EDUCATION ATIO A EDUCATIO N P WORKING PAPER No. 19 | June 2025 Innovative Financing of Education Technology as part of Maximizing Financing for Development Frederico Antunes de Carvalho, Changha Lee, and Yvonne Byanjeru © 2025 International Bank for Reconstruction and Development / The World Bank 1818 H Street NW Washington DC 20433 Telephone: 202-473-1000 Email: AskEd@worldbank.org Internet: www.worldbank.org/en/topic/education This work is a product of the staff of The World Bank with external contributions. The findings, interpretations, and conclusions expressed in this work do not necessarily reflect the views of The World Bank, its Board of Executive Directors, or the governments they represent. 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Cover design: Marianne Siblini. i Innovative Financing of Education Technology As part of Maximizing Financing for Development Frederico Antunes de Carvalho, Changha Lee, and Yvonne Byanjeru Abstract Digital technologies are increasingly important for delivering inclusive, resilient, and high-quality education, yet financing their effective deployment remains a key constraint in many low- and middle- income countries). This paper examines the scale of investment needed to achieve universal digital learning against the backdrop of constrained education budgets. It highlights common challenges ministries face, including limited fiscal space, underutilization of available funds, and inefficiencies in procurement practices. Drawing on global case studies and the World Bank’s EdTech principles, the paper outlines a practical framework for innovative financing that combines two strategic approaches: (1) stretching existing budgets through improved planning, cost-benefit analysis, and procurement reform; and (2) mobilizing additional funding from underleveraged sources such as Universal Service Access Funds, philanthropic capital, and blended finance. The report offers actionable recommendations to help ministries of education make smarter, result-oriented EdTech investments and build partnerships that enhance long-term impact and sustainability. JEL Classification: I200, I210, I240, I250, I280, J240 Keywords: Education technology; innovative financing; digital learning; EdTech procurement; low- and middle-income countries (LMICs); education budgeting; total cost of ownership (TCO); public-private partnerships (PPPs); universal digital access; universal service access funds (USAF); philanthropic investment; blended finance; impact bonds; education policy; cost-benefit analysis; government spending; household contributions; development assistance; equitable access; digital infrastructure; teacher professional development; learning outcomes; education system resilience; results-based financing; zero-rating educational content; connectivity; capacity building; education ecosystems. ii Contents Acknowledgments ........................................................................................................................... v Abbreviations ................................................................................................................................. vi Summary ..................................................................................................................................... viii 1. Introduction and Context .......................................................................................................... 1 1.1 The Cost of Financing EdTech................................................................................................... 1 1.2 Education Financing in Low- and Middle-Income Countries ........................................................ 3 1.3 Innovation in EdTech Financing ................................................................................................ 5 2. How Countries Currently Finance and Buy EdTech .......................................................................... 7 2.1 Current Sources of Funding for EdTech ..................................................................................... 7 2.1.1 Government Funds ...................................................................................................................... 8 2.1.2 Universal Service Access Funds .................................................................................................. 10 2.1.3 Donor Funding ........................................................................................................................... 10 2.1.4 Household Spending, Users’ Own Funds, and Cost-sharing Schemes ....................................... 12 2.1.5 EdTech Bonds ............................................................................................................................. 14 2.2 How Governments Procure EdTech ........................................................................................ 15 2.2.1 Traditional Equipment, Software, and Content Acquisition Procurement ................................ 15 2.2.2 Public-Private Partnerships ........................................................................................................ 16 2.2.3 Negotiated Bulk Discount Agreements ...................................................................................... 16 2.3 Current Challenges with Funding and Acquisition of EdTech ..................................................... 18 2.3.1 Limited Funding: Inheriting the Resource Constraints of Education Financing ......................... 18 2.3.2 Lacking Strategy: Funding EdTech Without a Strategic Plan ..................................................... 18 2.3.3 Poor Budgeting: Considering EdTech CAPEX not OPEX ............................................................. 18 2.3.4 Poor Procurement: Lacking Efficiency in Procurement of EdTech ............................................ 19 2.3.5 Poor EdTech Practice: Not Considering Return on Investment and Impact .............................. 19 2.3.6 Poor EdTech Practice: Failing to Keep up with Market Changes ............................................... 20 2.4 The Need for Innovative EdTech Financing .............................................................................. 21 3. Stretching Existing EdTech Budgets.............................................................................................. 22 3.1 Practicing EdTech Principles .................................................................................................. 22 3.1.1 Ask Why ..................................................................................................................................... 22 3.1.2 For All ......................................................................................................................................... 22 3.1.3 Be Data-driven ........................................................................................................................... 23 3.1.4 Engage the Ecosystem ............................................................................................................... 24 3.1.5 Empower teachers ..................................................................................................................... 26 3.2 Budgeting and Procurement: Recommended Practices ............................................................ 27 3.2.1 Begin with Request for Information .......................................................................................... 27 iii 3.2.2 Budget Better with Total Cost of Ownership Model ................................................................. 28 3.2.3 Integrate Updates and Support Services in Procurement ......................................................... 31 3.2.4 Annualize Costs and Stagger Investments to Improve Budget Stability and Sustainability in Government EdTech Procurement ..................................................................................................... 32 3.2.5 Purchase Based on Cost-benefit Analysis .................................................................................. 32 3.2.6 Aggregate Purchases to Take Advantage of Volume Discounts ................................................ 33 3.2.7 Consider Leasing Instead of Owning .......................................................................................... 34 3.2.8 Adopt “as-a-Service” Model ...................................................................................................... 35 4. Identifying Additional Sources of Funding .................................................................................... 36 4.1 Maximize Use of Universal Service Access Funds ..................................................................... 36 4.2 Scale up Device Loan Schemes with Guarantee Schemes ......................................................... 36 4.3 Utilize Advance Market Commitments to Support the Development of More Sustainable EdTech38 4.4 Increase Philanthropic Investment in EdTech .......................................................................... 39 4.5 Donor Funding for Global Public Goods (in addition to AMCs and direct funding) ....................... 42 4.6 Impact Bonds ....................................................................................................................... 43 4.7 Training Funds ...................................................................................................................... 44 4.8 Unlock the Billions in Private Sector IT Companies’ Cash Reserves ............................................ 45 4.9 The Giga Model .................................................................................................................... 46 4.10 Summary Comparison of Additional Sources of Financing....................................................... 47 5. Conclusion ................................................................................................................................ 52 References .................................................................................................................................... 54 Table 3.1: Examples of Total Cost of Ownership Costs ............................................................................... 28 Table 4.1: Examples of Microloans Combined with Guarantee Funds ....................................................... 37 Table 4.2: Partnership for Higher Education in Africa Contributions to ICT (2000–10) ............................. 40 Table 4.3: Spotlight on Levy Schemes in 75 Countries ............................................................................... 44 Table 4.4: Advantages and Disadvantages of Additional Sources of Funding ............................................ 48 Figure 1.1: Cost of Universalizing Learning ................................................................................................... 2 Figure 1.2: Total Education Spending and Growth in Education Spending, 2010–22 (US$ trillion) ............. 4 Figure 1.3: Government Education Spending per School-age Child (constant 2022 US$) by Income Group, 2010–22 ........................................................................................................................................................ 4 Figure 1.4: Distribution of Total Education Spending by Source, by Income group (percentage, US$ billion) ........................................................................................................................................................... 5 Figure 2.1: Ghana Student Loan Trust Fund Laptop Loan Promotion ........................................................ 14 Figure 2.2: Typical Public Procurement Process ......................................................................................... 