news - FMO supports the First Palestinian Employment Development Impact Bond (DIB)

Creating new jobs for Palestinian youth by mobilizing private sector investments that deliver economic and social returns

Under the patronage of His Excellency, President Mahmoud Abbas, the Finance for Jobs (F4J) project officially launched the First Palestinian Employment Development Impact Bond (DIB) in Ramallah on November 5. It will be implemented by DAI Global on behalf of the Palestinian Ministry of Finance, and is funded by the World Bank in partnership with four investors: FMO, Palestine Investment Fund (PIF), European Bank for Reconstruction and Development (EBRD), and Invest Palestine.

FMO’s support through its Capacity Development Program comes from the Dutch Government’s MASSIF Fund, which aims to take early high investment risks and acts as a catalyst for the growth of the private financial sector and financial inclusion in developing countries.

Idsert Boersma, FMO’s Director Partnerships for Impact stated during the launch event: “We are proud to be part of the first Development Impact Bond in Palestine as the world needs innovative and sustainable financing solutions to help solve some of the biggest global challenges i.e. inequality and climate change. It will be an exciting journey to create jobs benefitting young Palestinians and build new partnerships along the way.”

Finance for Jobs (F4J) aims to mobilize private investment in high potential sectors and to generate job opportunities across Palestine. It contributes to bridging the gap between academic outputs and the job-specific skills required in the Palestinian labor market, and to create new jobs for Palestinian youth by mobilizing investments that deliver economic and social returns.

The main purpose of the First Palestinian Employment Development Impact Bond (DIB) is to match employment opportunities with suitable employees by purposefully training job seekers in employer-demanded skills. The DIB will target an estimated cohort of 1,500 Palestinian job seekers aged 18–29 years (of which at least 30 percent will be women). An initial investmen­t commitment of private capital in the amount of US$1,8 million was secured from the DIB’s four investors, and US$5 million the World Bank’s West Bank and Gaza Trust Fund has been allocated for outcome payments through the Ministry of Finance.

The DIB is a results-based funding mechanism that allows outcome funders to partner with socially-motivated investors and high-performing service delivery organizations to help address youth unemployment in Palestine.

For his part, Kanthan Shankar, the World Bank Country Director, stressed the importance of this intervention: “This innovative instrument, the first time to be applied by the World Bank in a fragile environment, increases investment in young people and offers hope for the future.” Mr. Shankar added: “The mechanism promotes collaboration between the government and the investors on a shared development goal to support youth in their transition to employment. It is a mindset shift where the investors provide upfront funding for training and job placement programs and get repaid only upon achieved outcomes. The World Bank’s financial support to this public-private partnership is driven by the commitment for success, and investment in social good to address the jobs challenge for many Palestinian graduates.”

David Hutchison, CEO of Social Finance, which designed the program financing, said:“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 crying out for new talent. We look forward to capturing the results and learnings from this program so that they can be transferred to other parts of the world where there is a need to improve the commissioning and delivery of skills training.”