London, 27 October: The British Asian Trust has launched the $14.4m Skill Impact Bond (SIB), the first of its kind impact bond for skill development that will upskill and provide vocational training for 50,000 Indian youth. Sixty percent of the beneficiaries (30,000) will be women.
The SIB is the result of a collaboration with public, private and nonprofit partners and comes at a time when COVID-19 has rendered millions of Indians jobless. Women were seven times more likely than men to have lost their jobs during India’s lockdown. Between November 2019 and November 2020, the urban Indian female work force contracted by 27%.
Abha Thorat-Shah, Executive Director (Social Finance) of the British Asian Trust, said, “India has the lowest female labour force participation in South Asia at 20.3% and current outcomes of skills development programmes for them are highly inadequate. Out of every 100 women enrolled in skilling programmes, only around 10 stay in post-skilling jobs for three months or more.”
She added, “The Skill Impact Bond turns this challenge into an investable opportunity and can help put India back on track for meeting its gender and employment-related UN Sustainable Development Goals, post-COVID-19.”
Impact bonds are financing tools where funders agree to pay for social outcomes, such as number of people who retained jobs, rather than programme inputs, such as the number of people trained. Rather than a government or a donor financing a project upfront, private investors (risk investors) initially finance the initiative. They are repaid in full along with a small, fixed sum by parties called “outcome funders” if the outcomes are achieved.
The SIB follows the success of the British Asian Trust’s first bond in India, the Quality Education India bond. This was the world’s largest Development Impact Bond, valued at $11m. Launched in 2018 with the aim of improving learning outcomes for 200,000 primary school children, the final outcomes of the bond will be evaluated in 2022.
The British Asian Trust, founded by HRH The Prince of Wales to tackle widespread poverty, inequality and injustice in South Asia, is the transaction manager for the SIB. It has convened the outcome funders (Children’s Investment Fund Foundation, HSBC, JSW Foundation and Dubai Cares) and taken the lead in designing and structuring the bond.
The risk investors of the SIB, India’s National Skill Development Corporation and Michael & Susan Dell Foundation, have committed US$4m for upfront working capital to the service providers, Apollo Medskills Ltd, Gram Tarang Employability Training Services Pvt Ltd, Learnet Skills Ltd, Magic Bus India Foundation and PanIIT Alumni Foundation.
The final evaluation will be conducted in 2025 by Oxford Policy Management. Dalberg Advisors, the performance manager, will also regularly measure outcomes to help delivery partners stay on track to achieve outcomes. Nishith Desai Associates is the legal partner for the impact bond.
Richard Hawkes, Chief Executive of the British Asian Trust said, “This impressive coalition of public and private sector partners promotes collaboration on a shared development goal to support youth in their transition to employment. The Skill Impact Bond is a mindset shift and seeks to harness the power of its broad coalition to convince Indian state governments of the merits of outcome-based, gender appropriate interventions and increase their roll-out across India, potentially changing the skilling landscape”.
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Notes to Editors:
For more information, please contact Saiansha Panangipalli at [email protected].
About the British Asian Trust
The British Asian Trust wants to see a South Asia that is prospering and fair for all. Our work supports large-scale, sustainable solutions that enable poor and marginalised people to achieve their full potential. Since we started in 2007, we have had a positive impact on the lives of almost 6.6 million people in India, Pakistan, Bangladesh and Sri Lanka. By enabling our supporters to turn their values into action, we transform lives. Together we support a South Asia that is better for all.
About SIB
The Skill Impact Bond consists of an international coalition of public, not for profit and private sector organisations.
Risk Investors: National Skills Development Corporation (NSDC) and Michael & Susan Dell Foundation
Outcome Funders: The Children’s Investment Fund Foundation, HSBC Foundation, JSW Group and Dubai Cares
Transaction Partner: The British Asian Trust convened all partners in the design phase and will hold day to day accountability on behalf of stakeholders
Technical Partners: The Foreign, Commonwealth & Development Office (FCDO) and United States Agency for International Development (USAID) who is supporting this initiative through its flagship innovative financing platform – PAHAL. USAID in its role as technical partner, will support the initiative by assessing the impact of skill training on the wellbeing of women and youth in low-income communities.
