Hedging Currency Risk: From Strategies to Implementation
Shubhangi Rana, Program Manager, ‘23 Student Fellow, MIT Kuo Sharper Center for Prosperityand Entrepreneurship
Seif Zaki, Program Coordinator, MIT Kuo Sharper Center for Prosperity and Entrepreneurship
Delilah Heakal, Editor
Executive Summary
Persistent currency depreciation in Africa during recent years has placed significant strain on the operating environments of small and medium enterprises (SMEs), including their access to finance. Several economies experienced double-digit devaluations in less than five years, which in turn took a toll on inflation, liquidity and borrowing costs.
Beyond macroeconomic headwinds, other inherent ecosystem challenges limit access to local, affordable credit. Included are investor risk aversion and startup readiness gaps, relatively weak digitization, poor data aggregation and dissemination, as well as regulatory hurdles and lack of inexpensive hedging tools available to startups. As a result, SMEs often resort to costly foreign currency (FX) debt for funding.
In October 2024, the MIT Kuo Sharper Center for Prosperity and Entrepreneurship (MIT KSC) hosted a workshop in Boston to discuss currency volatility in African markets and explore innovative solutions.1 While promising ideas emerged, few gained traction due to regulatory inertia, operational complexities, and capital constraints.
To further last year’s discussions, a second workshop was held in Nairobi during May 2025. The aim was to pivot earlier ideas into actionable steps of implementation. Key stakeholders were brought together to work across three thematic sessions: guarantees, tapping into local capital, and tech-enabled innovation. Outcomes were then adapted to five selected markets: Kenya, Uganda, Nigeria, Egypt, and Zambia.
Out of the numerous pilots discussed, seven are now planned for execution. Lead members of these programs will report back on progress after six months, which will be coordinated through MIT KSC. A third meeting is planned for 2026 to showcase and assess the measurable results of these initiatives.