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.