Lessons Learned from USAID CATALYZE EduFinance

At Comparative and International Education Society (CIES) 2023, the USAID CATALYZE EduFinance project convened a session focused on lessons learned from its work building public-private partnerships in education. The session featured a rich discussion, kicked off by a question that framed much of the conversation: “What are the unintended consequences of this activity’s focus on supporting non-state schools?” The implication was that there are inevitable negative consequences of working with non-state schools, reflecting a long-held debate around what support donors and governments should provide to non-public education providers. 

Nirav Khambati is with Kaizenvest, one of CATALYZE EduFinance’s implementing partners in Rwanda and South Africa. He turned the question on its head. One positive unintended consequence of CATALYZE EduFinance and other programs focusing on non-state schools, he noted, was him. As the product of low-fee affordable schools, he attributed his success as living proof of non-state education’s ability to complement public provision and provide opportunity where government resources are scarce. Additionally, as a private equity investor not traditionally involved in the education space, CATALYZE EduFinance has provided an avenue for him and others like him to use innovative methods to improve access to and quality of education. 

The USAID CATALYZE EduFinance Activity (September 2019–2027) uses a blended finance approach — using USAID funds and private capital — to improve and sustain learning outcomes for children and youth globally, particularly for low-income communities. By mobilizing private sector capital for non-state schools and education ancillary service enterprises, EduFinance is addressing a substantial global funding gap in education, estimated to be $148 billion annually by UNESCO in 2020, which has increased to more than $200 billion a year due to the impact of COVID-19. This amounts to a massive deficit in meeting Sustainable Development Goal 4’s commitment to equitable access to quality education for all, a gap that public provision will not meet alone. 

CATALYZE EduFinance is currently piloting various models in 14 countries, supporting local education stakeholders at all levels of education, from early childhood care and education (ECCE) through youth workforce development, and improving policy and the enabling environment. CATALYZE EduFinance’s activities, while still in their early stages,  so far have reached 646 schools and over 274,000 learners, raised over $4.5M for early childhood lending in South Africa, and mobilized $1.2 Million in private capital in Zambia and the DRC. 

A key component of CATALYZE EduFinance is to build an evidence base for how blended finance approaches can contribute to improved access and quality of education. To this end, the project has created a formalized learning agenda and robust community of practice, the Education Finance Network (EFN). Through this network and many other channels, such as CIES, CATALYZE EduFinance seeks to disseminate its findings and convene diverse stakeholder groups to build further public-private collaboration to advance quality education and close critical gaps in evidence. 

In the end, the discussion at CIES led to a consensus that is foundational to CATALYZE Edufinance’s approach: the old debate of public vs. private provision in education presents a false dichotomy. As long as public resources are insufficient to fully reach all learners, supporting solutions that work with non-state actors is essential. Given more than one-quarter of all students (and growing)  globally are currently attending non-state schools, it is imperative to build the evidence base for what works best to reach our shared educational goals, regardless of who is delivering it. 

As such, a key takeaway is the need to recognize solutions to global education challenges have and will continue to come from both public and private actors working together. In doing so, we open avenues for innovation, the channeling of new sources of financing, and synergies that move us more quickly toward our goals of universal access to quality educational opportunities. 

Over the next four years, CATALYZE EduFinance looks forward to continuing to test models, disseminate key learnings, and engage the broader sector. We hope you will join us in this effort!

About USAID CATALYZE

USAID CATALYZE, implemented by Palladium, is an 8-year program designed to mobilize $2 billion in private capital for development impact, especially in underserved social sectors and frontier markets across the globe, complemented by a crosscutting inclusion of gender-lens investing. CATALYZE supports blended finance solutions working with local and international businesses and investors to explore and find commercially-viable opportunities and approaches to creating jobs, developing sustainable social services, tightening and rationalizing supply chains, and advancing inclusive growth. We work across 28 countries in Asia, Africa, Europe, Latin America, and the Caribbean, with 190 partners, including financial institutions, business advisory service providers, anchor firms, and job trainers.

Details of CIES Session

• Title: Optimizing Public-Private Partnerships, Blended Finance and Private Sector Investment in the Education Sector Amidst Turbulent Times: Initial Lessons from the USAID CATALYZE EduFinance Program
• Chair & discussant: Joe Di Silvio, Palladium / CATALYZE EduFinance
• Panelists
  • Suezan Lee, USAID DDI/EDU
  • Nirav Khambhati, Kaizenvest
  • Andrew McCusker, Opportunity International