Since its onset 12 months ago, COVID-19 has had a profound impact on decades of progress to improve the lives of people living in poverty throughout the developing world. In this blog post our CEO, Alix Peterson Zwane, reflects on how GIF has responded since the outbreak of the pandemic by protecting the social value of our portfolio and partnering with innovators to address its worst economic and health effects, and explains our priorities for 2021 as we set out to make the case for innovation in modern, post-pandemic international development.
Here we are in March of 2021, which feels in so many ways like a continuation of 2020. We are working from home, it’s second nature to connect through video software such as Zoom, depending on where you are it might be possible to get a haircut, but it’s not much fun and frankly it’s a stressful experience regardless. We’re still relying on the values of gratitude and interconnectedness to make it through these weeks.
On the other hand, we can see emerging trends that spark hope. Rates of vaccination are rising, at least in developed countries, and I would bet most of us know someone who has received at least one dose. New data from Israel show that efficacy rates in trials are being matched in the population at large, and coverage rates there among older people are sufficiently high that you see large declines in hospital use. There is much light at the end of the tunnel.
So, while today we might feel overwhelmed by sameness, we know that times are changing, and we need to think about what comes next. Life after lockdown, life when travel is possible, when the worry is equitable distribution of vaccines globally not the raw reality of shortage, when we can ask ourselves whether the Global Goals are still relevant, and what comes next, whatever the answer to that question.
It’s in this context that we at GIF are refreshing our thematic priorities. The priorities we chose for 2020 served us well. By the end of the year, we had contracted 18 grants or risk capital investments and two venture support grants. That is up from eight deals in 2019 and represents our most productive year to date. We directly contributed to pandemic response and supported our companies so that all of them weathered the immediate liquidity crunch of 2020 economic disruption. I am proud of the way that my team adapted, worked hard, and met the moment.
Of course, it’s also true that our ambition was scaled back in some respects, as was the case for organisations across the development community in the face of such huge economic upheaval:. foreign direct investment fell significantly, tax revenue shrunk, and basic relief had to take precedence over other goals. In 2021, our goal is to build back this ambition, and, crucially, to make the case for innovation in modern, post-pandemic international development.
Why do we need innovation more than ever? Simply put, decades of progress in lifting people out of poverty has been wiped out in the past year, leaving, tragically, more people now in our target market than there have been in recent memory. We cannot take decades more to regain this ground. We must find ways to move faster, and do so in a world with very different aspirations around a range of topics, from gender equality to carbon neutrality, than we had in 1990.
In a time of tight budgets, investing in innovation in international development pays off. Let me offer some examples from our own investment portfolio here at GIF.
Between 2015 and 2020, these five early investments have generated more than $400 million in social benefits. We calculate that $84 million in social benefits is directly attributable to GIF’s investment. The cost of GIF’s early 38 investments totalled $109 million, which means that just five of GIF’s investments have already returned social benefits equivalent to three-quarters of the portfolio costs.
With modest assumptions, projecting out five years, the five GIF investments will have generated $209 million. This corresponds to a social rate of return of 34%. USAID’s DIV has found similarly high rates of return to their work. Our overall portfolio catalytic impact is around 200 times that of cash transfers. Investing in innovation is a highly impactful use of development resources.
No matter what these data points show, there is no guarantee that innovation will be central to the development agenda. Innovation is risky, at a time when leaders have less appetite for the unknown. Global health security seems paramount. The downside of experimentation seems so salient. I believe, we believe, that to retreat from innovation and experimentation would be a tragic mistake, leaving more people poorer and more insecure, for longer.
To do our part to make the case for innovation in modern, post-pandemic international development, I have set three priorities for GIF to guide our work throughout the year ahead:
The international community must meet the challenges of development in 2021 with ambition. Not only will there be ambitious targets around vaccination, but global leaders must have ambitious goals for economic recovery. GIF can, and will, be part of this. Looking inward, we will build back our own ambition, restarting investing outside of pandemic response, return to building a returnable capital vehicle that can make long-term, concessional investments to support high-impact companies on their path to securing commercial financing, and aligning our work with the climate change agenda.
Making the case for innovation in the post-pandemic development assistance landscape requires evidence, and proof points, to back the claim that this is high-value, scalable, and responsive in a changing world. We are well placed to make this argument.
For GIF, proof points are the evidence that we are who we say we are and that we are evidencing that innovation can accelerate development outcomes. Five years in, we are more ready than ever to move from talking about our potential to talking about our results. We will walk the talk as strong investors in impact, generating outsized social value, and continue to be a great partner for governments and other impact oriented investors. We will make this evidence transparent, accessible, and compelling.
We are entering its next stage of maturity and we want not only to gather those proof points of success, including impact and lessons we’ve learned, but to show that proof to our partners and tell the credible and compelling story of what we have, and can still, achieve. This year we will not only nurture but also actively generate financial returns, social impact, and other sources of value, and leverage our portfolio, track record, and relationships to achieve our 2021 deliverables. This does not mean that we turn away from our impact-first stance: impact is the primary return we seek.
Since March of last year our focus has been firmly on protecting the social value that our portfolio generated before the outbreak of COVID-19, responding to the pandemic by investing in innovations that directly address the worst health and economic effects on the world’s poorest people, and demonstrating our resilience and our ability to respond to emergent development challenges.
Looking towards 2021 and beyond, we know that the challenges ahead are as great, and perhaps even greater, than those that we have overcome to date. The organisational priorities that will guide our work during the next 12 months reflect our commitment to building on the contribution we have already made to the global COVID-19 response, and advocating for the critical role that innovation should play in modern, post-pandemic international development.