On the sidelines of COP 26, the United Nations Economic Commission for Africa (ECA) announces the launch of a Liquidity and Viability Mechanism (MLV) to provide African governments with a liquidity structure of the same quality as international standards. The objective is to meet the specific needs of the Continent in terms of sovereign issues on the euro bond market.

The MLV offers international private investors wishing to invest in Africa a robust environment and diversified investment opportunities, particularly in the area of the Sustainable Development Goals (SDGs). It also offers African governments a liquidity structure of the same quality as international standards. These objectives will be achieved through the implementation of a repo market with the MLV using African sovereign issues as collateral. In a press release, the commission indicates that the MLV will be accompanied by Citi as a structuring agent which will provide its expertise in implementing this type of mechanism, by the law firms White & Case LLP and Matheson as well as by the consulting firm Eighteen East Capital.

The MLV will increase the liquidity of SDG sovereign bonds and those related to climate issues issued by African countries, which could significantly increase the volume of blue and green issues and at more affordable rates. Eligible bonds that the Facility will accept as collateral will be reviewed regularly and priority will be given to countries with a good track record of policy reform and strong governance. The communiqué informs that the Mechanism will be supervised by a Council whose members will be announced shortly.