Press Release: World’s First $10 Million Sanitation Development Impact Bond Launches

Thursday, November 21, 2019

A groundbreaking initiative to bring safe sanitation to some of the poorest and most vulnerable households in Cambodia launches today. The Cambodia Rural Sanitation DIB is the world’s first Development Impact Bond for sanitation and aims to eradicate the high rates of open defecation in the country and accelerate the Cambodian government’s efforts to reach universal sanitation.

The DIB aims to develop market-based solutions that will contribute to universal sanitation coverage in six provinces (Svay Rieng, Kandal, Prey Veng, Kampong Thom, Siem Reap and Oddar Meanchey)—reducing stunting among children and, preventing the spread of disease and contamination of drinking water. This supports the Cambodian government’s aim of eliminating open defecation by 2025—five years ahead of the Sustainable Development Goals target of 2030.

The Stone Family Foundation will provide the upfront investment required to achieve sanitation outcomes, which will be delivered through the third phase of iDE’s Sanitation Marketing Scale Up program. USAID will provide up to $10m in outcomes funding to the Stone Family Foundation, but only where results (open defecation-free villages) are achieved. The DIB model will allow iDE and the Stone Family Foundation to learn, adjust, and innovate in order to achieve the goal of 1,600 open defecation free villages while reaching the most vulnerable households.

The Cambodia Rural Sanitation DIB was developed with the support of Social Finance, which undertook the feasibility study for a sanitation sector DIB and facilitated the design discussions between USAID, Stone Family Foundation, and iDE.
Paul Gunstensen, Director of WASH at Stone Family Foundation, said“We are delighted to launch this initiative with USAID and iDE. This is the culmination of a six-year partnership to support iDE’s successful sanitation marketing program, and we hope it will serve as an example of how long-term finance and support can address the critical challenge of universal sanitation. This DIB demonstrates it is possible to transition from grant funder to impact investor, enabling both high social impact and financial return.”
The Cambodia Rural Sanitation DIB is a significant step forward for iDE’s already successful Sanitation Marketing Scale-up Program, which delivers affordable latrines to tens of thousands of households every year, contributing to increases in sanitation coverage from 29 percent to 67 percent between 2009 and 2018 in the six provinces. The impact bond mechanism incentivizes constant program improvement for delivery of results, allowing iDE to leverage its strengths in rigorous data analysis and adaptive management to achieve outcomes.
Lizz Ellis, CEO of iDE, said“The outcomes focus of an impact bond provides flexibility to evolve in a complex and constantly changing market ecosystem. This flexibility is important as iDE tests new strategies for increasing our ability to reach the poorest households with improved sanitation, ensuring that all people benefit from the drive towards total sanitation.”

The principle of supporting local markets to deliver products and services that local communities value is key to the program. It is in line with USAID’s focus on achieving greater development outcomes by building local sustainability so that foreign assistance is no longer necessary.

Veena Reddy, Mission Director at USAID Cambodia, said:“This new results-based financing approach to improving rural sanitation demonstrates our commitment to supporting Cambodia on its road to self-reliance. This DIB is USAID’s third and an example of our leadership in collaboration and co-design between partners and global innovative financing to achieve the best possible development results.”

As well as being the first impact bond specifically focused on a Water, Sanitation, and Hygiene goal, the impact bond went from initial design to launch in a relatively short time period of nine months.

David Hutchison, CEO of Social Finance, said:“The rapid development of this impact bond was enabled by the aligned priorities and commitment of the partners. It’s a great example of how focusing on outcomes allows different development partners to collaborate in a mutually beneficial way, playing to organizational strengths to deliver high impact programs with a clear end-goal.”

Photo courtesy of aaron gilson.

Source: Press Release (link opens in a new window)

rural development, SDGs