Social Impact Bonds, Phase II

This second phase builds on the previous engagement of the Social Impact Bonds Program, however expands its activities to Peru. Whereas in Colombia, the Program will further anchor and scale results-based finance models, in Peru the engagement will primarily focus on promoting the innovative model, fostering knowledge and on building respective markets. The Program aims at strengthening public institutions, private sector and markets in order to improve the impact of developing finance, stimulate innovation and mobilize new funds and optimize their use.

Phase II aims at consolidating and scaling innovative results-based finance (RBF) models in Colombia and to expand its use in Peru. It is structured into four components, each with a distinct objective for both Peru and Colombia:

1) Create enabling conditions for the adoption of RBF in the public sector: develop a critical mass of leading entities for RBF adoption.

2) Increase market readiness for RBF use and funding by private stakeholders: promote impact investing and create incentives to diversify investment roles.

3) Encourage public and private use and pre-funding of RBF through pilot and demonstrative projects in SECO's prioritized sectors: Design and implement RBF programs in areas such as access to finance, climate or skills development.

4) Strengthen the mainstream use of RBF through evidence and operational knowledge: Develop (Peru) and sustain (Colombia) the countries strategies in order to develop effective advocacy and support the development of RBF ecosystems.

New private stakeholders pre-funding RBF mechanism

Policies and regulations to incentivize the integration of RBF into the public policy adapted

Public and private RBF funding mobilized, RBF mechanism launched

Increased number of public entities participating. They have knowledge and apply best practices to adopt RBF

Private sector leaders trained, using and promoting RBF

Knowledge management and outreach

Strengthened capacities at public and private institutions. Stakeholders access and use knowledge from other entities

Learnings available for use and dissemination

Resultados previstos:  

Capacity building measures for new public sector leaders conducted and working group established

Guidelines and best practices on RBF developed, policy and regulatory development supported

New RBF champions strengthened through capacity building

Tools established to promote innovation and facilitate investment attraction, to improve RBF quality and efficiency

Transparency platform developed

TA provided for launching RBF mechanism and for public and private entities during RBF implementation

Digital-based solutions to improve RBF tested and knowledge transfer units developed

Knowledge management and outreach

Learnings and evidence from RBF systematized (factsheets, evaluations etc.)

Progress and lessons disseminated

Knowledge from Colombian ecosystem shared with Peruvian stakeholders

Resultados de las fases anteriores:  

Phase I successfully achieved its main targets: it launched 4 social impact bonds projects for workforce development for vulnerable people. More than 4'500 persons were formally placed in different sectors like sales or manufacturing. 70% of them are women, SIB 3 and 4 still ongoing). USD 12 million were mobilized, including more than USD 3 million from the Colombian Government and USD 3.7 million from the local private sector as upfront investments. The cost/effectiveness ratio, as well as the lessons learned from Phase I form the basic framework to further develop the RBF mechanism in Phase II. The Government of Colombia has launched its Outcomes Fund, supporting market building activities and allowing governmental entities to streamline results-based financing contracts. 3 governmental entities tested results-based financing, 9 service providers and 14 investors joined the program. Also, the Program was marked by an outstanding visibility in Colombia and beyond.