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 announced the launch of the first-of-its-kind and the largest Impact Bond for Skilling. The Skill Impact Bond (SIB) is also the first impact bond involving public, private partners and a public private partnership organisation, NSDC.
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.
“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 is 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,” said Mr. A.M. Naik, Chairman, National Skill Development Corporation, and Group Chairman, Larsen & Toubro Ltd.
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, who have been reviewed and selected for their strengths. These are Apollo Medskills Ltd, Gram Tarang Employability Training Services Pvt Ltd, Learnet Skills Ltd, Magic Bus India Foundation and PanIIT Alumni Foundation.
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.
The need for Skill Impact Bond
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 focus on women in the Skill Impact Bond is an urgent response to the negative impact of the pandemic on women and employment. Women were eight times more likely to lose jobs during the national lockdown than men3. Women made up 24% of the workforce before the pandemic, yet accounted for 28% of all job losses as the pandemic took hold4.
In addition, India has the lowest female labour force participation in South Asia at 20.3%5 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.
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.