Education Sectory Strategy

The Health and Education Department presented its education strategy document to its Board of Directors in 2001.

This document presents the strategic directions for IFC investments in education. It opens with a discussion of the trends and
rationale for private sector involvement in education. Then it highlights the World Bank Group’s (WBG) activity in private education. It next lays out the role for IFC in private education and explains how IFC advances the broader educational mission of the WBG. Finally, it explores how IFC’s role will develop by outlining proposed strategic directions and the steps proposed to implement these strategic directions
successfully.

The role of the private sector lies in both the provision and financing of education. Its role is expected to become more significant and diversified as more individuals demand better quality and more relevant education at all levels and as the public sector is faced with increased pressure to respond.

As the member of the World Bank Group charged with private sector development, IFC will identify key areas where the most significant impact can be achieved by mobilizing the private sector in education. It will ensure that quality objectives are met through sound monitoring and evaluation of projects. IFC will continue to focus on identifying improvements in educational effectiveness and efficiency and work with sponsors who demonstrate effective leadership, management, and governance of project operations.

In addition, IFC will identify good demonstration models and best practices in education that can be shared with
other institutions. While IFC education investments will continue to grow, education will remain a relatively small area. IFC expects that within the next four years, the social sectors will account for 4 percent of all IFC approvals; around half of these will be education projects.

POTENTIAL RANGE OF INVESTMENTS

The markets and regions around which IFC plans to concentrate are highlighted below and discussed further in chapter 3. The potential areas of investment are separated into those of higher investment probability, where the rationale for IFC investment is strongest, and those with relatively lower investment probability, which require more growth in the markets before significant IFC investment will be feasible.

HIGHER INVESTMENT PROBABILITY

Tertiary Education. There are strong arguments for supporting the growth of private sector tertiary education. To date, markets have signaled immediate and significant needs, resulting in strong activity in IFC financing. Latin America will most likely continue to constitute a large share of IFC involvement, and increased demand is expected from East and South Asia. IFC has not yet been approached for financing private higher education investments in Africa. IFC will pursue these possibilities in all regions in both distance and
campus-based projects.
Technical and Vocational Training. Examples of investment opportunities in this area include industry training projects that support skill improvement of existing workers and pre-employment training projects. Such training has recently become increasingly important within IFC’s education portfolio. IFC expects this trend to accelerate in all regions.
Technology-based Education and Distance Education. IFC can assist and mobilize the private sector to pioneer important and innovative ways to improve quality and access to information and communications technology at all levels of education. IFC will expand its existing work program in on-line learning institutions, in interactive delivery schemes that promote innovative teaching methodologies, and in curriculum development based on problem-based learning. Second or third rounds of capitalization will be considered in technology-based education companies and projects that have a proven track record or are experiencing a growing demand for their products and services. Small investments in innovative start-ups will also be considered.
Student Financing. IFC will expand its recent work with local banks to improve access to credit through student loan schemes to middle and lower-income families. Finally, IFC will also encourage private education sponsors to take advantage of public financing of private students through scholarships, vouchers, or direct support to private schools.

LOWER INVESTMENT PROBABILITY

Early Childhood Schooling. The private sector has an important role to play in the development of young children. IFC sees potential for investment in pure preprimary initiatives or primary and secondary schooling that extends downward to provide for preschool-aged children. The task for IFC is to identify ways that the private sector can help parents improve existing childhood programs operated within the private sector, and partner with the government to improve access to and quality of early childhood services. Primary and Secondary Education. There is significant unmet demand for access to good primary and secondary education. IFC’s continued involvement in this area complements the activities of the public sector. IFC will support investments with significant developmental impact, especially in Africa and South Asia, but also in other regions.
Limited Investment. The fact that early childhood schooling and primary and secondary education projects usually call for only smaller-scale investments will necessarily limit IFC investment, until IFC develops better mechanisms to deal with small projects.

TASKS AHEAD FOR IFC’S INVESTMENT STRATEGY

A number of critical tasks remain to be developed, implemented, or reinforced. They are outlined below.
Develop Instruments to Execute Small Projects.
Through various mechanisms, IFC plans to provide financing for smaller education initiatives. This will enhance IFC’s demonstration effect in the market and help build the capacity of the financial intermediary markets. Preliminary ideas include education investment funds, targeted lines of credit, use of existing technical assistance facilities, and local currency loans and guarantees.
Enhance Social Mobility and Improve Access for the Poor.
Education is the only reliable means of upward mobility for low-income groups, and private education—insofar as it expands educational opportunities to the middle and lower classes—can contribute to social mobility and poverty alleviation. Expanding opportunities at these levels will reduce the two-tiered nature of current public-private systems. IFC will strive to include components of social mobility and poverty alleviation throughout its portfolio.
Step Up Promotional Activity and Build Capacity.
IFC’s mission as a development institution calls for a strong role as pioneer, demonstrator, and partner. To further these roles in the education sector, IFC will invest more heavily in formal channels of information-gathering and sharing and will collaborate more closely with IFC and World Bank field offices and regional development facilities.
Strengthen Collaborative Efforts and Leverage Existing Knowledge.
To further promote the objectives of private sector development in education, a partnership across the WBG networks and institutions is necessary. This collaboration will improve the WBG’s ability to develop strategies for private sector involvement. In addition, IFC will enhance its collaborative work with other multilateral and bilateral development institutions, as well as with the non-governmental sector.
Develop a Monitoring and Evaluation Framework.
This document presents a preliminary framework for improved monitoring and evaluation of IFC’s education investments. The systematic use of the proposed project screen and the collection of key performance and outcome indicators for project monitoring and evaluation will help link project-specific goals to IFC’s broader objectives in this sector.

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