The GPE Multiplier is a new innovative finance instrument to crowd-in “more and better” resources to educate children in 89 countries, including many of the world’s poorest and most fragile environments.
“More”, because for every US$3 in new external resources a government raises for education, it can access US$1 from the GPE Multiplier. And “better” because these resources (as with all GPE grants) support high-quality education sector plans developed with support from development partners and the GPE Secretariat.
What makes GPE Multiplier different?
Unlike GPE’s existing grants, the Multiplier is designed to work alongside any type of external capital. That nuance opens the door to innovative financing solutions for education, a sector that is as critical for economic growth, security, and tackling inequality as it is critically underfunded.
For example, consider a country eligible for a grant of US$10 million to support its education sector plan. The same country might also be eligible for a further US$15 million from the GPE Multiplier. (These are notional numbers, but figures for grants and GPE Multiplier allocations generally arise from transparent, needs-based formulas agreed by GPE Board).
The country could use the GPE Multiplier funding to agree US$50 million in new borrowing from a regional or multilateral development bank, effectively lowering the soft loan’s (already low) interest rate. The overall effect would be to subtly tilt financial incentives in favor of investing in human capital, turning US$25 million in grants from GPE into an US$75 million blended investment.
Seven countries lead the way
Formally agreed in June 2017, GPE’s Board allocated an initial US$100 million to the Multiplier. In December—five months after launching-- the Board reviewed and approved US$67.5 million in earmarks (dubbed ‘recommended maximum country allocations’, or MCAs) using the instrument. The Board’s decision was based on expressions of interest from seven countries that are keen to access these additional resources.
One size didn’t fit all: countries are using the GPE Multiplier’s flexibility to work alongside a mixture of actors to source new funding for education, ranging from multilateral and regional development banks and donors to private foundations. And the countries themselves range from the island state of Zanzibar to populous countries like Ghana. The potential co-financing totals more than US$295 million. That would unlock more than US$4 for every dollar from the GPE Multiplier, well above the target ratio of $3 to $1.
There’s more work ahead. This funding-- like all of GPE’s support—has to meet the partnership’s high standards for impact and transparency, undergoing the same quality assurance process as GPE’s other funding for education sector plans. Along the way, the sources of co-financing need to come online; good intentions set out in expressions of interest must turn into concrete programming on the ground.
Learning by doing
This traction is heartening. More broadly, it’s vital to learn as much as possible from the GPE Multiplier’s early track record. One aspect of a rapid-cycle evaluation now underway is a close examination of the instrument’s financial additionality, a term of art in innovative finance for the extent to which the co-financing catalyzed by the Multiplier would not have otherwise been spent on education (and so is truly additional).
The ultimate goal is to determine whether and how to scale up the instrument from an initial US$100 million to the US$300 million envisioned in GPE’s ambitious Financing and Funding Framework. Those resources could supercharge the Multiplier, supplementing grant funding for education and potentially broadening the tools those grants work alongside, paving the way to operations like debt swaps or development and social impact bonds that have gained traction in other social but generally lag behind in education.
On the eve of GPE’s historic Financing Conference in Dakar, one thing is clear: more funding is crucial. But more money won’t, on its own, solve the learning crisis. Without “more and better” funding, we can’t realize the broader gains to which the world-- and GPE’s broad-based partnership-- has committed.
By piloting, delivering, and learning from the GPE Multiplier, GPE is working hard to build a bigger and better set of tools to catalyze more support for education-- and to invest those resources in education sector plans that raise the bar for equity, efficiency, and learning.