A report which analyses a new way of funding eye health care in low and middle income countries, which The Fred Hollows Foundation and partners launched last month, has praised the initiative.
The Foundation is working with Sightsavers, Conrad Hilton Foundation, African Eye Foundation, and D Capital Partners on this innovative funding approach.
The report, launched today at the Center for Global Development (CGD) in Washington DC, says the Cameroon Cataract Development Impact Loan, which will provide up to 18,000 cataract operations in the country over the next five years, provides useful lessons for the future use of Development Impact Bonds.
Bonds work by investors providing financing for social programmes upfront and donor organisations then repaying investors with interest based on performance.
The Cameroon cataract bond brings together public and private investors alongside eye care delivery experts and charities, including The Fred Hollows Foundation.
At today’s event at CGD, a panel of experts including The Foundation’s Director of Knowledge and Innovation Kirsten Armstrong, will discuss the way this project came together and provide insight for future impact investing.
The launch of this impact loan marks a key moment in the history of results-based financing. The cataract bond is the first to have a development finance institution as an investor, and one of the first to be used in a lower middle income country such as Cameroon.
The loan will provide the funding for a new eye hospital, The Magrabi ICO Cameroon Eye Institute, owned by the African Eye Foundation. As well as providing vital cataract surgery, the hospital will train eye health professionals from across the region, helping to strengthen local health systems and ensure they are self-sustaining.
“In Sub-Saharan Africa, the rate of blindness and vision impairment is twice the global average, with four out of five cases preventable or treatable. Half of those living with avoidable blindness are affected by cataract, which can be easily treated with a simple 20-minute surgery. Investors will have the unique opportunity to positively influence the lives of some of the world’s most vulnerable people,” Ms Armstrong said.
“Cataract surgery is one of the most cost-effective interventions available as it delivers high quality treatment with consistently high success rates.
“Impact bonds are a new way of financing eye health care in low and middle income countries and we are keen to learn how such schemes can be scaled up and sustained in the long run as they have the potential to unlock resources, not only to provide cataract surgery, but also to improve health care infrastructure and the training of eye health staff.”
The loan, coordinated by D Capital Partners, brings together two investors: US government agency the Overseas Private Investment Corporation and the Netri Foundation, a private Spanish charitable organisation, who are providing $1.75 million and $250,000 respectively. After an agreed period of time – in this case five years – the investors are paid back their investment, plus a return based on how well the hospital meets its targets.
The Fred Hollows Foundation, Sightsavers and the Conrad Hilton Foundation are the outcome funders, which means together they will provide the funds to repay OPIC and Netri at agreed points during the term of the bond.
This method reduces the financial risk to all the partners involved, and could provide a way to attract more resources for eye health in low and middle income countries.