In my previous blog (Social Impact Bonds – Moving from outputs to outcomes…) I have introduced the concept of Social Impact bonds (SIBs) and described in another one, how these SIBs can morph into Development Impact Bonds (DIBs).
Their mechanics are fairly straight forward and even similar, however, the proof of the pudding is in the eating….
On my flights this weekend, I was thinking about a SIB to tackle migration flows to Europe. I guess that my current job and the continuing discussions on the Western Balkan Route, refugees of the Syrian civil war, and Germany`s migration act with Turkey, etc. just let me think about potential solutions for the situation.
Why not try to use a Social Impact Bond? Maybe not directly for all European States but we can maybe try it out for just one country… say Germany? There are actually two SBIs that could be created:
1) SBI improving integration of immigrants who have recently arrived in Germany;
2) SBI reducing migrant flows to Germany.
In this blog, we discuss the first SBI, the other one comes in a following blog.
I tried to use the same structure as they did for the case studies in the Report of the Development Impact Bond Working Group managed by Social Finance and the Center for Global Development:
THE SOCIAL ISSUE
In 2015 1.14 million foreigners immigrated to Germany primarily from non-EU countries. According to the Ministry of migration, 75% are male, 68% are younger than 33 years old. Eighteen percent have completed university as highest education level, 20% finished high school, and 22% only primary school. This large inflow of foreigners evidently has an important impact on the social environment in Germany. Many suffer from not being able to immediately work in their new home country even though 75% of male immigrants worked before coming to Europe, only one third of women did. Only 2% of people arriving in Germany speak German. What is needed are services to integrate many of these young Syrians, Afghans, Iraqis and many others. Some might even require support in reorienting their career. There is support needed for families, for kids arriving without their parents. The requirements are so vast, and I think there is a lot of innovative thinking necessary to solve the situation and integrate the 2 million people successfully.
Without intervention, there is a serious risk of having a lot of legal immigrants who do not feel integrated in Germany and might create a serious antipole against the German population. Tension and riots might be the consequence as already seen in other countries. The consequences have serious cost implications for the German state. Cost effective and preventative measures are required to ensure that immigrants find a welcoming new, secure home where they can find a job, a place to live, and can move freely.
When these measures could be implemented, immigrants would be successfully integrated into the German society, would start work in Germany pay taxes and support the pension system.
TARGET LOCATION & POPULATION
With regards to the population we could count all foreigners arriving in Germany having been registered upon entry. But who are they? Here we would require some research on the countries from where immigrant flows reach Germany and what kinds of people (e.g., farmers, small business owners, etc.) decide to leave their home countries.
OUTCOME METRIX and PROPOSED INTERVENTION
The aim of the programme would be to help immigrants to successfully integrate into their new home country. It is envisaged that success payments would be triggered by:
– Number of immigrants prepared to participate in German society, where “participation” can only happen by speaking German, getting exposed to German culture, and participating in German daily life, i.e., kids would go to school.
– Number of immigrants successfully integrated into the workforce. “Successfully” would mean full-time jobs inline with someone’s education, or with an additional education conducted in Germany
Indicators could include:
- Number of immigrants speaking German (to be monitored via language tests)
- Number of immigrant kids in school (payment after at least one year completed)
- Number of immigrants with a full-time job (needs to be decided how long they have to be in this job before payment can be done)
Proposed interventions could involve targeted training programs for immigrants (language courses, vocational training, etc), family support, company internships, university scholarships, etc.
VALUE ADDED OF A SIB
Discipline in delivery is crucial to achieving and sustaining desired outcomes. By linking private investor returns with desired outcomes, a SIB could introduce a strong incentive towards cost control, intervention effectiveness and outcome delivery, usually through a coordinating agency. As outcomes are independently evaluated before payments are released, a SIB could also increase transparency around the impact of funding.
Governments should give space for service providers to innovate. Since SIB intermediaries and other potential project implementers compete for funds to be used as outcome payments, leading to innovation in design with funding flowing to the best-designed SIB proposals. Especially with regards to migration it would be great to find some innovative solutions for the problem.
New rooms for unconventional partnerships. To develop this SIB, many of the related parties might not be used to work together. Initially this might be complicated, however in the long run this should lead to important benefits and preparatory work for future SIBs.
I am not sure if this at all the right way to think about a SIB, but I thought I give it a try. I hope I will get a lot of critical comments to polish my understanding about this exciting new instrument.
Find here more in due course on a SIB to reduce immigration flows to Germany.