June 21, 2024. What do sustainable finance, public-private partnerships and improving employability have in common in Latin America? These were the topics discussed in San José and which arise from the leadership in impact investment and pay-for-results mechanisms between the public and private sectors.
As part of the GSG Impact activity in Costa Rica, the forum “Building opportunities: Contracting for results and public-private partnerships”, organized by Fundación Caricaco, Fundación Omar Dengo and VIVA Idea, together with the Central American Impact Investment Platform (PiiC).
This event brought together leading experts such as Ana I. Aguilera from the World Bank, Constanza Connolly from Keidos, Maria Laura Tinelli from Acrux Partners, Mauricio Miranda from Fundación Caricaco and Paola Fonseca from VIVA Idea. The moderation was in charge of Fernando Francia, communications coordinator of VIVA Idea.
The central discussion revolved around “Payment by Results” mechanisms and their potential to improve the effectiveness of public policies and strengthen public-private partnerships. These mechanisms allow the public sector to pay for effective job placements instead of massive training, thus improving the efficiency of public spending.
The tool not only maximizes the use of public resources but also provides flexibility and innovation on the part of field implementers and funders, promoting evidence-based decision making and improving the design of programs and policies with high social impact.
Successful cases in Argentina and Colombia demonstrated the scalability and effectiveness of these models, with labor market insertion rates significantly higher than those of traditional programs. In Argentina, a pilot program achieved a job placement rate of 36%, compared to 10-12% for traditional programs, without higher government spending.
In Colombia, the partnership between CORONA, SECO, IDB and the National Government demonstrated the effectiveness of “Payment by Results”. These examples underscore the importance of defining clear metrics and ensuring certainty in payments for the adoption and scalability of these models by governments.
During the forum, the difficulties faced by the State in generating mixed funds or participating in funds together with the private sector were discussed. Trusts are currently used to generate common funds between the State and private enterprise to develop projects, thus creating spaces for public-private collaboration.
The forum allowed for public participation, with interesting contributions from organizations such as CRUSA Foundation, the Center for Technology and Visual Arts (CETAV) Parque La Libertad and Voces Vitales Costa Rica, among others. This event not only allowed the discussion of critical sustainable development issues, but also strengthened the networks and alliances necessary to promote social impact initiatives in the region.
Fundación Caricaco has been a key player in carrying out a pilot experience, while Fundación Omar Dengo joined to discuss experiences related to its work with both the public and private sectors, as well as the work related to Sustainable Development Goals (SDGs) of the United Nations, and VIVA Idea with its contribution on issues that help improve social progress and empowerment of communities in Latin America.
The event concluded with the hope that the ideas and solutions discussed in the panel can be implemented and scaled for the benefit of Costa Rican society, thus continuing the work initiated by these organizations. Collaboration among them has been vital to create a space where achievements and emerging solutions can be reached, with the aim of maximizing the use of public resources and promoting evidence-based decision making.
Costa Rica, like many Latin American cities, faces significant challenges in terms of employment, especially for youth and women. With a youth unemployment rate of 30.6%, it is crucial to implement mechanisms that not only train, but also ensure employability to generate social progress.
In this context, Fundación Caricaco has set out to explore the use of results-based financing to improve youth employability, allocating USD 1 million over three years in its Acelera project.
This “Payment by Results” trial marks the beginning of a series of at least five more pilots that will be part of the Caricaco Foundation’s multi-year strategy. The objective is to promote insertion into formal employment in the country’s most disadvantaged regions, with a particular focus on youth and women, and to share lessons learned with the public sector to bring it to scale.
The June 21 forum highlighted the importance of public-private partnerships and “Payment by Results” mechanisms to address Latin America’s social and economic challenges. Collaboration and the sharing of successful experiences are essential to designing and implementing programs that generate significant and sustainable social impact.
Collaboration between these sectors, supported by innovative and efficient financing models, is essential to effectively address the social and economic problems facing the region.
With joint efforts and innovative models, it is possible to transform the future of the region and improve the quality of life of its inhabitants.