By Ed Malik, A | ed@ddnewsonline.com | posted Ocotober 28, 2024
The International Finance Corporation (IFC) and the Central Bank of Nigeria (CBN) recently signed an agreement aimed at bolstering local currency financing, which will provide Nigerian private businesses with enhanced financial support.
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According to Sidi-Ali, IFC’s Regional Director, this collaboration is set to channel over one billion dollars into critical sectors over the next few years. The funding is targeted at priority areas such as agriculture, housing, infrastructure, energy, small and medium enterprises (SMEs), and the youth and creative economy.
This partnership seeks to address financial constraints in these sectors, helping to stimulate economic growth, create jobs, and support Nigeria’s development goals by reducing reliance on foreign currency loans, which can expose businesses to exchange rate risks.
“Many of these sectors require local currency financing, and IFC’s partnership with the CBN is a key tool in expanding access,” she said.
“The partnership will allow IFC to manage currency risks and increase its investment in the Nigerian Naira across priority sectors of the economy,” she said.
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Meanwhile, the CBN Governor, Yemi Cardoso, said that this pioneering initiative would unlock much-needed long-term local currency financing for private businesses in Nigeria at economically viable rates.
“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 programs.
” It will serve as a catalyst for economic growth and advance the Federal Government’s agenda for economic diversification,” he said.
According to Makhtar Diop, IFC Managing Director, 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.
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“Our partnership with the CBN will enhance lending in Nigerian Naira, fostering economic growth and creating jobs across the country,” he said.
Diop said that with an active portfolio of investments in Nigeria of up to 2.13 billion dollars —the second highest in Africa—local currency financing is a key priority for IFC.
He said that the corporation would continue to leverage innovative financial instruments and strengthen partnerships to meet the growing demand for more local currency financing in emerging markets.
The News Agency of Nigeria (NAN) reports that the IFC is the largest global development institution focused on the private sector in emerging markets.
It works in more than 100 countries, using its capital, expertise, and influence to create markets and opportunities in developing countries.
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In fiscal year 2024, IFC committed record 56 billion dollars to private companies and financial institutions in developing countries.
It leverages on private sector solutions and mobilizing private capital to create a world free of poverty on a livable planet.