In the tropics
I was a bit late picking up this post in the Stanford Social Innovation Review by Michael Belinsky & Sebastian Chaskel last November, Designing a Social Impact Bond in the Tropics. They are working with the government of the state of Antioquia in Colombia and could bring us the first SIB from Latin America. They highlight the following:
- The ups and downs of legal innovation – the differences in regulatory environments that SIBs are being implemented in
- Savings are unlikely to significantly offset the cost of the program – this is becoming more widely accepted now. The concept of savings from prevention flowing back into a system that can pay for itself makes sense in abstract, but it’s more likely governments will be interested in purchasing better outcomes than reconfiguring their accounting systems to pick up ‘savings’
- Significant opportunity for development agencies – something we’re hearing more of and certainly development has a stronger history of innovative financial mechanisms than public services – in fact the SIB idea was seeded by Arthur Wood’s work in finance mechanisms for sanitation programmes
- Opportunity to shake up service providers – this is much more attractive in some places than others – the article talks about transferring responsibility to intermediaries, but some governments are considering a SIB as a way to reinvigorate and challenge their long-term providers to keen innovating
- The necessity of multitasking – this is about the multitude of skills needed to develop a SIB. The legal, statistical, financial and operational demands of developing these arrangements are immense, but I think that’s why everyone gets so excited about SIBs – they’re really challenging to work on and demand the building of capacity from all those involved.
Interesting article Social impact bonds gear up for Mozambique from Dave Mayers recently. The most interesting variant of this idea is the use of a non-government commissioner, mining companies, to pay for improvements in malaria rates. The argument is that the benefit to their workforce from effective malaria programmes justifies the investment – keep watching!
In South Korea
Park Ki-yong writes about a “social impact bond-inspired incentive” programme of Public-private sector partnership to prevent suicide in over 65-yr-olds. The programme doesn’t fit with my definition of a social impact bond because it doesn’t have external investors, so I’d just call it a performance-based contract. It’s interesting because:
- it uses competition between providers as a measure of results,
- it has a 10% bonus or 5% penalty based on results – not a whole lot, but certainly a logical way to drive performance
- the justification for not involving external investors was the inability of government to guarantee payments – I’m not sure what this means exactly, but it would be interesting to hear the expanded story about this.