The African Development Bank (AfDB) has approved a $25 million equity investment in The Currency Exchange Fund (TCX) to boost access to local currency financing and reduce foreign exchange risks for borrowers across Africa.
The Bank said on Thursday the investment will strengthen TCX’s capital base, expand its risk-bearing capacity, and increase its ability to offer hedging instruments in illiquid and less liquid currencies. The move targets fragile states and underserved markets where conventional hedging tools are underdeveloped or unavailable.
“This investment marks an important milestone in the Bank’s effort to deepen African capital markets and address the root causes of debt distress,” said Ahmed Attout, AfDB’s Director of Financial Sector Development.
TCX, which provides tailor-made foreign exchange hedging instruments, has hedged more than $17 billion globally since inception, including over $4 billion across 31 African countries. About 18% of its portfolio is focused on fragile and low-income countries.
Ruurd Brouwer, TCX Chief Executive, said AfDB’s participation would strengthen efforts to protect public and private sector borrowers from currency risks while advancing African capital market development.
The transaction forms part of AfDB’s 2024–2033 Ten-Year Strategy and is expected to crowd in other development finance institutions and private investors, the Bank added.
Leave a Reply