15 Figure 3.1: Consider a Holistic Approach in Planning for Edtech Investments ........................................... 27 Figure 4.1: Growth of private philanthropic flows for development, 2009–21 (US$ billion, 2020 prices) 39 Figure 4.2: Sectoral Distribution of Philanthropic Giving (2018–20 average, US$ million) ........................ 40 Figure 4.3: New or Under-utilized Sources of Funding: Funding Potential and Level of Complexity ......... 49 Map 2.1: Examples of Large-scale Deployments in Low- and Middle-income Countries............................. 8 Box 2.1: Challenges in Financing Artificial Intelligence– the Most Recent Novelty.................................... 21 iv Acknowledgments This World Bank Working Paper was prepared by Frederico Antunes de Carvalho, Changha Lee, and Yvonne Byanjeru under the guidance of Alex Twinomugisha (Senior Education Specialist). This work was conducted with the financial support of the Mastercard Foundation, and it is part of a series of background papers being published under the Youth Skills and Resilient Hybrid System Global Public Goods and Capacity Building program. Kia Penso edited the report, and Mabel Martinez performed the production editing. Acknowledgment of Artificial Intelligence (AI) Assistance This report was developed with the assistance of the generative AI tools like ChatGPT, which was used to create tables based on information presented in the paper, review reports that were uploaded to the AI tool, generate initial drafts of analysis and recommendations, and refine and restructure content based on specific prompts and feedback. While the generative AI tool provided valuable assistance in data interpretation and content generation, it was used in addition to the authors’ knowledge and experience and all analyses, conclusions, and final recommendations were reviewed, edited, and approved by human experts to ensure accuracy, relevance, and ethical considerations. The use of AI in this report which is about digital skills reflects the authors’ commitment to leveraging advanced technologies to enhance their analytical capabilities, while maintaining human oversight and judgment in the final product. v Abbreviations AI artificial intelligence BYOD bring your own device CAPEX capital expenditures CIOSPB National Centre for Information, Educational and Vocational Guidance, and Scholarships (Burkina Faso) COVID-19 Coronavirus disease 2019 DLP Digital Learning Program (Kenya) DaaS device-as-a-service EdTech education technology ESF European Social Fund GIGA Global Initiative for School Connectivity (UNICEF/ITU) GPE Global Partnership for Education HIC high-income country HP Hewlett-Packard ICT information and communication technology ITU International Telecommunication Union K-12 kindergarten to 12th grade LICs low-income countries LMICs low- and middle-income countries MIGA Multilateral Investment Guarantee Agency MOOC massive open online course NGO nongovernmental organization NSDC National Skill Development Corporation (India) OPEX operational expenditures PHEA Partnership for Higher Education in Africa PPP public-private partnership vi RFI request for information RFP request for proposal SDGs Sustainable Development Goals SIDH Skill India Digital Hub TCO total cost of ownership TVET technical and vocational education and training UNDP United Nations Development Programme UNESCO United Nations Educational, Scientific and Cultural Organization UNICEF United Nations Children’s Fund USAF Universal Service Access Fund vii Summary In today’s rapidly evolving educational landscape, the integration of education technology (EdTech) is no longer optional, it is a pressing necessity for governments worldwide. For low- and middle-income countries, EdTech holds the promise of closing learning gaps, adapting to learners’ level of knowledge, expanding digital access, and equipping learners with the skills needed for a rapidly changing economy. However, financing this transformation remains a significant hurdle. According to UNICEF, achieving universal digital learning would require an estimated US$1.4 trillion between 2021 and 2030, or approximately $48 per student per year in LMICs. Yet the current levels of per capita government spending on education technologies, particularly in low- and middle-income countries, fall well below this benchmark. Many countries face constrained fiscal space, declining donor support, and rising population, all of which further strain public education budgets. This World Bank Working Paper presents a practical framework to help ministries of education rethink how they plan, fund, and sustain EdTech investments. It begins by analyzing how governments currently finance and procure EdTech and highlights the challenges that undermine efficient spending. Traditional models of EdTech financing often prioritize capital expenditures (CAPEX) such as devices and infrastructure while overlooking the operational expenses (OPEX) such as training, maintenance, and ongoing user and technical support. Furthermore, the procurement processes are often decentralized and fragmented across ministries, limiting the ability to aggregate demand and achieve economies of scale and frequently are based on poor technological choices, given the limited knowledge of decision makers. Additionally, EdTech investments are rarely linked to measurable learning outcomes, reducing accountability and limiting long-term impact. To address these challenges, the paper proposes a two-pronged innovative financing strategy grounded in two core approaches: (1) using existing funds more efficiently and (2) unlocking additional or underutilized sources of financing. The first approach focuses on stretching existing education budgets. This begins with applying the core EdTech principles, aligning investments with national learning goals, and adopting total cost of ownership models that account for the full life cycle of EdTech. Countries are encouraged to improve budgeting, use cost-benefit analysis in procurement, and lead with results by tying investments to educational impact. For example, prioritizing lesson planning and teacher empowerment can reduce overall device spending while improving learning. Investing in professional development, support systems, and quality digital content enhances teachers’ ability to integrate technology meaningfully. Efficient procurement is central to this effort. This paper outlines actionable steps to improve procurement strategies, including issuing requests for information, testing innovations before scaling, viii fostering public-private partnerships, and strengthening transparency. A shift toward coordinated, long-term planning ensures that digital investments are sustainable and aligned with system-wide goals. The second approach centers on unlocking new or underutilized financing sources. These include Universal Service Access Funds, philanthropic capital, impact bonds, Advance Market Commitments, and blended finance mechanisms. These options can complement public budgets and diversify the funding base—particularly when paired with effective cross-government and private sector coordination. The paper includes a comparative overview of funding sources, outlining their key advantages and limitations to help governments weigh potential trade-offs. Building on this, a visual matrix maps each funding source by its funding potential and complexity to unlock, providing policy makers with a practical tool for assessing which financing mechanisms are most viable and strategic in their specific contexts. The US$1.4 trillion target may seem ambitious, but progress is possible. The paper emphasizes that success does not depend on massive new inflows alone. Rather, countries can make meaningful strides by optimizing current resources, improving procurement, and activating underused funding mechanisms already within reach. By strengthening governance, reallocating dormant resources like USAFs, and engaging broader financing partners, governments can take realistic, context-specific steps toward sustainable digital learning. With better planning and smarter spending, countries can unlock the potential of EdTech to build more inclusive, connected, and future-ready education systems. ix 1. Introduction and Context Digital technologies are essential for expanding access to education, reducing learning poverty, and building resilient education systems. They play a crucial role in reaching the 244 million out-of-school children aged 6 to 18—primarily at the secondary level—improving higher education access in regions like sub-Saharan Africa, where enrolment is significantly lower than the global average (UNESCO-UIS 2022; World Bank 2020a). They are essential in confronting the alarming rise in learning poverty, which escalated from 57 percent to 70 percent in low- and middle-income countries (LMICs) since the onset of the COVID-19 pandemic (World Bank et al. 2022). The pandemic also highlighted the need for education systems to withstand disruptions from crises such as climate change-related disasters, fragility, conflict, and violence. Sustainable investment in education technologies (EdTech) is essential to ensure that children can learn anytime, anywhere. With the rise of artificial intelligence (AI), personalized learning is becoming more affordable and widespread while it is also freeing teachers from administrative tasks, allowing them to focus more on student learning. However, investments in technology alone are not enough; they must be complemented by investments in teacher training, capacity building, and organizational capabilities for the effective procurement, deployment, and management of complex technologies. Many LMICs struggle to identify, finance, and sustain EdTech solutions within already constrained education budgets which leads to significant waste of scarce resources. This report aims to support governments, development agencies, and other education stakeholders in exploring alternative funding sources and making strategic procurement decisions to enhance the long-term impact of EdTech on education outcomes—an approach referred to as “innovative financing” (see Section 1.3 for the operational definition). 1.1 The Cost of Financing EdTech This report focuses on financing the delivery of digital learning; however, the cost of electricity and internet connectivity remains a major challenge in many LMICs, particularly in low-income countries (LICs). These two factors alone account for more than half of the total cost of universalizing digital learning. Without addressing electricity and connectivity, achieving universal access to EdTech will be simply impossible. According to UNICEF, achieving universal digital learning between 2021 and 2030 is estimated to cost US$1.4 trillion (UNICEF 2021). This total includes US$410 billion for universal electricity, US$428 billion for universal internet connectivity, US$498 billion for making data usage affordable (zero-rating), and US$46 billion for the recurrent delivery of digital learning (Figure 1.1). 1 Figure 1.1: Cost of Universalizing Learning Source: UNICEF (2021). The breakdown of the recurrent delivery learning (US$46 billion) defined by UNICEF includes: • Purchase and maintenance of devices for children and young people at US$36 billion; this cost assumes a device cost of US$20 per learner and notes that this is a “frugal” cost based on the least expensive smartphone. In reality, the cost for a reliable, durable device with more functionality, such as a laptop, is much higher. • Purchase and maintenance of devices for teachers and facilitators at US$2 billion; this cost also assumes a smartphone at US$50, which can hardly be considered an optimal device for teaching. • Pedagogical content that includes identifying, curating, and scaling up digital solutions, at US$2.4 billion. • Upskilling teachers and facilitators in digital learning and pedagogies, at US$3.1 billion. • Building policy and institutional capacity, at US$200 million. • Supporting data, analytics and research on the design and implementation of digital learning solutions at US$1.4 billion; and • Engaging the public, especially young people, for advocacy, scaling up, accountability at US$1.4 billion. These costs are assumed to be a minimum but are a good starting point from which to analyze the overall cost of EdTech in relation to the budgets available to education. The US$1.4 trillion over the 2 decade translates to an average of $140 billion required per year. This would represent about 35 percent of the US$404 billion global EdTech spend estimated for 2025. 