WASHINGTON, D.C., June 28 -- The International Finance Corporation (IFC) has signed agreements to establish local currency guarantee facilities for two finance companies in Cote d'Ivoire -- one for CFA 1 billion (US$2.1 million equivalent) for Société Africaine de Crédit Automobile and the other for the same amount for Société Africaine de Crédit-Bail. Société Africaine de Crédit Automobile and Société Africaine de Crédit-Bail are well-established Ivorian hire-purchase and leasing companies. The IFC local currency guarantee facilities will help overcome a major obstacle in Cote d'Ivoire: the limited access to medium- and long-term local currency funding. The facilities will assist Société Africaine de Crédit Automobile and Société Africaine de Crédit-Bail in raising medium-term local currency funding so that they can then expand their lending activities to local institutions. As the medium-term resources will be in the local currency, rather than US dollars or French francs, the companies will be able to avoi
d foreign exchange rate risk. Under the agreements, IFC will guarantee any refinancing transaction done by the two companies, including CFA-denominated loans from commercial banks and issuance of CFA-denominated commercial paper. IFC will also consider other transactions on a case by case basis. IFC-guaranteed transactions could qualify as reserve investment assets under the new regional regulations for CFA Zone insurance companies, which are eager to invest in high quality assets. "IFC local currency guarantees are a very efficient means of improving local financial intermediation," said Tei Mante, Director of IFC's Sub-Saharan Africa Department. "This is the first time IFC is offering local currency guarantee facilities to its clients, and we plan to make this product more available in the future." IFC is a member of the World Bank Group and is the largest multilateral source of equity and loan financing for private sector projects in developing countries.
