… as analysts push jobs-focused financing model
By Ebenezer Chike Adjei NJOKU
Policymakers should introduce a Skills Impact Bond (SIB) — an outcomes-based financing instrument that ties investor returns to verified employment results, to address a worsening youth unemployment situation that has defied conventional policy responses, analysts have told the B&FT.
The call comes as the nation prepares to return to the international capital markets following its 2023 domestic debt restructuring, and as the government seeks credible mechanisms to translate skills training expenditure into measurable labour market outcomes. Youth unemployment rate stood at 22.5 percent as of the third quarter of 2025, according to the Ghana Statistical Service, rising to 32.5 percent among the 15-to-24 bracket. Seven in every ten unemployed Ghanaians are aged between 15 and 35.
Approximately 1.95 million young people in that age bracket are classified as Not in Education, Employment or Training (NEET); a metric economists regard as the sharpest indicator of structural labour market exclusion. The World Bank estimates that 500,000 youth enter Ghana’s labour force annually, with the total stock of young workers projected to reach seven million by 2030. “The urgency of this instrument is best understood against Ghana’s labour market data. These are precisely the kinds of outcomes a well-structured Skills Impact Bond can fund and measure,” Nana Agyei Opoku-Agyemang, Chief Executive of Black Star Brokerage told this paper.
Skills Impact Bond
An SIB is a form of development impact bond in which private risk investors provide upfront capital to finance skills training programmes. An independent evaluator verifies whether agreed outcomes, typically certification, job placement, and employment retention over a defined period, have been achieved. Outcome funders, which may include government agencies, development finance institutions, or philanthropic organisations, then repay investors based on verified results. If outcomes are not achieved, investors absorb the loss.
The mechanism inverts the logic of conventional grant-based training financing, where institutions are paid for delivering inputs regardless of whether participants find and retain employment. “The focus is on paying for results, not just providing the service,” Deborah Adu-Twumwaah, a lawyer and lecturer in the Banking and Finance Department at the University of Professional Studies, Accra (UPSA). “When training institutions are paid per results achieved, they are forced to work towards equipping trainees with the required skills for a particular purpose,” she added.
Ms. Adu-Twumwaah pointed to a domestic precedent; the Ghana Education Outcomes Project (GEOP), launched in 2023, which uses independently verified improvements in student learning as the basis for payment, to demonstrate that the institutional logic of outcomes-based financing is not alien to the Ghanaian system.
Pensions and financing
The analysts identified the domestic pension sector as the most structurally significant potential source of domestic capital for such an instrument, but also the most immediately constrained.
Mr. Opoku-Agyemang noted that the pension industry holds total assets approaching GH¢100 billion, with private schemes alone accounting for more than 60 percent. Yet less than one percent of those assets are currently allocated to alternative assets, against a permitted ceiling of 25 percent under National Pensions Regulatory Authority (NPRA) guidelines, leaving a gap of up to GH¢25 billion that dedicated impact vehicles could begin to access.
The obstacle is regulatory as the current NPRA Investment Guidelines do not accommodate outcome-linked instruments. Permitted categories cover government bonds, corporate debt, money market instruments, equities, and open- and closed-end funds, with no defined bucket for instruments whose returns are contingent on social outcomes rather than conventional coupon structures. “SIBs do not fit cleanly into any of these defined buckets. The absence of a defined alternative investment or impact investment category in the NPRA framework is the core regulatory gap that must be addressed,” Mr. Opoku-Agyemang stated.
He pointed to Kenya, South Africa, and Nigeria as instructive comparators. Kenya’s Retirement Benefits Authority amended its investment regulations to recognise infrastructure as a distinct asset class after pension capital was unlocked for a local infrastructure bond, a template, he argued, that Ghana’s NPRA could follow for SIBs.
South Africa has accommodated ESG and impact investments for pension funds since 2016, when the Western Cape Government committed outcome funding for the continent’s first government-backed Social Impact Bond, focused on early childhood development.
