Under the patronage of President Mahmoud Abbas, the Finance for Jobs (F4J) project officially launched the First Palestinian Employment Development Impact Bond (DIB) on Tuesday, November 5, 2019, in Ramallah, Palestine.
The design of the DIB was led by Social Finance UK and it will be implemented by DAI Global on behalf of the Ministry of Finance (MoF), funded by the World Bank, and in partnership with the DIB’s four investors: Palestine Investment Fund (PIF), European Bank for Reconstruction and Development (EBRD), FMO, the Dutch Entrepreneurial Development Bank, and Invest Palestine through the Chilean-Palestinian Diaspora Investment Fund “Semilla de Olivo”.
The main purpose of the First Palestinian Employment DIB is to match employment opportunities with suitable employees by purposefully training job seekers in employer-demanded skills. The DIB will target an estimated cohort of 1,500 Palestinian job seekers aged 18–29 years (of which at least 30 percent will be women). An initial investment commitment of private capital in the amount of US$1,800,000 was secured from the DIB’s four investors, and US$5,000,000 from the World Bank’s West Bank and Gaza Trust Fund has been allocated for outcomes payments through the MoF.
The DIB launch was attended by several key members of the DIB’s partner organizations, including: Mohammad Mustafa, PIF Chairman, Ahmad Sabbah, Ministry of Finance Accountant General, Kanthan Shankar, World Bank Country Director, Heike Harmgart, EBRD Director for the Eastern Mediterranean Region, Idsert Boersma, FMO Director of Partnerships for Impact. Also attending the DIB launch were numerous high-level representatives from public and private sectors, economic experts, academics, and international institutions.
Mazen Asad, F4J’s Project Manager began the event with welcoming remarks and by introducing the overarching object of the F4J project: “To mobilize private investment in high potential sectors and to generate job opportunities across Palestine.” Asad pointed out that F4J primarily implements its activities through three innovative financial instruments: the DIB, an Entrepreneurship Ecosystem Matching Grant (EE-MG) program, and an Investment Co-Financing Facility (ICF) program. Each of these instruments are new in the Palestinian development sphere and are being purposefully tested in their effectiveness. He further stated that the DIB will contribute to bridging the gap between academic outputs and the job-specific skills required in the Palestinian labor market and will create new jobs for Palestinian youth by mobilizing investments that deliver economic and social returns.
Asad also pointed out that the creation of new jobs is one of the most critical issues in Palestine, which will only be achieved through meaningful partnership between the public and the private sectors, and the provision of a suitable business enabling environment for economic activities.
In a similar tone, and on behalf of the Ministry of Finance, Ahmad Sabbah, the Accountant General, noted that the Palestinian government is working in close partnership with the Palestinian private sector and with the support of the World Bank to develop new financial instruments to steer policies towards stimulating investments that generate social impact. By creating jobs in different sectors, Sabbah stressed that Palestine would make a qualitative leap in the process of sustainable development. To help ensure the success of the DIB, Sabbah recounted how a Public and Private Advisory Board (PPAB) was established for the specific purpose of supporting the DIB and its components.
Sabbah also stressed the importance of how the DIB will match skills to specific jobs, and that creating meaningful partnerships with the private sector will be crucial to sustainability. This was said to be true since the DIB is a results-based funding mechanism that allows outcome funders – MoF/World Bank – to partner with socially-motivated investors and high-performing service delivery organizations to help address youth unemployment in Palestine.
For his part Kanthan Shankar, the World Bank Country Director, stressed the importance of this intervention by saying: “This innovative instrument, the first time to be applied by the World Bank in a fragile environment, increases investment in young people and offers hope for the future.” Shankar added: “The mechanism promotes collaboration between the government and the investors on a shared development goal to support youth in their transition to employment. It is a mindset shift where the investors provide upfront funding for training and job placement programs and get repaid only upon achieved outcomes. The World Bank financial support to this public-private partnership is driven by the commitment for success, and investment in social good to address the jobs challenge for many Palestinian graduates.”
Although unable to attend in person, David Hutchison, CEO of Social Finance said: “This exciting new program will make a big difference by enabling young people to bridge the gap between developing meaningful skills and finding job opportunities in sectors that are crying out for new talent. We look forward to capturing the results and learnings from this program so that they can be transferred to other parts of the world where there is a need to improve the commissioning and delivery of skills training.”
Following the remarks from F4J, MoF and the World Bank, the DIB’s four investors then shared their support for the First Palestinian Employment DIB through their own statements.
Mohammed Mustafa, Chairman of the Board of Palestine Investment Fund (PIF), stressed the importance of this DIB as a proven global model being applied in Palestine for the first time with the aim of bridging the gap between academic education and actual skills required by the labor market. Mustafa added “We are very proud of this achievement in which we lead an investment in collaboration with partners aimed at creating job opportunities for Palestinian graduates. This investment mirrors PIF’s core Impact Investing Strategy by achieving social impact alongside a financial return.”
Idsert Boersma shared the following on behalf of FMO: “We are proud to be part of the first Development Impact Bond in Palestine as the world needs innovative and sustainable financing solutions to help solve some of the biggest global challenges i.e. inequality and climate change. It will be an exciting journey to create jobs benefiting young Palestinians and build new partnerships along the way.”
Heike Harmgart, EBRD’s Director for the Eastern Mediterranean Region, exclaimed in her speech that: “We are very proud to launch with our partners the First Palestinian Employment DIB, an innovative financing tool that will help tackle youth unemployment. We aim to provide sustainable jobs to the Palestinian people, thus contributing to the development of their economy.”
While unable to attend in person, Nicola Stefan, Managing Director of Invest Palestine through the Chilean-Palestinian Diaspora Investment Fund “Semilla de Olivo”, submitted written support for their participation as an investor in the DIB by stating: “We are glad to be able to participate in this investment opportunity as it offers a perfect match to the social impact objectives set out by our Chilean-Palestinian Diaspora investment fund “Semilla de Olivo”, and our mission to create new employment opportunities for the youth in Palestine. We believe this pioneering DIB in Palestine will serve as a turning point in the way we look at financing and investing in the sustainability of the Palestinian economy, and as such we are fully committed to its success.”