Please refer to the addendum for comments from all the partners.
Service Providers / NGOs:
- Apollo Medskills Ltd is focused solely on healthcare, with a strong simulated on-the-job training component.
- Gram Tarang Employability Training Services Pvt Ltd offers all women residential training with strong focus on vulnerable communities.
- Learnet Skills Ltd provides blended training with deep employer engagement.
- Magic Bus India Foundation provides sector agnostic training, focused on life and employability skills.
- PanIIT Alumni Foundation offers residential training with deep employer engagement and a skill financing loans model.
ADDENDUM: QUOTES BY THE GLOBAL PARTNERS OF THE SKILL IMPACT BOND
Mr. A.M. Naik, Chairman, National Skill Development Corporation, and Group Chairman, Larsen & Toubro Ltd. – “India’s aspirational youth require skills for the jobs that meet the demand of the industry. Core functional knowledge and competencies enhance an individual’s ability to secure and retain a job and improves their potential to earn. Skill Impact Bond is a collaborative effort of National Skill Development Corporation and esteemed global organisations and people who share their vision to improve skilling outcomes in India. This landmark financial instrument applies an entrepreneurial approach to philanthropy and ensures accountability which contributes to achievement of set objectives. The project has the potential to make a transformational impact especially in the lives of women.”
Alex Ellis, British High Commissioner to India – “The UK has a strong record of addressing development challenges including through the innovative mechanism of Development Impact Bonds (DIBs). Following the success of Quality Education Impact Bond in India, the British government is partnering with the British Asian Trust (BAT) and other stakeholders to launch the Skill Impact Bond that aims to equip young Indians, especially women, to be employment-ready as we look to build back better after Covid-19”.
Rahil Rangwala, Director India Programs, Michael & Susan Dell Foundation “Outcome-based funding models, which incentivize a more targeted focus on improving outcomes are ideally suited to driving placements in jobs as opposed to just providing the skills. This exciting new program will make a big difference by enabling young people to bridge the gap between developing meaningful skills and finding job opportunities in sectors that are in urgent need for talent. The Skill India Impact Bond’s ambition is to drive meaningful improvement in skilling outcomes at scale, while also leveraging our learnings to help the government and other funders make informed policy and spending decisions”.
Aloka Majumdar, Head of Corporate Sustainability, HSBC India – “Our support for the Skill India Impact Bond is a natural progression of HSBC’s work in the skilling sector in India. This programme is not about how many people it skills, but how many people get a sustainable livelihood. Given the scale of the requirement of the skilling sector, we believe, all viable financing options should be on the table. Innovative solutions like this outcome based financial instrument will help create tangible action on the ground at a time of great urgency. It offers another way to address these challenges effectively and generate more learning about what works in development. Capturing the results and learnings from this programme will be critical as it will help improve commissioning and delivery of large scale skills training”.
Mrs. Sangita Jindal, Chairperson, JSW Foundation – “Skills drive the nation. The JSW Foundation has decided to be an outcome funder to India’s first Skill Impact Bond in order to cultivate an innovative approach in the skill development space. A greater emphasis on placement and retention will definitely help secure a long-term impact. Skills are tools that translate dreams into reality. We are supporting this unique initiative to strengthen the overall skilling ecosystem in the country”.
His Excellency Dr. Tariq Al Gurg, Chief Executive Officer and Vice-Chairman of Dubai Cares – “The ongoing disruption in India’s job market necessitates the need for a young workforce that is fully equipped for the future and meaningfully empowered to play a leading role in driving the country’s economic progress. Youth skilling, therefore, represents one of the biggest opportunities that will catalyze and accelerate India’s growth and development in the years to come. Our support to the Skill India Impact Bond is a testament to our belief in collaborating with the right stakeholders to enable our youth’s successful integration into the economic fold and allow them to contribute towards greater prosperity for all, especially in a post COVID-19 era”.
Veena Reddy, Mission Director, United States Agency for International Development (USAID) in India – “USAID is committed, along with our partners, to innovative financing that focuses on results. Through the Skill Impact Bond, we will improve the livelihoods, health, and wellbeing of women and youth from disadvantaged backgrounds throughout India, with positive impacts on their resiliency and that of their families and communities.”
