Presentation of Juan Luis Coderque Galligo of ICRC at the ICAEW Switzerland event on 07 Feb 2018

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Humanitarian Impact Bond - HIB
The ICRC’s “Humanitarian Impact Bond” in Physical Rehabilitation,
supporting the construction and operation of three new centres in Africa
1ICRC HIB – December 2017

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Return Payment
Social
Investors
Outcome
Funders
Individuals with
physical disabilities in
the DRC, Mali and
Nigeria
• Finance
over 5 years
the
intervention
implemented
by the ICRC
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3
4
Assess the outcome-based
Staff Efficiency Ratio (SER)
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Investment
Verification
Provider
Implementation
of Services
Outcome
Evaluation &
Verification
Conditional
Pledge
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Payment by
Results
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HIB – Overview of the financial mechanics
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4
Pledge to ICRC to pay at the
end of year 5.
Payment by Results to ICRC
according to predefined SER
thresholds
ICRC will offer social investors &
outcome funders:
•quarterly status update reports
•semi-annual operational review
committee meetings
ICRC HIB – December 2017

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1 The conditional pledge of Outcome Funders
The Outcome Funders made a conditional pledge to
pay the ICRC for concrete results achieved in 5
years. Their eventual payment varies according to
the results achieved, up to the defined maximum for
each Outcome Funder.
Outcome Funder Amount CHF equivalent Share of Total
Swiss Confederation CHF 10’000’000 10’000’000 38.34%
Kingdom of Belgium EUR 8’696’990 9’305’779 35.67%
Republic of Italy EUR 3’000’000 3’210’000 12.31%
The United Kingdom GBP 2’000’000 2’500’000 9.58%
La Caixa Fondation EUR 1’000’000 1’070’000 4.10%
Total N/A 26’085’779 100%
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These relationships are defined in the payment for Results
Agreements between the respective Outcome Funder and the ICRC.
3ICRC HIB – December 2017

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Social Investor Amount CHF equivalent Share of Total
Social Investor I CHF 7’434’880 7’434’880 39.98%
Social Investor II EUR 2’397’308 2’565’120 13.97%
Social Investor III EUR 1’600’000 1’712’000 9.20%
Social Investor IV EUR 1’000’000 1’070’000 5.75%
Social Investor V EUR 500’000 535’000 2.88%
Social Investor VI EUR 500’000 535’000 2.88%
Social Investor VII EUR 500’000 535’000 2.88%
Social Investor VIII EUR 2’199’264 2’353’212 12.65%
Social Investor IX GBP 1’486’976 1’858’720 9.99%
Total N/A 18’598’932 100%
2 The Investments
Based on the assurance that the Outcome Funders
will pay the ICRC in 5 years, the Social Investors
made their investments. Half is paid at the start, the
remaining half after one year. That money goes into
the ICRC’s general accounts and allows it to carry
out the 5 year program.
The Investor Agreement defines the relationship between the Social
Investors and the ICRC.
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4ICRC HIB – December 2017

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3 The actual ICRC work
During the first 3 years, the ICRC will build and
equip three new PRP centres in Mopti (Mali),
Maiduguri (Nigeria) and Kinshasa (DRC) as well as
train the new staff for these centres. At the same
time, the ICRC tests new Efficiency Initiatives in 8
existing centres in Cambodia, Pakistan, Myanmar, Mali, Madagascar,
Togo and Niger as well as designs, tests and deploys a new ICT PRP
Centre Management Tool.
During the 4th and the 5th year, the ICRC supports the operation of the
three new centres while implementing proven efficiency initiatives.
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Build New PR Centres
Comprehensive Physical
Rehabilitation
Train New Professionals
Design, Testing & Implementing of Efficiency
Initiatives in Existing PR Centres
Phase 1 - Build Phase 2 - Operate
Implementation of Proven
Efficiency Measures
Equip New
Centres
Year 1 Year 2 Year 3 Year 4 Year 5
ICRC HIB – December 2017

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4 The External Verification
While the ICRC provides quarterly reports to the
Outcome Funders and Social Investors on the
progress of the program during the 5 years, the
actual measure which determines the return to
investors is only made at the end of the 5th year.
The Staff Efficiency Ratio (SER) is the number of beneficiaries
regaining mobility per mobility device professional employed in the
center (prosthetist or orthoptist - P&O). The SER of the new centres is
compared to the historical average of similar centers in Africa.
Philanthropy Advisors, the external Verification Provider, will verify the
reported data and report the findings to the Outcome Funders and
Social Investors.
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(# of Prostheses x 1 )+( # of Orthoses x 0.74 )+(# of Wheelchairs x 0.90 )
((# of trained P&Os x 1 ) + ( # of P&Os without training x 0.75 ) + ( # of bench workers x 0.50 )) x working hours ratio
SER calculation methodology
Each type of mobility device is given a weight to account for the different labor time requirements to manufacture them.
Different categories of mobility device professionals are given different weights according to their level of education.
The working hours ratio adjusts for differences in centers' working hours (as if they all worked a 40h week).
6ICRC HIB – December 2017

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5 The Payment for Results by the Outcome Funders
The Outcome Measure (the ratio between the SER
in the new centres over that of the benchmark
centres) determines the payment of the Outcome
Funders at the end of the 5th year. The higher the
efficiency in the new centres, the higher their
contribution (up to the defined maximum).
The Outcome Funder will therefore only pay for what has been
delivered. If the efficiency in the new centres is below that of the
benchmark centres, they will pay less than the effective costs. If the
efficiency is however above and hence more people received support,
their contribution is higher. This additional disbursement will be used
to pay the Social Investors an interest on their capital invested.
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0
5,000
10,000
15,000
20,000
25,000
30,000
0 0.2 0.4 0.6 0.8 1 1.2 1.4 1.6 1.8 >1.8
kCHF
Outcome Measure
Outcome Funder
Payment
Budget
7ICRC HIB – December 2017

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6 The return payment to the Social Investors
The funds paid by the Outcome Funders to the
ICRC in line with the results achieved will in turn be
used to pay back the social investors partially, in full
or with an additional return, depending on how well
the ICRC performs in terms of the efficiency of the
new centres.
If the efficiency in the new centres is below the benchmark, the Social
Investors will face a loss of up to 40% of the invested capital. In this
case, 10% of the return payment will have to come from the ICRC
regular resources. At par, the Social Investors receive their money
back while at a 14-80% increase in the efficiency of the new centres,
the Social Investors will be paid a variable annual return of up to 7%
on their investment.
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0
5,000
10,000
15,000
20,000
25,000
30,000
0 0.2 0.4 0.6 0.8 1 1.2 1.4 1.6 1.8 >1.8
kCHF
Outcome Measure
Outcome Funder
Payment
ICRC First Loss
Guarantee
Social Investor Loss
Budget
Social Investor Return
8ICRC HIB – December 2017