Empowering Latin America’s Future

IADB bonds and World Bank partnership for education and employment.

The Inter-American Development Bank (“IADB”) has embarked on a groundbreaking mission through its USD 3.1 billion social bond programme, designed to benefit a substantial 2.7 million Latin American students over the course of four years. This initiative, known as the Youth Education and Employment (“EYE”) bonds, represents a continuation of the IADB’s educational efforts that were initiated in 2014. Now, with a strategic partnership with the World Bank, the programme is poised to amplify its reach, strengthen its financial performance and stimulate human capital development across the region. 

Over the next four years, the EYE programme has ambitious goals. It aims to train 266,000 teachers, thereby positively impacting the educational experience of 725,000 students across countries such as Colombia, Mexico, Argentina and Brazil. Teacher training is expected to enhance educational outcomes, which have held steady even as student attendance rates increase. As the current director of an educational entity in Colombia explained, “We seek to support projects that facilitate access to quality education for children and young people, projects that develop digital skills, projects focused on educational infrastructure, teacher training and integration into the labour market.” Additionally, the programme seeks to generate 46,000 jobs and offer benefits to 97,000 individuals by fostering partnerships with the private sector in the employment sector. 

The financing approach adopted by this initiative acknowledges the persistent challenges of poverty and inequality in Latin America. However, “the expected results or impacts of the initiative are aimed at advancing the goals of the 2030 Agenda, where we find the SDGs to reduce poverty and inequalities in Latin America and the Caribbean,” emphasised the educational director. A comprehensive “life cycle” strategy to nurture human capital throughout an individual’s entire lifetime suggests that “the scope is gigantic”. This strategy incorporates crucial elements such as high-quality education, social support and good health. These components contribute to raising family incomes and, consequently, the overall well-being of the population, with an “expected impact on more than two million people in Latin America and the Caribbean.” 

“the expected results or impacts of the initiative are aimed at advancing the goals of the 2030 Agenda, where we find the SDGs to reduce poverty and inequalities in Latin America and the Caribbean.”

Current director of an educational entity, Colombia

The effect of the EYE programme can be seen in various projects throughout the region. For instance, investments have been made in Panama to enhance education quality, Honduras has focused on improving youth employment skills, and Colombia has worked on bolstering educational pathways in rural areas “and will have an investment of more than USD 5 million”. The success of these initiatives has relied on local ownership, but it is equally dependent on national coordination to ensure sustained progress. Neglecting other essential sectors like health, sanitation or energy can jeopardise the achievements made in education and employment. 

Promoting clearer regulation is essential to reduce risks for investors and the public sector in social impact bond projects. Governmental changes and shifts in political cycles can disrupt bond structuring and implementation, as seen in Mexico and Brazil. “In Brazil, there were plans to implement an investment project for social impact bonds in education that was cancelled due to political dynamics that would hinder the operation,” responded the director, with 22 years of experience in the educational sector.  

Changing mindsets to focus on delivering results rather than just fulfilling tasks is a challenge and acknowledging that “it is a challenge, but it’s actually the best part of it all.” Challenges do vary depending on the country’s context, for example, in Colombia, the “SIBs.CO (Social Impact Bond Programme in Colombia) initiative paved the way,” transitioning from a theoretical process to a practical one with “government participation and the collection of information and results,” reported the Columbian educational director. However, in countries new to Social Impact Bonds (“SIBs”), challenges differ as they face a learning curve and need to regenerate evidence. Changing mindsets to focus on delivering results rather than just fulfilling tasks is a challenge, but a crucial one. Convincing investors about risk mitigation and conveying that the social sector offers unique opportunities is also challenging.  

“[Changing mindset] is a challenge, but it’s actually the best part of it all.”

Educational director, Colombia

In pursuit of maximising the impact on development, the Colombian educational director continued, “It was announced that the IADB and the World Bank are going to work on a project called Connected Schools for All,” which aims to equip young people with the skills needed for the future economy. Their goal is to re-envision partnerships with the private sector and civil society to effectively address the challenges at hand. This involves ensuring access to devices, internet connectivity and fostering familiarity with the digital world. The director with 22 years of experience in the educational sector elaborated, “In Bogotá they created the Quiero Ser Digital fund that seeks investors so that they can finance operators that are generating routes for training, intermediation, employment, placement and retention of young people, specifically in the digital sector.” Technological advancements represent the most potent tool for accelerating education and youth employment in Latin America, but achieving this will necessitate a comprehensive modernisation effort that goes beyond localised community projects. 

The IADB’s EYE programme, in partnership with the World Bank, marks a significant step toward addressing the educational and employment challenges facing Latin America. By emphasising human capital development and leveraging technology, this initiative strives to create lasting positive change across the region. The success of this ambitious undertaking will depend on strong local ownership, effective national co-ordination and a commitment to holistic development that extends beyond the confines of traditional education. 

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