Sharing the vision of an ‘employment ready’ young India, the National Skill Development Corporation (NSDC) in collaboration with a coalition comprising HRH Prince Charles’s British Asian Trust, the Michael & Susan Dell Foundation, The Children’s Investment Fund Foundation, HSBC India, JSW Foundation and Dubai Cares, with FCDO (UK Government) & USAID as technical partners, has launched the first-of-its-kind and the largest Impact Bond for Skilling.
The Skill India Impact Bond will support 50,000 young people in India over four years, 60 percent of whom will be women and girls and provide them with skills and training and access to wage-employment in Covid-19 recovery sectors including retail, apparel, healthcare, and logistics. The coalition has brought together a US$14.4 million fund to benefit 50,000 young people in India over four years. The target group includes 60 percent women and girls and to equip them with skills and vocational training and provide access to wage-employment in Covid-19 recovery sectors including retail, apparel, healthcare, and logistics.
The collaboration amongst global partners also aims at building capacity of India’s skilling and TVET ecosystem through knowledge exchange and promoting good practices. The stakeholders will work towards promoting effective interventions, supporting research and enhancing the impact of the skill development program.
What is an Impact Bond?
Impact bonds are innovative and results-based finance mechanism that leverage private sector capital and expertise, with a focus on achieving results.
It shifts the focus from inputs to performance and results. Rather than a government or a donor financing a project upfront, private investors (risk investors) initially finance the initiative and are repaid by ‘outcome funders’, only if agreed-upon outcomes are achieved.
The outcomes to be measured are agreed upon at the outset and independently verified.
The Impact Bond’s focus on outcomes transforms the traditional approach to grant-making and philanthropy. Every partner is incentivised to achieve learning outcomes, not just deliver services. The result is maximum impact for money spent.
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Scope of Impact Bond
Impact bonds are innovative financing instruments that leverage private sector capital and expertise, with a focus on achieving results. It shifts the focus from inputs to performance and results. Rather than a government or a donor financing a project upfront, private investors (risk investors) initially finance the initiative and are repaid by ‘outcome funders’, only if agreed-upon outcomes are achieved. The outcomes to be measured are agreed upon at the outset and independently verified. This approach applies discipline to development funding, brings an entrepreneurial mentality and private sector dynamism and knowledge to global development challenges and ultimately transforms a development challenge into an investable opportunity rather than a problem.
What’s the need to launch Skill Impact Bond launched ?
Millions of Indians have lost their jobs during the Covid-19 pandemic1. Youth have been hit harder than adults (25 and older) in the immediate crisis and risk bearing higher longer-term economic and social costs2. The attention of the impact bond is to address the youth employment crisis and specifically that for young women.
The pandemic had a negative impact on women and employment. In addition, India has the lowest female labour force participation in South Asia at 20.3%3 and current outcomes of skilling for them are highly inadequate. Out of every 100 women enrolled in skilling programmes, only ~10 stay in post-skilling jobs for 3 months or more.
A.M. Naik, Chairman, National Skill Development Corporation, and Group Chairman, Larsen & Toubro Ltd. says
“India’s aspirational youth require skills for the jobs that meet the demand of the industry. Core functional knowledge and competencies enhance an individual’s ability to secure and retain a job and improves their potential to earn. Skill Impact Bond a collaborative effort of National Skill Development Corporation and esteemed global organisations and people who share their vision to improve skilling outcomes in India. This landmark financial instrument applies an entrepreneurial approach to philanthropy and ensures accountability which contributes to achievement of set objectives. The project has the potential to make a transformational impact especially in the lives of women.”
Who all are The Partners ?
Skill Impact Bond is an initiative of the National Skill Development Corporation (NSDC) in collaboration with a coalition comprising HRH Prince Charles’s British Asian Trust, the Michael & Susan Dell Foundation, The Children’s Investment Fund Foundation, HSBC India, JSW Foundation and Dubai Cares, with FCDO (UK Government) & USAID as technical partners.
The outcome funders on this impact bond for skilling, have been convened by the British Asian Trust. Each funder brings their own strengths, perspectives, knowledge and learnings in the skilling and education sectors to the design of this impact bond. CIFF, HSBC India, JSW Foundation and Dubai Cares support the outcome fund. NSDC and MSDF are the risk investors that have committed US$4 million to provide upfront working capital to the service providers to implement the programme for the lifetime of the impact bond, in this case four years. If outcome delivery is achieved, risk investor funding is then reinvested each year.
