Accelerating impact: COVID-19 and the future of outcomes-based financing

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Devex at #UNGA75: Accelerating Impact: COVID-19 and the future of outcomes-based finance. Via YouTube.

Development and aid contracts need to be reformed in the pandemic era to allow for crisis-related contingencies after COVID-19 forced numerous development projects to adopt remote and virtual approaches, experts said at an event co-hosted by Devex and UBS Optimus Foundation.

Maya Ziswiler, executive director of programs and social finance at the UBS Optimus Foundation, said COVID-19 had triggered systemic changes in the aid sector, forcing organizations to rethink and adapt programs to deal with new realities.

For instance, the maternal and newborn health “Utkrisht” impact bond in Rajasthan, India, shifted to virtual training for hospitals and remote evaluation, as well as service providers introducing telemedicine to aid mothers remotely. In the Quality Education India impact bond, low-tech solutions — such as SMS and door-to-door visits — and strong relationships were leveraged to harness community engagement. The flexibility provided by such instruments can allow for a quick transition to means and methodologies that suit the new environment and ensure a greater focus on impact.

Phyllis Kurlander Costanza, head of UBS in Society and CEO of UBS Optimus Foundation speaks at Accelerating Impact: COVID-19 and the future of outcomes-based finance event. Via YouTube

“The most important thing we’re learning is that flexibility in design at the beginning is going to be key,” said Maitreyi Bordia Das, global programs manager at the World Bank’s Urban, Disaster Risk Management, Resilience, and Land Global Practice. COVID-19 has caused delays in the field of outcomes-based financing, leading to contracts needing to be renegotiated, extended, or have their targets changed, she added. Building such flexibility into contracts from the beginning means that should such an event happen again, those most in need can continue to receive support.

Panelists from the UBS Optimus Foundation, World Bank, United Nations Children’s Fund, Instiglio, and the U.S. International Development Finance Corporation also reflected on the pressing need to find innovative funding tools that stimulate real impact on the ground both during the pandemic and beyond.

“With 10 years left to achieve the Sustainable Development Goals, the international community must think more creatively about the mobilization of capital,” said Charlotte Petri Gornitzka, deputy executive director at UNICEF. Such approaches are necessary at a time when the community is being “rocked with crisis,” she added.

Gornitzka highlighted a significant funding gap when it comes to projects that seek to ensure sustainability and said there is a need to pursue a holistic model for public-private partnerships. These should involve both domestic and international actors and drive governments to enable outcomes-focused mechanisms such as impact bonds, at a larger scale.

Phyllis Costanza, head of the UBS Optimus Foundation, said development impact bonds would help unlock new sources of funding needed to make measurable progress toward the SDGs. UBS was committed to seeing them grow, especially now in the pandemic period as budgets tighten and demands intensify for efficiency and transparency, she told the conference.

To learn more, watch the event above and join the conversation online using the hashtag #UNGA75.

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