GABON, a central African nation renowned for its rich biodiversity and vast oil reserves, is venturing into a pioneering financial manoeuvre known as a ‘blue bond.’ This innovative strategy aims to alleviate the country’s debt burden while channelling funds into its ocean conservation initiatives. The Nature Conservancy (TNC), a global environmental nonprofit, played a key role in facilitating the deal.
Ranked as the second-largest blue bond agreement globally and the first of its kind on mainland Africa, this effort signifies a groundbreaking approach to reconciling financial obligations with environmental stewardship. By refinancing $500 million of its foreign debt, Gabon stands to unlock $163 million dedicated to expanding its protected coastal zones and countering illegal overfishing. This comes as Gabon harbours the world’s largest population of leatherback turtles and various endangered species.
Minister Lee White, responsible for water, forests, sea, and environment in Gabon, remarked on the significance of the venture: ‘It’s a really interesting way of slightly reducing our debt repayments and also generating money for conservation.’ The collaboration between Gabon, TNC, Bank of America, and other entities sought to negotiate lower interest rates on the nation’s external debt, thereby freeing up funds for environmental preservation.
Despite its innovative approach, the blue bond strategy has met with scepticism. Critics like sustainable finance researcher Frederic Hache caution that the sums allocated for conservation efforts often represent a small fraction of the total deal. Of the $163 million earmarked for ocean conservation in Gabon, only $4.5 million will be directly accessible annually until 2038. Hache considers this amount inadequate, particularly for a nation with Gabon’s economic standing.
However, proponents of the deal, including Slav Gatchev, head of TNC’s sustainable debt division, emphasise that blue bonds stem from environmentally conscious countries’ independent intentions. They stress that these initiatives are aimed at fulfilling funding commitments for climate and conservation, which have frequently fallen short of targets set by wealthier nations.
The Gabon deal also raises questions about the country’s sovereignty. Past critiques have centred on concerns that similar agreements, known as ‘debt-for-nature swaps,’ could place decision-making power in foreign hands. Gabon’s plan involves a US-based charity managing the allocated funds, a practice White considers standard for conservation trust funds.
While the blue bond strategy sparks debate over its effectiveness and potential impact, both supporters and detractors agree that it should not replace broader climate financing solutions. The overarching challenge of addressing climate change requires multifaceted approaches that encompass debt relief, responsible funding commitments, and collaborative action.
‘We don’t claim, not for a second, that these transactions are a panacea,’ Gatchev acknowledged, acknowledging the limitations of the blue bond approach.
As Gabon forges ahead with this unconventional strategy, the global conversation around financing conservation, climate action, and national sovereignty continues to evolve, highlighting the complexities of balancing financial responsibilities with environmental imperatives.