Social impact bonds to improve lives of farmers in Armenia

Improving the lives of smallholder farmers in the Shirak region of north-western Armenia is the goal of a pilot programme announced on 4 February by the European Bank for Reconstruction and Development (EBRD) and the United Nations Development Programme (UNDP).

The two institutions signed a letter of intent to structure a social impact bond, an innovative financing tool linking financial success to the delivery of measured social outcomes. Social bonds provide investment to address social problems by funding preventive measures. When the social outcomes improve, investors are repaid their initial investment plus a return for the financial risk that they took.

This will be the first social impact bond introduced in Armenia and it will be dedicated to supporting the development of the local agribusiness sector.

The EBRD is the leading institutional investor in Armenia. Since the start of its operations in the country in 1992, the Bank has invested €1.47 billion in 187 projects there, in the financial, corporate, infrastructure and energy sectors, with 91 per cent of those investments in the private sector.

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Press release