More investments in Africa by hedging the currency risk:
KfW gives a guarantee
Frankfurt am Main (ots) –
– Greatly improved access for African borrowers too
Local currency financing
– Reduction of the causes of flight
– Expansion of climate protection measures
KfW has worked with the European Commission and TCX (The Currency Exchange Fund,
Netherlands) concluded a guarantee contract, the TCX additional
Funding of EUR 130 million from the European Sustainable Fund
Development (EFSD) taps.
Local currency financing is not sufficiently available in countries of
Sub-Saharan Africa, an obstacle to investment and financial systems development.
Through the EFSD funds, TCX can contribute to solving this problem,
because TCX can reduce the risk of exchange rate fluctuations when investing in Africa
eliminate and so additional financing from investors and
Facilitate private business. Specifically, the EFSD funds make the
TCX’s hedging capacity for interest rate risks when granting loans in
local currency to microfinance institutions, local banks and
Energy companies in sub-Saharan Africa increased. This also leads indirectly to
a significant reduction in the causes of flight, the reintegration of
Migrants and to expand climate protection measures.
“KfW supports the European Commission with this guarantee to TCX
the goals for sustainable development according to the Agenda 2030 of the United
Nations to realize. In addition, those secured by TCX provide
Financing contributes to the implementation of the Paris Agreement on Climate Change.
In addition, the importance of TCX for financial system development is the
African countries enormous. TCX helps the African financial markets too
strengthen and the increased demand for hedging against exchange rate risks
– especially against the background of the Covid-19 pandemic – “said Dr.
Günther Bräunig, CEO of KfW Bankengruppe.
TCX enables financing partners to use its hedging products,
To grant loans in local currency. This represents a tremendous advantage and one
Security for the lender because that way the
Fluctuations in the rate of many African currencies in relation to hard currencies such as
for example USD or EUR avoided. So will local borrowers
allows you to repay your debts in local currency. Subsequently
Lending and investment in these countries are going to be great
facilitated.
KfW, in turn, covers its risks through a back contract with the EU within the framework
the European Fund for Sustainable Development (EFSD). This is in
Context of the European External Investment Plan (EIP) the
Federal Republic of Germany supported through the EU budget. With the EIP is supposed to
an investment volume of up to EUR 44 billion in Africa and the
EU neighborhood regions to be mobilized by 2020. The goals are reduction
the causes of flight, climate protection and the promotion of the private sector. The EIP
offers with the ESFD an additional risk assumption.
Background information on the TCX:
TCX is a global development finance initiative that is long-term
Offers currency swaps and futures in more than 80 financial markets where
such protection options are not accessible or are difficult to access. The
Fund started operations in 2007 and has been since
Hedging instruments for a financing volume of USD 8.5 billion
on over 3500 transactions. Today the fund has one
Total exposure of $ 5 billion in 60 development and development currencies
Emerging markets. By selling part of this commitment to private investors
TCX creates markets and thereby opens these developing and emerging countries
access to the international capital market.
You can find the KfW Development Bank division at:
http://www.kfw-entwicklungsbank.de
Press contact:
KfW, Palmengartenstr. 5 – 9, 60325 Frankfurt
Communication (COM), Dr. Charis Pöthig
Phone. +49 (0) 69 7431 4683, Fax: +49 (0) 69 7431 3266,
E-Mail: mailto: [email protected], Internet: http://www.kfw.de
Further material: http://presseportal.de/pm/41193/4761946
OTS: KfW
AXC0143 2020-11-13/10:03
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