Get to Know: CATALYZE EduFinance Africa

Credit: Unsplash / Annie Spratt

CATALYZE: Background

USAID CATALYZE (2019–2027), implemented by Palladium, is a $250 million contract designed to mobilize $2 billion in private capital towards underserved sectors, geographies, and populations. The CATALYZE Education portfolio demonstrates commitments by USAID and Palladium to test creative blended finance solutions across different education sectors, models of intervention, and country contexts. CATALYZE co-creates with Missions, Bureaus, and Independent Offices (MBIOs) to design multi-year, results-based activities that are managed by Palladium and implemented by a broad network of principally locally led implementing partners.

Get To Know: CATALYZE Education is a new series that sheds light on different elements of the USAID CATALYZE Education portfolio, which pilots multiple models in 14countries across Africa, Latin America, the Caribbean,) Middle East, and South Asia by mobilizing private sector capital, particularly for non-state schools and education enterprises.

Main activities under the CATALYZE Education portfolio include CATALYZE EduFinance Africa, CATALYZE EduFinance Latin America and the Caribbean (LAC), Early Childhood Care and Education (ECCE), and Access to Finance (A2F).

EduFinance Africa: Our approach

The USAID CATALYZE EduFinance Activity develops private sector partnerships to facilitate innovations in financing and service delivery that increase access to low-cost, quality education. CATALYZE EduFinance uses a blended finance approach — the strategic use of USAID funds and private capital — to improve and sustain learning outcomes for children and youth across sub-Saharan Africa, particularly those most vulnerable, and address the substantial global funding gap in education, which is estimated to be $148 billion annually by UNESCO in 2020. We aim to:

1. Mobilize private capital via blended finance activities, particularly for the non-state education sector.
2. Increase equitable access to education for learners, especially the economically marginalized and disadvantaged.
3. Improve and sustain learning outcomes by strengthening the education entrepreneurial ecosystem.
4. Build a Community of Practice (CoP) to lead collaborative engagement among diverse stakeholders (e.g., governments, education practitioners, investors, and civil society), strengthen and communicate broadly the evidence base around a common learning agenda for greater private sector engagement in education, and enable all stakeholders to make data-driven decisions.

EduFinance Africa pilots four unique models that test blended finance solutions across sub–Saharan Africa.

The Technical Assistance & Education Quality model (Tanzania, DRC, Zambia), implemented in partnership with Opportunity International, is tested through a two-pronged approach: Education Quality, which strengthens the quality of affordable non-state primary schools, and Financial Institution Technical Assistance, which supports education financing by developing, launching and growing sustainable lending portfolios.

The Pooled Investment and Rewards and Recognition model (Rwanda, South Africa), implemented in partnership with Kaizenvest, is an outcomes-based lending model that mobilizes private capital by bringing in new investors and financial institutions (FIs) to invest in Early Childhood Development (ECD) and other areas of education, including Technical and Vocational Education and Training (TVET).

The PPP-Secondary School Quality and Capacity Building model (Zambia), implemented in partnership with Promoting Equality in African Schools (PEAS), delivers high quality secondary education to students in rural and remote areas. Through its Targeted Intervention for Excellence in Education in Zambia (TIEEZ) program, a pilot supported by CATALYZE, PEAS works directly with nearby government-run schools to create long-lasting systems to drive school improvements.

The Strengthening Non-State Education Policy & Enabling Environment model, (Zambia) implemented in partnership with the Education Partnerships Group (EPG) informs non-state education policy, engage stakeholders to prioritize non-state education policy, and support the piloting and scaling of policy reforms and initiatives.

EduFinance Africa further oversees a non-state education Community of Practice, which complements implementation-based evidence and network building:

The Education Finance Network (global) convenes diverse education stakeholders with a focus on leveraging non-state resources to create inclusive, high-quality education systems that assist children from schools in low- and lower-middle income countries globally. The Network has developed an interactive Evidence Gap Map that draws from the large body of existing evidence on non-state actors in education, and includes academic, peer-reviewed journals that present a high-level of rigor alongside grey literature that may be more relevant and easily applied to practitioners’ work.

