25 October, 2022

Seychelles is a small island nation in the Indian Ocean off East Africa, an archipelago of 115 islands, known for its beautiful coastline, coral reefs and beaches,  a popular tourist destination for beach lovers across the globe.

The Republic of Seychelles with its pristine beaches and much-talked-about biodiversity, in the year 2018, became the first African country, and the first country in the world to launch a sovereign blue bond to support its sustainable marine and fisheries projects.

Photo from Hotels.com

The first sovereign blue bond was structured in collaboration with the World Bank and demonstrates the potential for countries to harness capital markets for financing the sustainable use of marine resources. The bond, which raised US$15 million through the World Bank from international investors,  the three investors: Calvert Impact Capital, Nuveen, and U.S. Headquartered Prudential Financial, Inc. Help to further demonstrate the potential for countries to harness capital markets for financing the sustainable use of marine resources.

Vincent Meriton, Vice-President of the Republic of Seychelles, who announced the bond at the Our Ocean Conference in Bali, stated that “The blue bond, which is part of an initiative that combines public and private investment to mobilize resources for empowering local communities and businesses, will greatly assist Seychelles in achieving a transition to sustainable fisheries and safeguarding  oceans while sustainably developing the blue economy,”

The World Bank reports that Seychelles revised its Nationally Determined Contributions (NDCs) to the United Nations Framework Convention on Climate Change (UNFCCC) to include Blue Economy and coastal adaptation. Seychelles has pledged to reduce its economy-wide absolute GHG emissions by 26.4% nut to also protect 100% of its mangroves and seagrass ecosystems by 2030, implement its Marine Spatial Plan and effectively manage 30% of the marine protected areas within its Exclusive Economic Zone (EEZ).

After tourism, the fisheries sector is Seychelles’ most important industry, contributing significantly to annual GDP and employing 17% of the population. Proceeds from the bond will fund a range of oceanic and marine activities, from boosting the fisheries value chain, and the refurbishment of fishing boats for other purposes such as tourism, to improving aquaculture and marine conservation and spatial planning. The blue bond also complements a debt-for-nature swap that Seychelles did with The Nature Conservancy in exchange for greater ocean protection and climate change adaptation.

Photo from ADB

CultureBanxx reported that Seychelles launched its blue bond economic roadmap using an integrated approach to the sustainable development of ocean resources. It started back in 2016, when international environmental The Nature Conservancy (TNC) bought some of Seychelles’ debt from lenders. The Seychelles government then agreed to pay TNC back over time and to funnel the savings from its lower interest rates into ocean protection, which it has now achieved.

Seychelles being the first country to sell debt earmarked specifically for ocean projects make sense, especially because fishing brings in 97% of its annual export earnings. The concept has seen some traction worldwide, with both the Nordic Investment Bank and the World Bank launching their own blue bonds to address specific marine protection issues.

Seychelles releases 5.38 tons of CO2 per person annually, which is very high, 95% from electricity generation and transport. Still, the country remains committed to climate change: in 2021, it finalized a climate change strategic plan with targets for adaptation programs in transport, energy, and infrastructure. Its NDC targets include 15% of energy from renewable sources and switching 30% of vehicles from fossil fuels to electricity by 2030. The updated NDC lists mitigation and adaptation projects with a financing cost of about $670 million, split roughly equally. With a continued focused approach and partnership with global partners, Seychelles is likely to meet SDG 13 by 2030.

Ocean protection can be a complex and expensive business and Seychelles is trying to face this head-on. There are extensive challenges like insufficient economic diversification, a small domestic market and vulnerability to environmental shocks. Implementation of government policies and collaboration from private and public sector investors and partners will be of great benefit to the island nation’s, ocean economy.

The socio-economic and environmental strategies from the blue bonds could arguably contribute to narrowing inequality gaps in order to advance a fairer and more inclusive society.

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 By Rolake Bello 

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