The Central Bank of Nigeria and the International Finance Corporation (IFC), a member of the World Bank Group, recently signed an agreement that will see the IFC flow up to $1 billion into the Nigerian economy over the next few years.
According to the IFC, the $1 billion financing to the country is to help manage Nigeria’s currency risk. In a statement, the IFC said it will be providing the foreign currency financing to increase local currency financing to enable private businesses in Nigeria to grow and thrive.
With the agreement, IFC plans to significantly scale up its financing of critical sectors in Nigeria, with a goal of providing more than $1 billion in the coming years. Many of these sectors require local currency financing, and IFC’s partnership with the CBN is a key tool in expanding access.
The partnership will allow IFC to manage currency risks and increase its investment in Nigerian naira across priority sectors of the economy, including agriculture, housing, infrastructure, energy, small and medium enterprises and the creative and youth economy.
Governor of the CBN, Olayemi Cardoso, commenting on the agreement said “this pioneering initiative between the IFC and CBN will 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.”
On his part, IFC Managing Director, Makhtar 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.
On his part, Dr Muda Yusuf noted that the country should be careful about taking additional foreign loans at this time due to the exchange rate situation. According to him, servicing foreign loans is becoming increasingly challenging and because we are talking of IFC which typically finances private investments and unless those projects are those that are export oriented, servicing such facilities may pose a serious challenge.
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