The proposal originates from the discussions in the informal Working Group on the implementation of Development Impact Bonds (DIBs) hosted by the KIT. The project seeks to facilitate greater use of DIBs in the commodity sector by creating wider shared understanding of the DIB financing models as an instrument of achieving material development outcomes in partnership with competitive market players.

The use of DIBs is still in a very preliminary and explorative stage and the working group serves as point of information exchange by members on the design and practical use of DIBs The poor awareness by potential outcome sponsors is a major impediment to expansion of DIBs use.

A symposium to create more awareness among the potential outcome sponsors/commissioners on Development Impact Bonds (DIBs), whose involvement is crucial to bring expand the practical application of DIBs in commodity projects was held. Other stakeholders such as investors, service providers and independent verifiers participated in the event (nearly 100 participants ).

The symposium aimed at achieving the goal of enabling greater use of Development Impact Bonds (DIBs) in the commodity sector by creating wider shared understanding of the DIB financing models as an instrument of achieving material development outcomes in partnership with competitive market players. The symposium created more awareness among the potential outcome sponsors/commissioners on DIBs. Other stakeholders such as investors, service providers and independent verifiers were also invited. The symposium was co-organized and jointly funded by the CFC and other development organizations in the Netherlands.

The typical target beneficiaries of a DIB financed project would be a social enterprise in the commodity sector operating in a potentially profitable product niche and having significant social obligations within the community. Such enterprises have a definite economic development role but are failing to attract financing on commercial basis and need to develop a relationship with private financiers to be able to reach sustainability. DIBs offer an opportunity for such enterprises to obtain financing while continuing on the road to attain longer-term commercial viability without compromising their social nature.

PROJECT OVERVIEW
Submitting Institution: Koninklijke Instituut voor de Tropen (KIT) Project: CFC/2015/07/0045FT
Location: Netherlands Commodity: Development bonds
Total Cost: USD 55,000 CFC Financing: USD 27,500 (Grant)
Project Type: Fast Track Project



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