Developing an impact monitoring system for Sweden’s guarantee instrument

Background

Sida has been offering guarantees for the last decade by sharing risk with between public and private actors, with the goal to mobilize additional capital for development.

By December 2019, Sida’s guaranteed volume in its active portfolio amounted to nearly 7 billion Swedish kronor (US$750 million), mobilizing capital of almost 17 billion kronor (US$2 billion). Most guarantees target inclusive market development across multiple sectors including agriculture, while others also cover environment and energy, sustainable infrastructure, democracy, human rights, gender and health. Therefore, the guarantee instrument is placed to address global challenges and measuring impact towards their achieving is paramount.

Purpose

Sida pioneered the guarantee instrument in its current shape and the tool is increasingly being used by development partners. Sida’s instrument has raised interest of other stakeholders across the development sector.

Typically, Sida guarantees are requested by financial institutions. To monitor results and impact, Sida uses individual follow-up and reporting from the guarantee partners. However, this process is complex and requires a systematic approach towards measuring and monitoring development impact. This is especially important as impact created through guarantees is largely indirect and experienced not only at the level of the final beneficiaries (i.e. small businesses and agricultural entrepreneurs, their employees and related families and individuals) but also the financial institution that might be moving into new sectors or supporting new client segments.

Activities

The project is being implemented by the ILO’s Social Finance Programme in a co-creative partnership with Sida, and covers the following activities:

• Reviewing Sida’s existing impact measuring and monitoring practices for the guarantee portfolio and elaborating a diagnostic report of the situation
• Elaborating a development impact monitoring system and framework, including processes for the elaboration of a sound theory of change to achieve desired results/impacts and information management systems for existing as well as new guarantees.
• Developing tools to track and monitor results/impacts indicators (sex-disaggregated) aligned with Sida’s policies and strategies, as well as international good practice and standards
• Piloting and testing the tools
• Building capacity of Sida staff to apply the development impact monitoring framework (including gender considerations for data collection)
• Conducting gender-responsive research and case studies to extract development impact of the guarantees provided to financial institutions including impact on clients, their employees, and their families.
• Supporting Sida in implementing the development impact monitoring system and framework