The Development Impact Bond is building economic resilience for refugees and host communities in Jordan and Lebanon
Amman, Jordan – The IKEA Foundation, Novo Nordisk Foundation, Norad, the U.S. Development Finance Corporation (DFC), Ferd, KOIS, and the Near East Foundation (NEF) convened on 8 November at the Landmark Amman Hotel to mark the launch of the first tranche of a Development Impact Bond (DIB) for refugees in Jordan. The second tranche is expected to launch in Lebanon. The DIB, which commenced in November 2021, funds a micro-enterprise creation programme, delivered by the Near East Foundation UK (NEF), that helps refugees and vulnerable host communities recover their livelihoods and build their resilience.

“Ferd is enthusiastic about the Refugee Impact Bond as we believe it has potential to show how different actors can come together to finance lasting positive outcomes for people and communities in need.” – Johan H. Andresen, Owner and Chair, Ferd.

“We strongly believe there are smarter and more durable ways to integrate refugees into host communities than by relying on long-term humanitarian support. By providing the host communities, refugee entrepreneurs and refugee families in Jordan with support that allows them to earn an income, we can make sure that Jordanian communities continue to be vibrant, safe places to grow up in. And by developing smarter ways of financing refugee livelihoods, we can make the funding go even further, reaching many more people.” – Annemieke de Jong, Head of Portfolio Refugee Livelihoods.

Maha Shadid, the Jordan country representative from the Near East Foundation, welcomed stakeholders, government officials and guests to the event, noting the DIB’s significance for affected communities. A group of beneficiaries showcased their products and briefed stakeholders on how the DIB has impacted their businesses.

Worldwide, conflict and climate crises are forcing more people than ever from their homes, with displacement and its impacts lasting years beyond the crisis. The Syrian conflict has driven 6.6 million people to flee Syria, with 80% settling in neighbouring countries. Lebanon has the world’s largest refugee population per capita, and Jordan is the fifth largest. This puts a strain on local economies and infrastructure. It also leaves refugees and their host communities struggling to access safe and dignified work, basic services and affordable housing.

Refugees and conflict-affected community members need to be able to develop skills, earn an income, and become self-reliant once again. As well as improving their well-being, this can transform a host country’s demographic expansion into an economic opportunity. It can also support refugees’ economic inclusion in their home country or a third country in case of return or resettlement.

To be effective, job creation programmes in humanitarian settings must be tailored to diverse community needs and adaptable to local contexts. This means accepting a level of risk often too high for traditional development funders, especially when addressing the needs of the most fragile. The DIB offers a solution through multi-year, outcome-driven funding that shares performance risk between investors and donors.

DFC, through its Portfolio for Impact and Innovation (PI2) Initiative, and Ferd have provided a four-year results-based risk investment to fund a vocational, entrepreneurship and resilience-building programme. This supports 5,040 refugee and host population trainees and provides 3,400 business start-up grants in Jordan. Communities with large refugee populations have been selected based on higher than national-average rates of food insecurity, poverty, indebtedness, and unemployment. Women and youth, who are disproportionately impacted by crises, take priority.

The programme aims to improve business survival and the ability of households to meet their basic needs. An independent evaluator will rigorously assess these outcomes. Maximum success will generate a 5.1% annualized return for investors. NEF is also incentivized through outcome payments tied to the level of success achieved.

In case of failure to achieve the desired results, the IKEA Foundation, Novo Nordisk Foundation and Norad will support 80% of programme costs. NEF and its local delivery partners will have the flexibility to adapt programming and innovate to maximise results.

To date, NEF has completed intensive training for over 1,200 beneficiaries as part of the first cohort. Following the review of their business plans, NEF disbursed business grants to 823 grantees. In October, the DIB Steering Committee validated the commencement of support to a second cohort of beneficiaries.

By focusing on lasting outcomes, empowering NEF and sharing learnings, the partners expect the ‘Refugee Impact Bond’ to deliver a cost-effective and transformative impact. They hope it will become a template to help humanitarian actors and impacted communities better respond to the impacts of forced displacement and protracted crises.

For further information, visit www.RefugeeImpactBond.org