In the inaugural editions of our Blue Economy Chronicles, we embarked on a journey deep into the heart of sustainable finance initiatives shaping the maritime landscape. In Blue Economy Intel #1, we explored the innovative realm of debt-for-environment swaps, unraveling the intricate dance between financial mechanisms and environmental conservation. Building on this foundation, Blue Economy Intel #2 delved into the world of insurance solutions dedicated to the protection of coral reefs, highlighting the intersection of financial ingenuity and ecological preservation.
As we continue this exploration, we now shift our focus to a groundbreaking regional initiative – the Blu-X platform based in Cabo Verde. Join us in this edition as we unfold the narrative of Blu-X, a trailblazing endeavor set to redefine how sustainable finance intersects with the burgeoning blue economy.
1. Blu-X Platform: A Regional Hub for Sustainable Finance
The azure waters surrounding Cabo Verde, an archipelagic state nestled strategically between Africa, the Americas, and Europe, harbor more than the beauty of the Atlantic. They cradle a vision — a vision of a sustainable blue economy unlocking both economic prosperity and environmental stewardship. In this blog post, we delve into the groundbreaking Blu-X initiative, a regional platform hosted in Cabo Verde, aiming to spearhead sustainable finance exclusively dedicated to the blue economy. As the world increasingly recognizes the critical intersection of economic growth and environmental responsibility, Cabo Verde emerges as a beacon, showcasing how sustainable finance can chart the course for a resilient and thriving maritime future.
Cabo Verde's Blu-X platform stands as a testament to the nation's commitment to redefine its economic landscape. Unlike traditional stock exchanges, Blu-X doesn't merely facilitate transactions; it catalyzes a paradigm shift in the way investments intersect with the blue economy. Housed at the Cabo Verde Stock Exchange, Blu-X is poised to become the world's first platform exclusively showcasing financial instruments tailored for a sustainable blue economy. From bonds to equities and funds, Blu-X offers a comprehensive suite of innovative financial products, inviting investors to deploy their capital with a dual focus on sustainability and inclusivity. This blog post uncovers the layers of Blu-X's strategy, exploring how it plans to unlock private finance for high-impact ventures in the maritime sector.
In the realm of sustainable finance, Cabo Verde emerges as a strategic player, uniquely positioned to host the Blu-X initiative. The high governance standards, stable political environment, and the island nation's role as a regional pivot make it an ideal incubator for innovations in sustainable finance. As an archipelagic state, Cabo Verde recognizes the pervasive influence of the ocean on its economy and society. The government's commitment to the blue economy, articulated in the Ambition 2030 and Strategic Plan for Sustainable Development (PEDS), positions Blu-X as a catalyst for transformative change.
2. The Transformative Potential of Blu-X & Blu-X's Comprehensive Strategy
As we sail further into the heart of Cabo Verde's sustainable finance landscape, the transformative potential of Blu-X comes into sharp focus. Aligned with Cabo Verde's strategic goals outlined in Ambition 2030 and the Strategic Plan for Sustainable Development (PEDS), Blu-X serves as a linchpin for achieving a step-change transformation in the blue economy. The blue horizon of possibilities beckons, but significant challenges persist. Blu-X stands at the forefront, aiming to mobilize investments that capitalize on innovative entrepreneurial activities. In this section, we unravel the challenges and opportunities in mobilizing private sector resources for transformative blue economy investments, emphasizing Blu-X's strategic role in overcoming these hurdles.
In the intricate dance of finance and sustainability, Blu-X unveils a comprehensive strategy poised to reshape the trajectory of the blue economy. The six interlinked areas of operation form the pillars of this strategy, each addressing a specific facet of the challenges faced. Blu-X's strategy encompasses the creation of a platform at the Cabo Verde Stock Exchange for listing and promoting sustainable finance instruments, the development of criteria for labeling 'blue' bonds, and the building of a pipeline of investment-grade projects. With a keen focus on fintech and digital infrastructure, Blu-X aspires to connect the exchange seamlessly to regional and world markets. In addition, Blu-X commits to supplying investors with the necessary knowledge and data, ensuring trust, reliability, and integrity in every transaction. As we unfold Blu-X's comprehensive strategy, the blueprint for unlocking finance for the blue economy emerges as a beacon of hope and innovation.
