Around the world, the demand for financing to meet the Sustainable Development Goals (SDGs) far outstrips the supply of traditional aid and public resources.

By some estimates, lower income countries with the highest population growth rates are projected to experience a decline in per-capita public education spending between now and 2030.

In social sectors, the learning crisis isn’t confined to education: it already costs the global economy $3.3 trillion each year in lost productivity. In a vicious cycle, the ever widening social and economic inequalities compound the scale of needs facing the education sector.

Rethinking how the sector mobilizes, structures, and deploys capital in partnership with a diverse range of stakeholders to ensure all children have access to education is essential, and it has been at the heart of GPE’s innovative finance efforts.

Since its inception in 2018, the GPE Multiplier has proved that this is possible.

On one hand the Multiplier has catalyzed over US$4.7 billion in additional investments by working alongside other sources of external funding; on the other hand, it has rallied over 70 cofinanciers, from national foundations and businesses to regional banks, to leverage not just their funding, but also their expertise, knowledge and comparative advantages.

This approach represents a renewed and deepened collective effort to both mobilize catalytic investments and partnerships at scale for education system transformation.

Innovative finance as a platform to strengthen partnerships

Innovative finance mechanisms can be a critical pathway to bring together governments, development partners, investors, sovereign funds and civil society in new ways, creating shared ownership and risk-sharing frameworks that can drive systemic change.

Development challenges, from education to climate, are too vast, complex, and interconnected for any single actor to solve alone.

The share of total development aid allocated to education fell from 9.3% in 2019 to 7.6% in 2022, reflecting donors’ shift in funding priorities to energy, support for Ukraine, and health care in response to the COVID-19 pandemic.

Yet, despite shared goals, funding silos and fragmented efforts often slow progress. Traditional funding models often lead to parallel programs, each with its own priorities and reporting lines.

Innovative finance mechanisms, like pooled funds, blended facilities, and results-based frameworks, bring partners under one umbrella, uniting around measurable outcomes.

An example of how innovative finance can not only bring together visionary partnerships that have the power to significantly scale financing for education but also leverage concerted knowledge, expertise and leadership through a unique financing partnership is the Arab Coordination Group Smart Financing for Education initiative (SmartEd).

The ACG is a key stakeholder in the global education finance ecosystem. The group’s leadership and collaboration have been instrumental in laying the groundwork for transformative investments in education through innovative finance.

SmartEd goes beyond just financing

SmartEd is a co-created innovative financing model that blends grants with concessional resources to sustain larger, more predictable financing for country-led education reforms.

In its first phase, SmartEd has helped Member Countries of the IsDB tackle learning crises by mobilizing critical financing on better terms to scale education programs in Uzbekistan, Cameroon, Chad, Tajikistan, Nigeria and the Kyrgyz Republic, the first cohort of partner countries to access financing through SmartEd to improve access to and quality of education.

Our partnership with the ACG and Islamic Development Bank comes at a critical time.

Today, more than 270 million children and youth are out of school, two thirds of whom are in GPE partner countries, undermining these countries’ ability to build skilled workforces and grow their economies to respond to the challenges of a rapidly changing and interconnected world.

SmartEd shows that innovative finance isn’t just about mobilizing more money, it’s about mobilizing more and different partnerships. It has brought together key stakeholders in the financing ecosystem, to align incentives and channel collective strengths toward a greater shared solidarity for education.

A fundamental shift

To invest in the large-scale reforms needed to get all children learning, partner countries need a fundamental shift: away from short-term, fragmented support to long-term, strategic shifts anchored in larger shares to education from domestic resources.

Innovative approaches to education financing is not just needed, but essential to incentivize the mobilization of resources in new ways.

As countries strive to recover from overlapping crises, the GPE’s innovative finance instruments have shown that they have the ability to bring together a vast range of partners, paving pathways to ensure that our collective ambition to get every child in school and learning does not falter for lack of resources.

With thoughtful design, transparency, and country ownership at its center, the GPE Multiplier offers a pathway for partnerships to help unlock diverse sources of capital at scale while keeping equity, efficiency and impact in focus.

Under this umbrella, the partnership between the GPE, IsDB, and ACG through SmartEd is helping to build stronger, more resilient education systems, so that more children are in school and learning, able to use their full potential and contribute to more peaceful, more equal and more prosperous societies.