Paper short abstract:

This study examines Colombia's implementation of Payment-by-Results schemes, focusing on Social Impact Bonds. It explores the implications of emphasizing measurable outcomes in social programs and the evolving roles of the state and private sectors in social protection.

Paper long abstract:

Unlike many European nations, Colombia has historically lacked a well-developed welfare state, primarily due to profound inequalities and a colonial legacy. International development programs and local policies for social provision and protection have attempted to address some of its problems, often with limited success. Currently, approximately 36% of the population lives in poverty, 13% in extreme poverty; meanwhile, unemployment hovers around 12%, while informal employment around 50%.

In response, in recent years, the country has turned to payment-by-results (PbR) schemes, particularly Social Impact Bonds (SIBs), for reconfiguring social protection programs. In these mechanisms private investors fund social interventions upfront, with the state reimbursing the investment, plus profits, if predefined targets are met. This model posits a shift in social program implementation, with the promise of fostering greater efficiency and innovation in social service delivery.

In this paper, I analyze the transformative potential of PbR schemes in Colombia using ethnographic evidence. I focus on the experiences of beneficiaries of SIBs, designed to promote formal employment among vulnerable populations, and on the practices of professionals implementing them. I explore the consequences of prioritizing measurable outcomes, such as a certain number of job placements, over meaningful social impact. I highlight the role of SIBs in reframing state responsibilities and private sector engagement in welfare provision, and offer insights into the broader global discourse on privately-funded alternative welfare strategies in the face of state inefficiency and fiscal constraints.