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FEATURE STORYMarch 23, 2022

South Africa Pioneers Innovative Wildlife Conservation Bond to Protect Black Rhinos and Support Local Communities


PRETORIA, March 23, 2022—In the 1960’s, there were 100,000 black rhinos living near thorny thickets in the bushlands of South Africa, but poaching and loss of habitat have led to steep declines in their numbers in recent years. Conservation efforts have helped the rhino population rebound from 2,400 in 1995 to more than 5,600 today. Yet every day, rhinos are slaughtered for their horns and conservation of biodiversity and ecosystems face an estimated financing gap of an average of $711 billion per year.

An innovative approach to raise funds to grow the population of endangered black rhinos and help close the biodiversity financing gap, the Wildlife Conservation Bond, is being rolled out in South Africa.  This highly anticipated, $150 million five-year bond issued today by the World Bank, which includes a potential performance payment from the Global Environment Facility (GEF), will contribute to protecting and increasing black rhino populations in South Africa without adding to the country’s debt. The bond offers investors a return on their investment if black rhino populations increase in two protected areas, the Addo Elephant National Park and the Great Fish River Nature Reserve.

The Wildlife Conservation Bond is a first-of-its-kind, outcome-based financial instrument that aims to support 153,000 hectares of protected area that is not only critical to black rhino survival, but also for an entire ecosystem to thrive. The bond is specifically designed around the conservation of the black rhino because they are an umbrella species that helps shape the biodiversity of their surrounding habitat. Rhino growth is also measurable, making it the metric of choice for determining the success of the project. Rhino protection also contributes to South Africa’s national economy through tourism, job creation, and as an important source of foreign exchange.

So how does the Wildlife Conservation Bond work? The additional financing for conservation efforts comes from conservation investment payments that will be made to the parks by the World Bank, instead of coupons paid to the bond investors. At the end of the 5-year bond term, a $13.76 million results-based grant from the Global Environment Facility (GEF) supports a potential success payment to investors calculated based on the rhino population growth rate. The parks will receive the conservation investment after the bond is issued and investors will receive their principal investment back when the bond matures, together with a potential success payment.  

Activities supported by this bond aim to increase rhino population growth by 4% while also improving the management of over 150,000 hectares and providing over 2,300 jobs for local communities in and around both protected areas – a welcome boost in a region severely impacted by COVID-19,” said Carlos Manuel Rodriguez, GEF CEO and Chairperson

Specific project activities include measures to increase supply and distribution of water, improvements in rhino protection through enhancements in staffing, equipment, facilities, training, fence upgrades, improved aerial support, communications, and national and regional coordination.  Employment opportunities for local communities living around the parks will include construction and maintenance of park infrastructure, as well as conservation-related jobs such as park maintenance, rangers, monitors, gate guards, joint operations center staff, and project managers.  

The Addo Elephant National Park and the Great Fish River Nature Reserve were selected based on their importance for rhino conservation, intervention strategies, management experience, cost effectiveness, and risk profile.

The Wildlife Conservation Bond tests a new model for conservation financing where investors provide additional financing for conservation efforts and accept project performance risk in return for a potential payout if the project is successful. The design of this new financial instrument responds to a shift in the mindset of global investors who are seeking more opportunities to generate positive, measurable, environmental, and social impact alongside a financial return, and an increased interest in directly supporting conservation and biodiversity efforts. In this case, investors benefit from the safety of a principal-protected product issued by IBRD, which has a triple-A credit rating.

By engaging private and institutional investors, rather than donors alone, the risk that the project does not achieve the target outcome is transferred from donors to the capital markets. If rhino target growth rates are achieved, it’s a win-win for the species, investors, South Africa, conservation actors, and donors,” said Jorge Familiar, World Bank Vice President and Treasurer.

When it comes specifically to conservation in South Africa, this innovative bond leverages capital markets to raise funds from private investors without adding to South Africa's sovereign debt. This is critical at time when the country continues to grapple with the impacts of the COVID-19 pandemic,” said Marie Francoise Marie-Nelly, World Bank Country Director for South Africa, Botswana, Namibia, Lesotho and Eswatini.

“We are proud to be the lead investor in this innovative transaction that provided not only attractive total return potential, but also the direct and measurable outcomes we look for under our proprietary Impact Framework.  We are especially hopeful that this type of public-private partnership can serve as a template for future transactions to help improve biodiversity globally,” said Stephen M. Liberatore, Head of ESG/Impact – Global Fixed Income at Nuveen.

Monitoring and verification are an important component of the project and will support the potential conservation success payments at bond maturity. The rhino population will be constantly monitored and managed by the South African National Parks for the Addo Elephant National Park and Eastern Cape Parks and the Tourism Agency for the Great Fish River Nature Reserve. The rhino growth rate will be calculated and verified by two independent parties, Conservation Alpha and the Zoological Society of London (ZSL) respectively, at specific intervals during the five-year bond term. The bond structurer is Credit Suisse, and builds off of conceptual work done by other stakeholders, including the ZSL and preparatory work at the parks.

If proven effective, this instrument could be an important new way to finance biodiversity conservation. This innovative financial structure may also be replicated to finance other conservation activities and development challenges around the world. The Wildlife Conservation Bond could incentivize others to replicate the model to help mobilize much needed private capital for global public goods, allowing for the emergence of more just, resilient, and sustainable economies at a time when the world needs it the most.

* International Bank for Reconstruction and Development (IBRD)


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