IFC, a member of the World Bank Group, and the Central Bank of Congo have signed an agreement that enables IFC to swap US dollars for Congolese francs.

IFC will use the swap to make franc-denominated investments in the local private sector, supporting the country’s efforts to increase the use of local currency in the economy.

Oumar Seydi, IFC regional director for East and Southern Africa, said: “Supporting the DRC’s efforts to develop its financial and capital markets is a priority for IFC. Through this agreement we are bringing an innovative financing instrument to the country’s domestic financial markets that expands the options entrepreneurs have to borrow from the local markets.”

The Democratic Republic of Congo’s economy is dollarized, meaning that it is a dual-currency economy, using both US dollars and Congolese francs.

The majority of financial transactions—even simple ones carried out at cash machines—are currently conducted in US dollars.

The agreement increase IFC’s ability to make local-currency investments in Congolese companies serving the domestic market.

When companies borrow in the currency in which they generate revenues, they avoid currency risk, thus enabling companies to focus on growing their operations and creating jobs.

Deogratias Mutombo Mwana Nyembo, Governor of Central Bank of Congo, said: “The swap agreement with IFC will increase the availability of Congolese francs in the domestic financial markets.”

“This is an important step forward in our efforts to de-dollarize the economy and develop the domestic financial markets so they can meet the financing needs of the local private sector.”

IFC usually offers local currency loans by entering into swap agreements with major international banks.

International banks currently operating in the country are currently not set up to provide feasible options for exchanging US dollars into francs.

IFC has previously entered into similar swap agreements with the National Bank of Rwanda and the Central Bank of Paraguay.