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Social Impact Incentives for Water and Sanitation Enterprises
Social Impact Incentives (SIINC)
Social Impact Incentives (SIINCs) are innovative funding instruments within the Impact-Linked Finance (ILF) toolkit, offered through the Impact-Linked Fund for WASH programme. SIINCs have been developed by Roots of Impact in collaboration with the Swiss Agency for Development and Cooperation (SDC).
SIINCs reward selected water and sanitation enterprises with time-limited payments for achieving additional social and environmental impact. These revenues enable enterprises to improve their profitability and attract investments which accelerates their scaling efforts and supports them in reaching self-sustainability. Selected water and sanitation enterprises must raise repayable investment(s) (equity, debt or mezzanine, etc.).
Using SIINC in the water and sanitation sector was successfully piloted in the Social Impact Incentives for WASH (SIINC for WASH) programme. Since 2020, eight enterprises have received SIINC support including Aqua Clara Kenya, Jibu, and KWSH.
Impact-Linked Fund for Water, Sanitation and Hygiene (ILF for WASH)
The Impact-Linked Fund for Water Sanitation and Hygiene (ILF for WASH) is an innovative finance programme. It offers a suite of Impact-Linked Finance (results-based) solutions to water and sanitation enterprises in Africa, Asia, and the Middle East looking to scale and increase their impact.
ILF for WASH provides acceleration support and catalytic financing that contribute to mobilising private investments and scaling water and sanitation enterprises sustainably. This will ultimately contribute to achieving SDG 6, universal access to clean water and sanitation.
Financed by Aqua for All, ILF for WASH is developed and implemented in partnership with Roots of Impact. The programme builds on the learnings and promising results piloted by the SIINC for WASH programme, launched in mid-2020. SIINC for WASH is also financed by Aqua for All and co-designed and implemented in partnership with Roots of Impact.
All you need to know about SIINCs
What is SIINC and how can it support my business?
SIINC is part of the suite of Impact-Linked Finance instruments offered by the Impact-Linked Fund for WASH programme. SIINC have been developed by Roots of Impact in collaboration with the Swiss Agency for Development and Cooperation (SDC). SIINC reward selected water and sanitation enterprises with time-limited payments for achieving additional social and environmental impact. This additional revenue enables the enterprises to improve their profitability and attract investments. It therefore accelerates their scaling efforts and supports them in reaching self sustainability. Selected water and sanitation enterprises must raise repayable investment(s) (equity, debt or mezzanine, etc.).
Which kind of impact is rewarded, and how is it incentivised?
In SIINC transactions, impact is generally understood as either (1) verifiable, measurable outcomes or as (2) proxy-outputs with strong evidence of their linkage to specific outcomes. In general, incentives are identified on a case-by-case basis and in close collaboration with the entrepreneurs, so as to ensure that the metrics and targets are both desirable and attainable. Incentives are often aimed at increasing the breadth (quantity) and / or depth (quality) of impact. For example, performance-based rewards may be provided if the enterprise reaches more customers from low(er)-income or remote communities (breadth) or if their living situation (e.g., income, health) is further improved (depth).
Do I have to close the investment round before applying for SIINC?
No. Ideally, you should already be engaging with potential investors when you apply for SIINC. In case you are selected for SIINC for WASH, you can use the SIINC contract to get investors on board, because you can build the SIINC payments in your financial forecast. Bear in mind that the SIINC payments are conditional to the achievement of predefined social and environmental outcomes.
Can I raise grants to qualify for SIINC, instead of investment(s)?
No. SIINC is provided to selected enterprises under the condition that they raise repayable investment(s) (could be equity, debt, mezzanine, etc.) of at least €500,000 for drinking water and menstrual hygiene enterprises, or at least €250,000 for sanitation enterprises. This means you can raise additional grants, but this should be in parallel to your (repayable) investment round.
How can the impact enterprise use a SIINC contract to attract more commercial capital?
The enterprise can integrate the support that Impact-Linked Finance offers to boost their income statement and make their operations more attractive. SIINC can be seen as an additional revenue stream (see figure below), which encourages enterprises to adapt their future projections accordingly. If required, Aqua for All can a) provide proof (in the form of official documentation) that the enterprise was selected to receive SIINC or b) directly engage with (potential) investors.