DAKAR, Senegal (AP) 鈥 Gabon will use a controversial financial move to ease its debt burden and restore its oceans at the same time, a leading conservation group said Tuesday.
It鈥檚 the second-largest deal of its kind to date, and the first on mainland Africa, according to a press release by The Nature Conservancy, the global environmental nonprofit that helped broker the deal.
Gabon, an oil-rich Central African nation known for its biodiversity, hosts the world鈥檚 largest population of leatherback turtles and myriad other endangered species. By refinancing $500 million of its foreign debt, TNC estimates, Gabon will free up $163 million to expand its protected coastal areas and combat illegal overfishing.
鈥淚t鈥檚 a really interesting way of slightly reducing our debt repayments and also generating money for conservation,鈥 said Lee White, Gabon鈥檚 minister of water, forests, sea, and environment. He collaborated with TNC, Bank of America and others to negotiate lower interest rates on Gabon鈥檚 outside debt, with the goal of freeing up funds for conservation.
Since 2016, TNC has pulled off similar so-called 鈥渂lue bond鈥 agreements in the Seychelles, Belize and Barbados. But while donors and host governments pitch climate refinancing as a win-win solution for indebted nations, local populations and the environment, critics say such deals barely skim the surface of what鈥檚 needed to address climate change.
鈥淭his seems like a great deal at first glance, but when you look at the details 鈥 the money that is being freed up for conservation is typically a tiny fraction of the deal,鈥 said Frederic Hache, a sustainable finance researcher.
Of the $163 million TNC says will flow into ocean conservation efforts in Gabon, only $4.5 million will be directly available each year through 2038, according to White.
鈥淭hat鈥檚 a joke, frankly, especially for an oil-rich country like Gabon,鈥 said Hache. The average yearly income in Gabon is nearly $9,000, giving it the third-highest GDP per capita in sub-Saharan Africa, according to the World Bank.
The rest of the half-billion dollar TNC deal will go to paying off Gabon鈥檚 newly reorganized debt and paying transactional costs to Bank of America and others involved in the deal.
Slav Gatchev, head of TNC鈥檚 sustainable debt division, said the fees will be 鈥渃ompetitive and reasonable.鈥
Even if the deal were effective, it would raise concerns about Gabon鈥檚 ability to make decisions for itself, Hache said. In the past, critics have viewed 鈥渄ebt-for-nature swaps鈥 as impinging on the national sovereignty of indebted countries by placing financial and environmental decision-making power in the hands of foreign entities.
White says a U.S.-based charity will manage Gabon鈥檚 new funds. 鈥淚t is kind of standard practice on these conservation trust funds that you tend to get them offshore 鈥 and you limit the number of government representatives on them,鈥 he said.
Gatchev said blue bonds come from the independent will of environmentally conscious countries and pose no threat to self-determination. 鈥淲e are not telling governments what to do鈥 In Gabon, parliament met and voted on these transactions,鈥 he said.
Proponents and detractors of the Gabon deal agree governments should go beyond blue bonds and other conservation financing solutions to address climate change.
鈥淲e don鈥檛 claim, not for a second, that these transactions are a panacea," Gatchev said.
鈥淭his is one small way for the Global North 鈥 to at least partially fulfill its funding commitments for climate and conservation,鈥 he said. Wealthy nations have failed to deliver on the $100 billion per year they pledged at a 2009 summit to help address climate change in developing nations, according to a 2020 Oxfam report.
But critics say the Gabon deal and other debt-for-nature swaps do more harm than good. The wealthiest and highest-polluting nations, whose governments and companies facilitate the deals in lower-income countries, should not be let off the hook for curbing their own emissions because of it, according to Hache.
鈥淚t continues to further divert the conversation away from debt forgiveness,鈥 he said.
