The UBS Optimus Foundation and the Children’s Investment Fund Foundation (CIFF) are launching the first development impact bond in education. The aim is to improve the quality of girls’ education and attract new investment to this area.
Development impact bonds aim to provide new sources of financing to achieve improved social outcomes in developing country contexts. Investors provide external financing and receive a return only if pre-agreed outcomes are achieved. Funds to remunerate investors would usually come from a donor or government agency. Financial returns to investors are intended to be commensurate with the level of success. An independent evaluator verifies results to determine success and repayment.
‘This is a world first for international education,’ says Michael Anderson, CEO of CIFF. ‘Development impact bonds will focus governments and the aid industry on costing and paying for results … We want to test this model, and we want to show the world it can work.’
Capital made available up front by the UBS Optimus Foundation will go to Educate Girls, an NGO operating in government run schools in Rajasthan in India to enrol and retain girls, as well as to improve learning outcomes for all children. In India, 3.7 million girls are out of school. In Rajasthan, 40 per cent of girls drop out before reaching fifth grade and for those that remain learning quality is low. CIFF will pay for social outcomes achieved by the programme.