The Zambia Tobacco-Social Impact Bond (T-SIB) is the world’s first social impact bond for tobacco control and promotes alternatives to tobacco cultivation in Zambia. It was issued by the United Nations ‘Joint SDG Fund’. The Joint SDG Fund is an innovative instrument of the UN to incentivise policy change and promote strategic investments needed to achieve the SDGs (Social Development Goals).[2a, 2b]
Social impact bonds and development impact bonds are results-based financing mechanisms that front load private capital for social and environmental action. They combine the capital of private investors with that of governments and donors, to leverage new finance with a focus on sustainable development results. [3, 4]
The capital raised with the Tobacco-Social Impact Bond is supposed to support tobacco farmers to transition from tobacco cultivation to economically viable and environmentally sustainable crops. Private investors are repaid plus may earn a return over their investment, if the pre-defined outcomes are achieved. Usually the respective governments or donor agencies reimburse the investors.
To deliver an alternative livelihood programm or certain single services for the farmers, the fund works with service providers — public sector agencies, private companies or non-profit organizations.
The specific goals are a 70% increase in household resources of farmers, the protection of 17,000 ha of forests and the reduction of land cultivated with tobacco. 7,360 farmers are to transition from tobacco cultivation to diversified crop production, contributing to increase food security in the country. Further targets are providing farmers access to tailored services such as aggregation, marketing services, crop insurance and access to inputs to support them in transitioning away from tobacco production. Some of the farmers already know what they want to cultivate: from nuts and vegetables to sustainable aquaculture – there are many opportunities.
At the moment, the T-SIB is in the fundraising status. The preparatory phase is completed, which refined the financial mechanism and identified partners and investors. The UN implementers are UNDP, FAO, ILO, WFP and WHO together, the financial partners are BNP Paribas and Education Outcomes Fund, which is an independent trust fund hosted by the United Nations Children’s Fund (UNICEF).
This world’s first impact bond for tobacco control has a high potential for replication, according to the Joint SDG Fund.
Abbreviations of the internatinal organisations:
UNDP: United Nations Development Programm
FAO: Food and Agricultural Organisation
ILO: International Labour Organisation
WFP: World Food Programme
WHO: World Health Organisation