Debt Relief: How Gabon’s Example Can Inspire Africa

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Debt Relief: How Gabon’s Example Can Inspire Africa

15 août 2023 22:41

Gabon launched what is set to be Africa’s first debt-for-nature swap recently, with a plan to buy up at least $450 million (over FCFA 268 billion) of its government debt and switch it to an eco-friendly blue bond. At their simplest, debt-for-nature swaps see a country’s debt bought up by a bank or specialist investor and replaced with cheaper ones, usually with the help of a multilateral development bank «credit guarantee» or «risk insurance». The savings are intended to be used to fund conservation. The new «blue» bond - so called because some of the money goes towards ocean conservation - is intended to lower the interest rate Gabon is paying and generate significant savings over the next 15 years. Gabon’s beaches and coastal waters host the world’s largest population of leatherback turtles, with estimates putting it at nearly a third of the global population of the endangered species. About 88 per cent of Gabon is covered by forest, a massive carbon sink, which according to the REDD+ initiative allowed the country to absorb 187 million tons of carbon dioxide between 2010 and 2018. With this pioneer initiative to swap its debt for green financing of the economy, the central African country serves as a good example to inspire the rest of Africa especially countries with a huge potential of natural resources like massive forest and oceans. The blue bond could be just another niche for African countries to reduce their debt burden and redirect the resources to funding conservation. Ecuador pulled off a record $1.1 billion debt-for-nature swap in May, freeing up $18 million annually for the next 20 years for conservation of the Galapagos Islands. A handful of other African countries are also working on debt-for-nature deals, bankers have said, along with Sri Lanka and a clutch of Caribbean and Indian Ocean islands. Good enough, the African Development Bank and European Investment Bank are interested in providing credit guarantees. ...