The Domestic Debt Exchange Programme (DDEP), which concentrated losses on pension funds that were heavily exposed to Treasury securities, has sharpened the appetite for diversification. “Investors burned by concentrated exposure to government securities are actively seeking alternatives, making the timing for a dedicated SIB fund particularly opportune,” Mr. Opoku-Agyemang added.
Until regulatory amendments are in place, he proposed that pension funds access Skills Impact Bond returns through dedicated impact investment vehicles managed by specialist fund managers, preserving NPRA compliance while gaining indirect exposure to outcome-linked returns.
Pricing and risk structure
On pricing, Mr. Opoku-Agyemang benchmarked a prospective Ghana SIB against the domestic fixed-income landscape. With Government of Ghana secondary market yields currently ranging from approximately 10 percent to 14 percent across tenors, and the most recent corporate bond benchmark — Izwe Savings and Loans’ issuance — priced at 14 percent for a two-year tenor, he proposed that a well-structured Ghana SIB should offer a base return of 11 percent to 12 percent, with an outcome uplift of 3 to 5 percent on target achievement, producing a total return of 14 percent to 17 percent in an outperformance scenario.
Credit enhancement would be essential to the instrument’s commercial viability. He outlined a layered risk structure, with the Government of Ghana as outcome payer; a development finance institution such as the International Finance Corporation (IFC), the African Development Bank (AfDB), or UK Foreign, Commonwealth and Development Office, providing a first-loss guarantee covering 10 percent to 20 percent of the capital stack; pension funds and impact investors in the senior tranche; and philanthropic capital absorbing the equity and first-loss position. “An SIB with a strong DFI first-loss guarantee should offer investors a better risk-adjusted return than an unenhanced corporate at the same yield level,” he said.
Ms. Adu-Twumwaah stressed the legal architecture required to underpin such a structure, warning that delays in government payments after outcome verification represented a material risk to investor confidence. She called for a dedicated legal framework and suggested that existing public financial management and procurement frameworks could be strengthened and adapted to accommodate risk-sharing approaches, without requiring the construction of entirely new institutions.
The Indian template
The call from the analysts draws on a model that India has already demonstrated at scale. Its Skill Impact Bond, launched in November 2021 by India’s National Skill Development Corporation in partnership with a coalition that includes the British Asian Trust, the Michael and Susan Dell Foundation, the Children’s Investment Fund Foundation, HSBC India, JSW Foundation, and Dubai Cares — mobilised a US$14.4 million fund targeting 50,000 young Indians over four years, with 60 percent of beneficiaries required to be women.
Training is delivered across sectors including retail, apparel, healthcare, and logistics, with outcomes independently verified by Oxford Policy Management and performance management provided by Dalberg Advisors.
Results to date have been substantive. By July 2025, more than 29,000 first-time job seekers had been trained across 24 states and union territories, with 73 percent securing employment. Female certification reached 92percent and job placement 81 percent, while self-employment among women rose from 6 percent to 14 percent. A gender pay gap persists — men earning between ?12,400 (US$130.65) and ?15,700 (US$165.42) per month against women’s ?11,500 (US$121.17) to ?13,000 (US$136.97) — but the overall retention rates have exceeded national averages.
During a visit by journalists from Africa and the Pacific to India’s Ministry of Skill Development and Entrepreneurship in New Delhi, the Skills Impact Bond was cited among the ministry’s innovative financing experiments.
Devashree Mukherjee, Secretary of the Ministry, told African media delegates that India was eager to share insights from its skilling journey with Central and West African countries. “We see skills and entrepreneurship as a strategic national priority, and we are eager to share insights from India’s skilling journey and explore possible collaborations,” she said.
The ministry indicated it was actively working to develop further outcomes-based financing models beyond the SIB. Globally, the instrument has established a meaningful track record. According to the Brookings Institution and the Government Outcomes Lab at Oxford University, 276 Skills Impact Bonds had been contracted across 23 countries as of 2023, mobilising approximately US$745 million in capital. Studies of completed transactions indicate that approximately 75 to 80 percent met or exceeded their agreed social outcome targets.
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