MICROCAPITAL BRIEF: Multilateral Investment Fund (MIF) Allocates $5.3m to Test, Develop Social Impact Bond Market in Latin America, Caribbean

The Multilateral Investment Fund (MIF), a member of the US-based Inter-American Development Bank (IDB) Group, recently announced that it has allocated USD 5.3 million for the testing, development and implementation of social impact bond (SIB) programs in Latin America and the Caribbean. MIF’s SIBs are intended to “offer opportunities for private investors to participate in developing and delivering services to low-income or vulnerable populations.” The bonds are to be structured as partnerships among private investors, governments and service providers that undertake projects that aim to ameliorate the lives of poor and vulnerable populations in the region. In exchange for up-front capital from private investors, governments would commit to paying an undisclosed financial return over time contingent upon certain predefined, quantifiable “social outcomes” being achieved through the activities of the service providers. The outcomes are to be measured by third-party impact evaluators. According to MIF, “If outcomes fail to improve, investors do not recover their full investment, thereby transferring the performance risk of the program away from governments and taxpayers.”

Of the total allocation, USD 3 million will be channeled by MIF as investment capital to finance three pilot SIB programs in unidentified locations and to “…establish proof-of-concept.” The remaining USD 2.3 million will be disbursed as grants for technical assistance for stakeholders, raising awareness and building up the infrastructure to support the development of SIB markets.

From its inception in 1993 through 2013, MIF reports having approved 1,745 projects in 19 countries, disbursing approximately USD 100 million per year in grants, equity investments and loans. As of December 2013, IDB reported total assets of USD 97 billion.

By A’kos Szebeni, Research Associate

About Multilateral Investment Fund (MIF)

The Multilateral Investment Fund (MIF) is an autonomous fund that was founded in 1993 by the US-based Inter-American Development Bank (IDB). Now a member of the IDB Group, MIF has 39 donating member countries from the Americas, Asia and Europe. From its inception in 1993 through 2013, MIF reports having approved 1,745 projects in 19 countries, disbursing approximately USD 100 million per year in grants, equity investments and loans.

About Inter-American Development Bank (IDB)

The Inter-American Development Bank (IDB) is a US-based multilateral finance institution that was established in 1959 and operates in Latin America and the Caribbean. IDB works with governments, companies and non-governmental organizations (NGOs) to provide both loans and grants to support small and medium-sized enterprises (SMEs), health, education and other sectors. IDB also provides technical assistance and research in these areas. Its Board of Executives is elected by 48 member countries, 26 of which are located in Latin America and the Caribbean. IDB is headquartered in Washington, DC, with offices also in Japan, France and all 26 member countries in Latin America and the Caribbean. As of December 2013, IDB reported total assets of USD 97 billion.

Sources and Additional Resources

Multilateral Investment Fund Press Release, “MIF to test innovative Social Impact Bonds financing model in Latin America and the Caribbean MicroCapital,” http://www.fomin.org/HOME/News/PressReleases/TabId/467/ArtMID/3819/ArticleID/1097/MIF-to-test-innovative-Social-Impact-Bonds-financing-model-in-Latin-America-and-the-Caribbean-.aspx

MicroCapital, March 25, 2014, “Multilateral Investment Fund (MIF) Donates $150k to Caribbean Information & Credit Rating Services CariCRIS of Trinidad and Tobago to Support Small, Medium-sized Enterprises,” https://www.microcapital.org/microcapital-brief-multilateral-investment-fund-mif-donates-150k-to-caribbean-information-credit-rating-services-caricris-of-trinidad-and-tobago-to-support-small-medium-sized-enterprises/

MicroCapital, February 25, 2014, “Inter-American Development Bank (IDB), MasterCard Partner to Support Financial Inclusion Transparency in Latin America, Caribbean,” https://www.microcapital.org/microcapital-brief-inter-american-development-bank-idb-mastercard-partner-to-support-financial-inclusion-transparency-in-latin-america-caribbean/

MicroCapital, May 1, 2013, “Multilateral Investment Fund to Invest $5.8m in Equity in Nxtp Labs of Argentina to Support Technology Start-ups in Latin America,” https://www.microcapital.org/microcapital-brief-multilateral-investment-fund-to-invest-5-8-million-in-equity-in-nxtp-labs-of-argentina-to-support-technology-start-ups-in-latin-america/

MicroCapital, February 22, 2013, “Multilateral Investment Fund (MIF) to Invest $2.5m in Equity in Microfinance Institution Fondesa of the Dominican Republic as it Seeks to Become a Regulated Entity,” https://www.microcapital.org/microcapital-brief-multilateral-investment-fund-mif-to-invest-2-5m-in-equity-in-microfinance-institution-fondesa-of-the-dominican-republic-as-it-seeks-to-become-a-regulated-entity/

MicroCapital, December 3, 2012, “Access Bank of Azerbaijan Raises $10m from Symbiotics ‘MSME’ Bonds Impact Investing Platform,” https://www.microcapital.org/microcapital-brief-access-bank-of-azerbaijan-raises-10m-from-symbiotics-msme-bonds-impact-investing-platform/

MicroCapital Universe Profile: Multilateral Investment Fund (MIF)
https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Multilateral+Investment+Fund+%28MIF%29

MicroCapital Universe Profile: Inter-American Development Bank (IDB)
https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Inter-American+Development+Bank+%28IDB%29

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