Mission and History

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

  • Acting as an anchor investor and provider of technical assistance to financial service providers (including banks, MFIs, mortgage providers, leasing companies and SME lenders) and selected companies in renewable energy, housing and agriculture;
  • Improve the sustainability and diversity of funding sources for target issuers to reduce risk at the level of the individual financial institution or company, while reducing systemic risk across the financial sector; and
  • Facilitate sustainable borrowing, long-term investment and financial-sector sustainability, the Fund ensures greater economic opportunity for its target beneficiaries, specifically low income households and MSMEs.

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.

The ALCB Fund was incorporated in December 2012. Since May 2015, it has been managed by LHGP Asset Management (www.lhgp.com).


A functioning bond market is vital for developing economies as they grow, providing companies and financial institutions with a sustainable source of long-term local currency funding. Such markets can bring together issuers (e.g. companies and financial institutions), investors (e.g. pension funds, asset managers, etc.) and intermediaries (e.g. financial advisers, placement agents and legal advisers) to channel long-term savings into the real economy.

At this time, local currency bond markets in most African countries are characterised by limited primary issuance by private-sector entities, and a lack of market depth, liquidity and price transparency. Such market inefficiencies can be self-reinforcing and create barriers to finance for issuers, investors and intermediaries.

In absence of long-dated local currency funding, African borrowers have tended to finance operations and investment in foreign currency, exposing themselves to exchange rate risk; or alternatively finance long-term projects with short term loans, creating maturity-mismatches. These strategies create systemic risks in the private-sector and can restrict investment in the long-term.


The overall strategy of the Fund is to be an advocate for local capital markets and to work closely with issuers, investors and intermediaries to overcome the numerous market barriers and challenges they face. This involves:

  • Identifying financial institutions and companies that have the financial capacity to issue local currency bonds.
  • Promoting the advantages to potential issuers, such as diversification of funding and reduced risk from FX, maturity and interest rate mismatches.
  • Providing technical assistance, where required, to support certain transaction costs such as roadshows, credit ratings, regulatory filings and legal support.
  • Implementing an efficient investment approval process in order to assist issuers and their financial advisers in the bond marketing process.
  • Undertaking rigorous due diligence and, more generally, introducing improved credit standards to the market.
  • Ensuring harmonization of standards and appropriate legal documentation to enable the broadest marketability of the bond.
  • Supporting market transparency through publicly listed bonds, where possible, as well as first-of-their kind transactions that meet the Fund’s criteria