Characteristics of the Challenge Funds are:
- A transparent, competitive application process and selection procedure to invest in demand-driven and market-led innovative solutions open to all who are willing to compete, bid and achieve.
- Encourage development of ideas and innovations that propose local solutions to local problems.
- Co-investment for innovative, risky projects which motivates and disseminates good practices while promoting outreach, sustainability and replicability.
- Partnerships include co-funding in projects and providing technical assistance through the accelerator support to achieve economic and social development goals.
UKaid सीप Challenge Fund focuses on: ICT, tourism, commercial agriculture, construction, and light manufacturing sectors through interventions that expand and improve market-led skilling and employment creation in Nepal for increased incomes, productivity and resilience of Nepalis, alongside increased productivity for firms/industries. The programme also focuses on harnessing the benefits of migration for Nepal’s workforce and economic development through cost-effective models that increase migrants’ skills, lower the cost of migration, increase income and savings and productive use of remittances.
UKaid सीप’s innovative Challenge Fund mechanism is providing a pathway for the British Government (Foreign Commonwealth and Development Office) to deploy co-investment and technical assistance as a market-based solution to leverage private sector resources and unlock private and public funding for achievement of common socioeconomic development objectives. सीप’s co-investments in costly and risky projects led by the private sector is helping accelerate and amplify sustainable, market-led services that equip the most underserved people with the skills, networks, and resources needed to build reliable, dignified livelihoods and engage as productive human capital for socioeconomic growth of communities, industries, and the country.
Challenge Funds, as a lean and transparent co-investing mechanism, can stimulate the private sector to test business models for which the risk-return profile is unknown, and by doing so, unearth powerful new ways to make markets work better for the poor and encourage enterprise formation and expansion. It searches for innovative outcomes and recognizes that governments or donors do not have all the answers. Challenge Funds seek to capture the private sector’s greatest strengths: the ability to quickly generate and test new ideas; the flexibility to rapidly change direction; and the commercial motivation to replicate its successes.
Initiated in 2008 in Nepal by another UKaid funded programme, Sakshyam-Access to Finance, also implemented by WSP, the Challenge Fund model is now widely used and adopted in Nepal to catalyze private sector-led development initiatives, investments, and collaborations.