Seychelles DFC

This case study describes the 2017 debt for climate (DFC) swap in the Seychelles, the first of its kind focused on ocean protection, and outlines the general structural requirements and criteria for implementing similar DFC instruments in other middle-income countries.

• In 2017, the Seychelles implemented the first debt for climate (DFC) swap dedicated to ocean protection. The Nature Conservancy (TNC) purchased foreign external debt at a discount and secured USD 5 million in private donor funding. These funds, along with loan repayments from the government, are managed by the Seychelles Conservation and Climate Adaptation Trust (SeyCCAT) to conserve 13 Marine Protected Areas (MPAs) covering over 85% of the country's shallow waters and coral reefs.
• Since 2017, SeyCCAT has distributed more than USD 1.5 million in grants across 33 projects and over 25 grantees. These grants have supported areas including Alphonse Island, Bird Island, Farquhar, Aldabra, and Curieuse Marine National Park, as well as biodiversity assessments for Fregate island. Over 50% of funds supported projects benefiting or led by women, one-third supported youth-led or youth-beneficiary projects, and 23 projects benefited small-scale artisanal fisheries.
• The document outlines several requirements for DFC swaps, including the need for a transparent, autonomous non-government fund (like SeyCCAT) to manage funds and increase investor confidence. Debtor nations should ideally be Middle Income Countries (MIC) according to World Bank classification, or Low Income Countries (LIC) not participating in the Debt Suspension Servicing Initiative (DSSI). Eligible countries must have high public external debt but no imminent liquidity crisis, and possess high-level political leadership and whole-of-government support.
• Zimbabwe is identified as a potential candidate for a DFC swap because it is a middle-income country not part of the DSSI with high bilateral public external debt of USD 2.7 billion (12.8% of GDP). Despite high carbon emissions, with 87% of power generation coming from coal, the country has shown political will to transition to a low carbon economy via renewable energy and has requested debt renegotiation from China.

APA

Climate Policy Initiative (2021). Seychelles DFC. https://www.climatepolicyinitiative.org/gca-africa-adaptation-finance/case_studies/seychelles-dfc-2/

Chicago

Climate Policy Initiative. Seychelles DFC. 2021. https://www.climatepolicyinitiative.org/gca-africa-adaptation-finance/case_studies/seychelles-dfc-2/.

Wikipedia

{{cite report |author=Climate Policy Initiative |title=Seychelles DFC |date=16 September 2021 |url=https://www.climatepolicyinitiative.org/gca-africa-adaptation-finance/case_studies/seychelles-dfc-2/ |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{climatepolicyinitiative2021seychelles, author = {{Climate Policy Initiative}}, title = {{Seychelles DFC}}, institution = {Climate Policy Initiative}, year = {2021}, month = sep, url = {https://www.climatepolicyinitiative.org/gca-africa-adaptation-finance/case_studies/seychelles-dfc-2/}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }