Mobilizing more and better education investments
The Commission is collaborating with countries, multilateral development banks, and partners around the world to mobilize more and better investment in education. The International Finance Facility for Education (IFFEd) is an innovative education financing mechanism that aims to unlock at least US $10 billion of new funding by 2030, making it possible to get every child in school and learning.
What is the International Finance Facility for Education?
The International Finance Facility for Education (IFFEd) will be a powerful new financing engine for global education. It is specifically designed to tackle the education crisis in Lower Middle Income Countries (LMICs) which are home to 80% of the world’s children.
IFFEd is a recommendation of the Education Commission, put forward in The Learning Generation report released in September 2016. IFFEd complements existing grant instruments like the Global Partnership for Education (GPE) and Education Cannot Wait (ECW) and fills a critical gap in the international financing architecture for education. By using a combination of catalytic grants and guarantees and multiplying scarce donor resources by a factor up to four, investing in IFFEd will enable international donors to help close the massive education financing gap in LMICs without reducing their existing support for education in low-income countries or humanitarian settings.
- Commission Chair Gordon Brown’s keynote at the Education Disrupted, Education Reimagined WISE Summit
- Educating the COVID recovery
- Build Back Better: Six considerations for national education responses to COVID-19
- IFFEd: An opportunity to mitigate COVID-19's impact on learning
- Brown urges G20 to co-operate on delivery of coronavirus medical essentials to avoid profiteering
Download the IFFEd and COVID-19 Brief ›
Read how IFFEd can mitigate the pandemic’s impact on learning.
Download the 2020 IFFEd Update ›
Read the latest update on the Facility’s development.
Download the Prospectus ›
Learn why this Facility can make a difference.
Download the Design Proposal with Technical Annexes ›
See the details of how the Facility’s business model will work.
Download Statements of Support ›
Diverse leaders from around the world support the Facility.
Closing the gap in education financing
Funding for education is more important than ever. The world is in the midst of an unprecedented global crisis as a result of COVID-19 that will be felt for generations. Before the emergence of COVID-19, the education of the world’s children and youth was already in crisis – 250 million children were out of school and more than 550 million were in school but not learning the basic skills needed to thrive.
The COVID-19 pandemic has magnified the world’s learning crisis exponentially. According to UNESCO, more than 1.5 billion children and youth – over 90 percent of the world’s student population – have had their education disrupted due to school closures in more than 190 countries. More than 63 million teachers and the wider education workforce are grappling with ways to ensure that learning does not stop and that the most vulnerable children are protected.
The poorest and most marginalized children are at the greatest risk. The worst impacts of the crisis will be felt by the most vulnerable, especially girls, refugees, and those living in extreme poverty. A child who is out of school for more than a year is unlikely to return, and girls are 2.5 times more likely to drop out. Without being in school, millions of children could be trapped as laborers, child brides, soldiers, and victims of human trafficking and modern slavery. Without an education, an entire generation of future doctors, teachers, lawyers, and entrepreneurs will not be able to realize their full potential and contribute to the recovery and growth of their communities.
Lower-middle income countries will bear the brunt of the burden. LMICs house close to half of all school-aged children and more than half of the world’s poor, along with the highest number of refugees and displaced people. Even before the COVID pandemic, 155 million children were out of school. The size and scale of the education crisis in these countries will grow dramatically as student populations continue to expand and populations of disadvantaged children (whether by sex, location, disability or level of poverty) require additional investment. Despite large and rising financing needs, international development assistance has not kept pace with need. Total global aid for education is currently only around US$12 billion – roughly $10 per child – barely enough to pay for a secondhand textbook. Indispensable programs such as the Global Partnership for Education (GPE) and Education Cannot Wait (ECW) are not designed to address LMICs’ large long-term financing needs and are already stretched focusing on LICs or emergency humanitarian needs. The sheer scale of the education financing challenge in LMICs requires new and ambitious approaches.
A new way to finance education
IFFEd runs on a basic set of principles:
Efficiency: Harness the power of the multilateral development banks (MDBs) – the African, Asian, and Inter-American Development Banks, the European Bank for Reconstruction and Development, and the World Bank – to mobilize additional financing in capital markets and implement programs. IFFEd requires no new actors at the country level.
