IFC, Citi seal $98 million deal to boost local currency financing in South Africa

International Finance Corporation, the private-sector arm of the World Bank Group, has partnered with Citigroup to secure a R1.6 billion ($98 million) financing facility aimed at expanding local currency lending in South Africa, reinforcing efforts to reduce currency volatility and deepen domestic capital markets.

The agreement strengthens IFC’s ability to deploy rand-denominated funding to private sector players, a critical move in an economy where exchange rate fluctuations continue to weigh on business expansion and long-term investment.

Unlocking local capital markets

The facility forms part of the World Bank Group’s broader strategy to scale local currency financing tools across emerging markets. It has already supported IFC’s anchor investment in the Cape Water outcome-based bond issued by FirstRand Bank, the first outcome-based bond issued by a commercial bank globally.

“Local currency financing and capital markets development in emerging and developing markets are critical priorities for the World Bank Group,” said Jorge Familiar. He added that partnerships with private institutions continue to unlock innovative funding structures, from outcome bonds to scalable local currency solutions, supporting long-term financing and job creation.

Scaling a replicable model

The South African rand facility builds on a similar structure launched in Kenyan shillings in 2024, signaling a growing effort to replicate the model across multiple emerging economies.

“This facility deepens our partnership with the World Bank Group,” said Stephanie von Friedeburg. “Following our Kenyan shilling transaction, this first South African rand facility reflects a model that can be replicated throughout emerging markets.”

She noted that the structure expands the toolkit available to development finance institutions, enabling more targeted deployment of local currency financing where it is most needed.

Driving resilience in emerging markets

Currency volatility remains a persistent challenge for businesses in developing economies, often constraining investment and growth. By promoting deep and liquid local capital markets, institutions like IFC are helping to improve access to stable, long-term financing.

Over the past decade, IFC has committed more than $33 billion in local currency financing across 71 currencies, underscoring its role in mobilizing private capital and strengthening financial systems in emerging markets.

As IFC and Citi scale this model across additional countries, the initiative is expected to play a pivotal role in enhancing financial resilience, supporting private sector expansion, and accelerating sustainable economic development.