Project: Durban Homelessness to Decent Work Outcomes Based Contract
State of development: Current
Stage of development: Scoping
Type of instrument — Impact Bond: Yes; Outcomes Fund: No; Social Impact Incentives (SIINC): No; Social Impact Guarantee: No; Payment-by-results (no pre-financing): No; Technical Assistance and Market-building program: No; Other: 
Rationale for using outcome-based finance: "Innovative Approach: The program adopts holistic methods, transcending basic aid and shelter provision to tackle homelessness's root causes, notably employment and job retention. 
OBF Structure: Outcome-Based Financing promotes accountability. Contracting directly with investors, not intermediaries or service providers as in other local examples, pioneers a model for South African cities that unlocks the full benefits of an OBF structure.
Collaborative Model: By blending local and global insights of the partners, the initiative is tailored to Durban. Partnerships with local businesses and communities further enhance employment support, recognizing them as key stakeholders and indirect beneficiaries.
Scalability: Its design allows for expansion, with potential replication in other regions and cities.
Demonstration Effect: Serving as a blueprint for other cities, its success and clear metrics can inspire similar initiatives. The OBF contract between the City and investors positions South Africa as an appealing investment destination for impact investors."
Key challenges to launch: Current public and municipal financial management acts (PFMA and MFMA) restrict municipalities from being able to enter into long term OBFs with investors.  Existing OBF structures in South Africa are all with service providers.  City of Durban has a special purpose vehicle (named City People).  The current funding will not only explore the financial feasibility, availability of service providers, and what an eventual intervention should include, but also it will look into how an OBF can be structured directly with an investor through the SPV.  No current funding exists to take work further, and the award from Outcomes Accelerator will make these studies possible by complementing the budget that the City, National Treasury and Bridges are ready to provide. 
Social/developmental challenge: The program addresses a market failure in Durban, from a mismatch between the skills of the homeless population and the requirements of available jobs. Historically, South Africa has faced high unemployment rates, with figures around 30%. In urban areas like Durban, there's a demand for low-skilled jobs in sectors such as construction, retail, and services. However, these roles still require certain skills and a stable living situation, which many homeless individuals lack. The initiative aims to correct this inefficiency by providing skill training, vital services, and personalized support. By equipping the homeless with both hard and soft skills tailored to the local job market, and by fostering collaborations with local businesses, the program seeks to bridge the gap between the homeless and employment, addressing both the symptom and the root cause of the issue, benefiting not just the homeless, but also the communities in which they live.
Expected intervention model: Durban has been grappling with homelessness for many years. Covid made it worse. In June 2022, more than 16 000 homeless were found across eThekwini, of which approx. 5000 were in the inner-city. The main reason cited for homelessness is inability find and retain jobs. 

The initiative is to explore innovative interventions, using wholistic approaches and an OBF structure, a first in Durban. The project will leverage the City's relationships with local businesses and community groups to build a robust support system together with Bridges's global expertise in designing and delivering programs reducing homelessness and increasing employment. Through skill training, vital services, and personalized support, homeless individuals are expected gain independence and decent employment. 

Metrics are expected to be increase in employment rates, income, housing transitions, and self-sufficiency durations. The project anticipates delivering a program that can be scaled by the City.

The funding from the Accelerator will be used to cover part of the costs of the scoping study, local and international salaries, and limited travel. Remaining advisory costs are to be covered by the Cities Support Program of the National Treasury as part of ongoing programs.
Policy sectors — Employment and private sector development: Yes; Education: No; Social protection: Yes; 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: 1,8,17
Country income classification of beneficiaries — Low-income: No; Lower-middle-income: No; Upper-middle-income: Yes; High-income: No
Notes: Data for this pipeline project was last updated in March 2024
Delivery location: South Africa