Despite Ghana’s significant progress in reducing poverty over the years, regional and sub-regional disparities in income level and access to social services persist, particularly with regard to inequitable access to quality education.  Though education enrollment rates are high compared to other countries in the region, the quality of education is still far from ideal. Per the Human Capital Index for Ghana, out of the average years of schooling in Ghana (11.6), the number of quality-adjusted learning years is just 5.7—meaning that children are in school but not learning for nearly six years.

Children from hard-to-reach and low-income households must make challenging daily commutes to get to school, and in some cases, children lack access to formal classroom settings (there are some schools under trees). Other issues include limited infrastructure for gender and disability needs, barriers preventing pregnant, parenting, and working students from continuing their education, limited access to media and technology, and the opportunity cost of schooling, especially if students help their parents in generating income.

To tackle challenges like those faced in Ghana, and achieve the United Nations Sustainable Development Goals, developing countries must not only use existing resources more effectively, but also look to additional resources. Results-based financing (RBF), an innovative funding approach focusing on the achievement of actual results can contribute to narrowing the funding gap, both by increasing the cost-effectiveness of existing funding and by unlocking additional financing from the private sector.

The World Bank’s Global Partnership for Results-Based Approaches (GPRBA) recently approved a $25.5 million grant to harness outcome-based financing—a form of RBF that ties payments to the achievement of measurable outcomes—to help out-of-school children (OOSC) reintegrate into Ghana’s formal education system and improve learning outcomes. The United Kingdom’s Department for International Development (DfID) is providing this grant through GPRBA’s recently launched Education Outcomes Fund (EOF). The government of Ghana will contribute an additional $4.5 million to the program. The primary focus will be to support marginalized OOSC, including girls, children with disabilities, and children from lower-income households.  

This GPRBA grant builds on the ongoing work of the IDA-funded Ghana Accountability for Learning Outcomes Project (GALOP) a results-based operation. The GALOP aims to improve the quality of education by supporting teaching and learning. With greater focus on equity and efficiency, GALOP supports improved learning, improved accountability for learning, technology-based, in-service teacher training, and provision of learning materials. GALOP’s additional financing is also supported by the Global Partnership for Education, which recently approved an additional $15 million for Ghana as part of its response to the education emergency triggered by the COVID-19 pandemic.

With GPRBA’s grant, the government will work with social investors and non-governmental organizations (NGOs) as service providers to implement the EOF program. Social investors will provide the upfront financing in cases where service providers are unable to do so. Payments will be made based on agreed-upon outcomes, transferring the financial risk away from the government and onto the implementers. Technical assistance will help build government capacity to contract and manage outcomes.

The operation will target approximately 75,000 OOSC in areas with the highest absentee and dropout rates, in districts historically deprived of a strong educational infrastructure, and in the Greater Accra and Kumasi Metropolitan districts. In addition, approximately 120,000 students already enrolled in selected GALOP-beneficiary schools will benefit from strengthened interventions supported by service providers.

Since its approval by the World Bank in 2019, GALOP has seen considerable progress, including the completion of a revised curriculum training for all basic education teachers in the country and the establishment of a point-based sustainable professional development framework for teachers. Approximately 10,000 schools have been targeted to receive support, management, and resources. In addition, the process for strengthening the accountability systems for learning is underway.

The GPRBA grant is supporting Ghana’s commitment to reduce the number of OOSC in the country, bring more children to school, and increase sector resources by engaging social investors and NGOs. The first of its kind in Africa, this financing will help strengthen the ecosystem for outcomes-based funding in Ghana, spurring a shift from activity-based funding to outcomes-based financing.

Ghana Sanitation Project Exceeds Target by 17% 

2019.06.13, Modern Ghana

"Mr George Asiedu, Project Coordinator of the Greater Accra Metropolitan Area Sanitation and Water Project (GAMA-SWP) is advancing his reasons for additional funding to tackle the under-covered areas.

