The International Finance Corporation (IFC), the private-sector investment arm of the World Bank Group, has announced a major expansion of its local-currency lending and direct investments across Africa. The initiative, unveiled by Makhtar Diop at the Africa Financial Summit in Casablanca, is aimed at deepening African capital markets, reducing foreign exchange exposure, and fostering large-scale investment projects that can attract global institutional capital.
Diop noted that many African projects struggle to meet the scale demanded by major investors. “What investors tell us is that when we have assets of less than a billion, it doesn’t interest us,” he said. “When you talk to BlackRock, when you talk 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.”
Africa represented over US$15 billion of the IFC’s total commitments last year, largely in debt and trade finance, with nearly 30% of its portfolio already denominated in local currencies. The IFC now plans to expand that share, collaborating with African banks to exchange dollar-based resources for local-currency credit lines—a move expected to boost liquidity and empower local lenders.
Economists describe this strategy as a significant step toward financial sovereignty. One analyst observed that “African economies have for too long borrowed in currencies they don’t control. Local-currency lending helps nations build resilience against the volatility of global markets while encouraging the development of domestic financial infrastructure.”
Another regional economist explained that this model could “deepen African capital markets by encouraging pension funds, insurers, and local investors to hold more domestic assets rather than channelling savings offshore.” By doing so, he added, “Africa’s financial future becomes more grounded in African resources rather than external cycles.”
However, experts also caution that local-currency lending is not without risk. While it can reduce dependence on foreign exchange, its success depends heavily on stable monetary policy, market depth, and strong governance frameworks. One Nairobi-based financial policy researcher noted that “if domestic markets remain thin or inflationary pressures rise, local borrowing can quickly become expensive, eroding the very stability it seeks to build.”
Others stress that the benefits will vary across countries. In markets such as Nigeria, Kenya, and South Africa—where financial infrastructure is relatively mature—local-currency finance could spur investment in renewable energy, infrastructure, and small business growth. But in smaller economies, where liquidity is limited and monetary independence is constrained, the transition could prove more complex.
Makhtar Diop emphasised that deeper market integration will be critical. He urged African policymakers to create interoperable stock exchanges and cross-border investment platforms to pool capital across the continent. “We cannot grow if we continue to think in national silos,” he said. “African savings should finance African growth.”
A senior West African economist, reflecting on the move, suggested that the IFC’s approach represents “a quiet revolution in development finance.” He added: “This is not charity; it’s partnership. The more Africa builds in its own currency, the more it builds in its own image.”
By embedding local-currency mechanisms into its lending portfolio, the IFC is positioning Africa to capture more long-term, patient capital and to strengthen its collective financial voice on the global stage. While the path ahead remains challenging, the shift signals a deeper rethinking of how global finance can align with Africa’s aspirations for economic self-determination.
