Impact bonds and other innovative finance tools continue to grow and gather momentum globally, providing a potential solution to address the $2.5 trillion annual finance gap necessary to achieve the Sustainable Development Goals. There are currently over 200 impact bonds across the globe representing more than $400 million in private finance mobilised to resolve complex social challenges , but only two of those are in South Asia, and both in India (including the Quality Education India Development Impact Bond, convened by the British Asian Trust). With its ability to enable funding collaborations between the public and private sectors, drive a focus on outcomes and increase transparency, impact bonds have immense potential to be transformative for development in Pakistan.
Against this backdrop, the British Asian Trust recently convened a workshop: ‘Impact Bonds for Pakistan’, bringing together the key actors from the development community to understand the scope of impact bonds and innovative finance and to share examples and learning from other impact bonds across the globe.
The workshop was led jointly by Abha Thorat-Shah, Executive Director Social Finance at the British Asian Trust; Tanyah Hameed, Research and Policy Associate at the Government Outcomes Lab, University of Oxford and moderated by Farrukh Khan, CEO, Pakistan Stock Exchange. The workshop was joined by representatives from key service providers and actors from across the development sector such as The Citizens Foundation, Developments in Literacy, Karandaaz Pakistan and National Rural Support Programme, as well as key funders including the World Bank and Asian Development Bank.
When the challenges are so much bigger than the resources available, it is critical that every dollar is spent in the most effective manner and creates maximum social impact […] It is our responsibility to create blended finance products which are at the nexus of philanthropy and investments, and impact bonds are one successful example.
Farrukh Khan, CEO, Pakistan Stock Exchange
Key takeaways for Pakistan
The workshop demonstrated the growing interest in social finance solutions for Pakistan and highlighted the opportunities for impact bonds to unlock new funding envelopes (including from the private sector); increase transparency and focus on outcomes; and enable greater flexibility in delivery of interventions. The participants discussed particular case studies within health and education sectors as some of the most relevant sectors for impact bonds in Pakistan.
A few potential challenges were highlighted, including building capacity of local partners to implement outcomes-based contracts, driving government partnerships and ensuring contracting meets all local regulatory requirements. Despite this, the workshop demonstrated the potentially transformational role impact bonds can play in Pakistan’s development sector, and gauging from the high level of interest around the table, Pakistan’s first impact bond might be on the horizon in the not too distant future!
Impact bonds can be helpful tools for improving the well-being of some of the most vulnerable individuals in society. Well-designed projects can help shift focus from inputs or outputs to sustainable outcomes, encourage collaborative trust-based working, and build a healthy culture of data monitoring and performance management.
Tanyah Hameed, Research and Policy Associate, Government Outcomes Lab, Blavatnik School of Government, University of Oxford
Iga Wojtasik, Senior Programmes Officer, British Asian Trust
 Brookings Institution Global Impact Bond Database, June 1, 2020