Nigeria central bank has signed a landmark agreement with the International Finance Corporation (IFC), a World Bank Group member, to expand local currency financing options for Nigerian businesses, aiming to reduce foreign exchange risks and foster economic growth. The IFC plans to ‘significantly scale up’ its naira-based investments in Nigeria, with a target of over $1bn in funding across crucial sectors over the coming years.
This partnership is set to enhance the IFC’s ability to manage currency risks while increasing its investments in Nigerian naira, which will channel much-needed capital into agriculture, housing, infrastructure, energy, small and medium-sized enterprises (SMEs), and the creative sector. By focusing on local currency financing, the initiative aims to offer Nigerian businesses more stability amid volatile forex markets.
Supporting local industry growth
The initiative addresses a critical need for local currency financing across multiple sectors. According to the statement, the IFC highlighted the strategic importance of the partnership in expanding access to naira financing, particularly for industries with long-term investment needs and exposure to currency fluctuations.
‘Many of these sectors require local currency financing, and IFC’s partnership with the Central Bank is a key tool in expanding access,’ an IFC statement released on Monday noted, emphasising the broad impact this move could have on Nigeria’s economy.
Promising $1bn in local investments
Through this agreement, the IFC aims to deploy more than $1bn in local currency investments to strengthen Nigeria’s financial ecosystem and reduce reliance on foreign currency. Sectors such as agriculture and energy, which have historically been vulnerable to forex-related challenges, will particularly benefit from this locally-focused funding model. Additionally, this approach aligns with Nigeria’s economic diversification efforts, helping to reduce dependence on imports and mitigate forex pressures.
For SMEs and the creative industry, both rapidly growing areas, this shift to naira-based financing could support business expansion without the usual concerns over foreign currency volatility. The infrastructure and housing sectors are also expected to benefit from more predictable financing options, enabling longer-term planning and development projects.
A step towards economic stability
This partnership highlights Nigeria’s commitment to bolstering local industries and fostering a more resilient economy. The central bank’s agreement with the IFC represents a strategic move to build sustainable, naira-denominated financial structures that reduce currency exposure. By driving investment into these vital sectors, the collaboration could stimulate economic growth and increase Nigeria’s self-reliance.
As Nigeria navigates ongoing economic challenges, this push for local currency financing represents a promising step forward, offering businesses greater financial security and aligning with the central bank’s long-term vision for stable, diversified growth.
Credit: IFC.com
