Addis Ababa Financing development summit

A long way from Addis Ababa a bold experiment in development financing is underway

by Phyllis Costanza
16 July 2015

Almost 3000 miles from Addis Ababa, where delegates from around the globe have gathered for the Third International Conference on Financing for Development, the ground work is being laid for what may prove to be a catalyst for change for development financing: the Educate Girls Development Impact Bond, a pioneering new way to encourage private investors to fund development projects that is 100% focused on the outcomes achieved. And in our view it’s all about outcomes.

Yet, surprisingly, results are not always at the forefront in the development sector. An issue is identified, projects are started and then….well, it can all get a bit hazy after that. Would this be acceptable in business? No way. Business is all about results. So why should it be any different in the development space? The answer is it shouldn’t be.

And, at a time of continuing uncertainty about the prospects for global economic growth, and the consequent pressures on government budgets, there is clearly an even greater need for a more innovative approach to development financing. A new, smarter, more creative way of thinking is needed; one that helps draw in new actors, unlocks new sources of funding, and encourages investors and providers to place an emphasis on outcomes not activities. Seeking out result-focused partners — those we believe in and are willing to fund — gives us the confidence to grant them much more flexibility and the creative freedom to do what they are best at.

And these are the reasons why the UBS Optimus Foundation and the Children’s Investment Fund Foundation (CIFF) have joined forces in this pilot to test a proof of concept to show potential investors and donors that it is possible to invest in and achieve societal gains while, at the same time, achieving result-based financial returns.

Now let me tell you a bit more about the work going on in India and the DIB itself. Travelling through hundreds of villages in a remote area of Rajasthan, northern India, teams from the Indian non-profit organization Educate Girls have been recording how many girls in each house attend school, and if they don’t attend their families are being asked why not. This information will be used as the basis for a program to get more girls into quality primary education. Rajasthan has some of the worst indicators for girls’ education in India, and it is clear that something needs to be done if these communities are ever going to lift themselves out of poverty. You are probably thinking that there is nothing especially new about this. And you’d be right. But what is new is the way the program is funded.

So how does it work in practice? Well, a socially-motivated investor – in this case the UBS Optimus Foundation – puts in the working capital so the service provider – in this case Educate Girls – can begin its work on the ground. An outcome payer, in this case CIFF, promises to pay back the investor the original amount plus an extra return, as long as agreed targets are met. In this case the targets are focused on increased enrolment and the children’s progress in literacy and numeracy, which will all be assessed regularly by an independent evaluator over the course of the three-year program.

It’s envisioned that future outcome payers would be government development agencies or private foundations. And that’s why we want to invite development policy makers and practitioners along for the journey. Over the next three years, we’ll be sharing updates on how the program is progressing, and asking for input and advice from experts around the world.

While the value of the project may be small when compared to the yawning financing gap for the Sustainable Development Goals globally, the number of beneficiaries is larger than any Social Impact Bond of the past five years. And the hope is that we will uncover valuable lessons for the future. Success in the short-term will mean that many more girls will have the benefit of this vital early investment in their futures, and over the longer term this bold experiment in development financing could pave the way for new ways of addressing a range of issues that can be scaled up worldwide to deliver life-changing benefits for millions of people.

 

Pedro Pereira Leite

Researcher and professor. He had his PhD. on museology in 2011, with the title “Muss-amb-ike Homeland: The commitment on musicological process”, that was published in 2011. In 2012 he finishes a Post-PhD Research on "Biographical Glances: The intersubjectivity poetry on museology, at Lusófona University (Lisbon). Presently he is working in his Post PhD. Research about: “Global Heritages" with the aims to build a network on local cognizance and memory manager has a tool to build the will of action in 3 different communities, linked by past communed heritages.” He works at CES. He participates on different Research network, presented papers in national and international conferences, and had published books on research subjects.

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OpenEdition sugere que esta publicação seja citada da seguinte forma:
Pedro Pereira Leite (16 de Julho de 2015). Addis Ababa Financing development summit. Global Heritages. Recuperado em 7 de Outubro de 2024 de https://doi.org/10.58079/p2sx


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