By Marc Jones
LONDON (Reuters) – The junta that seized power in Gabon in August has paid the first instalment of conservation fund money that forms a key part of a pioneering “debt-for-nature” deal sealed just before its coup.
The $500 million debt swap was the first of its kind on continental Africa and saw the government of overthrown president Ali Bongo commit to protect Gabon’s coastal waters that host the world’s largest population of leatherback turtles.
His removal though raised concerns the newly inked deal could fall apart and even trigger a sovereign debt default that would cause further problems in the central African country.
Junta officials have since made public comments that the country’s obligations will be upheld. That has helped stem some of the immediate angst although the complexity of the debt swap has meant the worries haven’t disappeared completely.
As a result, The Nature Conservancy (TNC), a U.S.-based organisation which helped design the debt swap and is designated to keep tabs on its progress, requested discussions with officials.
In person talks have now been held they say and the regime has paid its first $1.1 million instalment into a new conservation fund that underpins the deal.
“The current administration has shown strong interest in understanding our ongoing and potential future conservation work in Gabon,” TNC said in a statement to Reuters about the talks.
Gabon’s environment ministry and Fund for Strategic Investments did not respond to requests for a comment, but TNC added there had been “frequent communications and briefings” in recent weeks, “specifically” on the “Blue Bonds,” so called because some of the money they raise will be used for ocean conservation.
REASSURANCES
At their simplest, debt-for-nature swaps see a country’s debt bought up and replaced with a cheaper loan or bond, usually with the help of a multilateral development bank guarantee or risk insurance policy. Savings are then used for eco-friendly projects.
In Gabon’s case, the U.S. International Development Finance Corporation (DFC), which is backed by the U.S. government, provides that boost in the form of “political risk” insurance that covers the new “blue” bond.
Washington said after the coup it was suspending most U.S. assistance to the Government of Gabon but the DFC has kept its insurance policy in place, saying the swap benefits the Gabonese people and the environment rather than any one government.
When asked whether it had been part of any of the post-coup talks on the debt swap, a DFC spokesperson referred Reuters to TNC’s statement.
Bank of America, which handled the financial aspects of the transaction, did not comment when asked whether it too had been part of the talks or had any contact with Gabon’s new regime.
Though the junta has made public reassurances over its debt and pledged to hold elections in August 2025, Gabon’s bond prices, including the blue bond, remain lower than before the coup.
The deal faced difficulties from the start. It was briefly delayed as bankers battled to finalise it, while the subsequent turmoil has raised questions about its timing given it was done just before presidential elections, which prompted the coup.
(Additional reporting by Alessandra Prentice in Dakar; Editing by Sharon Singleton)
