Design of Health and Education Blended Finance Platform

Design of Health and Education Blended Finance Platform

Overview: Convergence and IFC partnered in 2017 Q2 to develop a new blended finance platform for investment in health and education businesses in developing countries serving the base of the pyramid (BoP) – the 4.5 billion poorest people who live on less than USD 8 per day. Convergence and IFC will together fund the platform design, including product offering, with potential for raising as much as USD 500 million for investment and advisory support. This envisioned platform would leverage the new World Bank Group IDA - Private Sector Window in eligible countries, and will also mobilize private capital for inclusive health and education businesses in middle-income countries through other sources. The goal is to mobilize a diversified set of investors to provide capital, advisory support, and capacity building to a wide range of health and education investment opportunities in emerging markets.

Design question and learning potential for the market: How can IFC support health and education businesses that would typically be considered too risky for mainstream IFC products, while crowding in private investment into these businesses?

Expanding access to health and education services is a central element of the World Bank Group’s strategy to eliminate poverty and reduce inequality. In developing countries, the poor often turn to private sector health and education providers for access to services. IFC’s support of the private sector and public private collaboration initiatives has been a critical component of the World Bank’s efforts in this space. While IFC is one of the largest investors in private health and educations businesses in emerging markets – having invested more than USD 4.5 billion in more than 62 countries – there are still many businesses IFC is unable to support given their risk profile. The platform will complement IFC’s existing mainstream products and allow IFC to invest in riskier businesses with the potential for expanding access to quality, affordable health and education services for all income groups, especially underserved people living in the poorest countries. In addition, IFC plans to leverage its own resources to catalyze like-minded investors into the vehicles established under the platform.