Released: 23/03/2022 – 22:52 Revised: 23/03/2022 – 22:50
WASHINGTON (AFP) – South Africa’s critically endangered black rhinoceros will get help from an unusual source: Wall Street, where institutional investors have expressed their willingness to buy a new type of bond being issued by the World Bank that turns out to be successful. Will pay for the efforts. save the animals.
In this pilot project, which will be measured by the population of horned animals in two parks in the country, the Washington-based development lender will issue a $150 million bond on March 31.
Instead of paying investors annual or semi-annual interest, the proceeds will instead go to park employees to invest in the fight against poachers and improving the condition of the animals.
The World Bank said that the Edo Elephant National Park and Great Fish River Nature Reserve will benefit from this fund.
Officials hope the bond, two years in construction, will offer a new model for leveraging private money to finance conservation efforts or other projects. The catch is that they must have benchmarks that can be measured objectively.
“Rhino bonds are an important approach to enable private sector investment in global public goods – biodiversity conservation in this case, a major global development challenge,” World Bank President David Malpass said in a statement.
“Pay for the Success Financial Structure Protects an Endangered Species and Strengthens South Africa’s Conservation Efforts.”
The five-year bond, priced Wednesday, will be sold at 94.84 percent of face value, and will offer investors a guaranteed minimum return once it matures.
But they could also receive a share of $13.8 million from the Global Environmental Facility as rhinos grow in numbers.
risk exposure
Returns will be based on a sliding scale, and if growth reaches or exceeds four percent, investors receive the entire “success payout.”
Michael Bennett said, “What we want to do here is really change that risk allocation and ask if there’s a way we can pass on some of that project’s performance… (more risk to anyone other than governments and donors.” , Head of Market Solutions and Structured Finance at the Bank.
With about half coming in the first year, the parks will receive a total of $10 million. Bennett told AFP that these funds, which usually go to bondholders, could be used to raise drones and for things like monitoring aircraft against poachers and creating watering holes.
The rhino population growth rate will be independently calculated by Conservation Alpha and verified by the Zoological Society of London.
Black rhinos are listed as critically endangered by the International Union for Conservation of Nature, although their population in the wild has doubled from historic lows three decades ago to more than 5,000.
The animals are killed for their horns, which are smuggled into Asia, where they are mistakenly believed to have medicinal benefits.
The South African government last month issued hunting permits that would allow the killing of 10 animals, along with 150 elephants.
The bond issue comes at a time when more investment funds are under pressure to invest in eco-friendly or socially conscious ventures, a category known as ESGs.
Bank officials said while increasing the rhino population is the primary goal of the bandh, there are many positive benefits to the community.
“The nickname is rhino bonds, but it’s much more than that. It gives communities a real real advantage and an incentive to protect the land,” said Heike Reichelt, head of investor relations and sustainable finance at the World Bank Treasury.
She told AFP the project could help create more jobs, including for women.
© 2022 AFP
