It may be beloved of tourists but when it comes to business, France is an ongoing failure at the heart of the Euro currency zone. With a pure socialist economy (significantly more than 50% of economic activity comes from the government), the state is creaking at the seams, unable to grow and with unemployment essentially perma-stuck at something like twice US or UK levels. Thus, SIBs are a logical development, and the government is to be applauded for its movement in this direction. Hopefully the notoriously meddlesome French blob can avoid doing their own thing with standards which will adversely impact any cross-border benchmarking and investor interest. Happy scrolling:
First French Social Impact Bond
Esela
On 16 March 2016, the French government submitted its first request for proposals for Social Impact Bond projects. Social Impact Bonds already exist in a few European countries, including Belgium, the UK, and Germany, but the question remains as to whether France will follow protocol.
French Government Launching Social Impact Bonds With Mirova’s Support
Vibeka Mair – Responsible Investor
Call for proposals for ‘social impact contracts’ announced.
Blended Finance is the Way Forward for a Sustainable World
JustMeans
Blended finance can also be used to generate financial returns on investments that would normally only yield less tangible benefits. The most common method is the social-impact bond, in which “outcome funders”, such as governments and aid agencies, pay back investors who have funded projects that meet goals which, although socially desirable and delivering notional cost savings, do not yield direct profits.
For example, Children’s Investment Fund Foundation, a charity, has agreed to pay a return of 10% on a project designed to improve school attendance among Indian girls if enrollment, literacy and numeracy improve as agreed after three years. If the results exceed expectations, the return rises to as much as 15%.
Social-impact bonds are still new but promising. Kois Invest, an impact-investing firm, counts 60 social-impact bonds launched since 2010, mostly in the developed world.
Development Done Differently: Data Innovation & Partnerships For Better Cities
Steve Hamilton & Jenny Dai – Devex
Beyond new technology, the development community can utilize existing innovative finance tools such as social impact bonds and incentive prize design. These can help spur programs with a focus on measurable outcomes through donor-funded competitions across cities. Social impact bonds — public-private collaborations where private investors fund programs that requires the government service provider to agree to specific performance indicators — shifts focus toward service performance and delivery while allowing service providers more freedom to execute their programs. If goals are reached, the government will pay back the bond with added returns; otherwise, the investment is marked off as a donation or grant.