EDUFINANCE SIDE EVENT: Exploring alternative sources of finance to fund the global education deficit
In July 2021, Opportunity EduFinance hosted a side event to the GPE Global Education Summit. An expert panel discussed a range of options for alternative sources of finance to fund education in low- and middle-income countries. The event was a call to action for collaboration and experimentation to solve the global education deficit.
Nearly a month and a half after the event, we wanted to reflect on the compelling call to action that our panelists posed, as we look ahead towards opportunities to drive greater collaboration, learning and innovation in public and private finance in global education, such as the Community of Practice to be launched by USAID, as shared by panelist Suezan Lee during the event.
The below highlights key points from our speakers. The full event recording is available here.
Our keynote speaker was LIESBET STEER, Director of The Education Commission, chaired by the former UK Prime Minister, Gordon Brown. Through this role Liesbet was the Commission Director of the report, The Learning Generation, Investing in Education for a Changing World. During her talk, Liesbet presented the audience with five important questions:
1. What are the promising examples that exist out there, and what can we actually learn from other sectors, and what is ready to be operationalized?
"Why do we find ourselves so short of the necessary funding for education, if we believe education is so critical for our future and the future of our children, and the recovery from the pandemic? We need to make a much stronger case for investment in education but also, related to that take a much harder look at innovative solutions to address resource scarcity."
2. Who can do what?
"There is a need for greater clarity around how different actors can contribute to filling the financing gap because that could help clarify what can be funded publicly and what can be funded privately. We need to recognize that governments can’t fill the gap completely and others will need to step in, whether they are philanthropists, private sector donors or households themselves."
3. How can we change the attitude in the sector when it comes to engaging the private sector in education financing?
"So where are the private companies that are leaning on national governments to invest in education?"
4. How can we create a culture of impact?
"Where is that kind of initiative in education? Could we create that? And it has to be really driven by that impact piece."
5. How do we better coordinate and bring these different actors together in whatever platform is appropriate?
"I think we need to create new spaces to bring actors together because the sector as you know has been very fragmented. When we come together, we often come together with our peers. For example, in the Commission we do have the Global Education Forum that brings together the bilateral and multilateral donors, but we know that is not enough. That’s the public and the official donors. But we need to bring others into this.
So, we are organizing our work around these priority areas of health and nutrition, foundational learning, digital learning and the education workforce. It would be really great to get the private sector and private philanthropists and so on to also start thinking around these same priorities and how they could add value."
JUSTIN VAN FLEET, President of Theirworld and Executive Director of the Global Business Coalition for Education, spoke about the challenges facing countries to ensure there are enough school places for all, especially for Early Years pupils and how to help governments prioritise education:
“The challenge before us is shocking. We’re at a moment in history where every child around the world has had their education interrupted. Whether you are in a high-income country or a low-income country, you know what it’s like to not have a school to go to."
"It’s an absolute no-brainer. We are trying to build human capacity to help people reach their potential. We need to be creating jobs, innovating, and allowing parents to enter the workforce having early childhood education centres for their children to go to."
“This is a time when we need to be stimulating economies and investing in education and we are just not seeing that. We are seeing domestic revenue at lower rates and the international community is pulling back from supporting human rights and the right to education."
"The priority has to be in countries themselves. We must focus on helping to maximize domestic revenue and helping countries to invest more in education, whether prioritizing in domestic budgets, closing tax loopholes, tax reform.”
“At Theirworld we have global youth ambassadors, and we will have 2,000 by the end of this year. Young people campaigning for education spending from their governments. We need people to get out there and make this a priority.”
SCOTT SHERIDAN, Director of Operations at Opportunity EduFinance outlined some core findings from a study published in November 2020:
“In our report we found that this gap in domestic markets is being driven by strong population growth and a decline of out-of-school children, and in fact, in low- and middle-income countries you have governments that are already spending over 15% of their total budgets - roughly 4% of their GDP - on education... We found it’s difficult to imagine governments being able to deploy enough capital to meet the demand that there is for education.
[Opportunity EduFinance] meets with financial institutions, and we highlight the deficit the education sector is facing in their own markets, and the opportunities [for investment] in their own contexts. We conduct market research and develop products that are suited for their own markets. This gives them confidence to lend and attract local capital which can alleviate the finance gap [for education].”
“Covid has a strong effect on household incomes as well as school incomes. We’ve seen a reluctance to continue to lend [to schools and parents] at the start of the pandemic, but in recent months it has picked up. From our roadshows [with financial institutions] we’ve seen a lot of interest to address the need, and recognizing this education gap.”
SUEZAN LEE, Senior Education Finance Specialist at the United States Agency for International Development (USAID) outlined their approach and focus on strengthening education systems:
“USAID is committed to improving learning outcomes and expanding access to quality education for all children and youth. This is an ambitious vision, and no single approach or policy change is enough to achieve it. USAID focuses its work on strengthening education systems and in partnering with countries.
There is a huge gap in financing for education in low- and middle-income countries. The majority of this must be expanded through domestic research mobilization and expanded private sector investment. Not engaging with non-state schools would mean missing out on a tremendous opportunity and not reaching large swathes of school-age children.”
“How does USAID mobilize? We recognize our own funds are small compared to the government funding. We recognize the power of using blended finance using public funds to catalyze private funds. Our 2018 new state education policy takes a forward leading approach on innovative finance with non-state actors with the support of the government. With this mandate USAID launched a blended finance model called CATALYZE EduFinance in October 2019 to help close the financing gap.”
“We want to establish a community of practice to bring in the donors, host country governments and the school associations and academics to see what works and what is most effective.”
To find out more about the Community of Practice that USAID is launching, please email email@example.com and we will direct your request to the appropriate contact.
To hear about future Opportunity EduFinance events, please subscribe to our EduFinance Mailing List.