The COVID-19 pandemic has exacerbated education financing gaps and resulted in a huge loss of learning across the globe, threatening inclusive and quality education for all. In 2020, UNESCO projected an annual education funding gap of US$148 billion. The demand for private schools in low and lower middle-income countries is expected to grow on the back of a young, growing, and rapidly urbanizing population and parents that are willing to pay for quality education. To expand access to quality education, particularly in hard-to-reach communities, the donor community and the private sector are exploring new ways to finance education and childcare. Opportunities and interest in pre-primary care and education are particularly salient, and the prospects in this underinvested sector show significant promise.
Yet low-cost private education remains an underleveraged and undervalued asset class. There is some evidence that these schools are filling supply gaps and many low-cost private schools can provide cost-effective access to education of similar or slightly higher quality than government schools. Low-cost private schools, however, are unable to expand infrastructure or invest in additional teaching resources due to inadequate access to affordable financing. Even after operating at a profit for several years, these schools are often not seen as creditworthy businesses, thus greatly limiting their growth and response to increased demand for quality education. Vast opportunities exist in this underinvested sector.
To improve and sustain learning outcomes for disadvantaged children and youth in Africa, Latin America, and the Caribbean, and to foster commercial investment and expertise in the education sector, the United States Agency for International Development (USAID) partners with the private sector to support innovative education models and financial incentives. The USAID CATALYZE EduFinance Activity strategically leverages U.S. government resources to crowd-in private capital for low-cost private schools and address the educational funding gaps in partner countries. EduFinance increases access to low-cost, quality education by partnering with the private sector to facilitate innovations in financing and service delivery.
As the lead implementer of USAID CATALYZE, Palladium Group Global, LLC, will lead a session on how investors are unlocking opportunities in support of development goals. This session will be chaired by CATALYZE EduFinance’s local partner Kaizenvest, an emerging markets asset manager focused on the future of learning and work, managing private equity and private debt funds in South Asia, Southeast Asia, and sub-Saharan Africa.