SDG Impact Finance Initiative, supported by Convergence, has awarded KOIS and Interpeace’s Finance for Peace Initiative a USD 190,000 feasibility study grant to design a USD 100 Million Humanitarian-Development-Peace (HDP) Outcomes Fund. This fund aims to address the critical challenges faced by over 50 million displaced individuals in Sub-Saharan Africa by fostering sustainable livelihoods, expanding safe access to essential services and mobilizing private sector investment in displacement-affected settings.
The Challenge:
Sub-Saharan Africa (SSA) hosts approximately 50 million displaced individuals, including 33 million internally displaced people (IDPs) and 8 million refugees. Displacement in the region is driven by protracted crises natural disasters and recurring conflicts which continuously add to the caseload of displaced populations. Current responses typically rely on short-term humanitarian aid and grants, which do not adequately promote long-term development or integration of displaced populations with their host communities. Meanwhile, the potential for private sector engagement remains untapped, with few investments targeting displacement affected communities (DACs) to generate economic benefits and provide critical services.
The Opportunity
The HDP Outcomes Fund leverages KOIS’s expertise in humanitarian and results-based financing and Interpeace’s extensive peacebuilding experience and local networks in fragile states. This fund is envisioned as a scalable vehicle that will:
- Reduce transaction costs by pooling funding
- Promote coordinated approaches to building an enabling environment and centralize evidence building around the triple nexus
- Mobilize private capital to finance sustainable solutions for DACs
Design Question: How can an outcomes-based structure address humanitarian, development, and peace goals in a scalable, effective manner?
The Fund
The USD 100 Million HDP Outcomes Fund will deploy financing through two main windows:
- The “payment-by-results window” will fund multiple impact bonds, wherein outcome funders pay for pre-defined humanitarian, development and peace outcomes when achieved, providing capital repayment and a premium to investors who prefinance the interventions. Additionally, this window will create conducive conditions for private investments in displacement settings by developing robust results-oriented programmes that strengthen the enabling environment for social businesses to operate and grow.
- The “impact-linked finance window” will target social businesses, deploying instruments that provide a financial reward for social impact, such as social success notes, social impact incentives or impact-linked loans. The window provides patient capital that will enable social businesses to scale and deliver better services, goods and jobs to DACs.
Technical Assistance Facility
The fund also includes a dedicated Technical Assistance (TA) facility to build the project pipeline, provide targeted support to service providers and businesses, and facilitate knowledge sharing. Moreover, the TA facility will commission independent evaluations to determine whether funded interventions have been delivered according to the pre-agreed outcomes to trigger outcome payments.
Scalability and Diversification
The fund will be sector agnostic and aims to target multiple displacement-affected countries within the SSA region across multiple outcomes. Through a pooled fund, The HDP Outcomes Fund aims to blend different capital types and catalyze larger scale financing for sustainable interventions addressing the tripe nexus – humanitarian, development and peace outcomes – in fragile contexts.
Next Steps:
As part of the feasibility study, KOIS and Interpeace will:
- Select a shortlist of pilot countries using a robust assessment framework.
- Design the funds financial and impact strategies and structures, aligning with stakeholder priorities.
- Engage public and private investors to assess interest and refine the Fund’s design.
