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The first social impact bond for Early Childhood Development (ECD) has been launched in South Africa through a collaboration of The Bertha Centre, Volta Capital and the charitable organisation mothers2mothers (m2m).

The Impact Bond Innovation Fund (IBIF) is the first of its type to be launched in the Global South. Volta Capital and m2m are managing the IBIF as an intermediary partnership, along with the FCW – the Western Cape Foundation for Community Work – as the implementing partner.

Ragnar Horn has previously been a financial supporter of the m2m non-governmental organisation, which works to bolster healthcare systems and education in Africa while delivering opportunities for empowerment for women. You can learn more about the need for improved access to healthcare in Africa via the embedded infographic.

IBIF Financing

The Western Cape Department of Social Development (DSD) lead the transaction for the IBIF, working with a coalition of local and international investors and a matched funding arrangement developed with private sector outcome funder the ApexHi Charitable Trust. The local investors are both socially motivated organisations: Future Growth Asset Managers and The Standard Bank Tutuwa Community Foundation. These investors are joined by LGT Venture Philanthropy, part of the international community for venture philanthropy and impact investment.

The joining of forces of these three established investors is designed to facilitate sustainable, long-term educational development outcomes for children across South Africa. Valuable pre-launch funding was also provided by The Standard Bank and LGT VP to the intermediary partnership of m2m and Volta Capital. Private investment of around US$540,000 will be made available up front through ApexHi, which will fund the Early Childhood Development programme for an initial three-year period.

The Need for Better Early Childhood Development Programmes

The IBIF was established following an identified need for better outcomes for early childhood development in low-income families in South Africa’s Western Cape province. Early childhood is classified as the period of time beginning with conception and ending when the child reaches the age of about five or six. While there are huge economic benefits documented for ECD, most government funding pales into insignificance when compared to funding for primary and secondary education.

It is during the earliest years of childhood that humans form the basis of personality, social behaviour, intelligence and capacity to learn. Significant evidence has been gathered to link non-communicable adult diseases with adverse circumstances in the early years and bad habits formed during this time of life. The PDF attachment explores research from the World Health Organisation regarding ECD on a global scale.

Social Impact Bonds

Social impact bonds have existed since 2010, with the first launched in September of that year by Social Finance Ltd, which is based in the UK. A social impact bond operates over a pre-determined period of time but returns for investors are not fixed. Specific social outcomes need to be achieved for the investors to start receiving returns. Funds to remunerate SIB investors come from the budget of the host country, from donors or from some combination of the two.

SIBs bring the public, voluntary and private business sectors together to tackle challenges in society in a way that is designed to facilitate benefits for society as well as benefits for investors. In the UK, there are currently more than 30 SIBs supporting work in areas such as tackling homelessness and youth unemployment, long-term health and mental health issues, and poverty in childhood.

You can learn about the Family In Focus programme from the FCW by watching the short video attachment.