World Bank bond issue to save South Africa’s rhino

South Africa’s endangered black rhinos are about to get unusual help from Wall Street, as institutional investors have expressed their willingness to buy a new type of bond issued by the World Bank to finance their rescue.

In this pilot project, which will be judged on the increase in the population of horned animals in two parks in the country, the Washington-based lender will issue a loan of $ 150 million (136.5 million euros) on March 31st.

Read: In South Africa, poaching of rhinos breaks records

Instead of paying annual or semi-annual interest to investors, the profits will go to park staff to invest in the fight against poachers and improve animal conditions. The funds will benefit Addo Elephant National Park (AENP) and the Great Fish River Nature Reserve (GFRNR), the World Bank said.

“A revolutionary approach” to biodiversity

Officials hope the bonds, which have been underway for two years, will be a new way to raise private funds to fund conservation efforts or other projects. “Rhino Bond is a revolutionary approach to enabling private sector investment in global public goods – in this case, biodiversity conservation, a major global development challenge,” said World Bank President David Malpass in a statement.

The five-year bond, which was priced on Wednesday, will be sold at 94.84% of face value, giving investors a guaranteed minimum return when it expires. But they could also receive part of the $ 13.8 million (12.56 million euros) from the Global Environment Facility if the number of rhinos increases.

Also read: The rhino population is increasing in Nepal

“What we’re looking to do here is really change that risk allocation and say if there is a way to pass on some of the performance and risk of this project to anyone other than governments and donors,” said Michael Bennett, marketing manager. Solutions and Structured Finance at the World Bank.

The parks will receive about $ 10 million (9.1 million euros), about half of which in the first year would have gone to bondholders. These funds can be used to increase surveillance from drones and aircraft against poachers and create water holes for the animals to drink, he told AFP.

A project that was to “protect the earth” and create more jobs

The population growth of rhinos is independently calculated by Conservation Alpha and verified by the Zoological Society of London. Black rhinos are listed by the International Union for the Conservation of Nature as in danger of extinction, although their numbers in the wild have doubled to more than 5,000 from a historic low three decades ago.

The animals are slaughtered for their horns, which are smuggled to Asia, where they are mistakenly thought to have medicinal properties. The South African government issued hunting permits last month, which would kill about 10 rhinos and 150 elephants.

The bond issue comes at a time when more and more mutual funds are under pressure to invest in environmentally friendly or socially responsible companies, a category known as ESG.

About this topic: ESG, a must for leaders

Although the main purpose of the loan is to increase the rhino population, the operation has many other positive benefits, bank officials said. “The nickname is Rhino Bond, but it’s so much more than that. The show also has tangible benefits for communities and incentives to protect the earth, ”said Heike Reichelt, in particular responsible for sustainable funding at the World Bank. The project can help create more jobs, also for women.

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