Using impact bonds in education in low- and middle-income countries: An evidence review

Impact bonds are a relatively new form of results-based financing (RBF) that attach payments to outcomes, and where financial risk is shared with third-party investors. They are being increasingly used to support development in low and middle-income countries (L&MICs), including in education projects. Because they are relatively new, there is still limited understanding with regards to when they are most appropriate, how they should be best designed, and what they could achieve. Some guides on impact bonds exist, but due to limited empirical research they are often conceptual and not always based on real-world examples.

This report aims to plug this gap. It provides an independent assessment of the current state and evidence of impact bonds launched to support education service delivery in L&MICs and explores where possible how they compare to other forms of results-based financing approaches used in education.

This report is the first output informed by a systematic review into outcomes-based contracting being undertaken by Ecorys and the Government Outcomes Lab, supplemented by four additional sources of data: 1) existing technical guides and reviews of results-based financing approaches; 2) INDIGO impact bond data; 3) stakeholder workshops; and 4) interviews with key stakeholders involved in launching education-focused impact bonds in L&MICs.