The African Development Bank (AfDB) has approved a $25 million equity injection into The Currency Exchange Fund (TCX), a global facility that delivers long-term local currency hedging solutions for emerging and frontier markets.
This strategic move is designed to deepen African capital markets, curb foreign exchange (FX) risks, and unlock new financing pathways for micro, small and medium-sized enterprises (MSMEs), infrastructure developers, and public institutions across the continent.
TCX, a development-driven fund, specializes in bespoke hedging products that support local currency lending in markets where traditional FX instruments are either underdeveloped or entirely absent. By enabling businesses to access loans and repay in local currencies, TCX shields them from the volatility of hard currency debt.
Since its founding, TCX has provided hedging cover for over $17 billion globally, including $4 billion across 31 African countries. Nearly 18% of its current portfolio is dedicated to fragile and low-income states where governments and entrepreneurs face the sharpest financing constraints.
AfDB’s latest commitment will strengthen TCX’s capital base, enhance its risk-bearing capacity, and crowd in additional funding from development finance institutions (DFIs) and private investors. Priority areas include SME growth, public debt management, infrastructure, and energy access—all critical to driving inclusive development and creating jobs.
According to Ahmed Attout, AfDB’s Director of Financial Sector Development, the initiative tackles one of Africa’s deepest structural bottlenecks:
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“This investment will unlock local currency financing for MSMEs, infrastructure, and other key sectors, while addressing the root causes of debt distress linked to currency mismatches,” he said.
Ruurd Brouwer, CEO of TCX, welcomed the partnership, highlighting its systemic impact:
“AfDB’s investment strengthens a coalition of DFIs, impact investors, and governments working to de-risk African markets. This collaboration will shield borrowers from currency shocks and accelerate capital market development,” Brouwer affirmed.
The initiative aligns with AfDB’s Ten-Year Strategy (2024–2033), which emphasizes resilience in financial systems and inclusive growth. Analysts note that the deal could be transformative for small businesses in fragile economies, granting them predictable financing to expand operations and generate employment without being crippled by exchange rate fluctuations.
Amid tightening global financial conditions, the AfDB–TCX partnership is being hailed as a timely safeguard for Africa’s private sector, ensuring sustainable expansion even in the face of external currency headwinds.
