The International Finance Corporation and Citigroup have signed a R1.6 billion borrowing facility aimed at expanding local-currency financing in South Africa, a move designed to protect private-sector borrowers from the mounting risks of foreign-exchange volatility. The facility, valued at approximately $98 million, strengthens the IFC's capacity to provide rand-denominated funding to South African businesses, a critical buffer in an environment where companies typically earn revenue in local currency but often resort to hard-currency borrowing that exposes them to exchange-rate swings. Announced on the sidelines of the IMF/World Bank Annual Meetings in Washington, D.C., the agreement has already been deployed to support IFC's anchor investment in the Cape Water outcome-based bond issued by FirstRand Bank, the first outcome bond issued by a commercial bank globally. "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 noted that companies earning revenue in local currency face significant challenges when borrowing in hard currency, making rand funding an essential risk-management tool. The transaction builds directly on a pilot facility in Kenyan shillings signed between IFC and Citi in 2024. Familiar described the South Africa agreement as "proof that something we piloted and has worked well can be replicated elsewhere." Both institutions confirmed plans to extend the model to additional emerging markets Stephanie von Friedeburg, Global Head of Citi's Public Sector Group, said the facility "adds to the toolkit for development finance institutions and supports local currency financing where it is needed most." The IFC disclosed that over the past decade, it has committed more than $33 billion in local-currency financing across 71 currencies, with approximately 30% of the World Bank's own-account lending last fiscal year conducted in local currency. The new rand facility is expected to unlock further innovation in South Africa's relatively advanced capital markets while reinforcing resilience against global financial fluctuations.

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