Belgium promoted this week a new Humanitarian Impact Bond that the nation has been developing in cooperation with the International Committee of the Red Cross (ICRC).
As reported by Euractiv.com, private investors will invest in three new physical rehabilitation centers to be built in Africa over five years. The private investments are intended to encourage efficiency and good management, so that projects will be sustainable over time. If the developments meet all their management targets, investors could receive a 7% return on their capital. If they do not reach the targets, investors will receive 70% back, including a 10% penalty paid by the ICRC.
“This is the first time in the humanitarian world that we have built a system where we say we want to pay for the results that we get,” said Alexander De Croo, Belgium’s Minister for Development Cooperation.
Croo said that “important not to create an environment in which profits go to private companies, and losses are borne by the public sector,” reported Euractiv.com.
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