Earlier in October, Zanzibar President Dr. Hussein Ali Mwinyi called on the Arab Bank for Economic Development in Africa (BADEA) to support the Blue Economy strategy that has been a focal point of his presidency. Referring to BADEA as Zanzibar’s “best development partner”, President Mwinyi highlighted the bank’s support and singled out the Blue Economy as an important and ambitious new platform for the social and economic development of the archipelago. Later in the day, Zanzibar’s Minister of State, President’s Office, Finance and Planning, also highlighted areas where cross-sectoral BADEA support could have an impact, such as investing in technical colleges to enable the training of home-grown experts in essential Blue Economy disciplines.
These were the latest in a long and energetic series of public speeches championing further investment in the country’s Blue Economy. In December 2020 President Mwinyi highlighted the important role of local banks in supporting the Blue Economy and in February the Blue Economy and Fisheries Ministry moved to link small-scale fishermen with credit facilities and support skills development. President Mwinyi has also enthusiastically advocated for the Blue Economy in international diplomacy, calling for inward investment in the country’s Blue Economy from trade and development partners such as Germany, France and Indonesia.
Zanzibar’s dynamic promotion of the Blue Economy and its focus on additional investment to help achieve its goals comes at an interesting time for ocean financing initiatives across the globe. Despite the ocean comprising 99% of our planet’s living space and offering peerless potential for climate change mitigation and adaptation opportunities, SDG14: Life Below Water is the second-least funded of the 17 UN Sustainable Development Goals. This is not due to any lack of interest in ocean investing, but rather to the barriers presented by the inherently more interconnected nature of the ocean; knowledge and data gaps and silos; and inadequate ocean governance structures and regulations. Any systemic efforts to address these inter-related barriers and the yawning Blue Economy funding gap are highly welcome since the costs of inaction are very high, potentially exceeding $320bn p.a. by 2050 in terms of further losses from fisheries, tourism, ocean carbon absorption capacity and coastal infrastructure damages (Sumaila 2021). There is much work ahead to build the Blue Economy pipeline, both on the capital markets side and in devising compelling Blue Economy propositions.
Setting new standards for blue finance
On the investments side, September turned out to be a good month. The Asian Development Bank reached a key milestone in its Action Plan for Healthy Oceans and Sustainable Blue Economies with the issuance of its first blue bonds for A$208m and NZ$217m, or US$300m in total. The bonds were issued under the bank’s newly expanded Green and Blue Bond Framework, allowing them to be replicated and scaled across Asia and the Pacific, supporting ADB’s commitment to expanding its investments and technical assistance in ocean health and the Blue Economy to $5 billion between 2019 and 2024. Eligible projects will address ecosystem management and natural resources restoration; sustainable fisheries and aquaculture; marine pollution; the environmental performance and sustainability of ports and shipping; and marine renewable energy.
The World Bank also issued a 30-year EUR 200m water bond in September, supporting both SDG 6: Clean Water and Sanitation and SDG 14: Life Below Water. SWEN Capital Partners launched its new Blue Ocean impact fund with EUR52m, in partnership with Ifremer, France’s principal marine science and technology institute. And HSBC announced it is working with Earth Security to develop a Municipal Mangrove Bond framework which will allow coastal cities and municipalities to invest in this green infrastructure asset. As we noted in BE Pulse #5, “mangroves are super-ecosystems and we need them. They are the best carbon-capture-and-storage systems on the planet.” As one commentator aptly notes, market scale will also come when more issuers consider “blue” products and more investors demand them.
Discovering the blue value proposition
Devising national Blue Economy initiatives and investment needs involves several core themes a
nd steps, as we describe in our Blue Economy in Practice report published earlier this year. First is the need to map and measure
ocean wealth, which provides the context for what activities are possible whilst also supporting the investment case for Blue Economy action on and off the water. Alongside this is the need to assess risks and impacts on the marine environment, to prioritise action. Many threats to ocean and coastal habitats and eco
systems such as mismanaged waste and nutrient run-off are terrestrial issues requiring integrated, land-based solutions.
“By understanding how much we rely on ocean ecosystems, and how much we stand to lose from their deterioration, we can better mobilise the resources and investment needed for ecosystems to thrive into the future” commented a member of the Global Ocean Accounts Partnership (GOAP) team upon the announcement of new funding to support articulation of national ocean accounts. The GOAP is an inter-governmental community of practice sharing technical knowledge and insights on how countries can develop ocean accounts based on their System of National Accounts and environmental economic accounting. The $1.8 million of UK Government Blue Planet funding will provide strategic support for the GOAP, including the scaling of pilot projects in five developing countries in Africa and the Asia Pacific and increased global technical and policy collaboration.
