Reflecting on the Global Education Finance Conference 2024 in Arusha, Tanzania
I attended the Global Education Finance Conference in October this year, organized by Opportunity International, following the success of their 2022 event in Nairobi. It brought together over 150 participants from 26 countries, with over 100 financial institutions in attendance, to discuss the future of edufinance, looking at trends, innovations and opportunities. The scene was set with a nice big number – something us finance people like to see! The estimated market opportunity for education financing, across school improvement and school fee loans, within Sub-Saharan Africa, Latin America and Asia is US$38 billion. For this to be realized more we need more catalytic philanthropic capital to support more financial institutions in their exploration into what is likely to be a new sector for many of them. IDP Foundation has over 15 years’ experience of using grants, debt financing and credit guarantees in a blended finance approach that catalyzes on-lending and funds technical assistance and beneficiary capacity building to mitigate risk. And it is convenings like this that will contribute to the growth of edufinance portfolios across the micro-finance industry in Africa.
It was interesting to hear that Ghana is ranked third in edufinance demand, after Nigeria and Kenya, which tracks with the growth figures in the affordable non-state sector in these countries. I was also encouraged to meet a number of financial institutions who were interested in partnerships to catalyze an edufinance portfolio, which shows the required appetite to realize that market potential is there. However, as a philanthropic partner we have to consider the risks of sustainability and scale, the most challenging being currency fluctuations, while resource commitments for technical support are also a consideration. For financial institutions, accessing economical funding to grow portfolio is a challenge, followed by improper records for loan appraisals and lack of collateral. For the beneficiaries, schools face the challenges of unmanageable interest rates, loan approval criteria and non-flexible payments. While each of these challenges create their own complexities, with transparent conversation and collaborative efforts, that respect and include all local actors, the market potential can be maximized resulting in improvement of access to, and quality of, all education for all children, now.
After the convenings we had the chance to visit schools to see how this edufinance model plays out in real life. To see schools so committed to improving their operations and to involve parents in the process was evidence that this approach to education financing can have a real impact. Which is the most important picture for edufinance stakeholders to see.