First SIB a victim of the blob in New Zealand? “Global Goals” of the UN filter applied to progress of DIBs…
Emily Gustafsson-Wright & Sophie Gardiner – Brookings
Public and private sector leaders currently face the daunting task of identifying the path to achieving the United Nation’s 17 Sustainable Development Goals (SDGs or Global Goals) within 14 years. Financing is arguably one of the most important pieces of this complex puzzle. In the last 15 years, a number of innovative financing mechanisms, which address the volume of finance, the effectiveness, or both, have been designed and implemented. Results-based financing (RBF) arrangements, in which governments or donors pay service providers contingent on outputs or outcomes, are one of the fastest growing types of innovative financing.
Social impact bonds (SIBs) and related development impact bonds (DIBs) combine RBF and impact investing (investing that seeks both a social and a financial return). In an impact bond, an outcome funder (a government in the case of SIBs and a third party such as a donor agency or foundation in the case of DIBs) repays private investors with a return contingent upon the achievement of agreed upon outcomes (see Figure 1). Since the first one was established in 2010, 62 SIBs have been implemented across 14 high-income countries seeking to achieve a multitude of social outcomes. To date, there are two DIBs contracted in middle-income countries: one focusing on girls’ education in Rajasthan, India and the other to improve agricultural productivity in the Amazon rainforest of Peru. In addition to these contracted impact bonds, there are at least 60 initiatives in high-income countries and about 30 in low- and middle-income countries that are in feasibility or design stages.
New Zealand’s first social bond pilot has collapsed, with the government unable or unwilling to keep the sole provider, Wise Group, in negotiations.
The Ministry of Health NZ began working on the pilot program three years ago. The first bond was aimed at helping those with mental health problems enter the workforce by funding employment consultants in GP practices.
Radio New Zealand is reporting that the government was offering to prop up investor contributions in the bonds to get them over the line. Deputy Prime Minister Bill English (pictured) is now looking to begin negotiations on the next bond.