1 LMICs need to invest approximately $US48 per student per year in EdTech between 2021 and 2030, based on UNICEF costing, but even this modest expenditure may be challenging, given their constrained education budgets (see next section). Based on an average under-25 population of 2.9 billion in LMICs between 2021 and 2030, and applying UNICEF’s costing estimates, the projected investment required in EdTech equates to approximately US$483 per capita over the decade— equivalent to an average annual expenditure of US$48 per learner (UNICEF 2021). In comparison, EdTech spending in high-income regions like the European Union is significantly higher, reflecting the more advanced digital infrastructure (EIB 2021). The actual cost of effective EdTech likely falls between the low-tech UNICEF estimates and the high- tech EU benchmarks, underscoring the financial challenge for LMICs. While the required investment may seem modest in comparison to high-income countries, even the lower-cost models may be unsustainable given the limited education budgets in LMICs. 1.2 Education Financing in Low- and Middle-Income Countries The total global yearly education budget in 2022 was about 5.8 trillion with low-, lower-middle and upper-middle-income countries spending about US$2.1 trillion (Figure 1.2). The $1.4 trillion EdTech spend over the 10-year period averaging out at $140 billion per year would represent about 2.4% of the total education spending in 2022. The proportional spending in LICs and LMICs combining government or public spending, household spending and donor contributions would be even much higher. On a per capita or per student basis and looking at only government spending, Education Finance Watch 2024 estimates that government education spending per capita in 2022 in LICs was $55, while spending for LMICs was US$309 (UNESCO, UIS, World Bank 2024). In upper-middle-income countries (UMICs), spending was $US1273 while spending in high-income countries (HICs) was US$8,532 (Figure 1.3) (UNESCO, UIS, World Bank 2024). At current levels of per-capita government spending, LICs would not be able to afford the $48 per student per year required for universalizing digital learning, and even LMICs would struggle, as EdTech spend would represent nearly 20 percent of their total education budget. This is more so, given that the bulk of education financing currently goes towards operating expenses, especially to teacher salaries. 1 HolonIQ, Edtech in 10 Charts available at https://www.holoniq.com/edtech-in-10-charts. 3 Figure 1.2: Total Education Spending and Growth in Education Spending, 2010–22 (US$ trillion) Total education spending (government, aid, and household) in Growth in real education spending (all sources) by country constant 2022 US$, trillion, 2010–22 income groups, 2010–22, with 2010=100 Source: UNESCO, UIS, World Bank (2024). Note: income groups follow the following classifications: LICs = Low-Income Countries, LMICs = Lower-Middle- Income Countries, UMICs = Upper-Middle-Income Countries, and HICs = High-Income Countries. Please note that elsewhere in this paper, LMICs refers collectively to low- and middle-income countries. Figure 1.3: Government Education Spending per School-age Child (constant 2022 US$) by Income Group, 2010–22 Source: UNESCO, UIS, World Bank (2024). Note: Income groups follow the following classifications: LICs = low-income countries, LMICs = lower-middle- income countries, UMICs = upper-middle-income countries, and HICs = high-income countries. Please note that elsewhere in this paper, LMICs refers collectively to low- and middle-income countries. 4 It is important to understand the source of education financing in LICs. Government finances account for roughly 60 percent of the education spending, with households and donors making up a significant share. Most of the household expenditure on education is spent paying for private schools. With limited government funding, alternative or additional sources of EdTech financing could come from households or donors, but even this may not be feasible, because household budgets in LICs are already overstretched and donor funding is declining (UNESCO, UIS, World Bank 2024) (Figure 1.4). Figure 1.4: Distribution of Total Education Spending by Source, by Income group (percentage, US$ billion) Source: UNESCO, UIS, World Bank (2024). Finally, the impact of population growth on education and EdTech financing must be considered, especially in places like Sub-Saharan Africa, where the population is likely to double between now and 2050 (World Bank 2024). This will put more pressure on education financing and increase the amount of EdTech financing required to achieve universalization of digital learning. With government education budgets insufficient, declining donor funding and stretched household budgets amid a population explosion especially in LICs, universalizing digital learning in LMICs will require that all stakeholders look at innovative financing approaches. 1.3 Innovation in EdTech Financing Previous sections have highlighted that financing EdTech with current education budgets is simply unfeasible; and calls for more creative and innovative financing. UNICEF estimates that approximately $48 per year per student is required to universalize digital learning, yet governments in LICs spend only about $55 per year to educate each student, most of which is allocated to teacher salaries. To finance EdTech, the education sector must adopt creative and innovative strategies by optimizing existing budgets and sourcing additional funds. 5 The first step is to reduce the overall cost of universalizing EdTech. One cost-effective approach is zero- rating educational content rather than connecting all schools, which could reduce the total cost by as much as 30 percent. The rationale behind this strategy is outlined in Section 3.2.5. LMICs face ongoing challenges in sustainably financing EdTech to meet the growing demand for digital skills. Rapid technological advancements require frequent updates, significant upfront investments, and continuous maintenance—demands that existing procurement processes often fail to accommodate. Furthermore, limited awareness of industry trends and effective EdTech solutions frequently leads to suboptimal purchasing decisions, particularly when decision making is decentralized to subnational or school levels. In defining innovative financing, this paper considers these challenges and draws on various interpretations of innovative financing and strategies for maximizing development funding. 2 For our purposes, we define innovative financing as encompassing both spending existing funds efficiently and to best effect and raising funds outside the traditional sources of EdTech financing. Here are the two high-level categories: 1) Stretching the existing budget to do more. First, countries need to learn how to better spend what they currently have available. This may mean improving budgeting and procurement and focusing on maximizing impact by leading with results and performance. 2) Identifying new sources of EdTech funding, outside the traditional sources or increasing funding from underutilized sources. Each of these approaches will be explored in detail in the chapters that follow. But first, to provide proper context, it is important to understand how governments currently finance and procure EdTech. 2 See for example, World Bank (2018) (https://www.worldbank.org/en/news/speech/2018/05/15/leveraging- innovative-finance-for-realizing-the-sustainable-development-goals) and UNDP (2012) (https://www.undp.org/sites/g/files/zskgke326/files/publications/InnovativeFinancing_Web%20ver.pdf). 6 2. How Countries Currently Finance and Buy EdTech The chapter is divided into two sections: sources of funding and budgeting, and approaches to procurement or buying. It will explore how governments—especially in LMICs—currently raise funds for and buy or procure EdTech. In our analysis, we consider current approaches for large-scale EdTech deployments at the national or subnational level such as province and district, covering all or a majority of schools. We do not generally consider pilots or proof-of-concept projects, even if they are testing innovative financing and technology solutions, unless they have proven the ability to scale; in which case, they would be captured under the large-scale deployments. The chapter will also draw from examples 3 around the world. 2.1 Current Sources of Funding for EdTech There are several large-scale deployments in LMICs (see Map 2.1) that have been funded through a mixture of funding sources. The primary source of funding for EdTech in most countries is public funds, which come from regular budgets through ministries of education and ministries of information and communications technology (ICT) or their associated agencies, or through government bonds. Another major source of public funding for EdTech stems from election manifesto promises, 4 economic stimulus programs, and emergency response programs. The latter tend to be more temporary or sporadic than funding from regular ministry budgets. Another major source of funding, though underutilized, is the Universal Service Access Fund (USAF). 5 Households or students also contribute significantly to EdTech, as they do to education in general. Donor funding has mostly funded pilots but is increasingly funding large-scale deployments, especially since the recent COVID-19 pandemic. Finally, public-private partnerships (PPPs) are rarer and have not been developed to their full potential. Each source of funding has its own advantages and disadvantages, and the choice of the most appropriate financing source will depend on the specific context and needs of the country. 3 These initiatives may continue to be active today, but the specific projects and activities within them may have changed over time. It's important to research the progress of a specific project or initiative in order to get a more accurate and up-to-date understanding of its current status and effectiveness. 4 A public declaration of policy and aims, especially one issued before an election by a political party or candidate. 5 A public fund—financed primarily through contributions made by mobile network operators and other telecommunications companies—intended to expand communications services to underserved areas and populations. 7 Map 2.1: Examples of Large-scale Deployments in Low- and Middle-income Countries Source: Authors’ own elaboration. 2.1.1 Government Funds Some governments—mostly those in HICs like Korea, Singapore, the United Arab Emirates, the United Kingdom, the United States, and Uruguay—have had long-established and sustained budgets for EdTech. Often these are part of the regular ministry of education budget or are funded through long- term initiatives across ministries of education or ministries of ICT. Uruguay has a unique approach to funding EdTech with its creation of “Ceibal” 6, Digital Technology Center for Education Innovation. This autonomous entity coordinates with key ministries and has an annual budget of approximately 2.18 billion UYU (approx. US$ million in 2024). 