PRENSA / Latin Lawyer (Fredrik Karlsson)
Beccar Varela has helped the local government of Buenos Aires launch the country’s first social impact bond (SIB), which will fund a project to help young Argentines enter the labour market.
The local secretariat of strategic planning officially announced the project Proyectá tu futuro on 14 December. The project addresses vulnerable people living in the southern part of Buenos Aires between the ages of 17 and 24.
Beccar Varela advised on the legal structuring of the SIB and its associated contracts. This was completed on 25 October. The SIB has already obtained funding worth 40 million Argentine pesos (US$1 million) from a group of local and international investors. These funds will go toward the project.
SIBs are investment agreements between the state and private investors to finance projects which try to solve quantifiable social issues identified by the state. Expert organisations, normally in the third sector, carry out the projects by using the funds provided by the investors and disbursed by the state. The state is only obliged to repay investors if the project meets its goals. An appointed expert committee analyses the results to verify if the project has met its goals.
Buenos Aires’ SIB has five main objectives. The first is to help people complete secondary school. The second is to get people into formal employment for a determined or non-determined period of time at companies that are linked to the project. The third and fourth objectives are to make sure these jobs are kept for four consecutive months and for the youngsters stay in employment for 12 of 14 months. The fifth objective is to expand the project, convincing more companies to offer formal work to young Argentines.
If the project is successful, the government of Buenos Aires plans to use the model for other social issues, and encourage its use elsewhere in the country.
Youth unemployment is a widespread problem in Argentina. Nearly 25% of the targeted age group have no job, which is worse than the overall unemployment rate of 9%.
Informal employment is another issue and one the SIB also seeks to address. Nearly 50% of the targeted age group work in the informal sector. Buenos Aires hopes to fix this situation by making companies that want to benefit from the SIB offer young people formal employment only.
Worldwide, SIBs are still a fairly new initiative. The financial tool has its origins in the UK where the first financing of its kind was launched in 2010. More than 20 countries have used SIBs since then. Combined, the instrument has raised nearly US$400 million for social impact projects.
Counsel to the City of Buenos Aires
Partners Fernanda Mierez, María Shakespear, Roberto Crouzel, Pablo Torretta, Juan Stupenengo and Santiago Montezanti, and associates Constanza Connolly, Luciana Liefeldt, Lucía Degano, Gabriel Vernola, Lujan Callaci and Evangelina Petrizza.