Virtuous finance for education policies

How European agencies and finance organisations work together to build a new model of international development came under the spotlight Wednesday (November 24, 2021) in a European Training Foundation live online event.

“Virtuous Finance for Education Policies” hosted by the ETF looked at the emergence of a new ‘Team Europe’ approach to partnership and investments to assist the development of better education systems and stronger economies in transition and developing countries.

With the global pandemic exposing the skills deficits and labour market challenges in many countries as never before, the EU’s new focus on the so-called ‘Team Europe’ approach heralds a new era of greater cross-institutional cooperation to help EU neighbourhood countries find sustainable solutions to face global challenges that include greening and digitalising their economies.

The event, live streamed across various social media platforms to an international audience, brought together three experts to explain what this means in practice.

Anna Canato, Head of Education and Public Research, Projects Directorate, the European Investment Bank (EIB), observed that the pandemic crisis had exposed massive investment gaps in education.

“There were studies on this before COVID that estimated annual investment gaps in education in Europe of €15 billion; that figure will be higher now. Public education at large needs to be supported in terms of renewing infrastructure and supporting teachers to meet the new challenges they face,” she said.

“Vocational training and adult reskilling are more important than ever,” she said, adding that the bank had a core focus on education, research and innovation to improve Europe’s competitiveness and sustainability.

Focusing on how agencies can cooperate, Erja Kaikkonen, Head of Policy and Public Outreach at the ETF, noted that the EU had recently launched a new financial instrument for development assistance - the Neighbourhood, Development and International Cooperation Instrument - which from now onwards would be managed through the new Team Europe approach.

“This is a paradigm shift in partnerships in the sense that we now have both the interest and a mandate to all work more closely together,” she said. “The paradigm shift is more linked to the type of partnerships we have – a move away from the traditional development and cooperation approach to more equal relationships with our partners countries. The issues we face are all global – inequality, climate change, digital transformation, the pandemic…  It is no longer the case that we in the Western developed world have all the answers; we need to work together to develop the answers together.”

Finding the solutions require equal partners, she added. “We need to move strategically towards a world that is green, digital and fair and that has equal access [to skills and education] for all.”

That also involved a shift away from grants and towards loans and working with the private sector “to more of a focus on sustainability in our interventions.”

“Investments made should advance policy objectives; linked to inclusiveness and other goals we have - accessibility to women, minorities, people with disabilities, for example,” she said.

Mehmet Uvez, Principal Inclusion Specialist, European Bank for Reconstruction and Development (ERBD), gave some examples of exactly how the bank – of which he has recently been appointed head of its Ankara, Turkey, office – supports private sector solutions to promote key issues that include greening, inclusiveness, competitiveness, resilience and skills for transition.

Noting that the EBRD, established 30 years ago, had already invested €150 billion in over 6,000 projects, he said the bank was today active in nearly 40 economies “from Morocco to Mongolia, Estonia to Turkey.” As much as 80% of its investments were to private sector projects, he added.

In Kazakhstan the bank was engaged in policy dialogue and had been working to “establish partnerships to reform current labour laws that still contain a list of jobs that women cannot hold.” The Ministry of Labour and Social Protection had now signed a new order to open up 100 new occupations to women, he said.

The bank was also supporting the construction of private training centres at newly built shopping malls in Jordan; since 2017 around 350 young people including 100 Syrian refugees, had benefited from skills training and job placements via these centres.

It was important, he added, to identify comparative advantages between different agencies when looking at the ‘Team Europe’ approach.

“The EBRD has a strong focus on the private sector. In the division of labour our general tendency is to bring the voice of the private sector to the table – we support clients that provide employment to people and cooperate with regional governments and other agencies to help shape effective policy responses to the challenges faced.”

Anna Canato of the EIB agreed: “As a bank we are not policy makers, but policy takers – we don’t aim to influence the discussion around education; we look at our standards in terms of climate and social objectives, but every country has its own specificity and education is closing linked to a country’s culture. Our work is very much demand-driven; we are partners with ETF and all other organisations, but as financers we are at the back waiting for a request to come our way and then we look at whether and how we can provide support.”

The bank had recently been working closely with Serbia and Montenegro to look at investments needs to improve digital skills, for example.

The ETF, in contrast, did not provide funds, but expertise, Erja Kaikkonen stressed.

“The ETF is a policy organisation: we don’t have funds to put into a country, that is where we rely on others. What we do have is a lot of expertise and historical presence in countries that enables us to understand what works, and what does not.”

The ETF saw a need for more public sector investment in vocational education and training beyond infrastructure development – for example – in the development of curricula, human capital and policies to support various employment sectors, she added.

“We can play a role in this Team Europe partnership through, for example, working on the skills dimension of an investment,” she concluded.