7 Since 2007, Centro Ceibal has distributed over 2.9 million laptops and tablets to students and teachers, ensuring their maintenance and lifecycle management, and providing connectivity and managing local Wi-Fi networks for schools. Some LMICs, such as India, Kenya, Peru, Rwanda, and several South American countries, have also sustained long-term support for EdTech. However, substantial funding often comes from manifesto programs and emergency funding. Many long-term initiatives, which initially stemmed from manifesto 6 https://www.ceibal.edu.uy/en/institucional. 7 http://ceibal.edu.uy/wp-content/uploads/2024/04/Ejecucion-presupuestal-2023-%E2%80%93-Presupuesto- 2024-Centro-Ceibal-CGN.pdf. 8 commitments, continue to receive occasional support through renewed policies or economic stimulus programs. Manifesto Promises With ministry of education budgets often strained, the major flow of public funding for large-scale EdTech deployment often follows a promise made in election manifestos. Budgets to fulfill these manifesto promises then come from direct government budgets or from Universal Service and Access Funds (USAF), bonds, or loans. Several LMICs have launched manifesto projects to provide technology to students and teachers, such as Kenya’s Digital Learning Program (DLP) that provided over 1 million Windows -based tablets to primary schools between 2013 and 2020, 8 and Venezuela’s Proyecto Canaima Educativo, 9 launched in 2008 by late President Hugo Chavez and funded by the country's USAF. It should be noted that manifesto programs are not unique to LMICs; they also show up quite regularly in HICs and seem to be a popular and political winner globally. In Portugal, the government launched the “e-Escola" program in 2007 to provide laptops to university and secondary students, followed by the "e-Escolinha” project that provided Magellan netbooks to primary school students in 2008, revived again in the wake of the COVID-19 pandemic (Intel 2011). Manifesto-led EdTech programs can suffer from several challenges, however. Often there is a rush to get the program implemented within the elected official’s term, which can lead to poor planning. These programs can also get delayed or derailed if there is a political crisis, a change in priorities after the election, or a change in the leadership. Emergency Funding Another source of EdTech funding is emergency funding, such as was used for continuity of learning during the COVID-19 pandemic, or funding from economic stimulus projects during economic downturns. The COVID 19 pandemic probably led to some of the largest investments in EdTech worldwide in history. Some of this funding supported existing programs; in other cases, it was the first time EdTech was getting such significant funding. The US Federal government provided up to US$30.75 billion to States and School districts in COVID-19 funding for education, some of which could be used for EdTech. 10 Ireland's Minister of Education announced a €50 million ICT grant for primary and post- primary schools in November 2021 as part of the country's €210 million Digital Strategy for Schools. 11 Japan accelerated the implementation of its GIGA School project, launched in 2019, to provide an 8 https://www.digischool.go.ke/Home/executivesummary. 9 https://canaimaeducativo-wordpress-com.translate.goog/proyecto- canaima/?_x_tr_sl=es&_x_tr_tl=en&_x_tr_hl=en&_x_tr_pto=sc. 10 https://www.congress.gov/bill/116th-congress/house-bill/748/text. 11 https://www.gov.ie/en/press-release/eb756-minister-foley-announces-50m-ict-grant-funding-for-all-primary- and-post-primary-schools/. 9 educational digital device to every student and establish high-speed communication networks (UNESCO 2020). Peru's Ministry of Education deployed over 1 million tablets to support distance learning (The Public Purpose 2021), 12 while Brazil supported low-income schools’ internet connectivity and recently approved a $600 million law to provide low-cost devices and connectivity to students (Mari 2021). By its very nature, emergency funding for EdTech, while useful, has several challenges. A large infusion of cash without time for careful planning can lead to waste and sustainability issues. For example, UNICEF reports that one in three digital learning platforms deployed during the COVID-19 pandemic are no longer functional (UNICEF 2022). 2.1.2 Universal Service Access Funds USAFs are defined as “public funds—financed primarily through contributions made by mobile network operators and other telecommunications companies—intended to expand communications services to underserved areas and populations” (Thakur and Potter 2018). 13 USAFs typically target underserved areas that are not financially viable for commercial operators and are usually run by telecommunication regulators. The concept of universal access has evolved to include access to digital technologies, content, and skills necessary for users to benefit from the services provided. Some countries use USAFs to fund EdTech for low-income families or schools. In Uganda, USAFs have funded computer labs, digital content, and teacher training for all public secondary schools (Uganda Communications Commission 2021). Italy created a voucher program in 2020 to help low-income families pay for high-speed internet and a computing device (EU 2020). The United States uses USAFs to subsidize connectivity, a discount ranging from 20 percent to 90percent for all schools and libraries. 14 Other countries, such as Rwanda or Kenya, use USAFs to connect schools to the internet directly through commercial service providers, while Zambia, Morocco, and Uganda have used them to expand their National Research and Education Networks. Jamaica 15 and Ghana have used USAF funds to provide both internet connectivity and devices to schools. 16 2.1.3 Donor Funding Many donors have often funded EdTech proofs of concept, pilots, EdTech research and evaluation, and technical assistance activities. Donors include bilateral aid agencies and multilateral organizations as well as private philanthropic foundations and nongovernmental organizations (NGOs). 12 https://thepublicpurpose.com/2021/10/18/perus-digital-divide-in-public-education/. 13 https://webfoundation.org/docs/2018/03/Using-USAFs-to-Close-the-Gender-Digital-Divide-in-Africa.pdf. 14 Federal Communications Commission, Universal Service Fund. Available at https://www.fcc.gov/general/universal-service-fund. 15 https://usf.gov.jm/wp-content/uploads/2020/08/USF_Annual_Report_2018_2019.pdf. 16 https://en.wikipedia.org/wiki/Ghana_Investment_Fund_for_Electronic_Communications. 10 Many of the large bilateral and multilateral agencies that have significant funding for Education usually fund projects that include EdTech. The Asian Development Bank, 17 the African Development Bank, 18 the Inter-American Development Bank, 19 and the World Bank are all significant funders of education and technical assistance that often includes EdTech, especially since the COVID-19 pandemic. Notable examples of research and technical assistance funding include the EdTech Hub, a global research partnership funded by UK Aid Direct, the Gates Foundation, the World Bank, and UNICEF. 20 On funding for large-scale programs, a few notable examples include the World Bank funding 21 for Burundi Skills for Jobs: Women and Youth with a focus on digital skills; the Edo Basic Education Sector and Skills Transformation Operation in Nigeria that leverages technology to improve teaching and learning processes in basic education; the Egypt Education Reform Project that supports teachers and students with digital learning resources to enhance education service delivery; a new computer-based student assessment and examinations system and the Higher Education Development Project in Pakistan that includes support to equip students and higher education institutions with modern technology and to leverage technology to improve the teaching, learning, and research environment in Pakistan; and many others. Donor funding for EdTech rose during the COVID-19 pandemic. The Global Partnership for Education provided more than US$500 million to low-income countries for continuity of learning during the pandemic, helping governments sustain learning for up to 355 million children in 66 countries. 22 The World Bank has also scaled up its EdTech funding during this period, and today over 90 percent of World Bank education projects include some funding for EdTech. 23 Notable World Bank–funded emergency programs include US$9 million in emergency funding for Pakistan for the costs of developing and broadcasting television content; a US$160 million emergency project in Turkey that includes support in developing a new digital learning platform, along with digital content for TV and online channels reaching 721,000 students and 53,000 teachers; and a US$250 million project in the state of São Paulo in Brazil that includes support for the development and implementation of a hybrid remote learning scheme for 700,000 vulnerable students in public schools. Private Philanthropic Foundations Another important source of funding for EdTech is private philanthropic corporations such as the Mastercard Foundation, ProFuturo – a program of the Fundación Telefónica and Fundación “la Caixa” – 17 The Asian Development Bank’s Work in the Education Sector, https://www.adb.org/what-we- do/sectors/education/overview. 18 Africa Development Bank, Skills and Education, https://www.afdb.org/en/topics-and-sectors/sectors/human- capital-development/skills-education. 19 https://www.iadb.org/en/sector/education/overview. 20 https://edtechhub.org/. 21 https://www.worldbank.org/en/topic/edutech#3. 22 https://www.globalpartnership.org/covid19?location=initial-view. 23 World Bank EdTech team internal calculations. 11 and the Gates Foundation. Most of the EdTech funding has been relatively small and catalytic aimed at developing global public goods, supporting EdTech startups or providing technical assistance; it often flows through NGOs or multilateral agencies. Given their increasing size and importance in development aid and in education financing, there could be scope for larger funding for EdTech and other innovations in education (see Section 4.4). Nongovernmental Organizations NGOs play a critical role in supporting the development and implementation of EdTech solutions, particularly in contexts where government capacity and resources are constrained, as many NGOs source their own external funds for the projects they support or implement. NGOs bring specialized expertise in key areas such as digital content development, teacher capacity building, infrastructure provision, and last-mile connectivity, with a strong focus on underserved populations, crisis-affected learners, and remote communities. Many organizations have developed innovative, cost-effective solutions—such as offline learning hubs, mobile-based platforms, and adaptive digital curricula—that can complement and enhance government-led initiatives. For example, Learning Equality, Can’t Wait to Learn, Learning Upgrade and Library for All develop localized digital curricula, while Curious Learning and OneBillion create gamified learning apps to enhance student engagement. Organizations such as Rumie and eKitabu supply low- cost devices with preloaded content, and UN High Commission for Refugees, through its Connectivity Centers works with Vodafone Foundation to expand internet access in remote schools. In crisis settings, War Child Holland and the Connected Learning in Crisis Consortium implement digital learning programs for displaced children, ensuring continuity in education during emergencies. By leveraging the technical knowledge, implementation capacity, and contextual experience of NGOs, governments can pilot, refine, and scale effective EdTech models within national education systems. Strengthening collaboration frameworks between governments and NGOs, including formalized partnerships, co- funding mechanisms, and coordinated implementation strategies, can enhance the efficiency, sustainability, and impact of EdTech investments. 