Blue Bonds and Ocean Sustainability: Evidence from selected African countries

Abstract This study examines the nexus between blue bond issuance and ocean sustainability in selected African countries. Ocean sustainability is a major concern in Africa, as catalytic projects aimed at guaranteeing a blue economy are scarce and require substantial financing. The issue of blue bonds, a variation of blue finance, could be a plausible solution to finance ocean sustainability needs. Despite their importance, blue bonds face persistent barriers in the African context; therefore, they have been issued in only three countries to date: Seychelles, Gabon, and Cape Verde. Panel data from these countries for the years 2018–2023 were analysed using fixed-effects regressions. The study found that blue bond issuance is positively and significantly related to the ocean health index, implying that projects focused on ocean sustainability can be financed viably through blue bond proceeds. The growth rate of the gross domestic product was positive and significant, indicating that economic growth increases the sustainability of the oceans. Regulatory quality was significantly negative, indicating that ineffective regulatory enforcement stifles progress towards improving ocean sustainability. The proxies for carbon dioxide emissions and inflation were positively associated with ocean sustainability. There are several implications of these findings. Firstly, there is a need for the development of African capital markets to accommodate innovative financing through blue bonds to finance ocean sustainability-related projects. Secondly, African national governments must invest in financial infrastructure to support the development of the blue bond market and ensure robust institutional and capital market regulatory frameworks that align with international standards.