Exclusive: African Countries Consider World’s First Joint ‘Debt-for-Nature’ Swap

African Nations Explore Historic Debt-for-Nature Swap for Coral Preservation

At least five African countries are in discussions to potentially initiate the world’s first multi-nation "debt-for-nature" swap, aimed at raising over $2 billion to safeguard a crucial coral ecosystem in the Indian Ocean, as reported by a global conservation organization.

Debt-for-nature swaps are increasingly seen as an effective way for economically disadvantaged nations to fund conservation efforts. In these arrangements, existing bonds or loans are exchanged for more affordable debt, with the financial savings earmarked for environmental protection initiatives.

While nations such as Ecuador, Barbados, Belize, Gabon, and Seychelles have executed similar swaps recently, this African proposal would mark the first instance of multiple countries collaborating to protect a shared ecosystem.

Thomas Sberna, a regional leader for coastal and ocean resilience at the International Union for Conservation of Nature, did not disclose the specific African nations involved in the talks. However, he noted that countries endorsing the broader "Great Blue Wall" conservation initiative include Kenya, Madagascar, Mauritius, Mozambique, Seychelles, Somalia, South Africa, Tanzania, and the Comoros.

Originally unveiled in 2021 and supported by the U.S. and U.K. governments, the Great Blue Wall plan aims to preserve and restore 2 million hectares of marine ecosystems by 2030, benefiting approximately 70 million residents in coastal regions.

Sberna emphasized the importance of such ambitious collaborations in accelerating conservation efforts. He remarked, "If we aim to achieve significant impact within the next five years, we cannot afford to continue issuing swaps one at a time."

Historically, nations have faced challenges in reaching agreements on issues like fishing rights and funding for environmental programs. The hope is that a regional approach could facilitate consensus and attract investment.

Securing additional financial resources for biodiversity conservation will be a central focus in upcoming global discussions in Colombia in October, following a landmark agreement reached in 2022 to protect 30% of the planet’s oceans and land by the end of the decade.

With many nations facing significant debt burdens amid the climate crisis—requiring as much as 20% of their GDP to bolster resilience—Sberna affirmed that transformative measures are essential. He stated that to increase marine-protected areas from the current 1%-2% to 30% in less than a decade, a new approach is necessary.

Regarding negotiations, Sberna expressed hope that a framework for the deal could be finalized ahead of the U.N. Oceans Conference scheduled for next June.

Countries like Kenya, Tanzania, and Mozambique have experienced considerable loss of mangrove shorelines, coral reefs, and fish stocks since the 1980s, jeopardizing livelihoods, food security, and tourism income.

Key issues such as the extent of debt involved and the processes for overseeing the allocation of conservation funds require thorough negotiation.

To facilitate this, the International Union for Conservation of Nature and partners are considering establishing a specialized fund valued at a minimum of $2 billion, which would incorporate $500 million in concessional funding and $1.5 billion in bond swap financing.

Additionally, discussions are occurring with major multilateral development banks regarding potential credit guarantees and insurance for the swap, which would lower interest rates on new "blue" or "nature" bonds that replace more expensive existing debt.

Some ocean-dependent businesses in the region, particularly in fishing, shipping, and tourism, are also exploring their own debt-for-nature swap options, although specifics were not disclosed.

The progress of this African initiative may be influenced by similar efforts from Caribbean nations, which are reportedly investigating comparable plans for their coral reefs.

Madagascar, home to some of the largest coral reef ecosystems and extensive mangrove areas in the Western Indian Ocean, confirmed its involvement in negotiations, though significant work remains ahead. The country’s Minister of Finance highlighted that while multiple partners have shown interest, discussions are still in the appraisal phase. Other nations involved have not commented publicly.