Mission

KfW and the German government established the ALCB Fund in 2012 to promote corporate local currency bond markets as a viable source of funding in Africa. The Fund focuses on three core areas of impact:
‍

Act as an anchor investor and provides technical assistance to financial service providers.
‍
Improve the sustainability and diversity of funding sources for issuers, reducing risks for individual institutions and the financial sector
Ensure greater economic opportunity for target beneficiaries, specifically low income households and MSMEs by facilitating sustainable borrowing, long-term investment and financial-sector sustainability.

The mission of the ALCB Fund follows the G20 Action Plan to Support the Development of Local Currency Bond Markets (LCBMs), adopted by the Group under the French Presidency in 2011

Approach

In most African countries, local currency bond markets are characterised by limited primary issuance by private-sector entities, and a lack of market depth, liquidity and price transparency. In response, the Fund advocates for local capital markets, working closely with issuers, investors and intermediaries to overcome the market barriers and challenges they face. This involves:
‍

Identifying institutions with the financial capacity to issue local currency bonds.
Promoting the advantages of local currency issuances, including funding diversification, reduced FX risk, and interest rate mismatches.
‍
Providing technical assistance to support transaction costs.
‍
Implementing an efficient investment approval process to assist the bond marketing process.
‍
Undertaking rigorous due diligence and introducing improved credit standards to markets.
‍
Ensuring harmonisation of standards and appropriate legal documentation to enable the broadest marketability of the bond.
‍
Supporting market transparency through publicly listed bonds and first-of-their kind transactions.

Theory of Change

The ALCB Fund has developed a Theory of Change framework that guides its activities towards developmental objectives. The Fund has identified four key SDGs which drive the portfolio’s impact goals.
These are:
‍

SDG 1: No Poverty
‍
SDG 8: Decent Work and Economic Growth
‍
SDG 13: Climate Action
‍
SDG 17: Partnerships for the Goals
‍

As the Fund targets investments in several sectors, its investment activities also contribute to a diverse number of additional SDGs.