The International Finance Corporation (IFC), the investment arm of the World Bank, is increasing its local-currency lending and making more direct investments in African firms to help projects reach the scale required to major global funds, its Managing Director Makhtar Diop said at the Africa Financial Summit in Casablanca on Monday.
According to Reuters, Diop explained that many investors say projects “of assets of less than a billion … don’t interest us,” adding: “When you talk to BlackRock, when you t alk to all these people, they tell you that we need a certain volume so that we can invest in our countries and have long-term resources.”
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With rich countries cutting aid and concessional financing becoming tighter, there is a growing push to steer more private capital toward the developing world.
Experts say that making loans in local currency can protect nations from the currency swings they cannot control.
Last year, Africa received over $15 billion in commitments from the IFC, mainly in debt and trade financing.
Diop noted that local-currency loans already make up about 30 percent of the IFC’s portfolio, and the organization is now seeking partnerships with commercial banks to swap dollar assets for local-currency lines.
He also said that deeper market integration, including interoperable stock exchanges, would help mobilize savings and attract long-term investors.
See Also: https://crestafrica.com/kenya-secures-deal-to-protect-2-billion-in-foreign-investment/
Image Credit: Reuters
