Wildlife Conservation Bond

The World Bank (International Bank for Reconstruction and Development, IBRD) has issued the Wildlife Conservation Bond (WCB) to support of South Africa’s efforts to conserve endangered species of Black Rhino. Wildlife Conservation Bond (WCB) is also known as “Rhino Bond”. It is a five-year $150 million Sustainable Development Bond. It includes a potential performance payment from the Global Environment Facility (GEF).

Main point

• The Wildlife Conservation Bond is the world’s first-of-its-kind financial instrument that is outcome-based and will be channelling investments to conserve black rhino populations.
• International Bank for Reconstruction and Development of the World Bank has announced that the returns paid by the five-year bond will be determined by the rate of population growth of animals in two reserves of South Africa, the Great Fish River Nature Reserve and the Addo Elephant National Park.
• If this program is successful it could be expanded for the protection of black rhinos in Kenya along with other wildlife species like tigers, lions, orangutans, and gorillas.
• Similar bonds have earlier been issued to finance various outcomes from marine projects in Seychelles to the education of girls in rural India.

Rhino population

• Globally, there are five species of rhino. Most of the rhinoceros are concentrated in South Africa with most of them being white rhinos.
• The number of Black rhinos has dropped significantly from 65000 in 1970 to around 2600.
• These animals are found in three other countries of Africa. They weigh as much as 1.4 tons and are much smaller as compared to the white rhinos.

Issuance of the bonds

• The issuer, instead of paying a coupon, will be making contributions towards the conservation of the animals.
• The buyers will be receiving a payment from the Global Environment Facility which will be based on targets that are pre-set for the growth of the animals’ population.
• The bond has been structured by Credit Suisse Group AG and it also acted as a joint bookrunner along with Citigroup Inc. This bond was sold for 94.8 per cent of its nominal aggregate amount, with a USD 13.8 million maximum success payout.
• The program’s success, as well as its payments, will be determined by Conservation Alpha. Zoological Society of London is the verification agent.