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The future of education is impact

RE-Wave3_AuthorsWeb-Max.png   By Dr. Maximilian Martin, Global Head of Philanthropy, Lombard Odier


Systematic knowledge gathering, and its dissemination to the chosen few, began in antiquity. Establishing the first universities in the late eleventh and twelfth centuries in Italy, France, and England amounted to a revolution. The emergence of law, medicine, science and theology paved the way for the modern world. Had the Catholic monarchs of Spain not hired Italian explorer Christopher Columbus, there would likely have been no Spanish Golden Age.

The education revolution under way almost one thousand years later is similarly consequential.
 

If we want a world worth living in, we had better make it inclusive. To achieve this we need creativity, and to use capital markets for the societal benefit.


Education 2.0

Personalised medicine is already transforming the diagnosis and treatment of illnesses. Personalised agriculture asks how chemical genomics can improve plant biotechnology, revolutionising how we farm.
 

Now, the quest is on for relevant, personalised education for all, that fosters economic inclusion and is geared toward human-machine interaction.


Associated with the general rise of digital and artificial intelligence, long electronic supply chains have begun to emerge. These connect people in emerging markets to the global economy, helping them achieve a step change in their income and purchasing power.

Take Danish startup CodersTrust. Integrating FinTech, EdTech, and WorkTech, it invites young people in Bangladesh, India and Kenya to become “rockstar freelancers”, learning an IT skill that enables them to making a living anytime, anywhere in the online IT labor market. This helps fill the growing programming gap, while creating $2-an-hour jobs in countries like Bangladesh where more than 30 per cent of the population live below the poverty line and do not even make $2 a day.1
 

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This is quite a departure from the industrial paradigm, where people used the same knowledge and expertise to earn a living for decades. Given rising automation and faster innovation, individuals now need to continually learn and adapt.

As machines become more intelligent, anything that can be automated, will. As the value of existing knowledge falls, the ability to learn will become more valuable and new professions at the human-machine interface will become mainstream.


To meet demand, we need new formulas

In a world of machines, the main value added by humans will be creativity. To help us adapt, our education system needs to deliver on two fronts: suitable delivery mechanisms and content, and access for all. According to the World Economic Forum, in 2025, 65 per cent of today’s primary school students will have jobs that do not yet exist.2 Oxford University researchers studying the future of employment concluded that about 47 per cent of U.S. jobs are at risk from computerisation.3

However, except in wealthy countries, not enough people are in school. Globally, the adjusted net enrolment rates in 2014 were 91 per cent for primary education, 84 per cent for lower secondary education and 63 per cent for upper secondary education.4 About 263 million children and youths do not attend school, mainly in Sub-Saharan Africa and Southern Asia. 61 million are of primary school age.5

The reasons are partly financial. Globally, it will cost an extra $40 billion to provide 12 years of education to everyone in low and lower-middle income countries.6 There are also non-financial impediments. For example, with its relatively low percentage of trained pre-primary, primary and secondary teachers (44 per cent, 74 per cent and 55 per cent, respectively), Sub-Saharan Africa faces a particular challenge.7 Most schools there do not even have electricity or portable water.

Data from 65 developing countries indicates that over 60 per cent of schools have Internet access.8 Yet, students are also often not learning what they need. In its 2017 Report of the Secretary-General on Progress towards the Sustainable Development Goals, the United Nations Economic and Social Council found that less than half of students attain minimum mathematics proficiency (in nine of 24 sub-Saharan African countries, and in six of 15 Latin American countries studied). Less than half of primary students attain minimum reading proficiency (in six of 24 sub-Saharan African countries studied).9 And the canon of knowledge is shifting. Last year, a foundation on whose board I serve initiated Afghanistan’s first coding course for girls. Afghanistan is the 40th most populous country in the world, with 34 million people; 52 per cent of women there are illiterate.10


Wanted: innovation capital

While public systems are good at standardising and scaling established education models, they often find it difficult to find new formulas. Reaching groups with special educational needs such as children in rural areas, indigenous people, persons with disabilities, or refugee children is also hard.

The population of Africa alone is expected to more than double to 2.6 billion by 2050.11 One can only imagine the consequences of failing to achieve inclusive, equitable, quality education for all.
 

There is a lot to learn from the entrepreneurial energy in emerging markets. There, where educational issues are ubiquitous, creating new models is routine.


Philanthropy and capital invested for financial return and social impact tend to excel when novel, entrepreneurial formulas are tried.

