The African Development Bank (AfDB) has approved an equity investment of $25 million in The Currency Exchange Fund (TCX), a development finance initiative that provides long-term local currency hedging solutions in emerging and frontier markets.
In a statement on Wednesday, the bank said the investment would boost TCX’s capital base and risk-bearing capacity, allowing it to expand access to hedging instruments in illiquid and less liquid African currencies.
“The Bank’s investment will crowd in additional DFIs and private investors, reinforce Africa’s integration into global capital markets, and support sustainable growth by reducing the mismatch between the currency of debt and revenue for local borrowers,” the statement reads.
Speaking on the investment, Ahmed Attout, AfDB’s director of financial sector development, said the deal would help tackle one of the key sources of debt distress on the continent.
“This investment in TCX marks an important milestone in the Bank’s effort to deepen African capital markets and address the root causes of debt distress,” Attout said.
“The Bank’s support to TCX will unlock local currency financing for MSMEs, infrastructure and many sectors across Africa.”
