Gabon’s national debt has been restructured under a ‘Blue Bond’ in the world’s second-largest debt-for-nature swap and a first for mainland Africa.
In the deal, $500 million of sovereign debt has been refinanced by Bank of America, with the US International Development Finance Corporation providing political risk insurance for the deal, according to the bank.
“The Gabon Blue Bond will generate nearly $125 mln in financing for new marine conservation efforts over the next 15 years, advancing critical conservation goals, protecting endangered species, and supporting the country’s sustainable ‘blue economy’, said DFC CEO Scott Nathan in a statement.
In return for restructuring of the debt, government contributions will be made to an independent Conservation Fund and an endowment used to fund conservation after the initial 15-year payback period.
“The launch of Gabon’s Blue Bond is an important moment, giving us hope that green or blue financial mechanisms will grow significantly in coming years and help countries like Gabon, who effectively protect critical ecosystems whilst also growing our economies. All too often talk of these new mechanisms to reward countries like my own remain just that,” said Gabon’s President Ali Bongo Ondimba in a statement.
NGO The Nature Conservancy will act as technical advisor and project manager to develop an ambitious marine spatial plan and develop new protected areas with contributions.
“This project in Gabon unlocks an enormous stream of funding for conservation created by the issuance of new bonds, which was made possible with political risk insurance from the US International Development Finance Corporation,” said TNC CEO Jennifer Morris.
“It is among a growing number of innovative financial opportunities advancing both biodiversity and climate goals for people and nature.”
Gabon was one of the first countries to pledge to protect 30% of its ocean and land by 2030. However, The Nature Conservancy highlighted its estimate that the country loses $610 million annually due to illegal, unreported, and unregulated fishing.
The deal signifies a second debt-for-nature swap above half a billion dollars this year, with a similar deal supported by DFC in Ecuador. The Ecuador deal drew criticism from a group of more than 130 stakeholders due to a perceived lack of transparency and integrity.
In terms of carbon finance, Gabon last year flagged the potential for a partnership with South Korea, whereby the African nation would provide carbon credits that could be used under Article 6.2 of the Paris Agreement to help meet climate goals.
But the nation has not advanced on the plans it had last year to issue a massive 90 Mt of pre-2021 national-scale forest protection credits for the voluntary carbon market. Already-issued REDD.plus units have struggled to find buyers amid industry concerns that they lack sufficient rigour to be treated as fungible carbon credits.
By Tom Woolnough – tom@carbon-pulse.com
*** Click here to sign up to our weekly biodiversity newsletter ***
