Navigating Currency Volatility: Challenges and Explored Solutions for Small Businesses and Startups in Africa
The first day opened with a panel featuring African entrepreneurs who shared their experiences with currency volatility. Next, participants attended a panel on the role of development finance institutions (DFI) in de-risking investments and fostering financial stability for small and medium enterprises (SMEs).
The rest of the day was then spent in collaborative working groups to co-design foreign currency (FX) hedging solution ideas that aim to reduce risk premiums and lending rates. The second day continued with the same solutions-oriented focus, and attendants were challenged to develop models for lowering local currency borrowing costs for SMEs.
This paper, which focuses on the impact of currency volatility on SMEs in Africa, was derived from the October workshop. It builds on the rich discussions shared during the event and additionally incorporates insights from our quantitative analysis of select market data. It is intended to serve as a resource for policymakers, investors, and stakeholders. With that in mind, it is only through continued dialogue, exploration, and commitment that these ideas may transition into execution and take effect to build a more solid ecosystem in the region.