Swiss guarantee window to the International Finance Facility for Education

The financing gap for low- and lower- middle-income countries to achieve SDG 4 (ensuring inclusive and equitable education for all by 2030) now stands at nearly USD 100 billion annually. Lower-middle income countries (LMICs) account for 70% of this gap. LMICs also face a critical skills gap, with nearly 75% of youth lacking the skills required for employment, resulting in 51% of future labor earnings lost. LMICs are caught in a “missing financial middle”: “too poor” to afford non-concessional financing, but “too rich” to receive grants and access the low-cost financing necessary to improve education and skills development. IFFEd is designed to tackle the education and skills crisis in LMICs and the financing gap by increasing the participating multilateral development banks’ (MDB) capacities to finance education and skills development and by reducing the cost of borrowing for LMICs through a mix of guarantees and grants.

IFFEd’s “Swiss window” will leverage public–private capital through a philanthropic guarantee. This is a world-first innovation using private endowments of a foundation to issue a guarantee that enables to mobilize 3-4 times additional funds from MDBs to finance education and skills development. SDC’s support to the Swiss window will allow to pilot the philanthropic guarantee coupled with grants from a public donor. SDC’s grant will be used to finance technical assistance for the implementation of an Asian Development Bank (ADB) skills development project in Uzbekistan and to strengthen IFFEd’s capacities on VSD, results measurement, pipeline selection and to replicate the philanthropic guarantee.

• Participating multilateral development banks and supported LMICs.

• End targets: marginalized children and youth in LMICs.

Outcome 1: The philanthropic guarantee model for IFFEd is operationalized successfully piloted in an MDB skills development project, and replicated.

Outcome 2: Improved access to technical, vocational education training (TVET) education for target groups in LMICs including in the pilot of Uzbekistan.

Outcome 3: IFFEd has strengthened its capacity to select high impact education programs and track progress achieved beyond financial data including data on learning outcomes in education and skills development.

Principaux résultats attendus:  

• 59 million CHF guarantee from Jacobs Foundation mobilized for skills development and education through a CHF 8 million SDC grant linked to the guarantee.

• Increased skills development/education financing committed by MDBs. The philanthropic guarantee mechanism mobilizes a total of 225 million CHF for education and skills development in LMICs.

• Strengthened IFFEd capacity to identify high impact skills programs, improved Monitoring, Evaluation and Learning (MEL) system.

• Modernization of Vocational Education for Green Economy Project in Uzbekistan with the ADB.

Principaux résultats antérieurs:  

Key results achieved since the launch of IFFEd:

• USD 351 million mobilized in guarantees and grants from the UK, Sweden, Canada and Korea, plus CHF 5 million grants from Jacobs Foundation (JF) to strengthen IFFEd’s expertise on education.

• USD 125m in IFFEd guarantees and USD 50m in IFFEd grants allocated to the Asian Development Bank (ADB) which will allow the ADB to unlock USD 500m in concessional finance for education/skills development projects.

Key insights:

• Increasing financing is not enough. The impact must be increased by further improving qualitative aspects of skills development and education programs during design and implementation.

SDC: VSD projects (especially in Uzbekistan).

Other donors of IFFEd: Sweden, UK, Canada, South Korea, GPE.

Private sector: JF, Foundation for GPE, UBS Optimus Foundation.