Five African countries to explore world’s first joint ‘debt-for-nature’ swap
About five African nations are said to be currently working on what could potentially be the world’s first collaborative “debt-for-nature” swap.
This initiative aims to raise a minimum of $2 billion to protect a coral-rich area of the Indian Ocean.
The concept of debt-for-nature swaps is becoming increasingly popular among poorer countries as a means to finance environmental protection efforts.
In these arrangements, countries buy bonds or loans and replace them with cheaper debt, using the savings generated to fund conservation initiatives.
Historically, several countries such as Ecuador, Barbados, Belize, Gabon, and Seychelles have engaged in similar swaps; however, this African initiative stands out as it involves multiple nations sharing a unique ecosystem.
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While specific details about which five African countries are involved have not been disclosed, it has been noted that nations supporting the broader “Great Blue Wall” conservation strategy include Kenya, Madagascar, Mauritius, Mozambique, Seychelles, Somalia, South Africa, Tanzania, and Comoros.
The plan was initially announced in 2021 and has garnered backing from both the U.S. and U.K. governments. Its primary goal is to protect and restore two million hectares of marine ecosystems by 2030 while benefiting approximately 70 million people living in coastal communities.
Collaborative efforts
The significance of such ambitious deals lies in their potential to accelerate conservation efforts across regions facing severe environmental challenges. Thomas Sberna from the International Union for Conservation of Nature (IUCN) emphasized that if substantial impacts are desired within the next five years, countries cannot continue issuing individual agreements but must instead pursue collective actions.
Negotiations surrounding this joint swap will need to address various critical issues such as fishing rights and financial responsibilities for environmental measures—historically contentious topics that have hindered progress in similar initiatives. A successful regional agreement could help overcome these barriers and attract necessary investments.
Funding
To facilitate this process, discussions are underway regarding establishing a dedicated fund worth at least $2 billion. This fund would consist of $500 million in concessional funding alongside $1.5 billion derived from bond swap financing. Additionally, talks with major multilateral development banks aim to provide credit guarantees and insurance for these swaps—essential measures that can lower interest rates on new “blue” or “nature” bonds replacing existing high-cost debts.
As negotiations continue among the involved parties regarding how much debt each country will raise and who will oversee the allocation of funds for environmental projects, there remains optimism about reaching an agreement before significant upcoming international conferences focused on ocean conservation.
This joint effort among African nations represents a pioneering approach towards addressing both economic challenges related to debt and urgent needs for environmental protection through innovative financial mechanisms.
