Development Impact Bond
Invest in impact. Pay for results. Scale high-performing poverty alleviation programs.
We are working to end extreme poverty in rural Africa. We cannot do that without disrupting the poverty alleviation and economic inclusion space for the better.
Selected from over 80 organizations based on the strength of our randomized controlled trial (RCT) results, Village Enterprise launched the first Development Impact Bond (DIB) for poverty alleviation in sub-Saharan Africa in fall 2017. This $5.32M DIB directs funding towards measurable results: increases in consumption and assets of first-time entrepreneurs living in extreme poverty*. The DIB is a demonstration project with the potential to unlock more diversified funding opportunities in the international development world by attracting new investment capital.
In 2017-2020, with impact investments for the DIB, Village Enterprise equipped 14,100+ first-time entrepreneurs (75% women) in rural Kenya and Uganda to start 4,766 small sustainable microenterprises and 481 business savings groups, impacting the lives of over 95,000 East Africans. Due to operational challenges posed by the COVID pandemic, we made adjustments to the program in order to complete full delivery by December 2020 under the DIB contract.
*Performance outcomes are increases in consumption and net assets that were set based on results from Village Enterprise’s 6,300 households randomized controlled trial conducted by Innovations for Poverty Action.
“It has been extremely exciting to witness Village Enterprise’s willingness and desire to innovate, especially with their enhanced adaptive management systems aiming at improving field program delivery. The Village Enterprise DIB is a fantastic example of the potential of outcome-based funding to solve social issues.”Radana Crhova, Development Impact Bonds Adviser, UK Department for International Development
How is the Village Enterprise DIB Structured?
In this “payment-for-results model,” the outcome payers (USAID DIV, FCDO, and an anonymous fund) agree to pay back Village Enterprise and its investors the original investment plus a financial return if the agreed-upon outcome targets (increases in consumption and net assets, including savings) are delivered by Village Enterprise.
The outcomes will be assessed through an independent randomized controlled trial (RCT) conducted by IDinsight in Spring 2021.
Instiglio provides project management support and is the process evaluator.
The Global Development Incubator (GDI) serves as the trustee of the outcome fund.
The Development Impact Bond has been transformative for Village Enterprise by…
- Increasing our focus on impact with a strong performance management system.
- Accelerating technology adoption: mobile cash transfers for entrepreneurs, tablets, and dashboard for frontline field staff.
- Improving programming for greater efficiency and impact: more interactive digital training curriculum and mentoring.
- Strengthening our organizational systems and processes: risk assessment, financial procedures, and safeguarding.
- Increasing Village Enterprise’s visibility and positioning at the forefront of thought leadership in results-based financing and global poverty alleviation.
Scaling up results-based financing to drive impact
Building upon the learnings from our pilot, the vision of the scale-up includes:
- Overcoming barriers to funding poverty graduation at scale by attracting new funders and impact investors to the poverty alleviation sector.
- Attracting other high-performing organizations to the scale-up of a poverty alleviation outcome fund.
- Streamlining outcome evaluation and contracting to reduce costs and increase replicability of this results-based funding model.
Please contact Caroline Bernadi, Chief Development Officer at firstname.lastname@example.org for more information