LONDON — Stakeholders pledged their support for a much-vaunted global education financing facility Monday but emphasized it should avoid duplicating the work of other initiatives and increasing the debt burden of client countries.
Norway, Canada, Denmark, the United Kingdom, the United Arab Emirates, and the Netherlands were among the donor countries to promise their support — political, and in some cases financial — for the International Finance Facility for Education, or IFFEd, during a side session at the United Nations General Assembly. The European Union said it had already allocated funding to support the IFFEd secretariat.
First mooted by the Education Commission in 2015, IFFEd seeks to combine guarantees and grants from donor countries to enable the major multilateral development banks to lend more to lower- and middle-income countries that are committed to investing in their education systems but have difficulties accessing concessional and development finance.
To date, the facility has proved complex and time consuming to design and has attracted criticism from some education advocates. However, IFFEd has shored up international support and is now hoping for a launch next year, attendees at the session were told.
While the U.K.’s Secretary of State Penny Mordaunt stopped short of pledging money, she urged IFFEd to have a final design document ready by the end of November. Although the “complex nature of [the] facility means there are still questions to be resolved and work to be done … the U.K. stands ready to support this process and this important work. Let’s get it done,” she said.
There was also positive news from World Bank President Jim Yong Kim. Having announced his backing for the project in May along with the other major multilateral development banks, Kim said his institution would soon start approaching credit rating agencies — a crucial next step in getting the facility up and running.
“We are working through the final design issues but have received the green light to start approaching the necessary ratings agency services with a view of obtaining a robust AAA rating … With that [we] can move into the development and implementation phases of this important initiative,” Kim said.
Investment bank Goldman Sachs Group and law firm Reed Smith LLP are advising the IFFEd team on a pro-bono basis to help set up the facility, it emerged at the meeting.
The facility’s success also hinges on whether donor countries are able to support its model through their official development assistance budgets, particularly the requirement to provide guarantees. For members of the Organisation for Economic Co-operation and Development, this will depend on whether it is permitted under Development Assistance Committee regulations. Speaking at the meeting, DAC chair Charlotte Petri Gornitzka promised to consider the case and present a decision next spring.
“When IFFEd has become a legal entity we will consider whether it is ODA eligible … We can promise that we will look into that in a very constructive and positive way,” she said.
Education leaders at the event moved to address concerns that IFFEd could lead to fragmentation and duplication within the global education sector and promised to work alongside other education instruments, notably the Global Partnership for Education and Education Cannot Wait. GPE’s Chair Julia Gillard and ECW’s Executive Director Yasmine Sherif both attended and said they welcomed the new facility.
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Mordaunt said that “in designing IFFEd, we must also pledge to learn lessons from the other special purpose vehicles that the international community has set up.” Pakistan’s newly-appointed federal minister for education and professional training, Shafqat Mahmood, added that while his country welcomed IFFEd, it must be designed “using country systems to ensure there is no fragment[ed] financing of education activities.”
The Pakistani minister also said IFFEd should be designed to avoid increasing the debt burden of client countries, pointing out that “heavily indebted countries will benefit more from grants” than concessional loans. Civil society groups have previously raised concerns that IFFEd could increase debt levels.
U.N. Deputy Secretary-General Amina Mohammed said there would be careful analysis “as we work with governments and the World Bank” to ensure an appropriate “mix of financing” for countries.
Summing up the event, former U.K. Prime Minister and Chair of the Education Commission Gordon Brown said: “I think we have proved that this facility is urgently needed, that it’s complementary to what exists in education, that it’s feasible and can help bridge the [education financing] gap.”
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