Attendees at the AVCA Sustainable Investing in Africa Summit 2022 in London were “bewildered” over the DFI community’s divestment from the education sector. Those that raised concerns had education at the centre of their impact strategy.
In June, the World Bank’s International Finance Corporation (IFC) announced it would not resume its investment in for-profit fee-charging K-12 private schools. The IFC said in a statement that there is “potential” for investment to “exacerbate inequalities and have unintended, undesirable spillovers into the public sector school system”. Since then, DFIs have been divesting from education.
Sandrine Henton, managing director at impact investment firm EG Capital, said there is a “cultural bias” surrounding the decision. “There are countries that massively rely on funding from the DFI community. In regions like Africa, Asia and Latin America, private education is chronically underinvested… it is not given the same amount of attention by governments that it is across Europe and in the UK. Private capital has been proven to be hugely helpful in filling that gap and providing opportunities for people to receive a better education.”
Henton noted that the divestment of education investments is a “knee-jerk reaction” to the problems around private education and suggested “a more moderate and watered down approach is needed”.
Another conference attendee that New Private Markets spoke to also voiced concerns about this. They said GPs relying on the DFI community for funding will now need to look for that source of capital elsewhere.