The Asian Development Bank (ADB) has formalized a partnership with the International Finance Facility for Education (IFFEd), signing an agreement that will enable at least $500 million in new concessional education funding for lower-middle-income countries (LMICs) across Asia and the Pacific. The partnership is expected to expand education funding for countries such as Bangladesh, India, Mongolia, Pakistan, Papua New Guinea, the Philippines, Sri Lanka, Timor-Leste, Uzbekistan, and Vietnam.
This initiative aims to support educational development in various forms, ranging from early childhood education to tertiary education, vocational training, and skill development programs. The collaboration provides ADB with additional financial flexibility, combining IFFEd’s guarantees with grants to multiply the impact of its education loans.
IFFEd, a sovereign-backed Swiss foundation established in 2023, focuses on investment in education and skills development for LMICs. As part of this arrangement, IFFEd will guarantee $125 million of ADB’s sovereign loan exposure across all sectors and provide $50 million in grants. By integrating these guarantees with ADB’s capital, the agreement facilitates a fourfold leverage ratio, boosting ADB’s lending capacity while making loans more affordable for its developing member countries (DMCs).
ADB Vice-President for Sectors and Themes, Fatima Yasmin, highlighted the critical importance of the agreement, stating, “Education is the cornerstone of modern, prosperous, and inclusive societies, and we are pleased to announce this partnership with IFFEd.” The initiative, by pooling concessional and catalytic financing, is intended to scale up investment in education and skills development, vital to fostering knowledge-based economies in these countries.
LMICs face significant challenges in education. According to recent statistics, over 50% of students in these nations cannot read simple text by age 10, even after attending school. Many graduates also lack the skills needed for employment, creating a mismatch between education outcomes and market demand, which further stifles economic growth.
The ADB-IFFEd partnership aims to tackle these issues by helping countries in the region better prepare for future challenges such as digital transformation, demographic changes, climate change, and urbanization. It is particularly focused on countries caught in the “missing middle” financing gap, where they are no longer eligible for grants but cannot afford non-concessional financing. This gap limits their ability to invest in crucial sectors such as education, which is where the concessional funding provided by this partnership becomes essential.
IFFEd has received backing from sovereign donors including Canada, Sweden, and the United Kingdom. Private foundations such as the Atlassian Foundation, Jacobs Foundation, Porticus, Rockefeller Foundation, and the Soros Economic Development Fund have also contributed seed capital. IFFEd’s ability to draw on these resources, combined with its strong credit rating, positions it to make a significant impact in addressing the educational needs of LMICs.
IFFEd’s Founding Chief Executive Officer, Karthik Krishnan, emphasized the significance of the initiative, stating, “Investing in education and skills in LMICs—home to nearly half of the world’s children and youth—is key to powering long-term economic growth and making progress on global health, climate, and equity goals.” He also pointed out that IFFEd has been recognized as one of the most impactful development finance innovations in recent years, delivering up to seven times the impact compared to traditional grant funding.
The ADB-IFFEd collaboration is expected to play a crucial role in reducing poverty and fostering long-term economic development across Asia and the Pacific. By strengthening educational systems, the partnership aims to build a foundation for sustainable growth and empower millions of young people across the region, preparing them for the rapidly evolving global economy.