To boost Nigeria’s private sector, the the International Finance Corporation (IFC), a member of the World Bank Group, and the Central Bank of Nigeria have signed a major agreement to increase funding in local currency. This partnership will enable the IFC to better manage currency risks and significantly scale up its investments in Nigerian naira across key sectors of the economy.
The agreement, signed by IFC’s Hlazo Mkandawire and CBN’s Hakama Sidi Ali, will facilitate increased investment in priority sectors such as agriculture, housing, infrastructure, energy, small and medium enterprises (SMEs), and the creative and youth economy. The IFC has ambitious plans to provide more than $1 billion in financing in the coming years, recognising the need for local currency funding to support the growth and development of these crucial sectors.
“This collaboration is crucial for unlocking private sector growth and enabling key sectors—agriculture, housing, infrastructure, energy, and SMEs—to expand with greater financial stability,” said Makhtar Diop, Managing Director of the International Finance Corporation.
This partnership marks a significant step towards strengthening Nigeria’s financial markets and promoting sustainable economic growth. By providing access to long-term, affordable naira financing, the IFC and CBN aim to empower businesses, create jobs, and drive innovation across various sectors.
One of the key challenges faced by businesses in Nigeria is the volatility of the naira. Currency fluctuations can create uncertainty and hinder investment, particularly for long-term projects. The IFC’s partnership with the CBN addresses this challenge by providing a mechanism for managing currency risks, making it more attractive for investors to commit to naira-denominated projects.
This initiative builds on the IFC’s ongoing efforts to support private sector development in Nigeria. In 2013, the IFC launched a $1 billion local-currency bond program in Nigeria to deepen domestic capital markets and provide access to long-term naira financing for businesses. This latest partnership with the CBN further strengthens the IFC’s commitment to supporting Nigeria’s economic growth.
The agreement prioritises sectors that are crucial for Nigeria’s economic development. Agriculture, a significant contributor to Nigeria’s GDP, will benefit from increased access to finance, enabling farmers and agribusinesses to expand their operations and enhance productivity.
The SME sector, a key driver of job creation and innovation, will also receive a boost through this initiative. Access to affordable financing will enable SMEs to invest in growth, create new jobs, and contribute to economic diversification.
Imagine Nigerian farmers accessing the capital they need to modernise their operations, small businesses expanding their reach with affordable loans, and young entrepreneurs bringing their innovative ideas to life. This partnership between the IFC and CBN has the potential to make these visions a reality, driving progress and prosperity across Nigeria.
