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FEATURE STORY September 8, 2021

Palestinians Benefitting from Jobs and Training Despite COVID-19 Thanks to Innovative Development Impact Bond

Eman, Engineering graduate, West Bank, 2020

Eman, Engineering graduate, West Bank, 2020


  • The World Bank and partners launched its first employment-focused “Development Impact Bond” in the world in the Palestinian Territories to help people with job training and job placement
  • Impact bonds are a type of results-based financing where private investors provide upfront capital to fund an intervention that is later repaid after achieving the results
  • Despite COVID-19 restrictions, so far over 460 young people have been accepted into training programs, 350 young people have completed training, and 60 have found jobs, with over US$1 million in outcome payments repaid to investors.

By Abed Khatib, Jade Ndiaye, and Stefanie Ridenour

In the past year and a half, the adaptability and efficacy of one of the World Bank’s first Development Impact Bonds (DIB) has been put to the test in the Palestinian territories, which have faced the dual crises of conflict and the COVID-19 pandemic. Not to be confused with traditional debt financing instruments, impact bonds are a type of results-based financing in which private investors provide upfront capital to fund an intervention that is later repaid by the “Outcome Funder” after achieving the agreed results.  A common theory about impact bonds is they deliver better results due to flexibility, strong performance management, and data-driven decision making.

The DIB started implementation in the Palestinian territories in early 2020 to help tackle youth and women unemployment, as part of the World Bank-funded Finance for Jobs II Project, which aims to pilot innovative approaches to creating jobs and catalyzing investment. The DIB gives upfront financing to service providers that give training to Palestinians, especially young people and women, in a myriad of fields, such as medical or nursing, and help them to find jobs. This financing comes from four private impact investors (FMO Dutch Development Bank, the European Bank for Reconstruction and Development, Palestine Investment Fund and Invest Palestine). The private investors are only repaid by financing from the project once results are achieved. This creates an incentive structure to ensure that the investments are results-focused.  


Mariam, nursing graduate, West Bank, 2020

Turning Investments Into Job Opportunities for Palestinian Graduates

The video documents the process through Mariam and Eman’s personal experiences for over a year and generates learning about how it works.

According to the Brookings Institution, there are over 200 impact bonds contracted globally in 35 countries totaling US$437 million in upfront capital (as of August 2021). Only 19 of these impact bonds have been contracted in developing countries to date. There is still a lack of rigorous evidence on how effective these instruments are compared to traditional financing. A broader objective of the West Bank and Gaza DIB is to test whether a results-based approach is more effective than traditional input-based approaches, which an ongoing impact evaluation will measure. While it is too early in our evaluation to draw definitive conclusions, contracted service providers have shared that the DIB cultivates a greater focus on linking training to market demand, accountability for work and results, better awareness of project risk, and more extensive risk mitigation planning. 

Despite the unimaginable challenge posed by the COVID-19 pandemic in addition to recent conflict in the Palestinian territories, all partners worked to overcome challenges to the implementation of the DIB. One main challenge was that COVID-19 restrictions affected in-person and on-the-job training, a big part of the DIB. Simply switching to entirely virtual training was not feasible for several practical reasons, including formal certification requirements, and limited access to a stable internet connection for extended periods of time.  An additional challenge included the results verification process, which had to be adjusted to accommodate movement restrictions. 

To quickly adapt the DIB to COVID-19, a combined in-person and virtual training curriculum was devised, and in a matter of days, service providers focusing on medical staff training were prioritized and their results verification process was adjusted.  This was possible because of the inherent adaptability of the DIB delivery model, which focuses on results instead of the process, combined with the ingenuity of our  Palestinian partners — who are accustomed to operating in unforgiving conditions, even by Fragility, Conflict and Violence (FCV) standards. For example, one of the contracted service providers, tasked with training and certifying recent nursing graduates on Basic Life Support, included a mix of online and small in-person training sessions that were compliant with social-distancing rules. Moreover, the independent verification process, which is fundamental to the impact bond’s integrity, was temporarily adapted to fit the new hybrid curriculum, including reduced reliance on physical documentation, in favor of virtual spot-checks and desk-based verification procedures. 

Despite these challenges, early results are starting to show in three key areas: 1) Palestinian youth trained and placed into jobs, 2) stronger than expected participation from women, and 3) initial outcome payments to investors. First, over 460 young people have been accepted so far into the DIB program out of the 1,200 youth expected during the program’s several years duration. Nearly 350 young people have completed training and nearly 60 of them have started jobs to date. Second, there has been strong inclusion of women. With over half of the program beneficiaries thus far being women, the DIB is exceeding its expected 30% target of female beneficiaries. Finally, the investors have started to recoup some of their initial investment. Based on the results achieved to date, over US$1 million in outcome payments have been repaid to investors (as of May 2021) out of the US$5.75 million that may be ultimately generated from the DIB during its duration through October 2023. 

Early results are promising for the DIB, and if it proceeds as expected, it will connect around 460 youth to jobs as well as contribute to more knowledge on approaches for addressing unemployment challenges around the world.  We will continue to collect data and measure results to test this instrument’s efficacy. This is important as the COVID-19 pandemic has made job training and placement programs more important than ever for economic recovery. There are early signs that some governments will perhaps turn more to results-based instruments as part of their “building back better” agendas, especially as fiscal resources tighten. COVID-19 has required an unprecedented fiscal response by governments globally, so we invite you to stay tuned for future updates on this DIB’s progress and its potential implication around the world.

Outcome funding for the DIB is provided by the Palestinian Ministry of Finance’s Finance for Jobs II project, which is funded by the World Bank (including the State and Peacebuilding Fund) and implemented by DAI. The DIB is managed by the Finance for Jobs Consulting Services team with investments from FMO Dutch Development Bank, the European Bank for Reconstruction and Development, Palestine Investment Fund and Invest Palestine. Partners also include service providers and the verification agent (Deloitte). The DIB video is funded by the Middle East and North Africa multi-donor trust fund.