Scale: Multiply traditional aid more than four times, double existing investments from banks, and mobilize US$10 billion of new investments in education in its first few years of operation.
Affordability: Soften loan terms to make them more affordable and manageable for educational investment.
Sustainable financing for results: Align investments with education sector plans, encourage countries to mobilize domestic funds for education and manage their debt responsibility, and deliver results.
Maximizing the impact of donor dollars
IFFEd offers a game-changing model. It uses guarantees and grants from contributors to generate increased education financing by the MDBs and reduce lending terms for borrowers. IFFEd has two funding windows:
Grants: IFFEd will provide grants to participating MDBs to lower the cost of their education financing to eligible countries and allow LMICs to finance education on more affordable terms. Between 2015-2017, 12 percent of concessional MDB lending for LMICs was taken up by education, compared to just 2.5 percent of non-concessional lending.
Guarantees: IFFed will guarantee loan repayments to MDBs from their client countries, effectively providing MDBs with a form of capital which they can leverage four times on the capital markets. Donors only need to provide 15 percent of total commitments to this window up front in cash, with the remaining 85 percent provided in the form of a contract to convert commitments to cash if needed to maintain the financial stability of IFFEd.
Country commitment: Countries will only be eligible to access this new financing if they can demonstrate:
- A credible strategic framing document, such as an education sector plan;
- A commitment to improving education opportunities for marginalized children, consistent with the ‘leave no one behind’ principle;
- A commitment to increase its domestic education budget to meet international standards;
- A capacity to sustain additional MDB debt, as demonstrated by a debt sustainability analysis;
- A growing integration of results-based approaches to achieve nationally set targets (consistent with the Paris Declaration on Aid Effectiveness)
How does IFFEd work?
IFFEd is not an implementing agency. It will work by enabling participating MDBs to increase the amount and affordability of funding for education in LMICs. The fundamental premise of the MDBs’ financing models is that they can borrow and then lend, at low rates, a multiple of their capital base to countries due to their AAA rating. The guarantees provided to IFFEd by donors, treated as hybrid capital, allow the MDBs to further expand their lending to an estimated $4 for each $1 of guarantees.
IFFEd aims to mobilize at least $10 billion in additional international finance towards achieving SDG 4 by 2030. Its initial fundraising target is $1 billion for the guarantee window ($150 million in cash and $850 million in contingent commitments) and $1 billion for the grant window. This will deliver a total of $5 billion in new education finance in its first five-year programming period.
Steps are underway to establish IFFEd and its small administrative unit in the UK so it can be fully operational in 2020.
IFFEd at a glance
- Substantial new financing and bold reforms are required to help lower-middle income countries (LMICs) make significant progress towards achieving SDG4. LMICs are home to 80% of the world’s learners, who are being left behind.
- IFFEd can help countries mitigate the impacts of COVID-19 by providing a new, affordable stream of education finance in the face of declining revenues and increasing budgetary constraints.
- IFFEd will help LMICs close the financing gap by utilizing the financial leverage of MDBs and guarantees from contributors to maximize the impact of donor dollars.
- IFFEd offers significant value for investment. With $1 billion in contingent financing and $1 billion in grant funding invested, IFFEd could deliver a total of $5 billion in new education finance.
- IFFEd fills a critical gap in the international financing architecture for education, complementing existing instruments like GPE and ECW.
- Nearly 50 countries have the potential to benefit from IFFEd, including some of the world’s most populous countries with large marginalized populations, such as Bangladesh, Indonesia, Pakistan, Kenya, and Nigeria.
Jack Ma | Founder and Executive Chairman, Alibaba Group
António Guterres | Secretary-General, United Nations
Henrietta Fore | Executive Director, UNICEF
Luis Alberto Moreno | President, Inter-American Development Bank
Takehiko Nakao | President, Asian Development Bank
Amina Mohammed | Deputy Secretary-General, United Nations
H.E. Joko Widodo | President, Indonesia
Kristalina Georgieva | Managing Director, International Monetary Fund
H.E. Béji Caid Essebsi | Former President, Tunisia
H.E. Peter Mutharika | President, Malawi
Akinwumi Adesina | President, African Development Bank