People living on less than US$8 a day in developing countries are the focus of a new drive by the International Finance Corporation (IFC) and investor networking institution Convergence to channel public and private capital into education and healthcare.
The institutions have agreed to jointly fund the design of a platform that uses blended finance to provide essential services to around 4.5 billion of the world’s poorest. This is expected to be achieved by attracting public as well as private sector investment for health and education businesses in the lowest-income countries, as well as in post-conflict and fragile states.
Joan Larrea, CEO of Convergence, said: “The platform will be one of the most significant developments in this space and an important tool to achieving the health and education related Sustainable Development Goals.”
Lenders in the target countries, including those in sub-Saharan Africa, Southeast Asia and Latin America, rarely risk giving loans to providers of health and education services, leading to a significantly underserved portion of the population. Investors of private wealth are similarly inhibited by the risk of putting capital into economically fragile states.
Peter Stoute-King, managing director of Convergence’s investment network, told Development Finance: “This design funding award is going to be the first really serious effort by both organisations to try to capitalise on a tremendous amount of money in the health and education space, and its the first formal agreement between the two organisations to work together.”
According to Elena Sterlin, IFC’s global manager for health and education, the platform will enable it and other investors to “support riskier projects with potential for expanding access to quality, affordable health and education services for all income groups”.
As part of the overall project, Convergence and IFC will usher in a product offering, which according to a statement by Convergence could raise half a billion in investment and advisory support. Funding for Convergence’s goal of connecting investors to blended finance vehicles has meanwhile come partly from the Government of Canada.