DIB Instruments

Development Impact Bond (DIB)

The First Palestinian Employment Development Impact Bond (DIB), known as F4J DIB I, is an initiative designed to connect job seekers with relevant employment opportunities by providing targeted training in skills that employers need. In its first phase, the program enrolled 1,350 young Palestinians (653 of whom were women), with the majority between the ages of 18 and 29.

It is a type of ‘outcomes contract’ where investors provide upfront working capital, which is used to pay for service providers that provide development services. The investors will get paid by the outcome’s funder (commissioner of the service), only if the services succeed in achieving the targeted outcomes. 

The F4J DIB connects Palestinian youth aged 18-29 with sustained jobs through local service provider organizations that engage with employers to understand their needs, then deliver employment services, including training and job matching services to meet that demand, and help them secure sustained jobs for at least 6 months. 

The DIB Outcomes Contract (OC) prioritizes sustainable job outcomes, especially for women. The tariffs are the payments from outcome funders to the special purpose vehicle (SPV), owned by the investors for each result, and are heavily weighted on job outcomes to incentivise employment, not training, and are higher for women's employment. 

DIB I (2019-2024): 
The F4J DIB I four investors were: Palestine Investment Fund (PIF), European Bank for Reconstruction and Development (EBRD), the Dutch Entrepreneurial Development Bank (FMO), and the Chilean Palestinian Diaspora Investment Fund “Semilla de Olivo”. Social Finance UK, a social investment broker contracted by DAI Global, led the DIB design and provided initial advice and guidance. 
Through the application of DIB I, it succeeded in mobilizing $1.8 million in private investment, enrolled 1,350 youth in the program, and led to more than 546 program participants finding employment.  
The F4J DIB’s Outcomes Funders were: The World Bank, through the Finance for Jobs (F4J) project, a Ministry of Finance project, implemented by DAI Global. 

Through nine different Service Providers, the DIB targeted high-value jobs in a diverse portfolio of sectors, ranging from education and health to ICT and furniture, helping the SPV reach its outcomes contract cap earlier than anticipated, in April 2023. Given the social nature of the DIB mission, the investors decided to continue to fund jobs until June 2024.  
Recognizing its success in surpassing its job targets; DIB II has been moved to implementation. 

DIB II (Nov 2024 – Dec,2027): 
DIB II, which is implemented under F4JIII, will be managed through the Ministry of Planning and International Cooperation (MoPIC). 
The DIB II contract is capped at $6 million to be paid for verified outputs and outcomes. It targets a cohort of approximately 1,250 beneficiaries, most of whom will be youth aged 18-29 years old, of whom at least 35 percent will be women. Through several service providers' contracts, the DIB finances the training, job search, and placement services provided to beneficiaries, based on private sector demand. Specific outputs and outcomes include the completion of beneficiaries’ training, their placement into apprenticeships/internships/work-based training schemes, and their ultimate employment. 

Given the uncertain outlook in Palestine due to war in Gaza, DIB II OC has included a 15-month “discovery phase”.  This phase has been designed with specific tariffs, slightly adjusted to place more emphasis on training outcomes, while still adhering to the performance-based principles of the contract. This adjustment will help maintain momentum for the DIB initiative while enabling stakeholders to assess labour market conditions and potential job placement success rates. During the Discovery Phase, approximately 250 youth will be accepted for participation. The investors will provide the working capital (loans) required for the DIB2 Discovery Phase. The investors have agreed that the SPV will operate on a not-for-profit basis during this phase. 

Deloitte, acting as an Independent Verification Agent (IVA), validates claims of job outcomes as a condition for payment by Outcomes Funders, which are then used to fund more employment projects, DIB management and SPV operations and repay investors. The SPV shoulders most of the performance risk, shielding subcontracted local Service Providers from such risk; the SPV pays SPs ~80% of their potential contract value for training outputs, and ~20% for jobs outcomes, with a possible upside for overperformance on job outcomes.