During the Paris UNFCCC COP21, the Government of Seychelles completed a first of its kind debt-for-adaptation swap to enhance marine conservation and climate adaptation activities. The debt-swap creates a sustainable source of funding to support Seychelles in the creation and management of 400,000 square kilometers of new marine protected areas (the second largest in the Indian Ocean) to improve resiliency of coastal ecosystems.
The landmark agreement reached between Seychelles and its Paris Club creditors, led by France, and the Government of South Africa that resulted in a US$25.9million debt swap. The Nature Conservancy designed the debt-swap to enable Seychelles to redirect a portion of their current debt payments to fund nature-based solutions to climate change through the newly established Seychelles Conservation and Climate Adaptation Trust (SeyCCAT). Over a 20 year period, the proceeds of this debt will be used to:
- Finance marine and coastal management to increase resilience to the impacts of climate change
- Capitalize an endowment to finance work to support adaptation in the future
- Repay Impact Investors
Achieved through the platform of the Global Island Partnership with The Nature Conservancy this innovative solution helps Seychelles take a big step toward a sustainable and resilient future.
What makes it bright?
- A new investment model. This is the first debt swap designed explicitly for climate adaptation and first to include impact investments. The combination of public and private funds - each leveraging the other - creates a new model for co-investment debt swap in other areas of the world, noteably other Small Island Developing States.
- The debt swap represents the first time the Paris Club creditors have supported a debt agreement designed to benefit climate adaptation and the first time a developing country creditor—South Africa—has entered into a debt deal with another country from the global south.
- Demonstrating island leadership. This ground-breaking agreement demonstrates that island leadership can generate new ways of achieving twin goals of sustainable development and economic health, unlock critical financing, and forge unique partnerships between the public, private, and non-profit sectors.
- Linking sustainable financing mechanism to high-level commitment. Seychelles had foreshadowed the commitment to protect 30% of their EEZ, with half in no take zones, during Rio+20 basd on a successful debt swap agreement. This high-level political will, a measurable commitment and innovative financing mechanism each contribute to supporting Seychelles build a resilient and sustainable future.
- Scaling up. This debt-for-adaptation swap stands as a model for other island states around the world to scale and replicate.