Devex Invested: Can development impact bonds reverse an education crisis?

While the average child in Sierra Leone can expect to complete about nine years of school, they only acquire about four and a half years of actual learning. But a new outcomes fund looking to scale the social impact bond model is looking to change that, Education Outcomes Fund CEO Amel Karboul tells me.

While development impact bonds and social impact bonds have been deployed in recent years, they have generally been one-off efforts. The Education Outcomes Fund, the largest of its kind for education, is looking to take the model to scale and streamline the process.

The launch comes as global leaders are set to gather in New York for the Transforming Education Summit over the next week, where financing is sure to be a key piece of the agenda.

• The $18 million Sierra Leone fund, launched at the beginning of this month, aims to improve learning outcomes at 325 schools across the country. It is the biggest fund raised to date by the Education Outcomes Fund, which was founded with a goal of raising $1 billion to help governments across Africa and the Middle East address education and learning.

• How it works: The outcomes fund is a number of social impact bonds or results-based contracts with a group of five organizations — National Youth Awareness Forum, Rising Academies, Street Child, EducAID, and Save the Children — which will implement education-related programs. Investors put up the money upfront and a group of outcome payers, in this case, the government and a group of donors, will pay them back based on how well the intervention improves literacy and numeracy. The ultimate goal is for the government of Sierra Leone to take successful interventions to scale.

• Why it formed: A big part of the goal is addressing the frustration around money wasted in education. “We hope we can build trust again that we can achieve results,” and bring back skeptics who “give up” on education funding because they don’t think it yields results, Karboul tells me. More money is needed, but what’s there also needs to be spent more effectively, she adds.

On the summit: Over 100 countries gather to transform education for the world’s poorest

Watch: Devexplains what’s development impact bonds

Are you ready to UNGA?

It’s that time of year — when the who’s who of global development descend on New York City. It’s also the midpoint toward achieving the SDGs, which my colleague Tania Karas writes are even further from being attained than they were last year. The latest UNDP Human Development report estimates that the COVID-19 pandemic set back development progress to levels last seen in 2016.

While I won’t be at UNGA in person for the first time in nearly a decade — not including the 2020 COVID-19 hiatus — the Devex team will be tracking issues that you care about, from climate finance to the Global Fund to Fight AIDS, Tuberculosis and Malaria replenishment. Tania puts together a handy guide to the issues we’re watching this year.

Inside UNGA 77: The global development issues we’re watching (Pro)

Navigating UNGA: Events list

+ A Devex Pro membership brings you essential analysis, data-driven funding insights, and access to the world’s largest global development job board. Get these perks and more by signing up to our 15-day free trial.

On target

That’s how much the World Bank’s climate funding increased in fiscal year 2022 from 2021, hitting a total of $31.7 billion — and crucially, meeting its 35% climate finance target for the first time. Some 36% of World Bank funding had a climate component, my colleague Shabtai Gold writes.

Read: In a first, World Bank exceeds 35% funding target for climate finance

Debt star

Zambia is asking for $8.4 billion in debt relief through 2025, ahead of debt negotiations with its creditors, including China, which it owes some $6 billion, Shabtai writes. The International Monetary Fund seeks a deal that ensures that debt servicing doesn’t exceed 14% of revenue, but campaigners worry that unless debt is canceled, problems will just be delayed.

Read more: Zambia eyes $8.4 billion relief but worries crisis only being delayed

Background reading: China is owed 37% of poor countries’ debt payments in 2022

Is change gonna come?

The humanitarian financing system and the way it is governed is in need of urgent reform, Collacott and Micheletti write in an op-ed for Devex. One proposal? A new common humanitarian fund to counteract the fact that last year, 97% of public international resources responding to humanitarian crises were volunteered from just 20 countries. They argue that a new system would require mandatory contributions for humanitarian response, but that could be a challenge to push through at the United Nations.

Opinion: Are we finally ready to shake up humanitarian financing?

What we’re reading 

Experts say that focusing on monitoring and evaluation systems is key to effective investing for development organizations. [Devex Pro]

JPMorgan embraces double materiality with the launch of its new ESG tool. [Bloomberg]

Digital payments are expected to gain momentum in Africa. [McKinsey]

Liz Truss championed the launch of British International Investment. Now that she’s prime minister, what could it mean for the agency and U.K. development? [Devex]