Fixed income

Impact Bonds go Humanitarian

Stockholm (NordSIP) – Impact bonds have been around for a while, helping communities reach social targets, but for the first time a multinational humanitarian organisation is venturing into the private financing space. On 6 September, the Geneva-based International Committee of the Red Cross (ICRC) launched a humanitarian impact bond “to help transform the way vital services for people with disabilities are financed in conflict-hit countries.”

This CHF 26 million issue is destined to help build and run three new physical rehabilitation centres in Africa (Nigeria, Mali and Democratic Republic of Congo). As in the case of social impact bonds, the private investors in the ICRC bond (among which New Re, part of Munich Re, and Bank Lombard Odier’s philanthropic foundation) will be reimbursed their initial investment as well as a fixed income-like return, provided certain pre-agreed goals are met. The end-payment will depend on targets set together with the project’s “Outcome Funders”, governments and other organisations (Belgium, Switzerland, Italy, the UK and “la Caixa” Foundation), who will be the ultimate source of financing at maturity after 5 years.

According to Peter Maurer, President of the ICRC: “Today’s humanitarian challenges are immense, causing suffering for many millions of men, women and children around the world. This funding instrument is a radical, innovative but at the same time, logical step for the ICRC. It is an opportunity not only to modernise the existing model for humanitarian action, but to test a new economic model, designed to better support people in need.”

Picture (c) – Aleksandar-Milosevic—shutterstock

Kames Capital
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