The training will be imparted through NSDC’s affiliated training partners, namely, Apollo Medskills Ltd, Gram Tarang Employability Training Services Pvt Ltd, Learnet Skills Ltd, Magic Bus India Foundation and PanIIT Alumni Foundation.
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The agreed outcomes will be assessed by an independent evaluator, Oxford Policy Management. Dalberg Advisors, the performance manager, will regularly measure outcomes so that delivery partners can reiterate and adapt to stay on track to achieve outcomes. Nishith Desai Associates is the legal partner for the impact bond.
What the Partners says ?
Our support for the Skill Impact Bond is a natural progression of HSBC’s work in the skilling sector in India. This programme is not about how many people it skills, but how many people get a sustainable livelihood. Given the scale of the requirement of the skilling sector we believe, all viable financing options should be on the table. Innovative solutions like this outcome based financial instrument will help create tangible action on the ground at a time of great urgency. It offers another way to address these challenges effectively and generate more learning about what works in development Capturing the results and learnings from this programme will be critical as it will help improve commissioning and delivery of large scale skills training “, says Aloka Majumdar Head of Corporate Sustainability. HSBC India
Skills drive the nation. The JSW Foundation has decided to be an outcome funder to India’s first Skill Impact Bond in order to cultivate an innovative approach in the skill development space. A greater emphasis on placement and retention will definitely help secure a long-term impact. Skills are tools that translate dreams into reality. We are supporting this unique initiative to strengthen the overall skilling ecosystem in the country, says Sangita Jindal Chairperson JSW Foundation
The ongoing disruption in India’s job market necessitates the need for a young workforce that is fully equipped for the future and meaningfully empowered to play a leading role in driving the country’s economic progress. Youth skilling therefore, represents one of the biggest opportunities that will catalyze and accelerate India’s growth and development in the years to come. Our support to the Skill Impact Bond is a testament to our belief in collaborating with the right stakeholders to enable our youth’s successful integration into the economic fold and allow them to contribute towards greater prosperity for all especially in a post COVID-19 era.
His Excellency Dr. Tang Al Gurg, Chief Executive Officer and Vice Chairman of Dubai Cares
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“This impressive coalition of public and private sector partners promotes collaboration on a shared development goal to support youth in their transition to employment. The Skill Impact Bond is a mindset shift and seeks to harness the power of its broad coalition to convince Indian state governments of the merits of outcome based gender appropriate interventions and increase their roll-out across India potentially changing the skilling landscape”, says Richard Hawkes CEO British Asian Trust.
“USAID is committed along with our partners to innovative financing that focuses on results. Through the Skill Impact Bond we will improve the livelihoods health and well being of women and youth from disadvantaged backgrounds throughout India with positive impacts on their resiliency and that of their families and communities”, says Veena Reddy Mission Director. United States Agency for International Development (USAID) in India
“The UK has a strong record of addressing development challenges including through the innovative mechanism of Development Impact Bonds (DIB). Following the success of Quality Education Impact Bond in India, the British government is partnering with the British Asian Trust(BAT) and other stakeholders to launch the Skill Impact Bond that aims to equip young Indians, especially women to be employment ready as we look to build back better after Covid 1999”, says Alex Ellis British High Commissioner to India
“Outcome-based funding models, which incentivize a more targeted focus on improving outcomes are ideally suited to driving placements in jobs as opposed to just providing the skills. This exciting new program will make a big difference by enabling young people to bridge the gap between developing meaningful skills and finding job opportunities in sectors that are in urgent need for talent. The Skill Impact Bond’s ambition is to drive meaningful improvement in skilling outcomes at scale while also leveraging our learnings to help the government and other funders make informed policy and spending decisions”, says Rahil Rangwala Director India Programs, Michael & Susan Dell Foundation
“We are leveraging our strengths and working with governments and global philanthropies to maximise our collective impact to increase the economic participation of women. This requires innovation and out of the box thinking that the Skill Impact Bond delivers on by focusing on outcomes and not inputs. It not only prioritises women but will ensure creativity and innovation in delivering on outcomes by addressing barriers to women’s retention in the workforce. This landmark Impact Bond for skilling, will offer key learnings that can be applied both in the national as well as global context to help solve one of the world’s toughest challenges”, says Kate Hampton. Chief Executive Officer Children’s Investment Fund Foundation (CIFF)
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