Unlocking Africa’s Capital Markets: ADBF and the Botswana Opportunity

Abhi Yadav of MCB Capital Markets explains how the continued expansion of African fixed income markets is powering the growth of pioneering funds such as the African Domestic Bond Fund, listed across Mauritius and Botswana.

As global investors recalibrate portfolios for a new macro era, Africa’s public debt markets — particularly in local currency — stand out as one of the most compelling and underappreciated opportunities.

At MCB Investment Management, we’ve long believed in the potential of African local currency fixed income: deep real yields, diversification benefits, and a maturing ecosystem of capital markets. That belief led to the creation of the African Domestic Bond Fund (ADBF) — the continent’s first ETF dedicated to local currency African sovereign debt — launched in partnership with the African Development Bank.

ADBF is more than a fund. It is a platform for access and development. Structured as an exchange-traded fund and listed in USD in Mauritius, ADBF was created to address three longstanding challenges in the asset class:

Lack of transparency
Limited institutional access
Illiquidity

By tracking the AFMI Bloomberg® African Bond Index (25% capped), the fund delivers daily pricing, real-time transparency, and multi-layered daily liquidity — allowing investors to access a diversified portfolio of African sovereign bonds through a single, cost-efficient vehicle.

With a minimum investment of just one share (currently USD 7 or BWP 95), it has also democratised access: retail investors enjoy the same access and returns (net of fees) as institutional investors or HNWIs.

What the ADBF’s dual listing on the Botswana Stock Exchange means for various stakeholders

Recognising growing institutional appetite across Africa — particularly among pension funds — ADBF was dual-listed on the Botswana Stock Exchange (BSE) in 2024, a milestone aligned with our development-focused mission.

This BSE listing, together with Local Asset Status from NBFIRA, allows domestic pension funds to allocate onshore capital to the fund. It also raises ADBF’s visibility in one of Africa’s most credible and well-run markets. For Botswana-based and regional investors, ADBF offers regional exposure, local relevance, and world-class governance and custody standards.

For the broader ecosystem, it supports benchmark development, deepens secondary markets, and channels capital into local currency bonds — strengthening the foundations for long-term, sustainable development.

A stellar performance that speaks volumes about African local currency bonds’ potential

Since its 2018 launch, ADBF has delivered strong risk-adjusted returns, consistently outperforming global fixed income peers including US high yield, investment grade, and emerging market local currency ETFs.

Total returns for the fund in USD and BWP below.

	Since Inception (Sep 18, 2018)	1 year	2025 YTD
ADBF (in USD)	28.37%	24.6%	15.14%
ADBF (in BWP)	59.34%	23.43%	10.82%

Source: Bloomberg, MCBIM, As at Jun 24^th 2025

The fund’s 2025 year-to-date return of 15.14% in USD (10.82% in BWP) is powered by a portfolio spanning 10 countries — including South Africa, Morocco, Egypt, Nigeria, Zambia, Ghana, Kenya, Mauritius, Namibia and Botswana. Sharpe ratios continue to outpace global fixed income benchmarks, underscoring the uncorrelated and resilient nature of African local currency bonds.

African local currency Index (Orange line, up 19.82%) vs Bloomberg Botswana Bond Index (BBOTS) (white line, up 12.02%); since data exists for BBOTS

Importantly, we believe with the macro backdrop shifting in favour of the asset class, this impressive absolute and relative outperformance is expected to continue for the near to medium term future.

The shift in global macro dynamics reinforces the case for this asset class. After a decade of US dollar strength and capital concentration in developed markets, investors are reassessing. With US rates peaking, inflation easing, and fiscal concerns rising in developed economies, the search for alternatives is intensifying. In this evolving regime — one less dominated by USD appreciation — Africa’s local currency bonds offer a premium hard to ignore. High nominal and real yields across the continent offer a strong buffer against FX volatility, supported by ongoing reforms and more orthodox policy frameworks.

Bridging global and African capital: The case for African local currency debt

At MCB Investment Management, we’re proud to play a role in bridging global and African capital. ADBF’s dual listing on the BSE reinforces our commitment to regional integration and financial inclusion. We hope the fund not only serves investors, but also signals what’s possible when capital market innovation meets intent.

As African fixed income markets continue to expand — with local currency debt growing from USD 580 billion in 2015 to over USD 940 billion today — we believe investor interest will follow. The opportunity is here. The access is ready.

And the case for African local currency debt has never been stronger.

By Abhi Yadav, Head of Fixed Income – MCB Investment Management, MCB Capital Markets

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