India's first 'Skill Impact Bond' launched, fund to benefit 50,000 youth

The National Skill Development Corporation (NSDC) on Tuesday launched the first-of-its-kind and the largest 'Impact Bond' for skilling in India in collaboration with global partners, involving a USD 14.4 million fund which will benefit 50,000 youth by making them employment ready.

Along with the NSDC, the global coalition comprises of HRH Prince Charles's British Asian Trust, the Michael & Susan Dell Foundation (MSDF), The Children's Investment Fund Foundation (CIFF), HSBC India, JSW Foundation and Dubai Cares, with FCDO (UK Government) & USAID as technical partners.

"The Skill Impact Bond (SIB) is also the first impact bond involving public, private partners and a public private partnership organisation, NSDC," a statement said.

 

CIFF, HSBC India, JSW Foundation and Dubai Cares support the outcome fund.

NSDC and MSDF are the risk investors that have committed USD 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 statement said.

"The coalition has brought together a USD 14.4 million fund to benefit 50,000 young people in India over four years," it added.

The target group includes 60 per cent women and girls and the objective is 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 stakeholders will work towards promoting effective interventions, supporting research and enhancing the impact of the skill development programme.

"Skill Impact Bond is a collaborative effort of NSDC 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 A M Naik, Chairman, NSDC, and Group Chairman, Larsen & Toubro Ltd.

The training will be imparted through NSDC's affiliated training partners, including Apollo Medskills Ltd, Gram Tarang Employability Training Services Pvt Ltd, Learnet Skills Ltd, Magic Bus India Foundation and PanIIT Alumni Foundation.

"The attention of the impact bond is to address the youth employment crisis and specifically that for young women," the statement said.

Elaborating upon the need for the bond, it said the focus on women in the Skill Impact Bond is an urgent response to the negative impact of the pandemic on women and employment.

"Millions of Indians have lost their jobs during the Covid-19 pandemic. Youth have been hit harder than adults (25 and older) in the immediate crisis and risk bearing higher longer-term economic and social costs," the statement said.

It said women were more likely to have lost jobs during the national lockdown than men.

"Women made up 24 per cent of the workforce before the pandemic, yet accounted for 28 per cent of all job losses as the pandemic took hold," the statement said.

In addition, India has the lowest female labour force participation in South Asia at 20.3 per cent and current outcomes of skilling for them are highly inadequate. Out of every 100 women enrolled in skilling programmes, only about 10 stay in post-skilling jobs for 3 months or more.

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.