In 2017, the Global Impact Investing Network (GIIN) found that although 80 of 205 respondents invested in education, this comprised only three per cent of the $113.7 billion they had invested for impact.12  This is, nevertheless, precious innovation capital. When Impact Investors mobilise fresh funding, they engage the private sector in novel ways in public and private education. Their focus on finding what works helps develop tools that drive innovation in education, and improve the efficiency of service delivery.
 

At a time when technological progress is creating new possibilities, Impact Investors bring the longer investment horizon and risk tolerance needed to come up with new solutions, paired with capital discipline.


It is when philanthropy enters the picture that moonshots become possible. A combination of philanthropic and investment capital to pilot and – if successful – roll out transformative new solutions may be the only way to deal with some of our generation’s grand challenges. Take the ongoing conflict that has displaced over eleven million Syrians. Before the war, 25 per cent of Syrians aged 18-24 were enrolled in higher education. That number now stands at less than ten per cent. The University of the People estimates that over 100,000 qualified Syrian students are currently left out of higher education.13 Who will rebuild the country if not them?

It is hard to see a future for Syria without large scale tertiary and technical education. The question is, how can these former students access the skills necessary to contribute?
 

Online education is the easiest way to overcome the barriers between refugee students and higher education.


Building on the experience of some seventy Social Impact Bonds or public-private “pay-for-success” partnerships launched globally since 2010, consider the potential in delivering web-based, low-cost, quality online degrees to tens of thousands of Syrian refugees.

Bringing them into a worldwide student community would not only prepare them for the international job market and give them the skills needed to rebuild Syria; it would also help promote tolerance and understanding. Yet, it is safe to say that without a philanthropic vision and Impact Investment, such a solution will never materialise. To deliver on social inclusion, capital formation, business opportunities and new jobs, fresh solutions are needed.

Together, functioning capital markets considering such impacts, philanthropic capital and public investment can provide the requisite enabling environment.
 

Today, the future of education is impact. Considering the disruption ahead, where not every child can find employment as a drone mechanic and people are voting with their feet, we had better succeed.

 

1 Misha, Farzana and Sulaiman, Munshi, “Bangladesh Priorities: Poverty, Sulaiman and Misha, Copenhagen Consensus Center,” Copenhagen: Copenhagen Consensus.
2 World Economic Forum, “The Future of Jobs,” Geneva: World Economic Forum.
3 Carl Benedikt Frey and Michael A. Osborne (2013), “The Future of Employment: How Susceptible are Jobs to Computerisation?” Oxford: Oxford Martin School and Department of Engineering Science, University of Oxford.
4 United Nations Economic and Social Council (2017), “Progress towards the Sustainable Development Goals: Report of the Secretary-General,” E/2017/66, New York and Geneva: United Nations.
5 Ibid.
6 Office of the Secretary-General’s Envoy on Youth, “#YouthStats: Education,” New York and Geneva: United Nations.
7 United Nations Economic and Social Council (2017), “Progress towards the Sustainable Development Goals: Report of the Secretary-General,” E/2017/66, New York and Geneva: United Nations.
8 Ibid.
9 Ibid.
10 World Population Review, 2017, “Afghanistan Population 2017,” Walnut, CA : World Population Review.
11 Population Reference Bureau, 2017, “2017 World Population Data Sheet,” Washington DC:  Population Reference Bureau.
12 Abhilash Mudaliar, Hannah Schiff, Rachel Bass, and Hannah Dithrich (2017), “Annual Impact Investor Survey 2017,” New York: Global Impact Investing Network.
13 Lauren Holt (2017), “Worldwide, nearly 100,000 college-ready Syrians can't get higher education,” Minneapolis, MN: PRI – Public Radio International.
UNHCR (2017), “The Regional Conference on Higher Education in Crisis Situations. Higher Education in Crisis Situations: Synergizing Policies and Promising Practices to enhance Access, Equity and Quality in the Arab Region,” held in Sharm El-Sheikh, Egypt, 28-29 March 2017. Geneva: UNHCR.

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This document is issued by Bank Lombard Odier & Co Ltd or an entity of the Group (hereinafter “Lombard Odier”). It is not intended for distribution, publication, or use in any jurisdiction where such distribution, publication, or use would be unlawful, nor is it aimed at any person or entity to whom it would be unlawful to address such a document. This document was not prepared by the Financial Research Department of Lombard Odier.

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