Developing products in local currency

Financing in local currency

Local financial markets in many countries are not developed enough to be in a position to offer loan maturities that are long enough for the planned investments.

PROPARCO – in partnership with other funders – is consequently working to develop local currency markets. PROPARCO was a forerunner in providing products denominated in local currency by developing guarantee tools in Africa’s Franc Zone almost twenty years ago and, subsequently, in all the countries where it is active. For example, it was the first to guarantee bond issues denominated in local currency in Africa.
 
Beyond its guarantee operations, PROPARCO set up a mechanism two years ago which allows it to develop direct loan products in local currency. Since 2007, PROPARCO has been a shareholder of TCX – a multi-donor initiative that allows its members to offer swaps in exotic currencies. Moreover, AFD issues bonds in a variety of currencies and directly intervenes on markets.
 
PROPARCO consequently has resources available in CFA francs and South African rand. Finally, PROPARCO directly seeks resources in local currency from commercial or development banks which in 2010 allowed it to offer  funding in CFA Francs (XAF), in Kenyan shillings (KES), in Dominican pesos (DOP), in South African Rand (ZAR) and in Peruvian nuevos soles (PEN).
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