City council members of the Seoul Metropolitan Government in South Korea are voting on whether to implement the country’s – and Asia’s – first social impact bond (SIB).
The project, to support young people in the city who live in care to increase their educational standards and adjustment to society, is being backed with US$1.3m in investment from Daewoo Securities, the brokerage and investment firm that’s part of the Korea Development Bank.
Speaking to Responsible Investor, Chong-soo Lee, chairman of Social Investment Korea which is giving advice about the SIB, said the city council will discuss the issue on December 19.
There are around 300 young people who live in care in Seoul, and Social Investment Korea proposes to support 100 children over three years. In March, Seoul City implemented a municipal lawfor social impact bonds that allows government to pay outcome payments that are outside the usual government budget.
Lee, a former investment banker, said it took a lot of effort to explain social impact bonds to councillors as it is such a new concept. But, efforts have been fruitful, leading to one of the first laws worldwide around social impact bonds and consideration to establish a cross-department fund to pay for outcomes of the bonds.
Korea Social Investment was founded two years ago by Social Solidarity Bank, the largest microfinance institution in South Korea, and is the operating agency of the £100m Social Investment Bank introduced by Mayor Park Won-soon to increase social finance in Seoul.
Mr. Lee said the government had been a big driver of the social investment agenda in South Korea; in 2007 it passed the social enterprise promotion law, and more recently laws on co-operatives.