The majority of South Africa’s preschool children do not receive quality early learning services. This delays progress during formal schooling and entrenches long-term inequalities. Perhaps relatedly, South Africa’s unemployment rate registered a record level in the fourth quarter of 2020, partly accelerated by the Covid-19 pandemic. As such, Innovative thinking is required on how to best support our country’s human capital. One of the undeniable realities in the path to socioeconomic recovery is that investment in education and efforts to boost job creation is paramount.
While the state and the private sector spend billions on education annually, the country’s educational and employment outcomes remain exceptionally poor. Social Impact Bonds (SIBs) could change this. SIBs are a way of financing social welfare services that pay for results. For example, when set numbers of unemployed youths find jobs, or when a certain number of children have achieved improvements in early learning school readiness tests, investors are repaid their capital plus interest. This means investors get both a social and financial return on their investment.
The Standard Bank Tutuwa Community Foundation in partnership with Intellidex is launching a pioneering report, “Social Impact Bonds in South Africa”. This ground-breaking report provides a detailed assessment of the country’s first two SIBs that focused on early learning and youth employability and investigates the potential of using SIBs as vehicles to drive social change.
Zanele Twala, CEO of the Standard Bank Tutuwa Community Foundation says, “We are thrilled to be part of this pioneering journey—and as leaders in impact investing—we stand ready to strategically explore progressive financing mechanisms. Doing so will certainly ensure improved outcomes in the sectors where we invest.”
The first two SIBs in South Africa were launched in 2018: Bonds4Jobs and the Impact Bond Innovation Fund (IBIF). Both provided quality services to vulnerable youth and children. They demonstrate effective innovations in areas that have long suffered from poor quality service. This was driven in both cases by the pay-for-results structure, with outcomes measured and the working capital provided by investors.
We invite the media to join Intellidex's Dr Zoheb Khan and Dr Graunt Kruger as they discuss the report's findings with a panel of participants in the SIBs.
Launch Date and time: 15 April at 3pm (CAT).
Register here. The reports will be released on 15 April here.