2.1.4 Household Spending, Users’ Own Funds, and Cost-sharing Schemes In many countries the investment in EdTech is partially or entirely supported by households. Private schools, which tend to have higher investments in EdTech than public schools, are funded in many cases entirely by households (parents). Household and user funding is often used for device acquisition and software or content subscriptions. There are at least three major types of schemes for device acquisition in these cases: a) Bring Your Own Device (BYOD): BYOD allows students or teachers to bring their own technology devices to the classroom. This is the norm in many public universities in HICs and at private universities around the world. This approach leaves it to the student to find the money to acquire 12 their own device. BYOD schemes have been adopted by some K-12 schools in the United States, such as Allen Independent School District in Texas, 24 Forsyth County Schools District in Georgia, 25 Oak Hills Local School District in Ohio, and Mankato Public School System in Minnesota. BYOD can define or standardize the device to be acquired through “catalog.” Catalogs can be used to pre- negotiate discounts on devices to reduce the cost to students. The use of Catalogs also allows for easier maintenance and support by schools and governments because devices are standardized. BYOD schemes can raise equity concerns, because not all families can afford the necessary devices. b) Subsidy or Grant Schemes: To address equity concerns and increase the affordability of BYOD schemes, governments also use subsidies or grants schemes. Usually, the scheme offers a certain amount of money to students in the form of a voucher redeemable at selected participating device providers or through direct payments to selected telecommunication service providers. The amount of subsidy or grant could vary depending on the income of the parents. An example is the e-schools program in Portugal in 2007–08 which used subsidies to parents depending on income level and USAF. The World Bank has been supporting these schemes through several projects including DECIM in Madagascar 26 and, more recently, Mozambique Digital Acceleration Project. 27 c) Loan Schemes: Some governments arrange loan schemes through financial intermediaries including commercial banks, microfinance institutions, or government-owned education financing agencies, especially for higher education. These loan schemes often have flexible lending arrangements (e.g., no security required) and/or lower interest rates. Examples include Bank of Ceylon in Sri Lanka 28, South Africa’s National Student Financial Aid Scheme (NSFAS) 29 the World Bank–funded Rwanda Digital Acceleration Project, 30 which will facilitate the acquisition of devices by low-income families and could increase access to education for children from lower-income backgrounds, increasing the resilience of the education system; and the Ghana Student Loan Trust Fund, which offers the possibility of students borrowing not only to cover their school fees and other common university expenses but also to acquire a laptop (Figure 2.1). 31 24 allenisd.org. 25 www.forsyth.k12. 26 https://projects.worldbank.org/en/projects-operations/project-detail/P178701. 27 https://projects.worldbank.org/en/projects-operations/document-detail/P176459. 28 https://www.boc.lk/personal-banking/loans/education-loan/laptop-loan. 29 https://application-nsfas.org.za/how-to-apply-for-a-laptop-at-nsfas/. 30 https://projects.worldbank.org/en/projects-operations/project-detail/P173373. 31 https://www.sltf.gov.gh/faqs-for-sltf-laptop-smartphone-scheme/. 13 Figure 2.1: Ghana Student Loan Trust Fund Laptop Loan Promotion Source: Ghana Student Loan Trust Fund. 2.1.5 EdTech Bonds In recent years, school districts have issued bonds to finance digital technologies in classrooms. Traditionally, school districts in the United States sold bonds to investors for an increase in cash to fund capital assets such as new school buildings, with an agreement to pay back the money with interest. In 2008, the San Diego Unified School District received approval to sell bonds worth $2.1 billion. The school district allocated some of the funds to technology, buying more than 21,000 iPads (Diallo 2019). In Texas, a $1.3 billion bond was approved for one of the San Antonio school districts. About $90 million of it would pay for computers, high-speed internet, new audio systems and smartboards for public school classrooms (Herold 2020). Critics and school finance experts have questioned the use of long-term bonds to fund technological purchases which have a short lifespan and can quickly become outdated. Unless bonds are structured to have short payment terms, selling bonds to fund technology purchases might result in exorbitant costs in the long term (Diallo 2019). An alternative to normal bonds is the use of social impact bonds, which we will explore in detail in Section 4.6. 14 2.2 How Governments Procure EdTech Aside from sources of funding, it is also important to understand how governments spend this money and, particularly, how they buy EdTech. 2.2.1 Traditional Equipment, Software, and Content Acquisition Procurement Governments mostly acquire technology through competitive procurement processes. In exceptional cases where only one solution can fulfill the requirement, single sourcing is also considered. The typical procurement process is shown in Figure 2.2, with each government having its own nuances to these typical steps. Figure 2.2: Typical Public Procurement Process Source: World Bank. One of the first and most critical stages is identifying needs and defining requirements for the EdTech solution. This step should ideally involve evaluation of alternative approaches to meet the needs and requirements; and it is also critical to conduct market research to determine the amount of funds required. Unfortunately, this step is often glossed over, and this is where most challenges stem from: investments that under-deliver or lead to waste of scarce resources. More about how government focuses mostly on initial acquisition cost, rather than considering total cost of ownership is discussed in Section 2.3.3. 15 2.2.2 Public-Private Partnerships The World Bank’s EdTech principle—“engage the ecosystem”—acknowledges the role that the private sector can play in EdTech and encourages ministries of education to consider private sector partnerships as well as partnerships with other stakeholders outside the education sector. Nevertheless, private sector participation per se does not equate to a PPP. Consider the definition provided by the PPP Online Reference Guide: 32 “A long-term contract between a private party and a government entity, for providing a public asset or service, in which the private party bears significant risk and management responsibility, and remuneration is linked to performance.” Under this definition, many EdTech programs that involve the private sector in designing, building, deploying, financing, managing, and operation will not meet this PPP definitions. Therefore “true” EdTech PPPs that involve long-term contracts, a focus on outputs, outcomes, or performance and not on inputs, and that involve significant private sector risk, particularly pre- financing, may be rare in EdTech financing. Indeed, an evaluation of EdTech PPPs in South Asia found that many partnerships with significant private sector involvement and financing would not qualify as “true” PPPs despite being labelled as such and are often supplier-customer relationships, service contracts, private financing arrangements, or philanthropic efforts (Butcher, Hoosen, and Naidoo 2015). Nevertheless, private sector participation, especially in financing, design-and-build, operating and managing, or management outsource contracts could be loosely considered PPPs. Of interest are partnerships that involve “service delivery,” such as charter schools in the United States deploying EdTech (Robinson 2014), New Globe in Edo State Nigeria, 33 Online Program Managers, and EdTech PPPs in higher education, a market estimated at $7 billion and expected to double by 2025 (HolonIQ 2020). PPPs may be an underutilized form of EdTech financing, and we consider this option in more detail in Section 3.1.4. 2.2.3 Negotiated Bulk Discount Agreements Governments often seek economies of scale when it comes to EdTech, leveraging the size of their student and teacher populations. Though economies of scale are more difficult to achieve in EdTech equipment due to manufacturing and transportation costs, other types of education technology present opportunities for cost reduction through scale. For example, internet access, software, digital learning 32 The PPP Online Reference Guide is a joint product of the Asian Development Bank, European Bank for Reconstruction and Development, Global Infrastructure Hub, the Inter-American Development Bank, Islamic Development Bank, Organisation for Economic Co-operation and Development, United Nations Economic Commission for Europe, United Nations Economic and Social Commission for Asia and the Pacific, and the World Bank Group (World Bank Group 2017). Available at https://ppp.worldbank.org/public-private- partnership/PPP_Online_Reference_Guide. 33 New Globe, EdoBEST 2.0 reform: A new chapter for Edo State Universal Basic Education, available at https://newglobe.education/edobest-2-0-reform-a-new-chapter-for-edo-state-universal-basic-education/. 16 platforms, and digital learning content have low marginal costs per incremental user, making it more cost-effective for governments to pursue negotiated bulk discounts. This is often the case with journals and digital libraries in higher education and with software purchases and subscriptions at all levels of the education sector. One example of this approach is Portugal’s b-On online library of scientific publications, which was made available to every tertiary education student, teacher, and researcher in the country in 2003. 34 In response, many digital content and software suppliers have designed special pricing and discounts for education, usually pegged to a minimum purchase volume or special authorization, such as Microsoft with the Shape the Future Program 35 which, under request from the Ministry of Education can provide significant discounts for the operating system or free office products for students when licenses are acquired for teachers. Many governments are unaware of these opportunities and simply purchase licenses at retail prices. Another area that benefits from this approach is connectivity. The higher education sector collectively negotiates or tenders for connectivity through National Research and Education Networks. Education institutions have also come together to create common open solutions such as Eduroam, 36 which started in Europe but has since expanded to allow students to access Wi-Fi networks in universities all over the world. Bundled service agreements are another approach that allows governments, schools, and individuals to purchase technology infrastructure, services, and equipment in package deals at discounted rates instead of making separate purchases. For instance, the US Federal Communications Commission’s “Connect to Compete” program, which was initiated through partnerships between computer manufacturers and cable providers, provides affordable technology bundles to families with children who qualify for reduced lunch programs. 