The World Bank has priced a $120 million Spekboom Restoration Outcome Bond, a first-of-its-kind financial instrument designed to fund large-scale ecosystem recovery and job creation in South Africa’s Eastern Cape province. Maturing in 2040, the deal represents the World Bank’s longest-dated outcome bond to date.
The bond is structured to mobilise $25 million in private capital for the restoration of 50,000 hectares of degraded land. The project focuses on the planting of Spekboom, a native South African succulent renowned for its extreme drought resilience and high carbon sequestration capacity. Beyond environmental recovery, the initiative is expected to create 11,000 local jobs through small and medium-sized enterprises involved in harvesting, planting, and land management.
“Innovative financing is essential to address complex development challenges,” said Anshula Kant, Managing Director and World Bank Group Chief Financial Officer. “This outcome bond shows how capital markets can be mobilised… while aligning investor returns with measurable results.”
The bond offers investors full principal protection backed by the World Bank’s triple-A credit rating. However, it differs from traditional debt by linking a portion of the investor returns to the project’s success.
- The mechanism: Investors accept a lower fixed coupon compared to regular World Bank bonds. The “foregone” portion of the interest is channeled upfront to Imperative—the private company developing the project—to fund the restoration.
- The return: In exchange for the risk, investors can earn a higher variable return linked to the sale of Carbon Removal Units (CRUs).
- The offtaker: Amazon has signed a fixed-price agreement to purchase a large share of the CRUs generated by the project for over a decade, providing the revenue stream that will eventually pay out to bondholders.
Frederic Zorzi, Global Head of Primary Market at BNP Paribas, which acted as the sole lead manager, noted: “The structure illustrates how a collaborative approach… can accelerate private capital mobilisation while advancing development objectives.”
Global investor support
The bond attracted a wide array of institutional investors, including Nuveen, AllianceBernstein, MetLife Investment Management, and L&G.
“This investment will further display the potential that spekboom restoration presents to positively impact biodiversity degradation on the African Continent,” said Stephen M. Liberatore, Head of ESG/Impact for Global Fixed Income at Nuveen.
Jake Harper, Head of EM Private Debt at L&G, highlighted the social benefits, stating the project shows “how UK pension capital can support projects in emerging markets that bring together large-scale nature restoration with tangible social benefits.”
The Spekboom plant is recognised by the United Nations as a World Restoration Flagship for its ability to reverse desertification. By linking financial performance directly to carbon outcomes, the World Bank aims to provide a scalable model for future nature-based solutions.
