Nature Conservancy Mulls Southern Africa Debt-for-Nature Swaps

(Bloomberg) -- The Nature Conservancy, a US-based conservation nonprofit, is studying debt-for-nature swaps and blue bond sales to help protect a massive swath of southern Africa’s coastline.

Such instruments can provide longer-term funding than concessional finance from global environmental facilities, as TNC works with governments and other partners to bolster marine conservation in South Africa, Namibia and Angola.

“The big advantage of those is they have a completely different time horizon,” said Jeff Ardron, Africa Oceans director at TNC. “We’re talking 20, 30-year type time horizons.”

The group has previously used debt-for-nature swaps to fund marine conservation in countries including Belize and Gabon, which secured $553 million and $500 million deals respectively.

Such swaps typically take place when a government’s existing debt trades at a discount, and usually include guarantees from multilateral lenders. The debt is purchased on the secondary market and some of the money saved is used to fund conservation programs. Blue bonds would be issued by the governments.

“No one’s arm is being twisted here. This is something that the government voluntarily wants to do,” said Ardron, adding the instruments would likely be concluded on a single country basis rather than a regional arrangement. “We have a surplus and some of that surplus can go into the agreed upon actions.”

In August, Angola said it has been approached by TNC about the possibility of conducting a debt-for-nature swap.

The conservation project TNC is working on is known as the Blue Benguela Partnership, named after the Benguela current that runs along the coasts of the three countries. It stretches for 6,800 kilometers (4,225-mile) from Gqeberha on South Africa’s southern coast to the northern reaches of Angola.

TNC is working together with the Blue Nature Alliance and the secretariat of the Benguela Current Convention, a treaty between the three African countries.

Fish, Seabirds

The region is home to more than 20 commercial fish species as well as numerous marine mammals and seabirds.

The aim is to create an additional 148,000 square kilometers (57,143 square miles) of marine conservation areas to improve protection and management of the 238,000 square kilometers of already protected areas. Angola has committed to having 17% of its waters under protection, from zero currently, Ardron said.

A three-year pilot phase, which will include studies on aquaculture projects such as oyster and mussel farming and how to better manage fishing activities, will run until 2027 and after that significant funding will be needed, he said. In addition to the financial instruments, money will likely be sought from institutions such as the Green Climate Fund, he said.

“We don’t have a single financial instrument or answer,” Ardron said. “We view it as a portfolio approach.”