The environmental non-governmental organization World Wide Fund for Nature (WWF), the NGO WWF has offered Zambia a debt-for-nature swap as part of the southern African country’s talks with its creditors on the restructuring of approximately $13 billion in debt.
Zambia’s Ministry of Finance and National Planning, speaking in remarks relayed by Reuters on Wednesday, January 18, 2023, said that “we have received a proposal from the World Wide Fund for Nature regarding the inclusion of debt- nature “.
It should be remembered that a debt-for-nature swap is one of the debt relief techniques for developing countries, alongside the extension of payment terms, the reduction of interest rates, the granting of new credits and the cancellation of debts.
This technique, whose paternity goes to Thomas Lovejoy, a renowned conservation biologist who led the American section of the WWF, consists in exchanging part of the external debt of a developing country against local investments in measures of protection of the environment.
In their simplest form, debt-for-nature swaps replace expensive bonds or loans with cheaper financing, usually with the help of a credit guarantee from a multilateral development bank, reports Agence Ecofin. which quotes Reuters.
In July 1987, Bolivia was the first State to take part in such an exchange, with the NGO Conservation International. Debt-for-nature swaps have also enabled Belize and the Seychelles to benefit from reductions and to invest tens of millions of dollars in the protection of the oceans, the online media still recalled.
According to environmental NGOs, Zambia is a natural candidate that could benefit from this debt relief technique, given its large national parks which are home to several endangered species of wild animals and its Unesco World Heritage.
The proposal for a debt-for-nature swap was not considered in the debt sustainability analysis of Zambia prepared by the International Monetary Fund (IMF), but there is nothing to prevent it from being added later if the country’s creditors made it clear that they could support it.
The first African country to default on its external debt during the coronavirus pandemic, Zambia has already started debt restructuring negotiations with official and private creditors. The country, whose debt represents 120% of Gross Domestic Product (GDP), is asking its creditors to accept either outright debt reductions or an extension of the repayment term.
Moctar FICOU / VivAfrik