37 Governments and educational institutions can also save costs on technology through bundle internet access service subscriptions from telecommunications companies. Even negotiated discounts are sometimes arrived at through a competitive procurement process that allows for negotiations and approaches like “best and final offer,” 38 “reverse auction,” or framework agreements. 39 34 https://www.b-on.pt/en/. 35 https://www.microsoft.com/en-us/education/products/windows. 36 https://eduroam.org/. 37 https://www.fcc.gov/news-events/blog/2011/11/10/low-cost-broadband-and-computers-students-and-families. 38 See for example World Bank procurement guidance on Negotiations, Best and Final Offers (World Bank 2018b); available at https://thedocs.worldbank.org/en/doc/663621519334519385- 0290022018/original/ProcurementGuidanceNegotiationandBestFinalOffer.pdf. 39 See example of guidance on framework agreement by the World Bank (World Bank 2018a); available at https://thedocs.worldbank.org/en/doc/965231529950446871- 0290022018/original/GuidanceFrameworkAgreementsJune252018.pdf. 17 2.3 Current Challenges with Funding and Acquisition of EdTech Previous sections mapped and elaborated on the common practices of governments in funding and buying EdTech. In what follows are the main challenges that governments encounter in the current funding and buying approaches. These are the challenges that innovative financing can help mitigate. 2.3.1 Limited Funding: Inheriting the Resource Constraints of Education Financing The fact that most EdTech financing still relies on public funds, typically the ministry of education budget, presents a major challenge. As we saw in Chapter 1, education budgets in LMICs are constrained and are not large enough to provide for EdTech. There is a need to diversify the sources of funding for EdTech and to tap into underused sources. 2.3.2 Lacking Strategy: Funding EdTech Without a Strategic Plan When funds for EdTech do exist, they are often not allocated based on a specific plan, earmarked for concrete predefined activities, or segregated from other expenses, so they tend to be inconsistent and deprioritized compared to other needs such as salaries or current expenses. Governments must develop Edtech integration policies and plans and establish funding for their execution, managed autonomously from the rest of the budget allocated to education-related expenses. 2.3.3 Poor Budgeting: Considering EdTech CAPEX not OPEX Another challenge that complicates EdTech financing is costing and budgeting for EdTech only as capital expenditures (CAPEX) or one-off costs, and overlooking the operational expenses, the OPEX. Countries tend to focus on the initial cost, which corresponds to less than half of the total budget (i.e., purchasing of hardware and software and upgrading infrastructure), and they fail to factor in the rest, which are the recurrent and hidden costs related to user training, content, maintenance and support, and even replacement or upgrade costs as technology quickly becomes obsolete. When procuring, price becomes the dominant decision criterion in tenders, instead of product suitability and quality, performance and durability, vendor maintenance capabilities, user support, and others. In addition, because up-front budgeting is poorly executed, many countries do not source enough funds to maintain and sustain the technology. Poor budgeting also leads countries to not consider and evaluate alternatives. The solution is to adopt a “total cost of ownership” 40 approach that we explore in detail further in this guide (see Section 3.2.2). 40 See https://www.cosn.org/tco/. 18 2.3.4 Poor Procurement: Lacking Efficiency in Procurement of EdTech Another challenge in the initial stages of procurement is defining technical specifications. Poorly defined specifications and requirements beyond specification such as support and maintenance in country, lead to poor offers and make it difficult to evaluate the most advantageous and responsive offer. There have been several instances of failed procurement due to poorly written Request for Proposals (RFPs), incomplete requirements (especially around support and maintenance or existence of spare parts), unrealistic cost expectations, poor-quality offers, or ineligibility of the selected bidders. To avoid these issues, it is important to have adequate procurement planning and stringent criteria for bidders and to ensure that the technology meets the intended use and is capable of being operated and maintained adequately during its lifespan (For more procurement best practices, see Section 3.2.3 and onward). In addition, though EdTech buying can benefit from economies of scale, too many countries still rely on decentralization through individual schools or school districts and other subnational administrative bodies to make buying decisions. The reason may be devolved or federated education structures and funding or an attempt to grant greater autonomy to schools. Apart from losing out on economies of scale, this approach also leads to inefficiencies in acquisition, poor definitions of requirements (again), and expensive maintenance and support structures. In short, more money will be spent on less or, in the worst case, incorrect or ineffective technology is deployed. Furthermore, many countries still follow outdated practices, such as charging potential bidders a fee to obtain a copy of the Terms of Reference, rather than making these documents as publicly accessible as possible to boost interest and competition. Another harmful practice—particularly in LMICs with often underdeveloped IT sectors—is the procurement of “turn-key” solutions that bundle too many elements into a single lot. Examples include combining renovations (civil works), networking equipment, computing and software, projection and sound systems, and specialized science laboratory equipment. To improve procurement outcomes and secure the best offers and pricing, each of these distinct areas of EdTech and related services should be procured independently as separate tenders—not as separate lots within the same tender. This approach helps companies best positioned in each field clearly understand what is being procured and submit competitive bids aligned with their expertise. 2.3.5 Poor EdTech Practice: Not Considering Return on Investment and Impact Although not directly tied to budgeting or procurement, poor EdTech practices lead to wasted education funds and prevent the optimization of existing budgets. A common mistake is introducing technology into the curriculum without a strategic plan for its effective use. At the classroom level, EdTech is sometimes treated as a replacement for traditional learning tools rather than an integrated component that enhances teaching and learning (Carter, Greenberg, and Walker 2017; Bryant et al. 2020). Additionally, without structured implementation strategies, ministries may invest in learning 19 content without ensuring that it is aligned with curriculum objectives. Evidence shows that students perform better when digital learning tools are combined with teacher-led instruction (Mohammed 2019; Bryant et al. 2020), yet many education systems overlook the importance of training and support. Countries that procure EdTech without equipping teachers with the skills and time to integrate it effectively risk underutilizing or misusing these resources. Many EdTech investments are questionable with many large purchases having a small or negative impact on learning outcomes (Davis 2019). The concept of the “locked computer lab” or computers that are still packed in boxes is familiar to anyone who has visited schools in LMICs with large EdTech deployments. A survey of educators in the United States found that only 15 percent of financing is spent on tools that are “a good fit and implemented correctly” (Brown 2019). Providing access is a much easier task than ensuring that the EdTech is used as intended. Related to teacher training that lacks the consideration of return on investment is the “per-diem economy” prevalent in LMICs. Training programs are often structured around daily allowances (per diems) for participants, shifting the focus from skill development to monetary gain. As a result, attendance is driven more by financial incentives than by a commitment to improving teaching. Additionally, training programs are frequently designed as short workshops rather than structured as sustained, continuous learning experiences that lead to pedagogical improvements. This approach limits the depth of training, lacks accountability and follow-up measures, and ultimately fails to enhance classroom instruction in a meaningful way. A potential alternative to the per diem–driven teacher training is covered in Section 3.1.5. 2.3.6 Poor EdTech Practice: Failing to Keep up with Market Changes Education decision makers often struggle to keep pace with the rapid changes in the technology market, despite their significant impact on procurement strategies, funding sources, and budget optimization. The technology landscape evolves constantly, with new solutions emerging daily and traditional business models being frequently disrupted. One notable example is the rise of cloud services, which has transformed the cost structure of EdTech-supported initiatives. In the past, governments faced significant financial and logistical barriers, such as securing scarce resources to build data centers and hiring specialized staff. Cloud services have lowered these barriers by eliminating the need for large upfront investments, enabling more scalable and accessible digital education solutions. However, this shift also necessitates a change in budgeting approaches, moving from capital expenditures (CAPEX) to operational expenditures (OPEX) to better align with the evolving financial models of technology procurement (Box 2.1). 20 Box 2.1: Challenges in Financing Artificial Intelligence– the Most Recent Novelty Procurement challenges—limited funding, lacking strategy, poor budgeting and procurement practices, as well as poor basic EdTech practices—are all among the difficulties of financing related to artificial intelligence (AI). Ministries of education face significant challenges in procuring AI-based solutions due to complexities in defining clear specifications and estimating sustainable cost models. AI solutions often require adaptable, data- driven systems, yet procurement processes typically rely on rigid technical requirements and budgets that may not fully capture the evolving nature of AI technologies. Additionally, cost models for AI services—often subscription-based or consumption-driven—may not scale efficiently for large populations of teachers and students, leading to unpredictable expenses or inadequate funding allocations. Ministries of education should adopt more flexible and adaptive procurement and budgeting frameworks. This includes using subscription-based or “as-a-service” models that align better with the evolving cost structures of AI, and budgeting for operational rather than one-time capital expenses. Governments can also begin with small-scale pilots to better understand cost drivers, followed by phased scaling that is tied to clear performance metrics. Moreover, starting with Requests for Information before moving to the procurement process can help decision makers better define technical requirements and anticipate total cost of ownership. To ensure sustainability and mitigate risks, partnerships with private sector providers and donor-backed guarantee schemes can reduce upfront costs while promoting innovation. Source: Authors’ analysis, based on own experience. 