Rand Merchant, South Africa parks mull conservation, rhino bonds

A white rhino in Mokopane, Limpopo province, South Africa. Photo / Cebisile Mbonani, Bloomberg, via the Washington Post

South African National Parks, which runs some of the world’s premier wildlife reserves, said it’s in discussions with Rand Merchant Bank over the sale of bonds to fund conservation including boosting the number of endangered rhinos.

The notes, if sold, would build on a US$150 million ($182.3m) bond sold by the World Bank in 2022 that pays out returns determined by the rate of growth in black rhino populations in two South African reserves.

One of those, the Addo Elephant National Park, falls under SANParks management.

“SANParks is in discussions with RMB about various conservation-outcome bonds, including expanding upon the World Bank rhino bond,” it said in a response to questions.

Further details, including the size of the potential bond issue, will be shared when discussions are further advanced, it said.

So-called conservation bonds are being seen as a new tool to raise money for the preservation of wild spaces and as a way of enhancing biodiversity.

They are a subset of the US$6.5 trillion ($7.9t) use-of-proceeds bond market, which spans labels from green and social to blue bonds.

Nature bonds, coined by the Nature Conservancy, have been used to finance debt swaps where proceeds from lower interest rates are allocated to environmental projects.

Collectively, such bonds are expected to help close the US$200 billion ($243.1b) per year gap in funding to halt and reverse widespread global nature loss.

The World Bank rhino bond, at the time the world’s first wildlife bond, has been structured so that instead of paying a coupon, the issuer makes contributions towards conserving the animals and the buyers of the bond receive a payment from the Global Environment Facility based on preset targets for population growth.

To receive the maximum payment the rhino population in the two parks would need to increase by more than 4% per annum.

RMB, the Johannesburg-based investment-banking unit of FirstRand, last year said it was working on selling five-year bonds worth about US$233m ($283.2m) aimed at raising money for the conservation of wild dogs and lions in southern Africa.

RMB was working on the wild dog bond with the Endangered Wildlife Trust and on the lion bond with the EWT and the Peace Parks Foundation.

“We are in conversations with numerous clients around opportunities in this space,” RMB said, declining to comment on talks with SANParks.

FirstRand is Africa’s biggest bank by market value.

South Africa is home to about 80% of the world’s rhinos, with most of those in the country being white rhinos, the world’s most populous species.

The animals have been subjected to sustained poaching for their horns, which are hacked off the dead animal’s carcass and smuggled to Southeast Asia, where they are ground into powder and consumed as they are believed by some to boost virility and cure cancer.

In 2010 the country had a rhino population of about 20,000 with more than 12,000 of those in the Kruger National Park, a reserve on South Africa’s eastern border that’s the size of Israel.

Now, Environment Minister Dion George said on July 15, there are 14,389 rhinos in the country and less than 2000 in the Kruger.

That reduction is because of both poaching and a drought in 2015 and 2016 that saw more rhinos than usual die and their reproduction rate slow.