Project: Pakistan Employment Impact Bond
State of development: Current
Stage of development: Early stage
Type of instrument — Impact Bond: Yes; Outcomes Fund: Yes; Social Impact Incentives (SIINC): No; Social Impact Guarantee: No; Payment-by-results (no pre-financing): No; Technical Assistance and Market-building program: Yes; Other: 
Rationale for using outcome-based finance: Our outcomes-based livelihoods programme supports more than 8000 women to achieve increased income through skills training, including in non-traditional skills, across Sindh and Punjab. Evidence shows a 90% success rate of achieving outcomes through a focus on cost effective and innovative solutions. The DIB aims to evidence the impact and value for money of outcomes-based programmes and financial models by increasing investment to training providers who cannot access mainstream investment, allowing them to scale up and be more efficient. 

BAT has been at the forefront of building the market for innovative finance and implementing impact bond models for education and skills in India. We have developed templates and guidelines to support replicability of successful models across regions and sectors. The Pakistan market shares many of the challenges and opportunities of the Indian market. The DIB will leverage our experience and learnings allowing Pakistan to leapfrog to scale and systems change.
Key challenges to launch: Interest and engagement with outcomes-based financing in the Pakistan skills development sector has been growing with buy in from international and regional players including the ADB, FCDO and the World Bank. This buy in has seen an expansion in outcomes-based programmes. However key systematic challenges remain including a focus on outputs rather than outcomes and lack of willingness and ability to absorb risk. Monitoring and evaluation has not translated into sustained performance/efficiency improvement; instead, focussing mostly on validation of periodic results.

BAT would utilize the $300,000 Accelerator support to mitigate against the issues above by engaging with data gathering and analysis of specific challenges that are inhibiting outcomes for potential beneficiaries in Punjab. The funding will enable BAT in partnership with PSDF to design a clear outcomes metric, including the setting up of payment and financial models that supports fundraising and risk management for key investors and funders.
Social/developmental challenge: Skills development overall is chronically underfunded in Pakistan with as little as USD 83 million allocated to it by the federal government. In Punjab, the state government allocates less than 1% of the total available budget towards developing a skilled workforce. Moreover, skilling programmes tend to be of poor quality, and often not aligned to market needs. From a gender perspective, only a third of trainee positions in vocational training institutions are available to women. Among the positions that are available, women are channelled into traditional trades further entrenching gender stereotypes and limiting women's participation in more financially lucrative sectors.   

The program aims to draw in new sources of funding for the skilling sector through a robust payment-by-results mechanism that will ensure upfront flexible funding to incentivize training providers to design and deliver demand-led innovative solutions that result in employment outcomes for the target group with a strong gender lens.
Expected intervention model: The British Asian Trust (BAT) is launching Pakistan's first Development Impact Bond (DIB) in the Punjab. The DIB will promote the skills development of young people, with a focus on supporting young women into sustainable employment. BAT has undertaken a comprehensive feasibility study in Pakistan, funded by the Asian Development Bank (ADB), which identified emerging trends and gaps within the skills development sector and contextual requirements for implementing an outcomes-based solution with a particular focus on women. 

Having grown the innovative finance ecosystem in India, we will this experience and expertise in Pakistan. Given the nascent market, funding from the Accelerator would allow BAT to develop the first of its kind outcomes-based financial instrument acting as a catalyst for innovative finance in Pakistan. Our objective is to ensure that the DIB is transformative for the skills ecosystem in Pakistan by enabling cross-sector partnerships to align incentives for all stakeholders towards the achievement of outcomes. This will have a significant positive impact beyond the lifecycle of the proposed solution by strengthening an emerging impact investing ecosystem within Pakistan. Additionally, we will aim to showcase how government funding can be deployed to focus on longer term and gender focused outcomes.
Policy sectors — Employment and private sector development: Yes; Education: No; Social protection: No; Criminal justice: No; Health: No; Agriculture: No; Environment and climate change: No; Water, Sanitation and Hygiene: No; Energy: No; Humanitarian: No; Early Childhood Education: No; Other: 
Primary SDG goal: 8
Country income classification of beneficiaries — Low-income: No; Lower-middle-income: Yes; Upper-middle-income: No; High-income: No
Notes: Data for this pipeline project was last updated in May 2024
Delivery location: Pakistan