Examining Private Capital Investment in Education: Developing a Framework for Analysis

• In Event: Highlighted Session: Innovative Financing for Education: Leveraging Private Capital

Proposal

Innovative financing modalities that engage private capital investors have gained attention within the education sector as one of the avenues to raise additional financing or improve the efficiency and effectiveness of the existing financing. There are distinct but overlapping trends in global education financing dialogue that underpin the enthusiasm for and caution against the use of innovative financing approaches:
• Continued global commitment to fulfilling the right to education as a basic human right, most recently within the SDG4, with the recognition that meeting these goals requires a dramatic increase in funding.
• The growing trend of liberalisation, commercialisation, and privatisation of education, where market-based approaches are increasingly influencing the sector. This has called for a rethinking of the role of the government and the private sector in education, which has traditionally been seen within the domain of the state.
• Increased advocacy for results-based financing, which seeks to tie financing more closely to outcomes and deliverables. The argument with this shift in financing is to maximise the efficiency and effectiveness of existing resources by introducing strict ‘accountability’ measures. While this trend is more favourable to donors/investors, it may be prone to a shift in accountability in the system to the providers rather than providing the required resources to support the system.
• Multiplication of philanthropic actors and private investors interested in sustainable development need contextualised definitions of the private sector in education to understand their motivation and modes of engagement in the sector.
• Design and piloting of complex, innovative funding instruments that have not been critically scrutinised beyond the immediate circles that have developed them.
Globally, there is very little research and inquiry, especially in terms of social justice implications, into the nexus between non-traditional financing, education governance and service delivery systems. Critiques of private sector engagement in education have pointed to the emergence of a global education industry where private sector investors are motivated by profits and are looking to capitalise on the education sector, especially in the global south (Verger, Lubienski & Steiner-Khamsi, 2016). Others have pointed to some impact investment initiatives as constantly modifying the conceptualisation of ‘impact’ to respond to shareholders rather than educational needs (Ball & Junemann). Yet, others have argued that business engagement in education is imperative to realising global development goals (Winthrop et al. 2013).

In this presentation, we examine the existing data on the impact of private investment in education programmes globally through impact bonds, one of the most popular innovative financing mechanisms. Through this early examination of impact bonds, we will present a research framework that can be used to analyse any financing mechanism that engages private capital investment in education programming. This research framework aims to understand the advantages and drawbacks of introducing the goal of achieving financial returns alongside social outcomes in education programming for vulnerable and marginalised populations.

Authors

• Arushi Terway, NORRAG

• Marina Dreux Frotté, NORRAG