From concept to practice: Financing sustainable blue economy in lessons learnt from the Seychelles experience

Abstract

Despite an international enthusiasm for private capital to meet the financing gap in sustainable development, private sector finance for sustainable development and blue economy is still a very small percentage of global investment. Repurposed bonds and debt for nature swaps have gaining support with policy makers, international organizations, and investors keen to align their investment with global goals and borrowing countries with large ocean domains seeking new sources of finance.The paper explores how those trends have generated new financing opportunities for Small Islands Developing States, a group internationally recognized vulnerable countries, using Seychelles experience in blue economy development and financing through a blue bond and a debt swap. Based on interviews of local and international actors selected for their engagement in Seychelles blue economy finance, the research showed both global and local drivers and challenges to successfully attracting and delivering on private finance.A favorable global policy and financing climate, international partners with technical expertise and ability to di-risk private investment, political will and stability, clarity of national priorities, accountable institutions and sound financial management were key factors in Seychelles’ success in securing private finance. However, implementation challenges were identified, from improved access to affordable finance to the strengthening the local enabling environment and private sector capabilities.High level of indebtedness and structural vulnerabilities of Small Island Developing States (SIDS) combined with the inequality of the global financing architecture, which favors creditors over borrowers’ needs, remain key challenges to address the financing gap identified by the global community. Stronger SIDS voices in financing fora are needed to ensure the fair and equitable financing of sustainable blue economy.