Treasury eyes debt-for-nature swaps to fund wildlife conservation
The National Treasury Building in Nairobi. Treasury has set its sights on debt for nature swaps in its quest to raise resources for wildlife conservation.
The National Treasury has set its sights on debt for nature swaps in its quest to raise resources for wildlife conservation.
In newly published Public Finance Management (Wildlife Conservation Trust Fund) Regulations, 2023, the exchequer lists monies from debt-for-nature transactions as sources of the Wildlife Conservation Trust Fund.
Other sources for the fund shall include levies for payment of environmental services by beneficiaries, payment for environmental services and biodiversity offset schemes, income from investments, grants, donations, bequests, and gifts.
Debt-nature swaps involve the purchase of developing country debt at a discounted value in the secondary debt market, and cancelling the debt in return for environment-related action on the part of the debtor nation.
This implies that Kenya could not only tap new resources for conservation from the swaps but also earn relief from part of its debt obligations.
Debt for nature swaps usually seeks to free up fiscal resources so that governments can improve resilience without triggering a fiscal crisis or sacrificing spending on other development priorities.
“In cases where action would not have been taken without the swap, the arrangement aids climate action and protects nature. And to the extent that debt reduction exceeds the new spending commitments, borrowers get fiscal relief through budget savings. There can be other benefits, too, such as an upgrade to a country’s sovereign credit rating,” the International Monetary Fund notes.
States such as Barbados, Belize, and Seychelles have already leveraged swaps to unlock conservation resources.
Kenya has already considered using debt swaps to unlock funds for the construction of dams.
The move by the National Treasury to seek alternative funding sources has been against a cash crunch that has threatened to derail spending on critical development projects.
“Opportunities for debt for climate or nature swaps will be pursued under the proposed government water dams’ investment/funding programme to eligible creditors,” the National Treasury noted in recent disclosures.
Funds making up the Wildlife Conservation Trust Fund will be deployed in wildlife conservation initiatives for terrestrial and marine national reserves, wildlife conservancies, and national wildlife research priorities.
The purpose of the fund shall be to develop wildlife conservation initiatives, manage and restore protected areas and conservancies, protect endangered species, habitats, and ecosystems, and support wildlife security operations.
Additionally, the fund will be used to facilitate community-based wildlife initiatives and award wildlife conservation grants based on criteria established by the fund’s governing board.
The National Treasury has already injected the fund with Sh200 million capital passed down via the voted funds of the State Department for Wildlife in the 2020/21 financial year.
The fund shall be overseen by a board and an administrator who shall also be the CEO of the fund.
