The African Development Bank Group (AfDB) has approved a $25 million equity investment in The Currency Exchange Fund (TCX), a global development-focused institution that provides long-term local currency hedging solutions for emerging and frontier markets.
The investment marks a strategic step toward strengthening African capital markets, reducing debt vulnerabilities, and expanding access to sustainable financing for fragile and underserved economies. TCX specializes in creating tailor-made hedging instruments that enable local currency lending in countries where conventional hedging markets are weak or nonexistent.
By cushioning borrowers against foreign exchange volatility, TCX reduces the risks tied to hard currency borrowing, particularly in economies with unstable exchange rates. This helps protect micro, small, and medium-sized enterprises (MSMEs), infrastructure developers, and public institutions that often bear the brunt of currency swings.
With AfDB’s support, TCX’s capital base will expand, boosting its risk-bearing capacity and enabling it to extend its services to more illiquid African currencies. The investment is also expected to attract additional funding from Development Finance Institutions (DFIs) and private investors, unlocking larger volumes of hedging in key sectors such as public debt management, infrastructure, energy access, microfinance, and SME development. These sectors are critical for job creation, economic resilience, and financial inclusion.
Since inception, TCX has hedged more than $17 billion in notional amounts, with over $4 billion directed to 31 African countries. Around 18 percent of its global portfolio currently supports fragile and low-income markets, where access to financial risk management tools is most limited.
The AfDB emphasized that this initiative is not only a safeguard against debt distress but also a pathway to empowerment. By reducing foreign exchange exposure, African governments and businesses will have stronger capacity to manage debt sustainably, attract private investment, and build inclusive economies.
Ahmed Attout, AfDB’s Director of Financial Sector Development, described the partnership as a milestone in the Bank’s push to deepen African capital markets. He noted that the move will unlock new opportunities for MSMEs and infrastructure development, thereby fueling broader economic growth.
TCX’s Chief Executive Officer, Ruurd Brouwer, also welcomed the Bank’s entry, saying it strengthens a coalition of DFIs, impact investors, and governments committed to protecting borrowers and promoting capital market development across Africa.
The operation aligns with AfDB’s Ten-Year Strategy (2024–2033), which prioritizes financial resilience and innovation in financing. At a time when global financial volatility threatens developing economies, this initiative represents a decisive effort to stabilize Africa’s financial systems and empower its economies for long-term development.
