Can Frontier Technologies make Impact Bonds more Impactful?

The full study can be accessed HERE

An increasing number of donor funded programmes are applying cutting-edge technologies to increase transparency and foster trust in the results delivered by international development interventions.

These technologies may deliver other benefits, such as automated, streamlined pickup of data and an increased ability for an intervention to more quickly evolve and adapt in response to faster, real-time, data-rich feedback.

The first interventions have used technologies combining:
• Remote Measurement — low-cost, fast and trusted methods for measuring development project outputs and outcomes; in some cases, these include Internet of Things (IoT) sensors and communications

• A Digital Platform — that manages, analyses and communicates key project metrics over time in a trusted way; in some instances, these utilise blockchain/distributed ledger technology

• Payment By Results — whereby the digital platform may connect to a payment by results model such as development impact bonds (DIBs)

Early experiences with these technologies have raised challenges to enabling the success of this model:
• There is no clear evidence base about whether such a model works in attracting increased finance. It is not known who the likely investors who would be interested in these applications are and what their motivations would be.

• It is not clear how mature, low-cost, fast, and trusted methods for measuring development project outputs and outcomes are and when they can be successfully applied. For example, is there an adequate proxy for the outcome measure or can a result be verified in a trusted way?

• What does such a model mean for the implementing organization such as DFID, and what capacity does it need in order to deliver it?

• How can such a model be implemented in a way that enables flexibility and adaptation in delivery while avoiding incentivizing a linear “cash-for-outputs” approach?

With funding from the Frontier Technologies Hub, Stratigos recently undertook a study to explore these questions.

Lead author and Stratigos CEO Peter Vanderwal says it was one of the most interesting consultancies he’s ever been involved in;

‘Some of the innovation that is happening in this space is super inspiring — you’ve got incredibly bright people really pushing the boundaries of what’s technologically possible in order to make an enduring difference in the lives of the most vulnerable communities. I suspect that the global south will actually drive the adoption of many emerging technologies because the technology will be able to address really pressing needs that more ‘developed’ markets don’t actually have.’

For those interested, the full study can be accessed HERE