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Innovative Finance in the Sauna - Hot and Heavy in Helsinki!

Updated: Jun 1, 2018

On April 10th, the UNDP Istanbul Regional Hub organised a 4-day workshop in Helsinki for 5 eastern European countries: Armenia, Georgia, Macedonia, Montenegro and Moldova. The objective was for the participants to get a better understanding of the design process to develop an impact bond, apply the process to a specific development issue in their country, and leave with a clear action plan to approach relevant stakeholders.

SITRA, the Finnish innovation fund and major participant in all of the SIBs in Finland (in a variety of roles) hosted the workshop. Over the course of the four days participants were led by UNDP Innovative Finance Lead Elina Järvelä through an introduction to the different structuring and design stages, followed by practical application workshops related to each step guided by experienced mentors. These sessions were accompanied by keynotes, skill building sessions and exploration of case studies presented by subject matter and sectorial experts.

On the first evening, the hosts organised for participants to meet in the sauna of a former Finnish Prime Minister. Without doubt one of the oddest but most enjoyable experiences of my work in innovative financing to date was enjoying a Finnish buffet and a couple of olut (beer) followed by more olut, less clothes (to put it mildly), and a wide-ranging conversation on impact bonds with senior members of foreign governments as the spring sun disappeared slowly over an ice-bound harbour!

The importance of due diligence and data gathering to identify and confirm their issue area was impressed on the participants, a critical precursor to working on defining outcome metrics and then working through the financial modelling. , A number of presenters highlighted the need to think very much outside of the box when thinking about the non-traditional partners and different stakeholders required to build effective public private partnerships.

On the last day each country team, consisting of at least one government counterpart and one UNDP country office team member pitched their idea and proto-design to a panel of experts from the European Investment Fund, UNDP and SITRA dragons den style.

What are the big take-aways from this workshop? a) The interest in pay-for-success financing mechanisms is real, with more and more countries trying to understand how they can leverage private finance to align with the SDGs, b) sauna business meetings are an innovative, non-traditional way to both get to know people and do deep dives into complex issues and c) if we – subject matter experts and people in the trenches – want to enable the growth of this space, we need to simplify. This starts by coming together and agreeing on a common terminology so that people that are new to the field are not terminally confused.

Maybe something to add to the agenda of the Impact Bond Working Group meeting in Brussels this week?

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