This social success note (SSN) is designed to help provide schools in Uganda with access to clean water. Starting with a USD 500,000 working capital loan from UBS Optimus Foundation, Impact Water—the implementing NGO—will purchase and install the water purifications at the schools. The schools then repay their interest-free loan with the savings from on fuel that would normally be purchased to boil water. If targets are met, Impact Water will receive an interest rate discount, and a bonus payment from the Rockefeller Foundation to cover the remaining interest payments. Yunus Social Business will manage monitoring and evaluation and the success of the SSN is based on whether Impact Water provides an additional 1.4 million children with access to clean safe water of the 5-year term. The SSN is a 5-year loan with a 2-year grace period and is priced at 5%, with the UBS Optimus’ return increasing to 10% if targets are met.
Stage of Implementation
The SSN 5-year period began in 2018 and Impact Water has to date installed systems in 600 schools in Uganda. Yunus Social Business has continued to monitor and evaluate the progress of the program and Rockefeller Foundation pays out interest proportional to installation rate targets set at the beginning of the period. The instrument is still in progress and full details of success and challenges will be available at the conclusions of the instrument in 2022-23.
- Social business: Impact Water is a social enterprise which seeks lower than market rate returns and has specific objectives related to installation of water systems in schools to increase clean water access. Social enterprises can play an important role in water adaptation projects that are not fully bankable.
- Foundations/development agencies: Rockefeller Foundation offers an outcome payment and Yunus Social offers measurement and evaluation support. These institutions are critical to financing this high-risk instrument and to providing the relevant technical expertise surrounding impact evaluation.
- Private investor: UBS Optimus Foundation Network, provided a USD 500k working capital loan and plays an important role as a source of private capital. The instrument leverages other concessional forms of capital in order to mobilize this private finance.
Countries with relatively challenging underlying market and policy conditions are well suited to this instrument because it is largely concessional in nature. This could include countries with low sovereign credit ratings, high sovereign debt, and limited capital markets. The implementing environment does require at least some monitoring and evaluation capacity in the form of a sufficiently stable political environment to allow for evaluation of progress to take place.
The SSN is implementing in Uganda, Nigeria, and Kenya and could also be feasible in other countries with the conditions described above.