Historic first-ever International Finance Facility for Education (IFFEd) launched at United Nations Transforming Education Summit
UN Special Envoy for Global Education Gordon Brown…
IFFEd is a new, innovative financing facility designed to help close the chronic education funding gap in LMICs and support achievement of SDG 4 – ensuring inclusive, quality education and lifelong learning opportunities for all. It brings together and expands the education ecosystem by engaging with government, non-government, and philanthropic players, enabling and leveraging distinct strengths of each stakeholder.
It is also a robust response to the call for new financing initiatives under the Addis Ababa Action Plan to finance the SDGs and leverage “billions to trillions.”
IFFEd will increase the capacity of the MDBs to finance education in LMICs by providing them additional lending headroom for education projects and improving the concessionality of the education financing packages for eligible countries beyond what the MDBs can currently offer.
COVID-19 brings new urgency to IFFEd, as eligible countries are facing severe budget constraints that will make it difficult to protect education budgets. The World Bank and UNESCO report that two-thirds of low- and middle-income countries have slashed their education budgets since the onset of the global pandemic.
IFFEd’s financing will be delivered to countries through its partner MDBs. IFFEd will provide incentives to both the MDBs and LMICs to scale up investments in quality education programs by:
IFFEd is not a policy or implementing agency. A lean structure with a small core team will oversee the facility. Projects funded by IFFEd will be led and implemented by country governments.
Alongside its financing, IFFEd will identify breakthrough solutions in education by working with innovators to curate new ideas in a post-COVID-19 world, and collaborate with public and philanthropic partners to design, test, and evaluate approaches in different contexts.
There is an urgent, well-documented crisis in learning and education. Even before COVID-19, over half of the world’s children and youth were either out of school or in school but not learning the skills needed to thrive. This crisis has been tragically intensified by the global pandemic. At the same time, the scale of the resources needed for countries to respond effectively is mind-boggling. This is particularly true in lower-middle-income countries (LMICs).
LMICs house most of the world’s poor and out-of-school children and have the largest financing gaps to meet their education needs, but are ineligible for most grant and concessional financing programs. They are also facing severe financial shocks in the wake of the pandemic, due to a decline in revenues from sources like exports and tourism, as well as reduced access to markets. IFFEd will address a critical gap in the global development architecture by enabling LMICs to scale up investments in education.
IFFEd is unique because it is designed to help lower-middle-income countries (LMICs) – which house most of the world’s poor – address chronic, unmet needs in education finance. Other signature education initiatives target lower-income countries and countries in crisis.
IFFEd is a solution to a specific gap in education funding. It plays a very different role to other established funds that focus on low-income countries or fragile contexts. Its simple purpose is to generate more funds for LMICs that are no longer eligible for other concessional finance as they move through their development journey. Due to its unique financial guarantee structure, IFFEd is currently the only mechanism which multiplies scarce donor dollars by up to seven times.
To achieve SDG 4, a major uplift in education finance is required. IFFEd is a key solution which can bridge this gap, but it cannot do this alone. IFFEd and its multilateral development bank (MDB) partners will work alongside countries and other international actors such as the Global Partnership for Education (GPE); the Education Cannot Wait Fund (ECW); United Nations agencies such as UNICEF, UNHCR, and UNRWA; national donors; and civil society.
IFFEd is not a delivery or implementing agency. Its implementing partners will be the MDBs, which are important providers of programmatic and technical expertise in education and have established track records in improving learning outcomes. IFFEd will also foster and support MDB collaboration and cooperation on education.
Not yet. IFFEd is currently being established in Geneva and will be launched at the the UN Transforming Education Summit in September 2022, as called for by the United Nations Secretary-General António Guterres. It will evaluate its first project proposals in 2023.
Only public education programs funded by the MDBs will be eligible for IFFEd financing. These will include any education-related initiative or reform effort that is consistent with a country’s strategy to increase access, learning, and equity.
IFFEd funding can also be provided for activities related to other sectors (e.g. health, infrastructure) where such activities are directly related to or integrated with education services. For example, integrated early childhood development services (education, health, nutrition, protection) would be eligible but nutrition alone would not; school infrastructure would be eligible but rural roads would not.
IFFEd will work with sovereign and philanthropic donors. The first round of donors to IFFEd will be announced at the Transforming Education Summit in September 2022.
