The Village Enterprise Development Impact Bond

The Village Enterprise Development Impact Bond (DIB) is the first DIB launched for Africa, the first for poverty alleviation, and one of the first few in the world. Developed by partners from the U.S. Agency for International Development (USAID), U.K. Department for International Development (DFID), Village Enterprise, Instiglio, and the Global Development Incubator, this DIB will help graduate tens of thousands from poverty in rural Africa through results-based financing.

The Village Enterprise Development Impact Bond.  Photo: USAID/Siegfried Modola

HOW DOES IT WORK?

Impact bonds are part of a shift we’re seeing in how investors and donors are financing development. USAID, DFID, and our partners hope to crowd-in more resources and service providers to expand the partnership by pooling funding into a first-ever outcomes fund. Like others, this impact bond is entirely focused on paying for success. This bond aims to increase the number of people in rural Africa who will graduate out from extreme poverty and achieve economic self-sufficiency through the launch of their small businesses.

Through this Development Impact Bond, USAID’s Development Innovation Ventures (DIV), DFID, and other funders are committing to paying for specific outcomes: Village Enterprise gets up-front funding in the form of working capital from socially-motivated investors, and flexibility to adapt the program to maximize impact. USAID and other funders’ repayments to the investors are conditional on Village Enterprise delivering verifiable results such as improved income and consumption. The impact bond, valued at a total of $5.28 million, will allow Village Enterprise to scale its successful program that has already helped 39,000 small businesses get off the ground. Village Enterprise’s approach is to create and sustain microenterprises by providing a small cash grant, business and financial literacy training, mentoring, and access to savings.

The bond will help launch a minimum of 4,600 sustainable microenterprises over the next three years, positively impacting 13,800 or more households across rural Kenya and Uganda. By partnering with the private sector and maintaining a focus on results, we can remain good stewards of U.S. taxpayer dollars and advance our efforts to reduce poverty and promote economic growth.

OUR GOAL

Launch 4.6K MICROENTERPRISES to impact nearly 14K EXTREME POOR

This partnership will impact nearly 14,000 extreme poor in rural Uganda and Kenya by providing the resources needed to launch over 4,600 small businesses over the next three years.

Last updated: January 09, 2018

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