A new way of funding eye health care in low and middle income countries, launched by Sightsavers and partners last month, has been praised by development experts.
The Cameroon Cataract Development Impact Loan, which will provide up to 18,000 cataract operations in the country over the next five years, provides useful lessons for the future use of Development Impact Bonds (DIB).
The bonds work by investors providing financing for social programmes upfront. Donor organisations then repay investors the initial amount plus interest, based on performance.
The Cameroon cataract bond will bring together public and private investors alongside eye care delivery experts and charities, including Sightsavers, the Fred Hollows Foundation, Conrad N Hilton Foundation, African Eye Foundation, and D Capital Partners.
The approach was hailed in a report launched today at the Center for Global Development (CGD) in Washington DC. A panel of experts including Sightsavers’ Cameroon Country Office Director Dr Joseph Oye addressed the question: “What is the future of pay-for-success development?”
The launch of the impact loan is a key moment in results-based financing. The cataract bond is the first to have a development finance institution as an investor, and one of the first to be used in a lower middle income country such as Cameroon.
The loan will provide the funding for a new eye hospital, the Magrabi ICO Cameroon Eye Institute, owned by the African Eye Foundation. As well as providing vital cataract surgery, the hospital will train eye health professionals from across the region, helping to strengthen local health systems and ensure they are self-sustaining.
The loan, coordinated by D Capital Partners, brings together two investors: US government agency the Overseas Private Investment Corporation and the Netri Foundation, a private Spanish charitable organisation, which are providing $1.75 million and $250,000 respectively. After an agreed period of time – in this case five years – the investors’ money is repaid, plus a return based on how well the hospital meets its targets.
Sightsavers, the Fred Hollows Foundation and the Hilton Foundation will provide the funds to repay OPIC and Netri at agreed points during the term of the bond. This method reduces the financial risk to all the partners involved, and could help to attract more resources for eye health in low and middle income countries.