International Skills Forum Session 8: R. Perkinson - Innovative Financing for Education and Training

8/13/2019 International Skills Forum Session 8: R. Perkinson - Innovative Financing for Education and Training

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E C

ADB D

10 12 D, 2013

&


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Trends in Private and PublicInvestment In Developing Countries

19702003

Source:: International Finance Corporation 2004 Trends in Private Investment

0

4

8

12

16

1970 1974 1978 1982 1986 1990 1994 1998 1999 2003

%o

fGDP

Private

investment

Public

investment

14.65%

7.05%6.3%

11.8%


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Education is the opposite!

How do we mobilize underutilized resources?

Sources:: OECD 2000; UNESCO 1999; International Finance Corporation staff estimates 2005: * = conservativeestimate. Trends in Private Investment Current Financing Only Total Private Financing (including capital) indeveloping countries is thought to exceed 33% of total expenditures (IFC staff estimates, 2004/05 based oncountry data that is available):

0

20

40

60

80

100

1996 1998 2006

%

( )

18% *13% *

1996 2006

83%

87%


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A CD A 8 D A C

$7,712

$405

$13,717

$1,854

ECD A

E D

C A

: C 2003; B 2010; EC 2011

: A B, C, , , , , ,

2001 2008

12

4

6

8

10

2

14

16D

000

0


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The Privatization Spectrum

Commercial viability

Politicalwilltoprivatize

telecom

transport

health

education

Political will to privatize is directly related to the commercial viability of thepublic service (and inversely related to government funding required)

water & sanitation

electricity


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?

?


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University 10% Local Bank 10%

Total 20%

University 10% Foundation 10%

Local Bank 10%

Total 30%

Devpt Bank 10%

Foundation 10%

Total 20%

B 60% B 50%

Devpt Bank 20%

2 1


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. . .

$25 = 5000 @ $5000


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B

()

5%

() $40.5

/ B

/

. . .

%

%

$15= 3000

$25

C /

$10

$0.5

$40= 8000

25%

2

10%

B/

60%


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$15

= 3000

+

5000

11000

= 2.2 $25

$25

= 5000

@ $5000

$40

= 8000

= =


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B

()

5%

() $40.5

/ B

/

. . .

%

%

$15= 3000

$25

C /

$10

$0.5

$40= 8000

D

25%

2

10 %

B/

60%


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Foundation CoversFirst Losses17%

LocalBank IFC

Local Bank &

IFC ShareSecond 83% ofLosses 50/50

Local bankoriginated

USD21m(or 7 times

the first loss

reserve)

for lendingto students

Total>$21m

$2.8mloss reserve


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D 51

Cash Reserve $$

20% of tuition fees paid in to a special cash reserve account

75%

50/50

BC B

C

25%

DC C

DC C


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Risk Sharing Structure & Support Servicesfor Student Loans 2iE, Burkina Faso

CashReserve

2iE TuitionDiscounts

PossibleContributors

- World Bank- Donors

A

PartialScholarships

OR

: , B , 2012

AFD

Senior Risk

2iE / BOA / AFD

Risk Sharing Structure

2iE

BOA

Mezzanine Risk

First Losses


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A

Started Yr 2000

US$ 40 million portfolio (est 97,000 students) by EO 2006

served over 550,000 students by 2011

D ( 2%)

Initial access was to public University & TVET programs

later extended to shorter cycle professional training, nursing and

other training programs

/


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Chile


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Thisimagecannotcurrently bedisplayed.

8yr local Chilean bond - face value of Bond approx US$23

million

Bond proceeds used to finance Universitys expansion,

modernization and to improve quality of operations

construction of 3 new buildings and refurbishing 6 existing

Additional space catered for growth from 9,300 students to

14,000 students by Yr 2010

Project accommodated construction and refurbishment ofneighborhood of downtown Santiago preserving the

districts heritage

Universidad Diego Portales - Chile


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Securitization: UDP Structure

ORIGINATORUDP Bond

Proceeds

Bond Holders

Bond

Students

Education

$

SpecialPurpose Vehicle

Tuition PaymentsTuition PaymentsTuition PaymentsTuition Payments Administration/Collections

Tuition PaymentsTuition PaymentsTuition PaymentsTuition Payments

BondProceeds

IFC

Tuition and

Fees from:

- Law- Journalism

- Advertising

- Design


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. . .


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A

, 100% (

) ;

, 70% A ( ) , 30 ;


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;

5 15;

A $15,000 ;

1,000 2007 2025;

A D

;


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()

;

;5,000

;

;

;


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3 8,000

500 ;

$80 ;

1,000 ;


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;

;

D


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The scheme today provides up to 2000 places ayear and is sold out until 2027

At today's tuition of USD9,000 per year thisrepresents over USD300 million in future earningswith little or no cost to RMIT Vietnam

Part of the fund deposits (up to 10%) being usedto securitize expansion of facilities in Hanoi

C


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30% E 18 25

. . . .

?


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!

International Skills Forum Session 8: R. Perkinson - Innovative Financing for Education and Training

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