Pimpri Chinchwad Municipal Corporation(PCMC) has signed an Memorandum of Understanding(MoU) with United Nations Development Programme(UNDP) India to co-create India’s 1st Social Impact Bond(SIB).
i.As part of this investment tool, if the pre-defined project targets are fulfilled, the PCMC administration will bear only the public welfare project cost associated with the bond.
ii.The Palladium Group has been appointed to design and structure the expertise of the impact bond.
iii.UNDP will provide technical assistance to PCMC through its Sustainable Development Goal(SDG) Finance Facility as a support to it in the design of SIB.
Benefits of India’s 1st Social Impact Bond
This SIB will support PCMC to upgrade its healthcare services particularly regarding the COVID-19 pandemic, while incurring minimum investment risks.
In addition to this, it also develops the capacity of its staff and creates protocols that support high quality healthcare.
Highlights of Social Impact Bond:
i.SIB sets outcome-based targets that are to be achieved in the beginning of the contract.
ii.This feature allows to track the progress of the outcomes, thereby ensuring transparency for the investors.
iii.This mechanism also ensures whether the funds are used effectively and efficiently towards the project.
iv.This is the 1st time a govt body will act as the ‘Outcome Funder’ in a bond.
- Traditionally most government-funded public projects require large and early investments by the government with a substantial development period of outcomes and involve a wide range of risks.
About SDG Finance Facility
i.It is a multi-stakeholder platform to enhance the growth of SDG aligned innovative financing mechanisms.
ii.This facility is supported by the Swiss Agency for Development and Cooperation(SDC).
What is Social Impact Bond?
i.A social impact bond (SIB) is a contract with the public sector or governing authority, whereby it pays for better social outcomes in certain areas and passes on the part of the savings achieved to investors.
ii.If the project succeeds, the investors are repaid by the Government
iii.SIB is also called pay-for-success financing, pay-for-success bond, social benefit bond or simply a social bond.
i.The term SIB was originally coined by Geoff Mulgan, chief executive of the Young Foundation.
ii.The 1st SIB in the world was launched by UK-based Social Finance Ltd. in September 2010.
Recent Related News:
On September 15, 2020, Mexico became the first country in the world to inaugurate sustainable financing program for the achievement of Sustainable Development Goals (SDGs) by issuing a seven-year Sovereign SDGs Bond worth USD 890 million under its new “SDG Sovereign Bond Framework” developed with investment bank Natixis, located in Paris, France.
About United Nations Development Programme(UNDP) India:
UNDP worked in India since 1951
Resident Representative– Shoko Noda
Headquarters– New Delhi, India
About Pimpri Chinchwad Municipal Corporation (PCMC):
Headquarters– Pune, Maharashtra, India
Commissioner– Mr. Shravan Hardikar (Indian Administrative Service-I.A.S.)