3. Implementation and Strategic Partnerships
The realization of Blu-X is not a solitary endeavor but a harmonious symphony of implementation and strategic partnerships. Framed within the overarching objectives of Ambition 2030 and the SDG-aligned Strategic Plan for Sustainable Development (PEDS), Blu-X aligns its trajectory with ongoing strategic initiatives. Collaborating closely with key entities, such as the Office of the Prime Minister, the Ministry of Finance, and the Ministry of Maritime Economy, Blu-X positions itself as a pivotal player in Cabo Verde's journey towards sustainable finance. The partnership with the United Nations Development Programme (UNDP) and the Integrated National Financing Framework (INFF) adds international depth, ensuring that Blu-X's endeavors resonate globally.
4. International reach: Listing in Luxembourg and $32.5 million raised
On Nov. 14th, 2023, Luxembourg Stock Exchange (LuxSE) and Bolsa de Valores de Cabo Verde (BVC) celebrated a historic milestone, marking the listing of the first Cabo Verdean Green Bond on LuxSE. Less than two years into their cooperation, LuxSE and BVC facilitated the listing of sustainable bonds from Cabo Verde, further connecting capital markets and advancing sustainable finance.
The pioneering green bond, issued by the International Investment Bank (iib), raised EUR 3.2 million to finance sustainable ocean-based projects and support individuals and small businesses in the maritime and fisheries sectors. The $1 million would provide affordable loans to microentrepreneurs and startups in coastal communities. That would emphasize financial inclusion to ensure widespread access to the new value generated from the growing blue economy.
The remaining $1.5 million would be invested in structural improvements in small and medium-sized enterprises operating in the maritime and fisheries sectors.
Named Marine and Ocean-Based Blue Bond by the issuer, the bond has a 5-year maturity and offered an interest rate of 4%. The bond was launched as a public offering issued by the iib in Cabo Verde and was listed on BVC in March.
Francisco Ferreira, CEO of iib, commented:
“In the year 2020, iib embarked on a transformative journey with the objective of establishing a sustainable operation. The overarching ambition was to position iib as a benchmark in capturing and originating value from economic and financial flows between Cabo Verde and the West African region within the global economy. This commitment is exemplified through various initiatives, including but not limited to our socially indexed deposit, our social bond, and, in collaboration with UNDP and Joint Fund, the pioneering issuance of the iib Marine and Ocean-based Blue Bond.”
The bond issuance was met with great interest from both individual investors and investment firms, and demand exceeded supply. Around 20% of the investments came from Cabo Verdean emigrants now based in countries such as Portugal, the United States, France and Luxembourg, wishing to contribute to the development of Cabo Verde’s blue economy.
International Investment Bank (IIB) is a multilateral development institution with headquarters in Budapest, Hungary. The following countries are the Bank’s members: the Republic of Cuba, Mongolia, the Russian Federation and the Socialist Republic of Vietnam.
Overall, the partnership between UNDP and Cabo Verde has led to the issuance, of 6 sustainable bonds totalling EUR 35 million for sustainable development in the island state.
5. Future Prospects and conclusion
As Blu-X unfurls its wings, the gaze turns towards future prospects and potential global influence. The platform, already a regional pioneer, holds the promise of becoming a global model for sustainable finance. With its focus on innovation and inclusivity, Blu-X stands at the vanguard of shaping global trends in sustainable finance. The anticipated impact on the blue economy is not confined to Cabo Verde; it extends to a broader canvas, influencing how nations approach the intersection of economic growth and environmental responsibility. Blu-X's trajectory mirrors the evolving landscape of sustainable finance, offering a beacon of inspiration for nations navigating the delicate balance between prosperity and planet care.
As we conclude this exploration into Cabo Verde's Blu-X initiative, we stand at the precipice of a transformative era. Blu-X's comprehensive strategy, strategic partnerships, and successful financial instrument launches signify not just local triumphs but global milestones in sustainable finance.