Get to Know: CATALYZE EduFinance Latin America and the Caribbean

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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 14 countries 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 Latin America and the Caribbean (LAC): Our approach

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 LAC, particularly those most vulnerable, and to 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 LAC pilots two unique models that test blended finance solutions across Honduras, Paraguay, El Salvador, Guatemala, Haiti, and the Dominican Republic.

• The Technical Assistance & Education Quality model (Guatemala, Honduras, Haiti, the Dominican Republic), 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 Self-Sustaining School Model (Paraguay, El Salvador) implemented in partnership with Fundacion Paraguaya, offers affordable and high-quality secondary education and technical and vocational education and training (TVET) to low-income, rural youth. Under this model, students get hands-on experience running their school’s microenterprises. The revenue generated by small enterprises allows the schools to become financially self-sufficient, reducing the need for government and donor funding.
• EduFinance LAC 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 LAC: Key activities, highlights and results to date

Guatemala

• CATALYZE EduFinance LAC has mobilized over $3.1 million in private capital. *
• CATALYZE EduFinance LAC has provided technical assistance to seven financial institutions (FIs), which has resulted in the implementation of specialized education financing products.
• 73 schools are actively participating in the EduQuality program, with an additional 57 anticipated to join in 2024.

Dominican Republic

• CATALYZE EduFinance LAC has mobilized $224,576 in private capital.*
• 130 schools are actively participating in the EduQuality program.
• CATALYZE EduFinance LAC has provided technical assistance to four FIs, which has resulted in the implementation of specialized education financing products.

Paraguay and El Salvador

• CATALYZE EduFinance LAC generated business plans for six schools under the Self-Sustaining School Model — four in Paraguay and two in El Salvador.
• CATALYZE EduFinance LAC identified non-traditional financing institutions interested in investing in the Self-Sustaining School Model, with letters of intent in excess of $2 million.

Haiti

• CATALYZE EduFinance LAC launched a Request for Proposals (RFP) that will result in three primary schools submitting loan applications. The CATALYZE team is currently reviewing proposals and expects to award a subcontract in December 2023.

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, Europe, Latin America and the Caribbean (LAC). 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.

*$963,635 of this capital has been verified.

**$51,795 of this capital has been verified.