Sovereign and philanthropic donors interested in learning more about partnership opportunities with IFFEd are encouraged to get in touch: email@example.com.
The aim of IFFEd is the opposite. IFFEd has been designed to assess and mitigate debt risks.
The creation of IFFEd is required as a way to provide more affordable external financing options for lower-middle-income countries so they do not need to take on expensive and short-term commercial debt.
IFFEd would require that the multilateral development banks (MDBs) conduct a debt sustainability analysis of eligible countries, which will be included in IFFEd program documents. Proposals will need to be consistent with MDB and IMF limits on concessional borrowing. This requirement will reinforce the MDBs already prudent lending policies.
Yes, this is a key transformation needed and the pivotal pillar of sustainable education funding. It is vital that national governments commit to developing plans and budgets aimed at increasing their education spending to 4% to 6% of gross domestic product (GDP) or 15% to 20% of public spending. They can do this by taking on bold revenue reforms to mobilise additional tax income through fair taxation, eliminating and enforcing tax loopholes (including for corporations), and tackling corruption. Research shows that many countries – even those already meeting the education spending targets above – will require additional funding if they are to achieve the SDG 4 by 2030. To receive an IFFEd loan, a country must show a commitment to mobilising more domestic financing for education.
During IFFEd’s design period, over 50 CSOs participated in a consultation process to contribute their ideas and feedback, which were used to amend the baseline principles and inform the technical design document.
National and global education CSOs can bring value to IFFEd in areas related to programming, monitoring, results, and evaluation. CSO engagement will be most impactful at the country level, and through interactions with the MDBs. IFFEd and the MDBs will continue to consult with CSOs as to how best to work together on program design, implementation, and review.
There are several major education initiatives that provide grant financing for education needs in the poorest countries. But the largest, most pervasive, and chronic unmet education financing needs are in LMICs, which house the majority of the world’s poorest children and youth.
Sixty percent of all children and young people who are projected to lack basic skills by 2030 reside in LMICs. These countries will fall far short of their social and economic potential without major new commitments to educate their children and youth and equip them with skills for the future.
Many LMICs have taken important steps to transform their education systems through domestic investment and reform. But they need additional sources of funding to deliver quality education.
By 2030, 80% of the total global education financing needs will be in LMICs (pre-pandemic estimates). Most are not eligible for grant or concessional aid, and the costs of alternative external financing are prohibitive for long-term social investments, creating a significant funding shortfall. The shortfall is being exacerbated by stagnating or falling economic growth and reduced access to markets due to the impact of the COVID-19 pandemic.
IFFEd seeks to launch with $500 million in guarantees and $200 million in grants, which can be leveraged to $2 billion in additional financing for education.
In its first five years, IFFEd aims to unlock an additional $8 billion, creating $10 billion in new education financing. This new funding source could help up to 700 million children in around 50 LMICs improve their skills and learning and prepare them for the demands of a changing world.
IFFEd will be accessible to lower-middle-income countries (LMICs) that have access to the non-concessional financing windows of the active partner MDBs. IFFEd is expected to launch with 1-2 partner MDBs in September 2022, and expand globally thereafter.
For an eligible country to access IFFEd funding, it will need to show:
IFFEd has prepared a robust results framework with donors and the MDBs. The framework will include major SDG 4 indicators, disaggregated by gender. IFFEd will also provide annual reporting on all education programs of the participating MDBs and their impact on learning. IFFEd will report publicly on operations and results annually. In addition, IFFEd will be assessed periodically by an independent, external evaluator(s). The first independent evaluation will be commissioned before the end of IFFEd’s first five years of operation.
Yes, the OECD has recognized IFFEd as an ODA-eligible facility and confirmed that donor paid-in contributions to IFFEd will be ODA eligible.
IFFEd is the result of the landmark Learning Generation report supported by current and former heads of state, ministers of finance, and top global business and education leaders. One of the report’s key recommendations was the creation of a new international finance facility for education.
The Commission determined that MDBs are best placed to increase the volume and effectiveness of investments in education. MDBs have a wealth of experience with education at a systems level, which is where interventions are needed to make lasting change and already have strong relations with the potential beneficiary countries. By partnering with the MDBs, IFFed will work within the current education architecture, thus avoiding duplication and parallel structures, as well as the additional costs required to prepare, implement, and monitor a new facility which engages at country level.
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