2.4 The Need for Innovative EdTech Financing The challenges outlined in this section hinder the efficient and effective financing and acquisition of technology. Innovative financing approaches can contribute to solving most of these challenges. Each of these approaches will be explored in the next chapters: 1) Stretching the existing budget to do more. Countries need to learn how to better spend what they currently have available. This may mean improving budgeting and procurement, as well as focusing on maximizing impact by leading with results and performance. 2) Identifying new sources of EdTech funding or increasing funding from underutilized sources. 21 3. Stretching Existing EdTech Budgets There are, largely, two ways to maximize existing budget and ensure impact: doing due diligence by practicing the five EdTech principles recommended by the World Bank (Hawkins et al.), and improving budgeting and procurement practices. Without this combined approach, even if budgeting and procurement practices are improved, it will be difficult to generate meaningful outcomes. 3.1 Practicing EdTech Principles Making better use of existing budget begins by practicing the following five principles when investing in EdTech. 3.1.1 Ask Why It pays in the short and long term to start by asking what challenge is being solved and how EdTech in general or which EdTech solution will address this challenge. If they begin with clarity about the problem to be addressed, governments are better able to define their requirements and choose among EdTech options the one that offers best value for money. The education objective to be met also determines what to buy—something that governments seldom think about. This exercise must be done in detail, considering the actual daily use of technology by teachers and students in the classroom (Antunes de Carvalho 2022), rather than as a superficial generic exercise which often leads to incorrect technical decisions. 3.1.2 For All The “For All” principle advocates for ensuring that all learners, regardless of their background, socioeconomic status, or geographical location, can benefit from EdTech solutions. One option is to consider leveraging technology that may already be in the hands of users. For example, many teachers and university students in LMICs own a personal mobile device, which can be leveraged for educational purposes, such as accessing e-learning courses or AI tutors through smartphones. Although the small screen size and limited typing capabilities of smartphones may not be ideal for certain tasks, they still offer a means of accessing EdTech-supported education in areas where other options are limited. 41 In addition to mobile devices, televisions and portable radio receivers are also a widely available and cost-effective way to deliver broadcast lessons to students both in the classroom and at home, especially when teachers are unavailable or when students are unable to attend physical classes. This decision making has to be carefully thought through, because in some cases, the technologies on hand 41 might not necessarily be optimal for the intended results. It is often quite outdated and not manageable by the ministry, which means that effective maintenance, technical support and monitoring of its use are not available. 22 Leveraging these existing technologies, as well as allowing teachers to use their personal devices in the classroom, can be cost-effective and provide immediate access to educational resources. “For all” does not have to mean “one size fits all” however governments often face a dilemma: they either adopt solutions that are difficult to scale across all beneficiaries or settle for lower-common- denominator options that have less impact. For example, if some schools have reliable electricity and connectivity while others lack both, ministries should adopt solutions tailored to each context. This means investing in technologies that deliver the highest return on investment, given the specific circumstances of different schools, rather than applying a uniform approach (as in purchasing the same devices or other technologies for all students, teachers or schools). However, it is important to note that leveraging existing technology is only one aspect of a comprehensive strategy for education technology. Adequate infrastructure, such as radio or TV broadcasting, cellular towers, and back-end infrastructure such as cloud data centers, must also be in place to support digital content delivery. Additionally, investment in the curation of existing or development of new digital content is critical to ensure that students have access to meaningful learning experiences on these devices. More on this holistic approach to EdTech investment is covered in Section 3.1.5. 3.1.3 Be Data-driven The “Be data-driven” principle emphasizes the importance of using data to inform decision making, monitor progress, and improve the effectiveness of EdTech initiatives. This principle encourages the collection, analysis, and use of data to guide program development, assess impact, and optimize the use of technology in education. At the beginning of the EdTech intervention, it is paramount to conduct a readiness assessment of the environment in which the EdTech will be deployed and used. Readiness assessments can be used to identify gaps in investment, determining binding constraints such as space for a computer lab or lack of electricity or connectivity, to evaluate existing technology initiatives and to provide a baseline which can be used for later evaluations. The World Bank has developed a comprehensive EdTech Readiness Index 42 with several Global Public Goods, which countries can adopt or adapt to their own needs. Once the EdTech environment has been identified, it is also important to pilot the intervention before the full scaling. Although “pilots” have been abused as a solution to limited budgets, there are situations where it is advisable to undertake a pilot or a proof of concept before deciding to scale. It is also important to distinguish between a proof of concept and a pilot. A proof of concept tests the feasibility of a specific ICT solution in a controlled environment, focusing on validating its technical and functional 42 World Bank, EdTech Readiness Index available at https://documents1.worldbank.org/curated/en/811011628250703800/pdf/World-Bank-EdTech-Readiness-Index- ETRI.pdf. 23 viability; in contrast, a pilot involves implementing a solution—whose technical and functional viability has already been confirmed—on a small scale in real educational settings to learn what it takes to bring it to much larger population. The goal of the pilot is to assess its impact, scalability, and practical challenges before proceeding with full deployment. Either can be beneficial when: • There is a need to evaluate and compare different EdTech solutions or approaches for addressing a particular education goal. • There is a need to evaluate a new innovative technology or EdTech approach for which efficacy data are not yet available. • As a part of a design and to build the procurement process, the prototype must be tested, how it works in the real world needs to be understood. • Dealing with solutions from start-ups. • There is a need to understand the total cost of ownership of a given solution. • Assessing the scalability of a solution as well as its limitations or requirements. Proofs-of-concept and pilot deployments should be run in a representative sample of contexts, for example, rural versus urban, poorly resourced versus well-resourced settings, or in locations with low or no connectivity or power. They can help governments make decisions on what to fund and how it will work. However, they must be designed starting with the education goal to be achieved, considering a holistic approach, taking total cost of ownership into consideration, with a clear and defined monitoring and evaluation framework, and in a pre-established timeframe. The EdTech world is littered with small-scale deployments under the names of proof of concept or pilot that lack clear objectives, research on impact, pre-defined timeframes, and intent to be implemented at scale. 3.1.4 Engage the Ecosystem The “Engage the ecosystem” principle recognizes that successful EdTech interventions require collaboration across various sectors, including governments, private sector companies, NGOs, teachers, students, and local communities. PPPs in the EdTech sector offer a compelling opportunity to leverage private sector investment and expertise in the delivery of education technology solutions. In countries where public funding of private education is common, the introduction of PPP models has enabled a wider range of business models to emerge, leading to more flexible options for parents and students. There is scope to adopt long-term Build-Own-Operate-Transfer (BOOT) or Finance-Design-Build- Operate models and their variations to solve issues such as reducing the need for large up-front budgets, complex maintenance and support structures, and deployment and management structures. PPP models can provide a viable alternative to traditional government-led procurement models, offering increased flexibility and private sector investment, along with the potential to achieve greater economies of scale, improved quality, and innovation in the delivery of edtech solutions. 24 One example is to outsource the management and operation of the EdTech solution. Governments often lack the staff and capacity to oversee, manage and operate complex EdTech systems or large-scale deployments. This is a perfect job for the private sector. The outsourcing of the management of EdTech has become increasingly popular in HICs 43 in recent years as educational institutions and ministries of education struggle to maintain and support the technology they have invested in. One example of this is in the Middle East, where Creative Technology Solutions has provided device management services to private schools such as GEMS Schools and Taaleem Group, as well as government entities such as the Abu Dhabi Department of Education and Knowledge. Outsourcing of management of EdTech has not yet taken root in LMICs except for a few notable examples such as New Globe in Nigeria and Liberia, although even then it not recognized as outsourced EdTech per se. The success of PPP models in the EdTech sector is highly dependent on effective collaboration and coordination between the public and private partners, and on the development of transparent and efficient procurement processes. Additionally, the potential risks associated with PPP models, such as a lack of accountability and transparency from both sides, must be carefully managed to ensure that the interests of all stakeholders are protected. Ministries must ensure that private providers deliver the agreed results and must also ensure provision of funds to prevent disruption of the provision of those services due to lack or delay of payments. Further, it should be noted that large or global private sector players may not have the risk appetite to invest in EdTech PPPs, especially in LICs. PPPs in such contexts could be made more attractive by combining them with other financing mechanisms such as donor payment guarantee funds. An alternative is to use donor or private foundation funding to develop an ecosystem of local “Education Solution Providers” who can be nurtured to enter PPPs with governments, as is the case of Mastercard Foundation Center for Innovative Teaching and Learning who has been identifying and nurturing promising EdTech companies in different part of Africa 44. These local providers could also be linked with larger EdTech firms to act as their local resellers or system integrators. In conclusion, innovative PPP models offer a promising approach to the procurement and financing of EdTech solutions in developing countries, providing a platform for the private sector to invest in and support the delivery of quality education services. However, careful consideration must be given to the design and implementation of these models to ensure that they deliver the desired outcomes while also ensuring a win-win situation for private companies and governments. 