Development finance institution the International Finance Corporation (IFC) has made a $13-million investment in the Africa Conservation and Communities Tourism (ACCT) Fund to support the post-pandemic recovery and sustainable growth of sub-Saharan Africa’s ecotourism sector.
The investment will support ecotourism businesses in and around conservation areas in Eastern and Southern Africa, with a focus on Botswana, Kenya, Namibia, South Africa, Tanzania and Zambia.
The ACCT Fund will invest in operators of safari camps, hotels and lodges, helping them address liquidity shortages while recovering from the impact of the Covid-19 pandemic. The fund is also helping them refurbish, renovate and expand their operations, especially where the businesses can achieve meaningful conservation and community development impact, the IFC said.
Based on IFC estimates, the ACCT Fund is expected to contribute at least $530-million to economies where it invests through direct, indirect and induced effects in the agriculture, retail, transportation and recreational sectors. IFC expects the investment to also save about 21 200 full-time jobs.
Impact investment and advisory group ThirdWay Partners and environmental nonprofit organisation The Nature Conservancy established the ACCT Fund, which is a structured debt vehicle, in 2021 in response to Covid-19-related challenges affecting the ecotourism sector.
“We are very grateful for IFC’s support of this innovative and very important initiative. The ACCT Fund is an impact investment vehicle which balances financial goals with a clear conservation and community impact agenda,” said ACCT Fund MD Maarten Weehuizen.
Tourism is critical to the long-term survival of conservation landscapes across the African continent, to the benefit of the people and the wildlife who depend on them. Even prior to the Covid-19 pandemic, these areas were under significant pressure. Tourism provides jobs in rural areas, funding for nature protection and its activities with guests in these landscapes significantly reduce the risk of poaching, deforestation and land conversion, he highlighted.
Ecotourism businesses are committed to protecting the environment and wildlife where they operate.
“As part of this innovative blended-finance approach, IFC has partnered with The Nature Conservancy to support sustainable ecotourism and deliver impact to small tourism operators. IFC’s investment in the ACCT Fund will help financially affected ecotourism businesses to preserve jobs and contribute to the local economy,” said IFC Africa VP Sérgio Pimenta.
The partnership aligns with the IFC’s strategy to support the revival of domestic and regional tourism markets, and to use a blend of financing tools to support countries’ development priorities, he noted.
With the financing from IFC and other investors, the fund has now reached final close with a total of $70-million raised. The ACCT Fund is structured using a blended finance approach with three tranches of capital: grant funding, junior equity, and senior equity funding. IFC will invest up to $13-million in the senior equity tranche.
Additionally, IFC will also provide non-commercial risk mitigation and capacity building by supporting the development of climate guidelines that will contribute to setting standards for the sector and help operators improve their environmental performance by reducing energy and water use and improving waste management.
Further, the ACCT Fund is strongly aligned with the national tourism strategies of the beneficiary countries, developed to support the recovery and resilience of their respective tourism sectors after the Covid-19 pandemic.
The ACCT Fund is aligned to the World Bank Group’s goals of ending extreme poverty and promoting shared prosperity as well as the World Bank Group’s Green Resilient and Inclusive Development framework, which aims to repair the structural damage caused by the Covid-19 pandemic, accelerate climate change mitigation and adaptation, and support a strong and sustainable recovery.