Four Ways CATALYZE Improves Learning Outcomes and Expands Access to Quality Basic Education through Innovative Blended Finance Solutions

Despite significant increases in literacy rates since the first International Literacy Day in 1967, children from vulnerable and marginalized families continue to demonstrate significantly lower literacy rates. A recent report entitled, “The State of Global Learning Poverty: 2022 Update,” a joint publication of the World Bank, UNICEF, FCDO, USAID, the Bill & Melinda Gates Foundation, and in partnership with UNESCO, indicates that gaps in learning have grown since the COVID-19 pandemic, with an estimated 70 percent of 10-year-olds in low- and middle-income countries unable to understand a simple written text. To address this pervasive challenge, USAID’s education programming prioritizes improved learning outcomes and expanded access to quality basic information for all, particularly marginalized and vulnerable populations. Non-state education plays an important role in addressing the gaps. As of 2020, it accounts for 14 percent of primary school enrollments in Sub-Saharan Africa and 38 percent of primary enrollments in India.

CATALYZE: A global mechanism for reaching learners and youth in marginalized communities

USAID CATALYZE addresses the education needs of learners and youth from marginalized communities in low- and middle-income countries (LMICs) through non-state schools and education enterprises in USAID partner countries while contributing to increased global literacy and Sustainable Development Goal 4 (SDG4) gains. The CATALYZE Education portfolio consists of three Activities: EduFinance, Early Childhood Care & Education (ECCE), and Access to Finance (A2F), which are summarized in Figure 1.

A snapshot of CATALYZE EduFinance achievements

Mobilizing capital in Africa: To date, USAID has mobilized over $3.7 million in private capital to support low-fee, non-state schools across South Africa, Zambia, Tanzania, and the Democratic Republic of the Congo (DRC). In South Africa, we secured nearly $830,000 to increase access to capital for early childhood development (ECD) centers serving lower-income and vulnerable families. As of September 2023, USAID CATALYZE reached over 190,000 learners through support to 531 schools across Africa. As part of CATALYZE EduFinance activities in the region, many schools are participating in EduQuality programs, which focus on improving learning environments and outcomes. An upcoming external evaluation will capture the impact of these interventions on learning. 

Access to credit for schools in Latin America: In El Salvador, Paraguay, Dominican Republic, and Guatemala, we have delivered technical assistance to dozens of financial institutions on methods for developing loan packages tailored to low-fee, non-state schools, and in parallel, provided training to school operators and administrators to support improved school management and quality. 

Convening diverse education stakeholders: The Education Finance Network – a non-state education community of practice under CATALYZE – convenes education and finance experts globally through member workshops, networking events, and steering committee meetings. The EFN is a key partner in consolidating and packaging critical non-state research and technical perspectives (see learning brief, Evidence Gap Map, article), and supporting wider dissemination of CATALYZE Education activity learning and results.  

Navigating a changing world through systematic learning and adaptation 

At the heart of our approach is an understanding of and respect for the complexities of designing and implementing different blended finance solutions in education sectors across country-specific contexts. CATALYZE Education is committed to learning and adaptation, demonstrating an ability to adjust and pivot the models across various financial and education landscapes. This approach allows CATALYZE to build a data-driven case for continued investment in education finance.  

Early evidence generated under CATALYZE indicated: 

1. Blended-finance interventions for ECCE could yield greater impact and allow for critical research to inform future early childhood policies and investments at USAID.
2. ECD center operators have a significant unmet need to obtain capital to expand their operations. There is also a need for increased financial literacy training in Rwanda and South Africa.
3. Opportunities exist to build on technical and vocational education and training (TVET) activities in Africa and Latin America to support workforce development activities in other regions.

In response, CATALYZE has launched ECCE blended finance interventions in eight countries across Africa (Ethiopia, Liberia, Malawi, Rwanda, South Africa), Latin America, and the Caribbean (Honduras, Paraguay) and South Asia (India). These interventions collectively expand equitable access to high-quality ECCE while generating and disseminating learnings based on effective ECCE models.

Each tailored approach aligns with the country’s context based on individual market assessments conducted by CATALYZE. For example, we collaborated closely with USAID/India to co-design a tailored approach to strengthen the capacity of early childcare centers (referred to in India as “Anganwadis”). By infusing capital into Aganwadis, building the capacity of their employees, and engaging with state governments to ensure strong enabling environments for ECCE, CATALYZE ECCE in India is improving access to high-quality ECCE services and ensuring school readiness for positive early learning outcomes in schools.

CATALYZE is also breaking new ground at the nexus of financing small- and medium-sized enterprises (SMEs) and skills development and job creation for youth, based on our TVET interventions implemented under CATALYZE EduFinance in Africa and Latin America. 

CATALYZE’s A2F Activity in Iraq will mobilize transaction advisors to facilitate deals for SMEs so  they can receive financing from commercial banks and microfinance institutions (MFIs). A number of these Iraqi SMEs are owned and operated by youth. The A2F Activity will evaluate the impact of increased capital on these SMEs and its impact on job creation for youth.

Looking forward 

As we prioritize literacy gains globally, our CATALYZE Education portfolio remains steadfast on continued implementation, capture of learning and results, and proactively engaging with key blended finance and education stakeholders.

To keep up with the latest updates and learn more about our impact on the ground, explore our Medium page.