EIB has contributed $18m to the fund, a partnership between UBS Optimus Foundation and Bridges Outcomes Partnerships, which supports outcomes-based programmes in low- and middle-income countries.
SDG Outcomes Fund, a partnership between UBS Optimus Foundation and Bridges Outcomes Partnerships (BOP), has reached final close of $100m (€85m) with an $18m commitment from the European Investment Bank (EIB). The announcement was made yesterday at the 4th UN International Conference on Financing for Development in Seville.
The EIB investment is being made through funding from the European Commission via the ACP Trust Fund, a financing mechanism which focuses on high-risk impact-finance operations in the Africa, Caribbean and Pacific region.
The Article 9 fund is a blended finance initiative launched in 2021 and designed to accelerate progress towards the UN SDGs by supporting outcomes-focused programmes in low- and middle-income countries, particularly in Africa and Asia.
To crowd in other impact investors UBS Optimus Foundation, a global network of philanthropic organisations, established and managed by UBS, is providing 20% first-loss capital, whilst BOP, the not-for-profit subsidiary of UK-based Bridges Fund Management, is acting as the portfolio and delivery manager.
Speaking to Impact Investor, an EIB spokesperson said the bank was motivated to invest by the fund’s ability to mobilise private capital for impact, and make a meaningful difference especially for the world’s most vulnerable communities.
“In the current political context, where different priorities are competing for budgets, here is a product that is able to both unlock large scale financing and deliver progress towards the SDGs over an acceptable timeframe. This is good for the range of partners but even more so for the people benefitting from the impact on the ground. It’s a model we would like to replicate,” he said.
Mezzanine and senior capital have been committed by the US International Development Finance Corporation, and British International Investment. The fund has also received contributions from private investors including Legatum, family offices such as the Tsao Family Office and Ferd, and high-net-worth individuals.
Outcomes-based programmes
According to UBS Optimus Foundation and BOP, this is the first fund specifically designed to support outcomes-based programmes in low- and middle-income countries, focusing on health, education, women’s economic empowerment, and the environment.
With a lifespan of 12 years, the fund has invested in 12 programmes to date and for every programme it supports, BOP identifies and works with a range of partners to find, finance and deliver the programmes on the ground.
Whilst the fund covers the up-front costs, the outcomes funders, who are typically local or national governments, donors, foundations, corporates, NGOs, or even individuals, only pay if successful and verifiable outcomes are achieved.
Speaking to Impact Investor, Mila Lukic CEO and founder of Bridges Outcomes Partnerships, said the fund and outcomes contracts in general, were vital in enabling funding to achieve the SDGs, especially at a time when development finance is being squeezed by government cuts on both sides of the Atlantic.
“By focusing on hyper-localised, bottom-up outcomes, you are enabling funding to be more effective. You can achieve genuinely person-centred and community-centred outcomes in partnership with the very individuals and communities you’re serving. This is critical in general but even more so in today’s context of funding cuts.”
The partners said the focus on outcomes, rather than the traditional approach of paying for activities or inputs, allows delivery consortia to adjust and tailor their programmes as they go along, enabling them to learn from real-time impact data about how to achieve the best possible results in each context.
Outcomes results
One of the programmes supported through the fund is the Kenya Health Outcomes Partnership (KHOP), a collaboration between the fund, the UN in Kenya, the Government of Kenya, the Children’s Investment Fund Foundation (CIFF), and delivery partner Tiko, an NGO focused on addressing multidimensional poverty, including the triple threat of teen pregnancy, HIV, and sexual and gender-based violence (SGBV), faced by young women and girls in Sub-Saharan Africa. To date, the programme has helped to deliver more than 1.5 million sexual and reproductive health services to over 700,000 girls aged 15-19 in Kenya, beating its HIV and family planning delivery targets nine months in advance.
Tom Hall, global head of social impact and philanthropy for UBS and CEO of the UBS Optimus Foundation, told Impact Investor that the announcement, which was made at a roundtable of senior ministers and business leaders from several countries, had generated a lot of interest.
“We had a panel today with ministers from different parts of the world, including India, Colombia and the Swiss government, and there seems to be a real recognition of the nature and strengths of these contracts,” he said giving Tiko’s work with girls in sub-Saharan Africa as an example.
“This is the real power of this model – creating transparency around how public money and development capital is being spent for outcomes whilst also creating investment opportunities for private capital in sectors and geographies that simply didn’t exist before. The data has shown that this can be significantly more efficient than traditional input-based procurement.”
Other outcomes delivered by the fund include support for more than 50,000 schools in India and more than 100,000 children in Sierra Leone and Ghana, the collection of 3,000 tons of plastic waste for recycling in Nigeria and the provision of IT upskilling and employment opportunities for over 800 long-term unemployed young adults in Türkiye.
To date, nearly $13.5m of outcome payments have been catalysed by the fund.
