Cameroon Cataract Bond


The Cataract Fund launched in March 2018 is an example of an innovative development impact bond launched to fund cataract surgeries among low-income patients in the sub-Saharan region. The pay for performance loan is developed by the Cataract Bond Design Coalition, a collaboration between Outcome Funders – The Fred Hollows Foundation, Conrad N Hilton Foundation, and Sightsavers, Bond Manager – Volta Capital, and the African Eye Foundation. Magrabi ICO Cameroon Eye Institute (MICEI) is African Eye Foundation’s flagship project, the first subspecialty eye care hospital and training institute in Central Asia. The outcome funders and service provider share the risk for driving the intervention with a full capital guarantee to the investors. $2 million of capital was raised from the investors on top of $10 million already invested in the project. MICEI follows a business model similar to Arvind Eye Care, it subsidies costs of low-income patients and charges middle-income patients higher market-driven rates for performing surgeries. This read refers to the case study produced as part of an evaluation of the Cameroon Cataract Bond and the DFID DIBs pilot program, commissioned by the Fred Hollows Foundation and the Department for International Development and undertaken by Ecorys UK, written by Alma Agusti Strid at Ecorys.

The five-year bond targets number of cataract surgeries with quality outcomes benchmarked to WHO guidelines and financial stability focusing on positive Earnings before interest tax and amortization (EBITA). EBITA is a measure form the income statement. There are three type of income statement – Balance Sheet, Income and Cash Flow Statement. Balance sheet discusses information on assets and liabilities of the firm, income statement discusses revenues and expenses of the firm and income of a firms over a period of time and cash flow from sources of cash in a firm from operating, investing and financing activities. To help underserved communities, the financial structure targets at least 40 percent of the bottom two wealth quantiles of the population in Cameroon by end of year 5.

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Arvind Foundation and African Eye Foundation were consulted for the project, and looking at commercial and political risk the interest rates for achieving the outcome was increased from 5 to 8 percent. The five-year bond is structured such that part principal is paid back after three years when the first outcome measurement is due. If the outcome is achieved in year 3, 60 percent of the upfront capital of $2 million is paid back to the investors by the outcome funder, and 8 percent accrued interest. Otherwise, outcome funders pay 76.5 percent of principal to investors plus a 4 percent interest. Further, this bond has an inbuilt feature of a failure fee of 4 percent paid to investors. In case of failure to achieve the target, the implementor pays 23.5 percent of the principal over the next five years. The structure had a high commercial risk as the hospital was under construction when the bond was structured. After the end of five years, if the equity target is met, outcome funders pay a fee of $1,20,000 to the implementor. For full details refer to Cameroon Cataract Bond: A case study produced as part of the Cameroon Cataract Bond Evaluation.

Learn more about Cameroon Cataract Bond – Refer to the Online Course on Impact Bonds here.

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