Restoring Land, Building Livelihoods: Supporting Spekboom Restoration in South Africa

Struggle to Access Upfront Financing

Across South Africa's Eastern Cape, decades of overgrazing and land degradation have stripped once-fertile landscapes of their biodiversity. Widespread soil erosion and vegetation loss undermine rural natural capital and heighten exposure to both drought and flooding as upstream soils have disappeared. To restore this degraded land requires long-term investment, yet projects that deliver environmental benefits often struggle to access upfront financing.

A new World Bank outcome bond aims to help close that gap, mobilizing private capital to support the restoration of degraded land using spekboom, a succulent plant native to South African known for its resilience and exceptional carbon-sequestration properties that can grow to the height of several meters.

Spekboom Restoration

Spekboom restoration offers more than environmental benefits. Large-scale restoration projects create local employment in fencing, harvesting, nursery operations, planting, monitoring, and ongoing land management. It also boosts biodiversity, creating microclimates for native species to thrive by improving water retention and strengthening the entire ecosystem's resilience to drought (spekboom has been an important source of nourishment for some of Africa's largest species for millennia earning its nickname as elephant's food). For people and communities in the Eastern Cape, restored spekboom habitat means restored land and a pathway toward more resilient local economies.

The spekboom restoration project supported by this outcome bond is designed, developed and operated by Imperative, a private company specializing in large-scale ecosystem restoration. By restoring degraded land, the project aims to remove carbon from the atmosphere and generate long-term ecological benefits while creating jobs and income opportunities for local communities in the Eastern Cape. Phase 1 of the project (10,000 hectares) has been in execution since 2024, and the outcome bond will help enable financing for a 50,000-hectare expansion.

Collaboration

Amazon committed to purchase a large share of carbon removal units ("CRUs") generated by Imperative's spekboom project at fixed prices under a contractual agreement for more than a decade. Amazon's commitment to purchase CRUs at fixed prices offered the visibility into cash flows necessary to attract institutional bond investors to support the project. The project also benefits from capital commitments from GenZero, Mirova, Rubicon Carbon, and Bregal Sphere. This collaboration between the World Bank Group, Amazon, and impact investors helps bridge the financing gap for ecosystem restoration.

"We are very pleased to have been able to place this outcome bond, working hand in hand with the World Bank and BNP Paribas and with Amazon as our strategic offtaker," said Scobie Mackay, CEO of Imperative. "In this case, the bond and Amazon offtake work seamlessly with the private sector carbon streaming funding that we have received from GenZero, Mirova, Rubicon Carbon and Bregal Sphere. This blended syndicated stream plus bond model is a pioneering example of how outcome bonds and private sector capital can be co-leveraged to scale up nature restoration efforts globally."

About Outcome Bonds

Outcome bonds channel amounts that would otherwise have been paid as part of the bond's coupon to finance a specific development project. Investors earn a smaller fixed coupon compared to an ordinary World Bank bond of similar maturity, but have the potential to earn a higher overall return through additional variable coupon components that are linked to restoration outcomes and carbon credit revenue generated by the project. Independent verification of the carbon removal units helps ensure transparency and accountability in measuring results.

"This Spekboom Restoration Outcome Bond shows how we can mobilize private capital with a principal-protected structure that links investor returns to independently verified outcomes," said Jorge Familiar, Vice President and Treasurer, World Bank Group. "It builds on the World Bank's outcome bond platform to support jobs, resilience, and sustainable growth where they are needed most."

The entirety of the bond's principal supports the sustainable development lending activities of the World Bank and will be repaid to investors at maturity based on the triple-A credit strength of the World Bank.

Corporate demand for high-quality carbon removal credits play a key role in supporting restoration projects. Long-term carbon offtake arrangements help create predictable revenue streams which can then be used to attract and secure institutional capital that can help projects launch or scale.

By aligning investors, project developers, and corporate partners, the outcome bond structure helps bridge the timing gap between when projects need funding and when outcomes and revenues are realized.

Mobilizing Capital Markets To Support Projects

The Spekboom Restoration Outcome Bond builds on earlier World Bank outcome bonds structured around carbon revenue streams from projects such as Amazon reforestation, clean cooking solutions, and water purification. Together, these transactions demonstrate how capital markets can be mobilized to support projects with measurable climate and development impact.

"South Africa has a clear opportunity to turn land restoration into jobs," said Satu Kahkonen, the World Bank's Division Director for South Africa. "Spekboom restoration can support growth, strengthen resilience, and help rebuild productive land while creating jobs and supporting rural livelihoods."