The African Development Bank has approved a $25m equity investment in The Currency Exchange Fund to expand access to local currency financing and reduce Africa’s exposure to volatile foreign exchange risks.
In a statement on Thursday, AfDB said the investment will strengthen TCX’s capital base and widen its capacity to provide hedging instruments in illiquid African currencies. The bank noted that currency risk is a major barrier for businesses and governments, often leading to debt distress when loans in foreign currencies collide with revenues earned locally.
“The transaction will help mitigate the foreign exchange risks faced by borrowers in Africa, particularly those operating in fragile states and underserved markets,” AfDB said. It added that the move will attract other development finance institutions and private investors, integrate Africa further into global capital markets, and promote sustainable growth.
TCX, headquartered in Amsterdam, provides long-term local currency hedging instruments in emerging and frontier markets. Since its creation in 2007, the fund has hedged over $17bn globally, including more than $4bn across 31 African countries, with about 18 percent of its portfolio focused on fragile and low-income markets.
AfDB’s Director of Financial Sector Development, Ahmed Attout, described the partnership as a milestone. “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,” he said.
TCX CEO, Ruurd Brouwer, welcomed the bank as a shareholder, calling it the beginning of a close partnership to protect borrowers from currency risk and advance African capital markets.
The deal aligns with AfDB’s 2024–2033 strategy, which prioritises financial innovation, local currency bond issuance, and expansion of private sector lending. Analysts say the AfDB-TCX collaboration will reduce Africa’s dependence on foreign-denominated loans, shield vulnerable economies from exchange rate shocks, and strengthen resilience across the continent’s financial systems.
