Project: Lesotho Development Impact Bond for Stunting

Lesotho faces a severe malnutrition issue, which has resulted in the stunting of children under five years of age. As of 2014, one-third of children under five were stunted (DHS, 2014).

The Government of Lesotho, through the Ministry of Health, in partnership with World Vision Lesotho, UNICEF, World Health Organization, and World Food Programme, is interested in assessing the suitability of one or more social impact financing mechanisms, namely a Development Impact Bond (DIB) and or other results-based social financing alternatives, to address the underlying causes of malnutrition and stunting in children under five years in Lesotho.

Limestone has been hired to conduct a feasibility assessment for this project.

Several aspects of the environment surrounding stunting in Lesotho would be conducive for a DIB. This includes the general assessment that a significant reduction in stunting can be achieved through the proper comprehensive intervention and that there is ample support among stakeholders to attempt to address the problem through a DIB. At the same time, several other factors present challenges for a DIB to address stunting in Lesotho, including coordination challenges and data limitations. Therefore, the Limestone team recommended a “learning-first approach” to DIB financing. Such an approach focuses on implementation and evaluation to maximize learning and program refinement during the first stage of the project (years 1-3) while also investing in institutional strengthening to address the underlying issues exacerbating malnutrition and stunting.