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The International Finance Corporation has announced that it will invest $20 million in debt in the African Local Currency Bond Fund (ALCB Fund) to help develop local currency capital markets in Africa, according to a statement released on Thursday.

The Washington D.C.-based multilateral lender said its investment in the ALCB Fund was announced during the IFC-sponsored Capital Markets Africa Conference in Nairobi, which held from May 11-12, 2017.

The ALCB Fund was established in 2012 by KfW Development Bank on behalf of the German Ministry for Economic Cooperation and Development (BMZ) to support the development of African bond markets and improve private sector access to long-term, local currency financing.

“ALCB Fund is a culmination of IFC, KfW and other partners’ efforts to develop domestic capital markets in Africa,” said Jingdong Hua, IFC’s Vice President and Treasurer. “The fund’s success will set an example to other asset managers, and could lead to similar funds that provide local currency financing to African businesses.”

According to the IFC, the ALCB Fund mobilizes domestic capital to invest in local currency bonds, which can provide a source of finance for businesses in Africa. This improves the sustainability and diversity of funding sources and reduces risk at the level of the individual issuer as well as on a systemic level across the economy. The Fund targets non-sovereign bonds whose proceeds promote financial inclusion, housing finance, renewable energy, agriculture and supply chain finance.

ALCB Fund has been investing for four years and it has played a key role in bringing 19 local currency bonds to market for 14 companies in seven countries. The Fund has invested a total of $42.6 million. For every $1 invested by the Fund in local currency bonds in 2016, $10.62 was invested by third parties. The Fund is managed by LHGP Asset Management (LHGP AM), an alternative asset manager regulated by the UK Financial Conduct Authority, with offices in London and Nairobi.

“IFC’s investment is truly a landmark event for the ALCB Fund, as it will help strengthen the Fund’s position as a main actor in local currency bond markets in Africa,” said Karl von Klitzing, Director of the ALCB Fund and Principal Project Manager at KfW Development Bank. “The additional funding will strongly improve its positive impact on African bond issuers, local capital markets and final beneficiaries alike.”