NATURAL CAPITAL SOLUTIONS
The OFC offering uses existing structures and commercial models such as project finance, active asset management, protected areas, debt-for-conservation swaps, sustainability-linked finance and blended finance.
This allows for the monetisation of a country’s Blue Economy so as to enable the mobilisation of capital from donors, development organisations and commercial sources to offer to Governments in the form of debt, on terms at least equal to what can be accessed in the commercial market.
OFC raises its capital in a blended finance approach from sources that value the positive impact the initiative has on oceans.
Capital is provided to as loans at or below commercial market rate, on the basis that the availability of the loans will be linked to a commitment from to take positive action in respect of protecting oceans resources and other ecosystems.
The funding provided by OFC can be applied to either (a) finance national budget deficits; (b) refinance maturing debt or a loan paid before the redemption date; (c) obtain foreign currency; (d) maintain credit balances ;(e) regulate internal monetary conditions should the necessity arise; or (f) any other purpose approved in terms of national budgeting purposes.
OFC applies a portion of the repayments it receives from government in respect of the loan to fund the management, enhanced levels of protection and expansion of the protected areas and playing an active role in the management of these protected area either as the principal operator, or in partnership with the existing management authorities to deliver the benefits of, inter alia, biodiversity improvement, carbon sequestration, ecosystem restoration and resilience as well as growth of industries associated with the ocean.
Given the fiscal pressures occasioned by a slower economy, additional COVID-19 expenditure, weakening currencies and growing government debt servicing costs, the OFC proposal provides governments with a financial solution that will:
Decrease the budget deficit
Reduce Government’s debt service costs
Contribute to GDP growth
Lead to job creation
Improve the health of communities