SAN FRANCISCO — A new development impact bond aims to save the lives of as many as 10,000 mothers and newborns in India over five years. But when United States Agency for International Development Administrator Mark Green announced the DIB at the Global Entrepreneurship Summit in Hyderabad, he noted the potential for impact was not only on maternal and child health, but also on USAID’s approach to development.
In response to a question from Devex, he said it reflected how USAID is trying to partner with, rather than merely contract with, the private sector to take on development challenges through a business lens.
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“I think the model's a very good one because it truly harnesses the strength and creativity of the private sector, and while this is the first [USAID DIB to launch], I don't believe it will be the last,” he said. “In fact, there are a number of innovative financing techniques that we are taking up in many places. It just seemed natural to do the first one here in India, with the vibrancy of the private sector here and [the Global Entrepreneurship Summit] around this theme of empowering women, because that's what I believe this will ultimately achieve.”
Following his return from India, Green spoke with Devex about what this DIB reflects about the future of non-traditional financing mechanisms at USAID. He said he hopes the new “Utkrisht Impact Bond” — so named for the Hindi expression for excellence — will be a catalyst for more payment-by-results-based approaches to health and development outcomes. The following interview has been edited for length and clarity.
USAID officials told me that future DIBs can build on the work that went into this one — so it sounds like the impact of this DIB will be not only in India but also at the agency?
I think you put your finger on it. That is exactly right. This is a new application of the principle [in maternal and newborn health], and it is a needed application, and I think it is going to be significant.
But there is also this sense of possibility that we think emerges with the development impact bond.
I look at the innovative finance opportunities that are out there as a way of not only making our dollars go further, but also refreshing our work. I think it creates a spirit of innovation and competitiveness that is just, as an overall matter, good for development work.
I spent much of my first weeks here at USAID literally going around the agency listening and learning from the bright minds that we have. What I hope they’ve gotten from me is encouragement to look at those possibilities, license to be innovative and to think big, and to try things knowing they’ll have in me a champion for out-of-the-box thinking.
“I look at the innovative finance opportunities that are out there as a way of not only making our dollars go further, but also refreshing our work.”— Mark Green, USAID administrator
We will still do our traditional work. Make no mistake about it. That is an essential mission. But we will be better as an organization if we have the experience of tapping into these innovative mechanisms and some of these bright innovative partners that are out there.
It makes us better. It helps to shape our work and priorities. So I see nothing but good in these kinds of partnership arrangements and these financing opportunities.
DIBs are, of course, just one tool in the kit that allows you to take a business approach to development. Another that Devex has covered, for example, is the Broad Agency Announcement, which lowers barriers to entry. What do you find most compelling about the DIB model in particular, and why are you drawn to these new approaches more broadly?
With respect to the DIB itself, it’s paying for results, and that’s particularly attractive.
“I believe in people’s creativity and innovation and competitiveness, and when you can incentivize it, which you can do with a development impact bond, you’ve got something special.”—
In the development world, and I guess I’ve been at this a long time now, there's a lot of talk about how we look at inputs and measure results. And what I like about the DIB is our exposure is only there if there’s delivery of results. So you’re incentivizing performance, and that obviously meets a number of principles that I believe in.
I believe in people’s creativity and innovation and competitiveness, and when you can incentivize it, which you can do with a development impact bond, you’ve got something special. You’ve got something that holds great promise.
As you noted, the DIB is but one form of innovative financing that we’re utilizing. I am interested in the challenge grant initiatives that we’ve done. Early in the new year, we’ll be formally issuing our humanitarian assistance grand challenge, in which we will be allocating a sum of money and soliciting input for ideas — the best ideas that will bring innovations to the area of humanitarian assistance work.
What I like about these mechanisms is they make it easier for new partners to participate. As you know, with the BAA the statement of interest is a couple of pages long as opposed to 30, 40, 50 pages. We want to invite new ideas and new participants.
In the case of the DIB interestingly, for example, PSI is one of the participants. PSI is a longtime partner of USAID. In this case, we have a longtime partner participating in new ways.
So on one hand I hope mechanisms invite new partners. On the other hand, mechanisms like the DIB show that we can have long-standing partners participate in new ways, both of which are good for the agency.
We’ve got lots of talent here. We’ve got good thinkers and we’ve got some great tools. What I want to do is optimize these tools to take on pretty significant challenges that we see that are out there.
We have existing tools to take on these challenges. I actually think we have a lot of what we need. The challenge for us is to apply them effectively in innovative ways.
Let’s talk about innovation more broadly. It’s an overused term, and questions remain about the best ways to operationalize on innovation. How do you look at that at USAID?
Innovation is an overused term. We all are guilty of overusing innovation. Another one is “public-private partnership.” I don’t even know what it means anymore, it’s used so often.
I’m trying to bring collaboration to all parts of the agency. One of the things that I’ve seen since I arrived is that we have pockets of very bright people with very good ideas. That’s certainly true in the Global Development Lab. Part of what I want to do is make sure we all have eyes on it — that we take some of these innovative ideas and principles and tools, and test their applicability in many of the sectors in which we’re working.
This one happens to be maternal and newborn health. We’re doing some very innovative financial work in food security with Feed the Future. So what I hope we do at the agency is go through our redesign — or “reposturing,” as I usually refer to it — trying to do more collaboration across the agency.
We need to create a greater opportunity for people to see what their colleagues are working on and to test its applicability to the work that they’re doing.
We just went through a round of strategic reviews in our geographic bureaus, and we invited others from outside the bureaus to sit in, and what I heard over and over again was “Wow, they’re doing great stuff. I didn’t know they were doing that.” Part of what we’re trying to do with some of these tools, and tapping into the Lab, and tapping into our accelerators, is to really bring that sense of trying new approaches to every part of the work that we do.
We do a lot of things in a lot of places. Not everything is applicable everywhere and we know that. But I’m hoping that when other parts of our agency read about the implementation of the DIB in maternal and newborn health, that for my team working in Power Africa, or my team working on food security, the wheels will start turning and they’ll ask themselves about the applicability.
Read more Devex coverage on USAID.