West African Development Bank (BOAD) and International Finance Corporation (IFC) Sign Landmark EUR 600 Million Reciprocal Financing Facilities to Strengthen Local Currency Financing in West Africa

In a significant move aimed at enhancing local currency financing and fostering private sector growth in the West African Economic and Monetary Union (WAEMU), the West African Development Bank (BOAD) and the International Finance Corporation (IFC), a member of the World Bank Group, have announced the establishment of two reciprocal financing facilities. The total amount involved is up to EUR 600 million, which will be allocated in both euros (EUR) and West African CFA francs (XOF).

Partnership Details and Strategic Goals

The partnership was formalized during the Africa CEO Forum held in Kigali. Under this agreement, the IFC will extend long-term EUR funding to BOAD, enabling the bank to broaden its lending capabilities in critical sectors such as energy, agribusiness, transport, urban development, and micro, small, and medium enterprises (MSMEs). This initiative aligns with BOAD’s strategic plan for 2026-2030, titled “Djoliba….La suite.” In return, BOAD will offer a flexible XOF facility to the IFC, facilitating cost-effective, long-term local currency financing for impactful projects that create jobs in the region.

This initiative, supported by Galite, BOAD’s structuring advisor, aims to establish local currency financing as a fundamental aspect of regional development in West Africa.

Implications for Local Currency Financing

The transaction marks a historic first for the IFC, representing its inaugural reciprocal facility between development finance institutions. This arrangement is expected to enhance BOAD’s capacity for private-sector lending throughout WAEMU, while simultaneously broadening the IFC’s sources of long-term local-currency financing at competitive rates. The collaboration is anticipated to benefit various projects, thereby promoting regional growth and job creation.

Makhtar Diop, the Managing Director of IFC, emphasized the importance of this transaction, stating that it underscores the strength of the partnership between the two institutions and their collective ability to deliver effective financial solutions at scale. He noted that this agreement aligns with IFC’s 2030 ambitions.

Serge Ekué, President of BOAD, highlighted that enhancing access to long-term local currency financing is a core priority of the “Djoliba…La suite” strategic plan. He expressed that the collaboration with IFC strengthens BOAD’s ability to serve the private sector across all eight member states, reflecting a shared ambition to deepen cooperation between development finance institutions for sustainable and inclusive growth in West Africa.

Addressing Short-Term Lending Challenges

In the WAEMU region, bank lending has predominantly been short-term, which restricts the availability of long-term financing for essential infrastructure and transformational investments across various sectors. Given that most private sector borrowers generate revenues in XOF, local-currency financing is crucial for mitigating foreign-exchange risk.

The reciprocal financing structure aims to optimize resource mobilization, aligning the long-term objectives of both BOAD and IFC with the financing needs of WAEMU. This initiative is expected to strengthen local markets by enhancing the XOF market and expanding diverse, resilient funding options for West African enterprises. Additionally, it will contribute to macroeconomic stability by helping to maintain the integrity of foreign-exchange reserves across the WAEMU region.

A History of Collaboration

The IFC and BOAD have a robust history of collaboration in the WAEMU region, having previously engaged in joint financing initiatives across key growth sectors, including housing, MSME finance, digital infrastructure, and more. This latest agreement is a testament to their ongoing commitment to fostering economic development in West Africa.

For more information on this landmark development, visit the source: www.zawya.com.

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