In a major step towards strengthening capital markets and unlocking private sector growth in emerging economies, the World Bank Group has partnered with Citi to establish a lending facility of 1.6 billion South African rand (about $85 million) through the International Finance Corporation (IFC).
The landmark agreement is designed to expand the IFC's ability to provide local currency financing in South Africa – a vital tool to reduce currency risk and accelerate sustainable investment in developing markets.
Expanding Local Currency Solutions for Development
The new facility marks a significant expansion of the World Bank Group's local currency financing toolkit, strengthening its broader strategy to deepen domestic capital markets and support long-term private sector development.
“Local currency financing and capital markets development in emerging and developing markets are important priorities for the World Bank Group,” said George Familiar, Vice President and Treasurer of the World Bank Group. “This facility demonstrates how strong private sector partnerships can deliver innovative financial solutions – from results-based bonds to local currency instruments – that promote job creation and economic growth.”
By enabling financing in South African Rand, this initiative reduces the risk of foreign exchange volatility – a persistent barrier to businesses and investors in emerging markets.
Empowering Innovative Finance: First-of-its-Kind Result Bond
The facility has already played a catalytic role in supporting IFC's anchor investment in the Cape Water results-based bond issued by FirstRand Bank. The bond is notable as the first results-based bond issued by a commercial bank globally – an innovative financing structure that links returns to measurable social or environmental outcomes.
Such instruments are gaining popularity as part of a new generation of development finance, aligning capital flows with impact-driven outcomes in areas such as water security, climate resilience and infrastructure.
Building on a Scalable Model
The South African rand facility is based on a similar agreement signed between IFC and Citi in Kenyan shillings in 2024. Together, these transactions signal the emergence of a scalable model that can be replicated in many emerging markets.
“This facility deepens our partnership with the World Bank Group,” said Stephanie von Friedeburg, global head of Citi's public sector group. “Following our Kenyan shilling transaction, this rand-value facility demonstrates a model that can be expanded to emerging economies, supporting local currency financing where it is needed most.”
Both institutions have confirmed plans to expand this framework to additional countries, potentially unlocking billions in local currency financing in the coming years.
Addressing Currency Risk and Unlocking Investments
Currency instability remains one of the most significant challenges facing private sector development in emerging economies. Many businesses rely on foreign currency loans, leaving them exposed to exchange rate fluctuations that can undermine financial stability and hinder investment.
In contrast, local currency financing enables companies to borrow and repay in their home currency, aligning revenues and liabilities while reducing financial risk.
Experts say initiatives like the IFC-Citi facility are necessary to:
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Expanding access to affordable financing for businesses
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Supporting infrastructure and climate-related investments
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strengthening domestic financial systems
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Encouraging long-term private capital flows
IFC's growing influence in local markets
Over the past decade, IFC has significantly expanded its local currency financing operations, committing more than $33 billion in 71 currencies around the world. This reflects a strategic shift towards building resilient financial ecosystems in developing economies.
The South Africa Facility adds momentum to this effort, particularly in one of Africa's most sophisticated but still developing financial markets.
A catalyst for broader market growth
In addition to immediate financial benefits, the initiative is expected to contribute to deepening South Africa's capital markets by introducing new instruments and attracting institutional investors.
“Deep and liquid capital markets are essential for sustainable development,” the World Bank Group said, emphasizing that such partnerships help build the financial infrastructure needed to support long-term economic growth.
looking ahead
As global economic uncertainty and currency fluctuations continue to challenge emerging markets, such innovative financing models may play an increasingly central role in development strategies.
The IFC-Citi partnership not only strengthens South Africa's financial landscape but also sets an example for how multilateral institutions and private sector players can collaborate to unlock scalable, impact-driven solutions around the world.