The Development Impact Bond Educating Girls in India

Picture credit: Skoll Foundation

Three years ago, the world’s first Development Impact Bond (DIB) in education was launched to improve the learning outcomes of girls in Rajasthan, India. Since then, the Educate Girls DIB has achieved 116 per cent of its enrolment target and 160 per cent of its learning target in the final year of the programme, serving over 166 schools in rural communities.

Female education is crucial for development: when girls receive an education, they have the potential to enter the formal economy, gain employment and lift not only themselves but their families and communities out of poverty. Education gives women the tools to overcome gender discrimination and play a more active leadership role in their communities, as well as decreasing early pregnancy, child mortality and maternal deaths. School enrolment also reduces child marriage — a significant issue in Rajasthan, where 60% of girls are child brides.

Unfortunately, lack of female teachers, poor school amenities and the distance and safety of travel between school and home all keep girls out of education. One of the most important reasons for gender disparity in education is cultural and gender bias which creates expectations of domesticity — when it is believed that girls are destined to be wives and mothers and never have a job, school is viewed as an uneconomical distraction from contributing to household chores and agricultural work.

In India, there are almost 3 million out-of-school girls and the state of Rajasthan stands out as having the lowest female literacy rates, with girls in rural areas more than twice as likely than boys to be out of school. In response to this, non-profit organisation Educate Girls works with the Indian government and a network of 12, 000 community volunteers called Team Balika to increase girls’ enrolment and quality of education.

In 2015, UBS Optimus launched a DIB programme to provide Educate Girls with greater operational and financial flexibility. According to Safeena Husain, Executive Director of Educate Girls, ‘the funding enabled us to innovate and apply tailored solutions to enrol the hardest to reach girls in school and significantly improve the learning levels of a large number of marginalized first-generation learners.’

The outcome payer, the Children’s Investment Fund Foundation, pays for the measurable social outcomes of the programme and the risk investors, UBS Optimus, provide upfront funding for the service provider and only receive a return if the targets are achieved. UBS Optimus, which provided capital of $270, 000, has now been repaid with a 15 per cent return — part of which has been given to Educate Girls as a bonus payment.

Picture credit: Instiglio

A key part of the DIB’s success was the focus on measurable impact and independently evaluated payment-by-results. The metrics used were student enrolment, defined by the percentage of out-of-school girls enrolled by the end of the third year, and learning, measured by a controlled, randomised trial of the ASER literacy and numeracy test.

Husain has emphasised the importance of focusing on outcomes of the programme rather than outputs. She also points out the significance of the DIB scheme being a three-year contract rather than one- or two-, as it gave Education for Girls the flexibility to adapt to better achieve their goals; when the learning outcomes in Year one and Two fell behind schedule, a number of alterations were made, including aligning teaching groups with competency levels, an increased number of sessions, improved curriculum content and home visits for regularly absent students. These improvements meant that in Year Three learning outcomes shot up, outperforming their target.

The success of this Development Bond has implications not only for girls’ education in India but in demonstrating the potential of innovative financing solutions for service delivery. The CEO of UBS Optimus, which is now working on a second DIB for education, said ‘it is proving an increasingly attractive approach as people recognize the DIB’s ability to secure new and much needed funding and deliver significant and sustainable social returns.’

There are still concerns relating to DIBs, including high evaluation costs and the sustainability of outcomes after the contract ends; however, the success of the Educate Girls DIB and the lessons we have learned from it– namely the importance of focusing on outcomes and performance management — have offered significant insight into how this financial instrument might be used to contribute to educational and social development in the future.

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