New development impact bond aims to improve economic opportunities for refugees and host communities in the Middle East while providing measurable development outcomes to investors
WASHINGTON – U.S. International Development Finance Corporation (DFC) today announced $10 million in financing for the Near East Foundation (NEF) UK to help support refugees and host populations in Jordan and Lebanon. With the issuance of the DFC loan, NEF will provide a comprehensive micro-enterprise training program for refugees and host populations, primarily women and youth. This is the first Development Impact Bond (DIB) to specifically target refugees, seeking to mobilize private sector investment to enable vulnerable refugee populations to participate in the economy and become more prosperous alongside their host communities. DFC is making this investment under the agency’s Portfolio for Impact and Innovation (PI2) Initiative.
“Refugees, especially women and youth, face extraordinary challenges accessing economic opportunity, but investments in displaced populations and their host communities can yield transformative results in those societies,” said Algene Sajery, DFC’s Vice President of External Affairs and Head of Global Gender Equity Initiatives. “Through DFC’s support for the Refugee Impact Bond, NEF will mobilize private sector investment to help support economic inclusion and resilience for vulnerable refugee populations in Jordan and Lebanon.”
NEF president and CEO, Charlie Benjamin, spoke to the need for funding structures like the DIB saying, “Through its outcome-driven approach, multi-year funding, and independently evaluated outcomes, the DIB fills a critical gap in livelihoods programming – especially in crisis contexts.” He continued, “We’re very excited to build onto our long commitment in Jordan and Lebanon in collaboration with the DFC and a unique group of like-minded partners. Together we will leverage new perspectives and resources to strengthen and scale programs that mitigate the dangerous impacts of protracted displacement on refugees and their host communities, while ensuring a focus on long-term resilience and self-sufficiency.”
According to the United Nations, 79.5 million people were displaced worldwide in 2019. Refugees often face multiple challenges in accessing economic opportunities which can lead to risky coping strategies and isolation. Jordan and Lebanon host many of the Middle East’s refugees, placing additional pressure on these countries’ job markets, infrastructure, and educational systems. The DIB will work with local partners to address these challenges by creating pathways for economic resilience, reducing reliance on humanitarian aid, and supporting social cohesion.
Although traditional humanitarian response mechanisms are critically important, it is challenging to shift from providing emergency relief to establishing long-term, large-scale resilience programs. By shifting the focus to measurable outcomes and empowering delivery partners with the flexibility to focus solely on sustainable impact, financing through a Development Impact Bond – a loan where the principal and interest is repaid by donors seeking specific measurable social impacts – has the potential to generate a paradigm shift. Through the Refugee Impact Bond, NEF aims to help refugees and those with limited resources acquire skills, sustainably improve the ability of households to meet basic needs, safely rebuild assets, and protect against shocks. As they lift themselves out of poverty, vulnerable Jordanians, Lebanese, and refugees will positively contribute to the fabric of their communities and economies.
The $10 million loan to NEF will be made through DFC’s Portfolio for Impact and Innovation (PI2) Initiative, which aims to catalyze investment in high-impact, early-stage projects across the developing world, by targeting measurable development outcomes for populations currently lacking financial access and inclusion. DFC’s investment also advances its 2X Women’s Initiative, which is dedicated to supporting the economic empowerment of women across the developing world. At least 65 percent of the beneficiaries under this refugee project will be women, who are often the most vulnerable among refugee populations.
Through its involvement in this project, DFC hopes to demonstrate to other investors the value of results-based financing and continues to support the growth of the DIB market. DFC was one of the first development finance institutions to invest in DIBs in 2018 through its investment in the Cameroon Cataract Bond.
###
U.S. International Development Finance Corporation (DFC) is America’s development bank. DFC partners with the private sector to finance solutions to the most critical challenges facing the developing world today. We invest across sectors including energy, healthcare, critical infrastructure, and technology. DFC also provides financing for small businesses and women entrepreneurs in order to create jobs in emerging markets. DFC investments adhere to high standards and respect the environment, human rights, and worker rights.