IFC and Citi Finalize R1.6 Billion Agreement to Expand Local Currency Lending for South African Infrastructure

The IFC and Citi sign a R1.6-billion facility to expand rand-denominated financing in South Africa, supporting the Cape Water outcome-based bond.

By: AXL Media

Published: Apr 15, 2026, 4:42 AM EDT

Source: Information for this report was sourced from Engineering News

Strategic Expansion of Local Currency Capacity

The International Finance Corporation (IFC), the private sector arm of the World Bank Group, has significantly bolstered its ability to fund development projects in South Africa through a new R1.6-billion borrowing facility. Signed with global financial services firm Citi, this agreement represents a strategic effort to provide financing in South African rand, thereby reducing the risks associated with foreign exchange fluctuations. By securing local currency, the IFC can offer more stable, long-term credit to private sector partners, which is a critical mechanical necessity for sustainable job creation and infrastructure development in emerging markets.

Mitigating the Impact of Currency Volatility

Currency volatility remains a primary hurdle for private sector investment in developing economies. When developmental projects are funded in foreign currencies like the US dollar or euro, the local borrower often faces increased repayment costs if the local currency depreciates. This new facility directly addresses that vulnerability. According to Jorge Familiar, World Bank Group Vice President and Treasurer, deep and liquid capital markets are essential for ensuring that development priorities are met without exposing stakeholders to predatory exchange rate shifts. The facility serves as a template for how developmental finance institutions (DFIs) can partner with private commercial banks to deepen local markets.

Supporting Innovative Outcome-Based Financing

A notable immediate application of this new facility is the IFC’s anchor investment in the Cape Water outcome-based bond. Issued by FirstRand Bank, this is the first bond of its kind to be issued by a commercial bank on a global scale. Outcome-based bonds are structured so that financial returns are tied to the achievement of specific social or environmental targets—in this case, water security and infrastructure in the Cape region. The R1.6-billion facility provided the necessary rand-denominated capital for the IFC to participate in this pioneering instrument, demonstrating how local currency solutions can catalyze innovative financial products.