The IBIF, a first for the global South, was set up to drive Early Childhood Development (ECD) targets in the Cape. It was the culmination of more than four years of research, design and advisory support delivered to the Western Cape Department of Social Development (DSD) by the Bertha Centre for Social Innovation and Entrepreneurship at the UCT Graduate School of Business.

Early childhood is a period of unparalleled opportunity for promoting and developing human potential. The period from conception through the first five to six years of life is critical for the development of a child’s physical, social, emotional, and cognitive wellbeing. These benefits are life-long – improving education performance, bettering careers and earnings performance, and health.

Using the model of Social Impact Bonds (SIB), which means that governments only pay if pre-determined outcomes are achieved, the IBIF formed a public-private sector coalition to sustainably finance ECD. Commencing in November 2017 and running for three-years, the IBIF worked to improve the cognitive and socio-emotional development outcomes of more than 3,000 children in the low-income communities of Atlantis and Delft, in the Western Cape province of South Africa.

The IBIF transaction supported a home visiting ECD programme targeting 3- to 5-year-olds, delivered by FCW through its Family in Focus (FIF) programme). FCW has over 40 years of experience working within the ECD sector in the Western Cape and is a long-term partner of the DSD.

The DSD entered a matched funding arrangement with ApexHi Charitable Trust, a private sector outcome funder to augment the available funding for the programme. Three private investors, the Standard Bank Tutuwa Community Foundation, Future Growth Asset Management, and LGT Venture Philanthropy, invested ~US$540,000 up front to fund FCW’s ECD programme over a three-year period. They were repaid with a return on their investment by the government department and private outcome funder once the improved social outcomes were achieved over a three-year term.

An Intermediary partnership between m2m, an Africa-based maternal and child health NGO; and Volta Capital, a global financial intermediary made implementation possible. As the intermediary partners in this transaction, m2m and Volta structured the transaction, raised investment funds for the up-front cost of the implementation by FCW, and conducted programmatic performance management, output and outcome monitoring, and general oversight and reporting services over the life of the transaction.

In pioneering the IBIF, the Bertha Centre also partnered with Social Finance UK, and has been supported by the LEGO Foundation and Innovation Edge to develop this project and others.

Volta Capital and m2m and other project partners are exploring the potential for a successor to the IBIF.