Being investment ready
To issue sovereign blue bonds and attract inward investment for the Blue Economy, governments also need adequate public finances and robust ocean governance mechanisms which align key ministries around an agreed Blue Economy roadmap or plan. Many countries seeking to unlock their nascent Blue Economy potential have unsustainable levels of post-pandemic public debt, so this in itself is a tall order.
Various avenues exist to resolve the debt conundrum and one such is the negotiation of a debt swap for conservation. In September Hon. John Briceño, Prime Minister of Belize, announced the government had reached a major breakthrough in negotiations for a national debt swap for ocean conservation and Blue Economy development, which could see a reduction in the country’s national debt of BZ$0.5bn. Following the model set by Seychelles, the first country to undertake an oceanic debt for nature swap, Belize is partnering with The Nature Conservancy to undertake the transaction and in the process create a Marine Conservation Endowment Account, supporting marine conservation in perpetuity. Funds will be used to upgrade protection and management of the marine environment; create new jobs; strengthen the tourism and fisheries sectors and catalyse further funding from NGOs and Blue Economy stakeholders to support these activities. Marine spatial planning which identifies key biodiversity zones; additional safeguards for the Belize barrier reef system and refinements to the management of blue carbon habitats and key watersheds are all within the scope of the transaction, to create a national Blue Economy which is sustainable over the long-term through the integration and alignment of new policy, planning and governance structures and financial flows. This builds on Belize’s existing track record of marine conservation and sustainable use and a recent ambitious commitment under its NDCs to double the area of mangroves protected and develop a national seagrass policy.
The proposed debt swap has the recent support of the National Trade Union Congress of Belize, which is requesting several important safeguards be incorporated, including a new Social Partnership Mechanism, to ensure local communities and indigenous people are able to fully participate in and benefit from the proposed arrangements.
Seychelles was the first large ocean state to undertake an oceanic debt for nature swap, initiated in 2013. This included a commitment by Seychelles to protect 30% of its EEZ (over 400,000 sq km) and undertake comprehensive marine spatial planning, whilst supporting marine science, conservation and Blue Economy initiatives through SeyCCAT, an independent trust. At a webinar hosted last week by ADB, former President of Seychelles James Michel described the approach he adopted in winning hearts and minds within and beyond government to create this innovative new pathway towards sustainable blue prosperity, simultaneously addressing the critical finance and governance needs for enabling Seychelles’ Blue Economy to be articulated and developed in an evidence-led, participatory and inclusive manner. Noting that “blue is the new green”, he encouraged other large ocean nations to consider the Seychelles model as a template for Blue Economy development, adaptable to the unique circumstances of each country. The emerging example from Belize is timely, building on the Seychelles model and integrating new aspects such as watershed management and local ownership safeguards whilst creating greater long-term national financial capacity.
Further innovation ahead
In addition to replicating, scaling and improving on existing investment models such as those outlined above, from micro credit and loans to fishers to macro national debt arrangements, huge scope and need for further innovation in Blue Economy investment remains.
As seaspaces become ever busier with rising commitments to introduce offshore renewables and multiple forms of aquaculture along with protected areas into the mix of existing fishery, tourism and shipping activities, national and transboundary marine spatial planning activities underpinned by effective Blue Economy governance, policy and financing arrangements assume greater importance, to effectively balance trade-offs and manage the ocean environment sustainably and equitably. New sectors and emerging Blue Economy clusters require significant blue finance whilst marine planning and management activities require cutting-edge transdisciplinary science, translated into the language of policy-makers; shared open data systems; strong coordination at multiple levels and good knowledge-sharing mechanisms. According to MSP Global, 45 countries worldwide are either implementing or approving marine spatial plans and dozens more are laying the foundations. Streamlined and integrated land-ocean governance structures which overcome coordination barriers, such as the model implemented recently by China, can maintain national momentum.
Blended approaches where the private sector and philanthropic organisations partner with governments to create new finance and governance models, such as those being adopted by the Global Fund for Coral Reefs and the Ocean Risk and Resilience Action Alliance, will play a key role in catalysing further investments at scale.
A Blue Future for Zanzibar and other large ocean states
President Mwinyi and all relevant Ministers and stakeholders in Zanzibar are
promoting the Blue Economy at a time when many new innovations in policy, finance and implementation are navigating the way ahead. As the announcement in June of new World Bank projects for $292m suggests, the Zanzibar government is converting ambition to practice, consistently promoting the need to invest in infrastructure projects and in local youth to prepare them for Blue Economy careers.
One thing is certain, diverse forms of partnership to achieve SDG14 are esse
ntial. After all, sustainable ocean management and thriving inclusive blue economies are in everyone’s interest.
Sumaila, U.R, et al. 2021. "Financing a sustainable ocean economy." Nature Communications.
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