Social Impact Bonds in Colombia January 18th, 2017

Social Impact Bonds in the world Partnerships to transform the way we understand solutions for complex social problems 34 Workforce Development 14 Homelessness 8 Criminal Justice 12 Child and family welfare 1 Environment and sustainability Adults with complex needs Education 11 Health

9% 50% NATIONAL UNEMPLOYMENT YOUTH UNEMPLOYMENT 16% Cifra del 35% sacada de informe de MEI de 2016. YOUTH UNEMPLOYMENT 16% 35% VICTIMS UNEMPLOYMENT OF EMPLOYERS IN COLOMBIA SHOW DIFFICULTIES IN FINDING THE HUMAN RESOURCE THAT THEY REQUIRE 50%

Our differential factors SIB generate high social impact and economic benefits Focus on outcomes Drive performance management Incentivize collaboration Reduce risk for government Culture of monitoring + evaluation Invest in prevention PROVEN EVIDENCE Achieve scale Sustain impact Crowd in private funding Support experimental interventions Source: Brookings. Impact Bond in developing countries: early learnings from the field. New York: 2017, page 13.

Colombia’s SIB program We aim to design and test SIB in Colombia, starting with workforce development among vulnerable population. Component I SIB pilots - pay for sucess contracts for workforce development among vulnerable population. First pay-for-success contract Second pay-for-success contract Third pay-for-success contract Capacity building Component II Data infrastructure Creation of the market Policy advocacy Component III Case studies Knowledge and lessons learned Scale

First SIB Colombia Participants Geographic location Outcome metrics OUR GOALS: Improve employment outcomes for vulnerable populations and victims of conflict in urban areas Enhance knowledge and capacities around pay-for-success finance, social impact bonds and impact investing. First SIB Colombia Participants 514 people Geographic location Bogotá, Cali, Pereira Colombia is a pioneer in innovating, taking risks and experimenting to transform workforce development programs Outcome metrics Formal employment Labor retention for 3 months Labor retention for 6 months Intervention scheme 1.5 years duration Uses an inclusive employment model (training in specific skills and socio-emotional abilities, intermediation, psychosocial support). OUR ATTRIBUTES: Efficiency Knowledge Transformation Targeted population Victims of the conflict and vulnerable population between 18 and 40 years Participants must not: have a formal job or participated in productive inclusion programs during the past two years.

The roles of each actor engaged in Colombia’s first SIB Outcome payers Investors Intermediary Service providers Evaluator Result verification Compromise and disbursement of resources Initial investment Implementation of the program Administration of the operation Technical assistance providers Support the design Integral Manager Administration of the investment and performance management

SPV - FIDUCIARY CONTRACT The structure of the first SIB in Colombia and Latin America CONSULTANTS TECHNICAL ASSISTANCE FOR SIB DESIGN: INSTIGLIO LEGAL ADVISOR F. PROBONO y DURAN & OSORIO ADVISOR: CCC PRINCIPAL INVESTORS INVESTMENT RETURN CONDITIONED TO RESULTS KUEPA 3 IMPLEMENTATION GROUP 7 F. MARIO SANTO DOMINGO F. BOLIVAR DAVIVIENDA F. CORONA OTHER INVESTORS SPV - FIDUCIARY CONTRACT CORPORACIÓN INVERSOR INTERMEDIARY FUNDACIÓN CORONA 4 VOLVER A LA GENTE COLOMBIA INCLUYENTE FUNDACIÓN CARVAJAL PEOPLE WITHOUT JOBS EVALUATION INDEPENDENT EVALUATOR OUTCOME PAYERS REDUCTION OF UNEMPLOYMENT 5 6 PAY FOR RESULTS 8 PROSPERIDAD SOCIAL BID/ FOMIN SECO INTERVENTION 2 1 PAY-FOR-SUCESS CONTRACT

SIB 1: preliminary results Partial results: 5 January 2018 Goal Progress People employed 514 410 79% We have been able to monitor our results in real time: Developing an online performance management tool Building data infrastructure Systematizing lessons learned People retained for 3 months 514 42 8.1% People retained for 6 months - - During 2017, the Colombian government paid COP $647 million for results (UDS $ 215.000). In 2018, it is estimated that outcome payers will pay around COP $1.432 million for results (USD $477.000).

Next steps SIB 1, SIB 2 and market creation First Pilot completion in July 2018 and evaluation of results. SIB 2: Design and structuration of second SIB with a local government. SIB launch on July 2018. Market creation: Train-the-trainees strategy to strengthen stakeholders. Public policy advocacy: presidential candidates and new government development plan.

Project outlook 2018-2019 We have achieved important milestones and we will continue working NOV 2016 mar 2017 JAN 2018 JULY 2018 AUG 2018 DIC 2019 Kick-off SIB Program SIB 1 Kick-off SIB 1 completion SIB 1 implementation, evaluation and lessons learned systematization Training SIB 2 Kick-off SIB 2 completion Labor intermediation Employment SIB 2 implementation, evaluation and lessons learned systematization 3 – 6m retention Market creation and lessons learned: train the trainees strategy, data infrastructure, policy advocacy and stakeholder mapping 18/1/2018

Lessons learned SIB 1, SIB 2 and market creation Legal structuring of a SIB Verification of results using administrative data bases. Cost structuring for SIB design and operation Coordination and accountability within stakeholders Performance management tools and processes Three SIB pilots versus only one pilot Market creation for new stakeholders and reducing transaction costs