EduFinance Africa: Key activities, highlights, and results to-date

CATALYZE EduFinance has made impressive strides toward improving and sustaining learning outcomes for vulnerable children and youth. To date, CATALYZE EduFinance Africa has mobilized $17.8M, and supported 1,953 non-state schools to improve educational quality and expand access to financing, including 210,838 learners. An additional $5.5M has been committed by investors and financial institutions (FIs) through Kaizenvest’s activities in Rwanda and South Africa.

South Africa

• Secured investments totalling $2M from NedBank, Ishk Toloram, KaiCap, and Save the Children Global Ventures (SCGV). In addition, local financial institution Rhiza Babuyile has committed to lending $1.75M off its own balance sheet, and the GROW EduCare partnership will mobilize $1M in private capital via a $50k investment in technical assistance, for a total of $4.75 in capital commitments to date.
• South Africa has mobilized $102K 40 ECD centers, including $76k to 32 additional ECD owners in the GROW EduCare network.

Rwanda

• Save the Children Global Ventures committed the first $1 million (of an anticipated $6 million) to the CATALYZE EduFinance Rwanda fund, which leverages USAID funding to bolster learning outcomes and improve access to capital for affordable education providers in Rwanda. Read more.

DRC

• Mobilized $11.1M in private sector capital to 41 schools and 364 parents of learners.
• Developed 16 EduFinance loan products (nine school improvement loan and seven school fee loan products) for nine FI partners and delivered staff trainings for eight FI partners; signed technical assistance agreements with five additional FI partners; and enrolled 281 school partners in the EduQuality program, which provides school development planning support and professional development training for school leaders and teachers.

Zambia:

• Mobilized $4.5M in private sector capital, of which $1.79M has been verified, to 121 schools and 50 parents of learners.
• Developed 11 loan products (six school improvement loan and five school fee loan products) for six FI partners; delivered staff trainings to six FI partners; and enrolled 177 school partners in the EduQuality program.
• The EduFinance Zambia Activity is supporting the Targeted Intervention for Excellence in Education in Zambia (TIEEZ) program, in collaboration with PEAS which works closely with government-run schools across Zambia to deliver high-quality secondary education to marginalized students in remote and underserved areas. As of November 2023, 60 school leaders in Zambia have undergone training through the TIEEZ approach to drive school improvements through professional development and capacity-building.

Tanzania

• Mobilized $2.14M in private sector capital, of which $1.57M has been verified, to 17 schools and 970 parents of learners.
• Developed seven EduFinance loan products (four school improvement loan and three school fee loan products) for four FI partners and delivered staff training to four partners.

Learning and evidence building

A key component of USAID CATALYZE is to contribute to USAID’s understanding of designing and implementing blended finance programs across sectors. CATALYZE EduFinance contributes to this understanding through a formalized learning agenda and a systematic approach to building and communicating a multi-layered evidence base around finance and non-state education that draws from country- and global- level public and private sector perspectives. The evidence measures the efficacy of non-state education approaches and how education finance increases access to, and equity in, education. The EduFinance evidence base aims to inform investment, policy development, and program design decisions on non-state education for host-country governments and ministries, FIs, non-state school owners, families of learners, as well as governments globally.

About USAID CATALYZE

USAID CATALYZE (2019–2027), implemented by Palladium, is a $250 million contract designed to mobilize $2 billion in private capital towards underserved sectors, geographies, and populations across 28 countries in Africa, Asia, Latin America and the Caribbean (LAC), and Europe. CATALYZE co-creates with Missions, Bureaus, and Independent Offices (MBIOs) to design multi-year, results-based activities that are managed by Palladium and implemented by a broad network of principally locally led implementing partners.

Resources:

• Press Release: Save the Children Global Ventures leads US$1 Million investment in affordable education providers through USAID CATALYZE EduFinance fund in Rwanda
• CATALYZE EduFinance expands Early Childhood Development access and quality in South Africa
• CATALYZE EduFinance TIEEZ Trainings Making a Mark: Transforming School Leadership at St Joseph’s Primary School in Zambia
• UNESCO International Literacy Day — CATALYZE EduFinance DRC Phonics Training Builds a Strong Foundation