Gabon announces $500 million debt-for-nature swap deal for marine conservation

Subject :Environment

Section: International convention

Context:

Gabon on August 15, 2023 announced a $500 million debt-for-nature swap. In Africa, it is the largest such deal signed by any country to refinance its debt and conserve marine resources.

What is the Debt-for-nature swaps deal?

Debt-for-nature swaps allow heavily indebted developing countries to seek help from financial institutions in the developed world with paying off their debt if they agree to spend on conservation of natural resources.
Usually banks in developed countries buy the debts of such counties and replace them with new loans which mature later. These have lower interest rates.

World’s first and largest debt swap:

In May 2023, the world’s first and largest debt swap to conserve oceans was signed by Ecuador. The country had exchanged $1.6 billion denominated bonds for a new $656 million loan.

About Gabon’s debt swap deal:

Gabon’s debt has been restructured under a Blue Bond in the world’s second-largest debt-for-nature swap.
Under the debt-for-nature swap, Gabon has agreed to a deal with the Bank of America, the US International Development Finance Corporation (USDFC) and The Nature Conservancy (TNC), to refinance $500 million in national debt toward marine conservation efforts in the country.
This is the fourth project under TNC’s “Blue Bonds for Ocean Conservation” strategy. Gabon is the fourth country to partner with TNC on a Blue Bonds project after Seychelles, Belize and Barbados.
According to US International Development Finance Corporation, the Gabon Blue Bond will generate an expected $163 million in financing.

Gabon Bleu initiative:

A government-led initiative called ‘Gabon Bleu’ announced in 2013, has contributed significantly to the expansion of marine protected areas.
In 2014, Gabon became the first central African nation to protect its marine resources with the establishment of a marine protected area network.
As of February 2022, Gabon has created 20 protected areas, increasing protection of Gabonese waters from less than 1 per cent to 26 per cent.

About Gabon:

Gabon is a country on the west coast of Central Africa.
Located on the equator, it is bordered by Equatorial Guinea to the northwest, Cameroon to the north, the Republic of the Congo on the east and south, and the Gulf of Guinea to the west.
There are coastal plains, mountains (the Cristal Mountains and the Chaillu Massif in the centre), and a savanna in the east.
The largest city, as well as the capital, is Libreville.
Gabon’s original inhabitants are the pigmy peoples. Bantu migrants began settling in the area as well.
Official language: French
Manganese is the main mining activity in Gabon. Gabon was the third largest producer of manganese in 2020.
The Belinga iron ore deposit, believed to be among the largest iron ore deposits in the world.