Financing
Our innovative financial model facilitates access to specific strategic financing to ensure the viability and success of AFI projects through transactional support for:
- Due diligence.
- Project financing.
- Legal structuring.
- Post-transaction follow-up.
- Impact report.
- Expansion of projects.
Characteristics of our financial model
Long-term financial sustainability.
Low transaction costs to maximize the effectiveness of the funds requested.
Incentives for meeting goals and efficiency in execution.
Characteristics of our financial model
Long-term financial sustainability.
Low transaction costs to maximize the effectiveness of the funds requested.
Incentives for meeting goals and efficiency in execution.
Structure
Our financial model is organized along three main lines:
Sustainable investment promotion
Enables multi-sectoral collaboration to mobilize funds efficiently and effectively.
Biodiversity conservation projects promotion
Identifies, supports and ensures the technical and economic viability of innovative projects that integrate environmental conservation and community development.
Diversified financing guarantee
Promotes a catalog of impact investments to meet AFI’s financial needs. These include grants, concessional loans and donations.
Green bond for the
biodiversity conservation
Thanks to CAF’s experience in bond issuance, Audubon and BirdLife’s expertise in conservation science, and the support of the Global Green Growth Institute (GGGI), we are developing an innovative model that provides zero-interest concessional loans and fixed-income payments linked to indicators of positive impact on biodiversity conservation. These resources will be promoted and financed by a donor.
It is a hybrid bond that combines the structure of a green “resource use” bond (BV) with that of a conservation success payment (CSP) bond and elements of a sustainability-linked bond (SLB), according to the International Capital Market Association (ICMA).
With this instrument, we combine the use of resources (BV) constraint with the performance-based, commitment-backed remuneration structure (SLB). The entire instrument is backed by the Secured Overnight Financing Rate (SOFR), which is based on transaction repurchase agreements for overnight loans, collateralized by U.S. Treasury securities.
We build on and leverage the previous work of the World Bank’s Wildlife Conservation Bond (WCB), which supports the financing of conservation activities and, together with funding from the Global Environment Facility (GEF), transfers project risk from donors to investors.
The operation currently mobilizes private capital to facilitate the financing of black rhino conservation activities in two protected areas in South Africa, the Addo Elephant National Park (AENP) and the Great Fish River Nature Reserve (GFRNR).“WBC Case Study.”.
Who can be subject to credit?
Projects of natural or legal persons, public or private, established in a CAF member country, such as:
- Central governments
- Local and municipal governments
- Public law institutions
- Private sector entities
Those individuals or legal entities that are on the List of Prohibited Counterparties or that do not comply with CAF’s know-your-customer policies will not be subject to credit.
Facility investors and donors
Our mechanism promotes the incorporation of donations, grants and other financial instruments from philanthropy, international organizations and the private sector to complement and strengthen financial flows, particularly to enhance the strategic support and project preparation components.
Financial instruments
for capitalization
Main instrument
Green biodiversity bond issuance
- Immediate capital raising period.
- Fixed interest rate payment.
- Guaranteed return to the investor.
- Guarantee of full payment of the debt.
- Allow to retain a higher cash flow in the bank.
- Total or partial participation of impact investors.
Complementary instruments
Environmental impact fund
- Capital raising period between 12 to 24 months.
- Probability of limited capital raising.
- It requires the entry or hiring of a manager who performs the capital raising.
- Investment tickets generally do not exceed USD 50 million.
Donations and grants
- Regularly small donation tickets (compared to AFI capital needs).
- Limited capital flows.
- It does not guarantee the self-sustainability of the mechanism.
Stages of the mechanism
Preparatory stage of the conditions (2024-2025)
- Key stakeholders alignment.
- Biodiversity credit lines creation.
- Biodiversity projects research and preparation.
- Facilities process and operation.
Financing and Pilot Phase (2025-2030)
- Issuance of an impact bond, the proceeds of which will be used for a biodiversity credit.
- Financing of the first 10 projects.
Consolidation Stage (2030 onwards)
- An impact bond issue that will fund the projects identified during the 2025-2030 phase.
Stages of the mechanism
Preparatory stage of the conditions (2024-2025)
- Key stakeholders alignment.
- Biodiversity credit lines creation.
- Biodiversity projects research and preparation.
- Facilities process and operation.
Financing and Pilot Phase (2025-2030)
- Issuance of an impact bond, the proceeds of which will be used for a biodiversity credit.
- Financing of the first 10 projects.
Consolidation Stage (2030 onwards)
- An impact bond issue that will fund the projects identified during the 2025-2030 phase.