'We set ourselves to construct about 19,100 household toilets with two financiers, one from the GPOBA (now GPRBA) which gave us $4.8 million with other funding support from the World Bank. As we speak, the project has a one year live to go but we’ve constructed 22,342 household toilets exceeding our target by 17 percent, one year far ahead of the project closing date. If we continue to the end of the project it will be massive but then, we are also limited by funding,' he intimated."

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Imagine if you could bring private sector resources and skills to social projects. Impact Bonds (IBs) are an innovative Results-Based Financing (RBF) mechanism that tie financial returns and payments to specific results incentivizing investors and service providers.

As governments and development partners seek to meet the Sustainable Development Goals (SDGs) with limited financial resources, it is becoming apparent that we need to crowd in private investors, capital and expertise to reach the goal.

The World Bank Group (WBG) along with other multilateral development banks (MDBs) have emphasized the need to shift focus from “billions” in Official Development Assistance (ODA) to “trillions” in investments of all kinds to achieve the SDGs. Impact Bonds make social sectors more “investible” and support the WBG’s agenda to maximizing financing for development.

While the WBG has ample experience with private sector participation in infrastructure sectors, this experience is limited in social sectors where programs are traditionally funded from public resources. Impact bonds change this paradigm by monetizing the benefits of social outcomes and making investments in social programs attractive to private investors.

Delivering basic public services to the world’s poor or underprivileged sometimes requires innovative, even experimental solutions. In addition to lack of capital to fund solutions to these problems, private investors usually aren’t willing to take a risk on projects that aren’t always a “sure thing.” Impact bonds, a relatively new funding approach successfully bring together private investors, governments and services providers to unlock funding for projects that focus on delivery of social and environmental outcomes. 

At the Global Partnership for Results-Based Approaches (GPRBA), for the past 15 years we have been promoting different types of RBF instruments that link funding to actual results achieved. Impact bonds are one of those approaches we have been looking at recently, as they create the opportunity to make social programs attractive to private investors making them “investible”.

What are impact bonds?

Impact bonds are innovative, performance-based, contracts between an investor, an outcome funder and a service provider that tackle a social or environmental challenge. Also known as pay-for- success bonds and social benefit bonds, impact bonds aren’t really “bonds” in the conventional sense. They are a form of public-private partnership that rewards investors for successfully delivering impact.

How does it work?

First, investors—which could be a private sector actor or an NGO—provide the upfront capital to a service provider to carry out an intervention that targets a population in need. Once the desired results are achieved, outcome funders, typically a donor or a government, repay the investor at a premium. The investor thus generates a return on its investment and the outcome funder only pays for success.  There are two types of impact bonds: In a Development Impact Bond (DIB), the role of the outcome funder is played by third parties as opposed to a Social Impact Bonds (SIB) where the role is played by the government.

Where did impact bonds get their start?

The first social impact bond was launched in 2010 in Petersborough, United Kingdom and targeted short-sentence male prisoners with the aim of reducing re-offending. Prisoners were provided with a mentor and support finding housing, treating drug addiction or securing a job up to 12 months after their release from jail. The £5 million program, which ended in 2015, was a success; it reduced recidivism by more than eight percent.

The first development impact bond was implemented in Rajasthan, India in 2014 to enroll out-of-school girls and improve the performance of boys and girls in English, Hindi, and math. It targeted 15,000 children, of which 9,000 were girls, in the Bhilwara District.  Going door-to-door, the service provider, Educate Girls, identified out-of-school girls and engaged directly with their families to encourage enrollment. The program also helped boys and girls in grades three-five improve their schoolwork.   

How many impact bonds are in operation now?

Today, 151 impact bonds are active globally, eight of them are in middle-income and low-income countries. The countries with most impact bonds are the United States and the United Kingdom. 

Some 28 impact bonds are in the implementation and design stages in developing countries.  Most popular sectors are health, employment, agriculture, education, and social welfare.

How is the World Bank involved?

GPRBA, housed in the World Bank, provides innovative financing solutions that link funding to results. Impact bonds are one of the RBF approaches that GPRBA adopted to ensure access to basic services like water and sanitation, energy, health and education for low-income families and communities that might otherwise go unserved.

Useful Resources

Social Finance
Brookings
Impact Bond Working Group