“The only man I envy is the man who has not yet been to Africa- for he has so much to look forward to.” – Richard Mullin

African Domestic Bond Fund

The outlook for Africa

Africa is widely considered to be the world’s last frontier market with many African economies having recorded economic growth of 5% p.a. or more over the past decade. 6 of the world’s 10 fastest growing economies are in Africa. The continent has the world’s youngest population and the number of Africans of working age is expected to reach 1.1 billion by 2020. Against this backdrop, it is estimated that approximately US$ 100 billion a year is needed to finance infrastructure projects. (Sources: World Bank, Mckinsey Global Institute)


“The state of the continent is good. Africa’s general economic performance continues to improve, but it remains insufficient to address the structural challenges,” A. Adesina – President of the Africa Development Bank for the African Economic Outlook 2019.

Easing access to African markets

In spite of the improving macroeconomic, political and regulatory environment in Africa, institutional investment in African local currency debt remains under-represented in most asset management portfolios. This is partly due to the asymmetry of information and perception of risks in Africa and the real difficulties surrounding market access. The ADBF attempts to address both issues by providing exposure through a transparent, low cost and liquid vehicle listed on the Stock Exchange of Mauritius.


The African Domestic Bond Fund invests in debt obligations issued or guaranteed by African governments and their agencies and by African government sponsored entities and quasi-government entities, denominated in local currency. The fund aims to provide gross investment returns (before fees and expenses) that tracks the total return of the AfDB/AFMISM Bloomberg® African Bond Index 25% Capped ("Index").

Strong Partners

“We are excited to partner with MCB Investment Management in launching the ADBF as the fund will play a critical role in supporting local government bond issuance and producing positive developmental outcomes.” Stefan Nalletamby, Director Financial Sector Development Department, Africa Development Bank.

ADBF benefits from the support of strong institutions such as the African Development Bank (AfDB), a cornerstone investor in and sponsor of the fund. As the continent’s premier development bank, the AfDB is ideally positioned to lead, coordinate and drive the initiatives needed to ensure the success of this fund.


The primary goals of the AfDB and of other Development Financial Institutions supporting the ADBF are as follows:

  • To reduce the dependency of African countries on foreign currency denominated debt;
  • To encourage the deepening of domestic bond markets through investments in longer dated debt; and
  • To broaden the investor base in African domestic bond markets.

The Manager

ADBF is managed by MCB Investment Management Co. Ltd (MCBIM or the Manager), the Manager is also responsible for the fund’s NAV calculation.

The main objective of the African Domestic Bond Fund is to track the performance of the AfDB/AFMISM Bloomberg® African Bond Index 25% Capped. The Manager invests in a diversified portfolio using a stratified sampling approach to match the index’s characteristics and returns.


The objective of the ADBF makes the fund suitable for institutional and individual investors who:

  • Are looking to access the sovereign bond markets in Africa in a diversified, transparent and cost effective manner;
  • Are seeking to diversify their portfolios and potentially enhance their returns;
  • Have an investment horizon of at least 3 years; and
  • Are looking for regular returns in USD from coupon income and potential long-term gains from capital appreciation of the underlying bonds.

The ADBF is managed against the AfDB/AFMISM Bloomberg® African Bond Index 25% Capped, a sub-index of the AfDB/AFMISM Bloomberg® African Bond Index which was launched in 2014. It initially included 4 local sovereign indices namely South Africa, Egypt, Nigeria and Kenya. Namibia and Botswana were added in September 2015 while Ghana and Zambia were included in April 2017.


The AfDB/AFMISM Bloomberg® African Bond Index is a rules-based market value weighted composite index of the Bloomberg Local Sovereign Index of each country. Criteria for inclusion in the local indices are as follows:

Index NameISINMinimum par amount
Bloomberg Kenya Local Sovereign IndexBBKENKES 1 billion
Bloomberg Botswana Local Sovereign IndexBBOTSBWP 500 million
Bloomberg Namibia Local Sovereign IndexBNAMINAD 500 million
Bloomberg Egypt Local Sovereign IndexBEGYPEGP 1 billion
Bloomberg Nigeria Local Sovereign IndexBNGRINGN 50 billion
Bloomberg South Africa Local Sovereign IndexBSAFRZAR 2 billion
Bloomberg Ghana Local Sovereign IndexBGHAGHS 100 million
Bloomberg Zambia Local Sovereign IndexBZMBZMW 50 million

The weighting of the constituent securities of the Index changes on a monthly basis. It is accessible in the Weekly Update available in the Document section.

Growth of African Local Currency Bond Markets

Local African capital markets have grown in both breadth and depth over the past decade, and much has been done to improve the regulatory frameworks and capital market infrastructure, and expand the potential investor base. Within the local currency African bond space, government securities easily dominate corporate bonds, both in terms of liquidity and issuance value. Outstanding local currency pan-African government securities amounted to approximately USD 500 bn at the end of 2018. Accordingly, government bonds are a more efficient way to invest in the African fixed income asset class.


A diversified exposure in African fixed income markets via a transparent and cost effective vehicle


A key advantage of investing in African local currency bonds is the diversification benefits that the asset class offers. African local currency bonds have a low correlation which makes it attractive from a portfolio efficiency perspective.


The asset class also offers yield pick-up compared to its developed market peers with 10-year bond yields ranging between 7% and 18% in local currency across the continent.


There are no entry and exit fees for investors on the primary market except for duties and charges which currently stand at 0.45%. The Total Expense Ratio of ADBF is expected to be 0.65% p.a. based on assets under management of USD 100 million. Transaction fees on fixed income ETFs trading on the Stock Exchange of Mauritius are 0.10% per trade.

Favourable tax regime

ADBF is domiciled in Mauritius and authorised by the Financial Services Commission as a Global Fund. The fund benefits from taxation relief under the terms of various treaties between Mauritius and several African countries where the fund is invested. Additionally, Mauritius currently does not levy any taxes on capital gains.

ADBF may not be suitable for all investors. Investment into the Fund involves significant risks and should be made only upon advice from independent, qualified sources of investment, legal, tax, accounting and other matters.


Any figures relating to past performance published on this website are not to be taken as a guide to future returns. As is true of any investment in collective investment schemes, investment in the securities herein is not guaranteed. The value of the investment and the income therefrom may go up as well as down and the investor may not get back their initial investment. In certain circumstances an investor’s right of redemption may be suspended.


The main risks factors to be considered when investing into the Fund are summarised below. Please refer to the Prospectus for further details.

Market risk

The performance of the Fund depends on the market prices of the underlying bonds in which it is invested. The value of the Fund will thus fluctuate as a result of changes in market prices.

Interest rate risk

The Fund is invested in bonds, the value of which normally rise and fall in response to changes in interest rates.

Currency risk

Investments will be made in bonds denominated in currencies other than the US Dollar, the base currency of the Fund, Investors will thus be subject to the risk that those currencies could decline in value relative to the US Dollar.

Emerging markets risk

The Fund is invested in bonds issued by various governments in Africa. It is generally accepted that investing in emerging/frontier markets entail a higher degree of risk of loss than investing in developed markets.

This is due to, among other things, greater market volatility, high levels of inflation, deflation or currency devaluation, restrictions on purchases of securities by foreign investors, currency or capital controls, the risk of expropriation or nationalisation of assets, political, social and economic instability, and uncertainty around and unexpected variations in the application of local rules and regulations.