AFDB APPROVES 10 MLN USD LOAN TO SUPPORT AFRICAN LOCAL CURRENCY BOND FUND

HARARE– The African Development Bank (AfDB) has approved a 10 million US dollars loan to support development of local capital markets through the African Local Currency Bond Fund (ALCB Fund).

The loan has a seven-year tenure and two-year grace period. The ALCB, which was incorporated in 2012 with the backing of the German Development Bank and an initial paid-in capital of 47 million USD, is licensed as an open-ended fund, domiciled in Mauritius.

“Through the funding, the African Development Bank will help to broaden and deepen Africa’s local currency corporate bond markets, thus supporting local capital market development in regional member countries,” the AfDB said in a media statement received here Tuesday.

The AfDB said the loan would also support opportunities for local African corporate issuers to access and diversify their long-term funding sources in local currency and crowd in local institutional investors.

Sectors likely to benefit from the financial support include renewable energy, housing, health, education, the financial sector and agriculture. Since its establishment, the ALCB has invested in Botswana, Ghana, Kenya, Zambia, Lesotho, Senegal, C?te d?Ivoire, Nigeria, Uganda, Malawi, Gabon and Togo.

The ALCB Fund is expected to invest in all African countries where local currency bonds are possible.

Zimbabwe is currently excluded from benefiting as it does not have its own currency and is using a basket of foreign currencies for transactions.

At the end of last year, the ALCB had made 27 investments across 19 companies and in 10 currencies.

The AfDB said its support to the fund would complement existing initiatives to mobilize domestic institutional savings and stimulate non-sovereign local debt capital markets development across Africa. This will ultimately help grow private sector financing through capital markets, it said.

Source: NAM NEWS NETWORK