The barriers to adopting Social Impact Bonds in the public sector in South Africa

Abstract

Despite the initial popularity that Social Impact Bonds (SIBs) enjoyed in the wake of the 2008 global financial crisis, governments have had lukewarm uptake, with only 138 SIBs worth a total of $441 million having been issued date. Emerging economies, including South Africa, have been especially slow in embracing SIBs, which is puzzling given the fiscal constraints they face whilst still addressing the rising levels of social malaise, including unemployment, illness and homelessness. This qualitative study explores the barriers to the adoption of SIBs by the public sector in South Africa. The diffusion of innovation theory (DOI) provided the theoretical context. Fourteen semi-structured interviews with subject matter experts, practitioners, and senior civil servants were conducted to explore barriers to adopting SIBs within the public sector in South Africa. The study found that the inability by SIBs to sufficiently align the interests of stakeholders and the narrative associated with SIBs that result in a lack of Government accountability to citizens created barriers to their adoption. The study contributes to the literature on DOI and public sector innovation by proposing a model to address the barriers to the adoption of SIBs in the public sector in South Africa.