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CGD in the News

Testing the Waters on DIBs (Devex)

July 21, 2014

From the article:

Girls’ education in India, malaria in Mozambique, African sleeping sickness in Uganda — all are development challenges that will likely be the test cases for a new financing model known as development impact bonds. Modeled after social impact bonds, DIBs can help leverage private capital to tackle development challenges: Investors put up the money to fund a development project, a service provider or implementer carries out an intervention to tackle a project, and then an outcome payer or group of payers (in this case development finance institutions or donor agencies) pays for the success of the intervention. Under this pay-for-success model, the outcome payer disburses a return on the initial investment at a rate determined by the progress made in addressing the development challenge. But while DIBs have been generating quite a buzz, the model has yet to be tested or proven.

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Owen Barder
Vice President, Director of CGD Europe, and Senior Fellow