H2O Contributes to New Study on Development Impact Bonds
June 07, 2013
Findings of the groundbreaking work undertaken by H2O in collaboration with Social Finance on the potential of a development impact bond (DIB) for the control of sleeping sickness in Uganda was presented at a public consultation held in London on 5 June 2013.
The consultation draft report was compiled by a Working Group convened by the Center for Global Development and Social Finance to explore the utility of DIBs as a new financing instrument to deliver societal impact in developing countries. The Working Group was made up of members drawn from development finance institutions (DFID and USAID), governments (including UK, USA and Sweden), philanthropic foundations (including Rockefeller Foundation, Omidyar Network and Bill & Melinda Gates Foundation) and international impact investment institutions (including World Bank and OPIC).
The report explores the application, challenges and benefits of DIBs in development funding, containing six detailed cases studies of pilot DIB offerings, including the reduction of sleeping sickness in Uganda. The work on the potential of a DIB to reduce the burden of sleeping sickness, a fatal disease affecting the rural poor and their cattle in East Africa, was undertaken as part of the H2O partnership with the Research Into Use DFID-funded programme. Contributors to other pilot case studies include the Clinton Health Access Initiative, OPIC, USAID, Lion’s Heads and the educational charity PEAS.
The Working Group concluded that DIBs have the potential to improve the effectiveness of traditional development projects by concentrating on implementation quality and the delivery of successful results. Based on the model of Social Impact Bonds spreading in the UK, the US and elsewhere, DIBs engage private sector investors who may be better-positioned than the public sector to take on the risks associated with innovation.
Elizabeth Littlefield, president and CEO of OPIC and a co-chair of the working group welcomed the report: “Innovative financing mechanisms such as social impact bonds stand to improve the efficiency of development assistance in the coming years – and that is what has brought us to the working group. As a vital component of the impact investing sector, outcomes-based finance can be a powerful means of enhancing the effectiveness of aid and development finance”.
Toby Eccles, development director at Social Finance and a co-chair of the working group, said: “Development impact bonds turn social services into investible opportunities. There is huge demand among investors for opportunities to do good while doing well, and development impact bonds will enable investors for the first time to bring their resources, expertise and energy to the world’s most pressing social problems.”
Dr Paul Coleman, co-founder and Principal of H2O, who lead H2O’s work with Social Finance, commented: “H2O would like to thank the efforts of the Working Group in producing this seminal report. Novel financing mechanisms that can leverage private sector involvement to deliver social impact have the potential to address many of the pressing problems facing the poor communities in developing countries. We look forward to continuing our collaboration with Social Finance and moving from planning phase to the delivery of the sleeping sickness DIB.”
For further information on the consultation see: http://www.socialfinance.org.uk/resources/social-finance/dib-working-group-report-consultation-draft