate Communications Department, Hakama Sidi Ali, and Hlazo Mkandawire for IFC.

The agreement will allow IFC, a member of the World Bank Group, to manage currency risks and increase its investment in the naira across priority sectors of the economy, including agriculture, housing, infrastructure, energy, small and medium enterprises, and the creative and youth economy.

The corporation aimed to significantly scale up its financing of critical sectors in Nigeria, with a goal of providing more than $1 billion in the coming years.

The agreement acknowledged that many of the sectors required local currency financing, saying IFC’s partnership with CBN remains a key tool in expanding access.

Commenting on the landmark deal, CBN Governor, Mr. Olayemi Cardoso, said the initiative will unlock the much-needed long-term local currency financing for private businesses in the country at economically viable rates.

Cardoso said, “This collaboration marks significant progress in the CBN’s commitment to delivering innovative development initiatives through reputable third-party service providers, moving beyond traditional intervention programmes.

“It will serve as a catalyst for economic growth and advance the federal government’s agenda for economic diversification.”

IFC Managing Director, Makhtar Diop, said access to affordable local currency financing for small businesses in Nigeria was crucial in order to catalyse the economy.

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.”

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

The statement added that the corporation will continue to leverage innovative financial instruments and strengthen partnerships to meet the growing demand for local currency financing in emerging markets.

IFC remains the largest global development institution focused on the private sector in emerging markets in 100 countries, using its capital, expertise, and influence to create markets and opportunities in developing countries.

In 2024, the corporation committed a record $56 billion to private companies and financial institutions in developing countries, leveraging private sector solutions and mobilising private capital to create a world free of poverty on a liveable planet.