(Washington) South Africa’s endangered black rhinos are set to get unusual help from Wall Street after institutional investors expressed interest in buying a new type of bond issued by the World Bank to finance their rescue.
Posted at 6:43 p.m.
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 dollars on March 31.
Rather than paying annual or semi-annual interest to investors, the profits will go to parks staff to invest in the fight against poachers and improve the animals’ conditions.
The funds will benefit Addo Elephant National Park (AENP) and the Great Fish River Nature Reserve (GFRNR), the World Bank said.
Officials hope the bonds, which have been in the works for two years, will be a new way to raise private funds to finance conservation efforts or other projects.
“The 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 the 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 once it matures.
But they can also receive a share of the $13.8 million from the Global Environment Facility if rhino numbers increase.
Spread the risk
“What we’re looking to do here is really change that allocation of risk and say if there’s a way to pass some of the performance and risk of this project to someone other than governments and donors,” said Michael Bennett, Head of Market Solutions and Structured Finance at the World Bank.
The parks will receive about $10 million, about half of which in the first year, that otherwise would have gone to bondholders.
These funds can be used to increase surveillance from drones and planes against poachers and create water holes for the animals to drink, he told AFP.
Rhino population growth rate is independently calculated by Conservation Alpha and verified by the Zoological Society of London.
Black rhinos are listed by the International Union for Conservation of Nature as being in danger of extinction, although in the wild their numbers have doubled to more than 5,000 from a historic low it three decades ago.
The animals are slaughtered for their horns, which are smuggled to Asia where they are mistakenly believed to have medicinal properties.
The South African government issued hunting permits last month that would kill around 10 rhinos and 150 elephants.
The bond issue comes at a time when more and more investment funds are under pressure to invest in environmentally friendly or socially responsible companies, a category known as ESG.
Although increasing the rhino population is the main purpose of the loan, 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 land,” said Heike Reichelt, responsible in particular for sustainable finance at the World Bank.
The project can help create more jobs, including for women, she said.