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First Humanitarian Impact Bond

The first humanitarian bond issued in 2017 is a type of a Development Impact Bond. Development Impact Bonds bridge the gap of funding between the public and private sectors and transfer the investment risk to non-governmental players. Built around the public-private partnership model, today globally there are 194 impact bonds contracted with $441M capital paid upfront for implementing the projects or interventions which target specific preventive social outcomes for a financial return. Impact Bonds can be divided into two parts i.e. social impact bonds and development impact bonds. Development Impact Bonds are implemented in low- and medium-income countries and the outcome payer is a third-party example of a donor unlike a government entity for a social development bond. Over the past decade, various thematic bonds focusing on education and healthcare have emerged. (M: million)

Graph: Source Brookings | The middle Road


International Committee of the Red Cross (ICRC) launched the first Humanitarian Impact Bond to target people with disabilities in Mali (Mopti), Nigeria (Maiduguri), and the Democratic Republic of Congo (Kinshasa). La Caixa Foundation and governments of Belgium, Italy, the United Kingdom, and Switzerland are funding the outcomes. The Government of Netherlands provided upfront grant finance for designing the bond. The upfront capital would be used by the service provider International Committee of the Red Cross (Physical Rehabilitation Programme) to increase the efficiency of Physical Rehabilitation Program Centers and support at least 3600 disabled people to regain mobility. Also known as Programme for Humanitarian Impact Investment (PHII), ICRC wants to address a global systemic problem among the 90 million disabled people. Only 10% of these disabled people have access to physical rehabilitation support.  ICRC has pooled in capital from private investors for a duration of five years to provide interventions that would help disabled people in post-conflict countries Mali, Nigeria, and Congo improve mobility. The $26.2 M (exchange rate 1.00525 11/10/2019) bond is structured to accelerate the efficiency of 107 physical rehabilitation centers using enhanced data management through an ICT Digital Centre Management System tool


Impact Bonds, pay-for-success bonds are financial instruments that reward a monetary return for achieving stated social outcomes targeted by the interventions. This bond provides a 7% return if the bond reaches or outperforms pre-determined objectives. Investors could lose up to 40% of their capital if the outcomes are not achieved. However, to mitigate the concerns of investors, the service provider has invested 10% of its capital. The outcomes are evaluated by a third party, and in this case, Philanthropy Associates would be conducting the impact evaluation. The idea enables the African development sector, the next two years significant for analyzing the social impact of this instrument. The pandemic effect might have hurt the outcome of the project and the success of this project could catalyze global mobilization of capital within the region.

To know more about the Impact Bonds; refer to the tutorial on Impact Bonds under Online Learning. Register on The middle Road.

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