43 Another popular option in high-income countries is to manage all EdTech-related policies and programs through a national EdTech agency (OECD 2023): https://www.oecd.org/en/publications/2023/12/oecd-digital-education- outlook-2023_c827b81a/full-report/the-role-of-support-organisations-in-implementing-digital-education- policies_3bbd88bb.html#chapter-d1e50989-86a1745621. 44 https://mastercardfdn.org/en/what-we-do/our-programs/centre-for-innovative-teaching-and-learning/. 25 3.1.5 Empower teachers The return on EdTech investment lies in its effective usage, not in access only, and the usage heavily depends on, among other factors, continuously empowered, trained, and supported teachers and school leaders. Many teachers, however, lack the digital skills and pedagogical strategies needed to teach digital skills or leverage technology into teaching. This gap in teacher preparedness originates, largely, in a historical lack of emphasis on teacher digital skills within many educational systems (Hennessy et al. 2016). Having technical skills alone is insufficient; teachers must know how to incorporate digital tools into their teaching practices to create engaging and meaningful learning experiences for students. This includes pedagogical skills, such as checking for understanding, providing personalized feedback, and assessing student learning. To ensure that existing teacher professional development opportunities deliver meaningful outcomes for student learning, it is essential to shift away from the current per diem–driven model and strengthen career development through performance-based incentives. As highlighted in Section 2.3.4, the current approach prioritizes attendance over learning, with teachers often participating in training primarily for the financial benefit rather than genuine professional development. This can result in passive engagement and minimal knowledge retention, undermining the effectiveness of teacher professional development. Alternative models—such as school-based training, online learning platforms, or peer mentoring programs—are recommended to ensure that resources are directed toward sustainable capacity-building efforts that make an impact, rather than attendance-based incentives. Clear incentives should be offered, based on the application of the learning that contributes to career progression, salary increase, and continuous professional development opportunities. Teacher capacity building, however, is only one piece of the puzzle that drives the usage of EdTech. The integration of technology in education also depends on supportive management systems, policies, and pedagogy; on having curriculum-aligned and engaging digital content; on reliable connectivity and power; on effective maintenance and support processes and structures; on security and privacy; and on being able to manage and upgrade devices and software when needed. These pieces combined make investments in EdTech quite complex (Figure 3.1). EdTech budgets therefore need to take all these other critical factors into account. Because of all this complexity, decisions on what to buy and how much to buy are critical and should be led by educational objectives (Section 3.1.1) and evaluation (Section 3.1.3) of different EdTech solutions for cost effectiveness. Governments should plan their EdTech investments comprehensively, starting by defining a theory of change and publishing an EdTech policy and respective action plan with clear goals and objectives (see the Digital Skills Knowledge Pack for step-by-step guidelines (World Bank 2023) 45). A gradual and holistic approach is needed for the successful integration of technology in education, combining hardware, software, content, and training, supported by changes in curriculum, pedagogy, and policies. Paying 45 https://documents.worldbank.org/en/publication/documents- reports/documentdetail/099118004132238882/p1742520615db3006094220dcbb0af52257. 26 attention to organizational capabilities is also important: limited capacity to effectively plan for and use the funding made available can lead to low absorption of funds and poor program deployment. It is also important to address governance issues—such as competition between government bodies and lack of transparency and accountability in funding usage—that can create inefficiencies. Figure 3.1: Consider a Holistic Approach in Planning for Edtech Investments Source: Authors’ own elaboration. 3.2 Budgeting and Procurement: Recommended Practices Following solid budgeting and procurement practices will ensure that EdTech investments deliver meaningful learning outcomes, maximize value for money, and promote sustainability. 3.2.1 Begin with Request for Information Using a Request for Information to define the scope of a Request for Proposal improves decision making and budgeting. Given the rapid evolution of technology, government officials responsible for defining procurement requirements may not always have access to the latest market developments. This challenge is particularly evident in emerging fields such as AI, where the components, implementation requirements, and associated costs remain unfamiliar to many decision makers. An effective way to address the knowledge gap is to begin with an RFI —a process that invites market participants to present information about solutions to specific problems. By engaging with industry stakeholders at an early stage, governments can gain insights into available technologies, assess 27 potential implementation approaches, and refine the terms of an eventual Request for Proposal (RFP). Beyond informing the procurement strategy, an RFI also serves as a valuable market scan, helping to identify potential vendors for future bidding processes. Additionally, it enhances budgeting accuracy, because bidders are typically required to provide indicative pricing, which is particularly useful when navigating complex licensing structures. By leveraging the RFI process, ministries can make more informed decisions, ensuring that RFPs are well structured and aligned with both market realities and policy objectives. 3.2.2 Budget Better with Total Cost of Ownership Model As discussed earlier, governments often tend to budget for the initial costs of EdTech and do not consider a holistic approach to acquiring and using EdTech. EdTech has significant ongoing costs and ignoring them leads to serious long-term sustainability issues and limits usage. The solution is for governments to adopt a Total Cost of Ownership (TCO) model. TCO is a comprehensive approach for estimating the costs involved in acquiring, operating, and maintaining technology developed by Gartner Inc. 46 and further detailed in the World Bank Devices for Education Knowledge Pack (Antunes de Carvalho 2023). Table 3.1 shows examples of EdTech costs of ownership. Table 3.1: Examples of Total Cost of Ownership Costs Acquisition Costs Operating Costs Sustainability costs - Initial purchase cost - Maintenance - Upgrade - Taxes (can be high in LMICs) - Technical support - Replacement - Financing costs (interests) - Connectivity costs - Disposal/ e-waste - Transportation - Electricity - Warranty - Security - Installation and testing - Insurance - Initial training - Continuous user training - Monitoring and evaluation Source: Antunes de Carvalho (2023). Note: LMIC = lower-middle-income country. The initial costs represent just a small portion of the total costs, with operating and sustainability costs being the largest cost. The operations and sustainability budgets should account for between 50 percent and 100 percent of the acquisition costs for every 5–6 years of device or software use for maintenance and support costs (see Table 3.2). The total cost of ownership model is useful for estimating more realistic budgets in EdTech investments, but its use can and should go much further, including: 46 https://www.gartner.com/en/documents/487157. 28 • Identifying and accounting for “hidden” costs. A good example is open-source software. While this software may have no license costs, it can come with significant customization and adoption costs (Trucano 2015). • Identifying cost savings. With a comprehensive total cost of ownership calculation, governments can analyze areas where costs could be saved, for example through economies of scale or automation of processes for maintenance and support or changing teacher training from purely face-to-face to a blended model. • Creating realistic annual budgets by considering all the upfront and recurring costs (For more see Section 3.2.5). • Evaluating and selecting from EdTech options based on costs and benefits. • Selecting Offers and negotiating with suppliers during procurement. Undertaking a total cost of ownership assessment or requiring Offers to show the total cost of their offers can help in the evaluation of offers and in negotiating with bidders. Applying the Total Cost of Ownership Model Let’s suppose you need to purchase 1,000 devices to deploy in some schools; what device would you choose? Without applying the total cost of ownership model, your immediate reaction would be to opt for the cheapest. You might consider another after taking into account the lifespan, maintenance, updates, performance capabilities, etc. As seen in Table 3.2, the annualized cost per device between an entry-level tablet, a rugged tablet, and a rugged entry-level laptop is extremely similar despite the significant up-front cost differences. So, a client who chooses an entry-level tablet because of its low purchase price will miss out on providing a laptop that offers more functionality to its users at a similar overall cost, simply because of poor budgeting. By embedding lifecycle management into EdTech procurement strategies, governments can extend the longevity of their investments, reduce total cost of ownership, and ensure that digital learning environments remain reliable and effective for students and teachers alike. The expected lifespan of consumer-grade technology products, such as smartphones, tablets, and laptops, varies greatly. Smartphones typically have a lifespan of up to three years, 47 while tablets can last up to five years 48 (usually two to three years for low-spec models), and laptops up to seven years (usually three to five years for low-spec models 49). This influences the TCO and can influence the selection of the device based on TCO rather than initial cost. Operating systems, such as Google's Android, Chrome, Microsoft Windows, and Apple Mac OS, also see frequent security and functional updates, with new versions released annually for some and every two to six years for others. 47 https://www.strategyanalytics.com/strategy-analytics/blogs/devices/smartphones/smart- phones/2021/12/17/smartphone-replacement-cycle-will-start-recovering-from-2022-onwards. 48 https://www.statista.com/statistics/267473/average-tablet-life/. 49 https://www.hp.com/in-en/shop/tech-takes/post/average-computer-lifespan. 29 Table 3.2: Example of Calculations over 10 Years of Schooling Cost at time of Purchase Ruggedized mainstream Entry-Level Ruggedized Item Entry-Level Tablets Tablets Laptops/Chromebook No. of devices 1000 1000 1000 Cost per item $100 $200 $300 Lifespan 2 years 3.3 years 5 years % of devices repaired per 20% 10% 10% year Cost of repair (parts and $50 $50 $50 labor) % of damaged devices 10% 2% 2% replaced per year Cost over 10 years Upfront costs 1000x100x5 = $500K 1000x200x3 = $600K 1000x300x2= $600K Maintenance costs 200x50x10= 100K 100x50x10= 50K 100x50x10= 50K Replacement costs 100x100x10 = 100K 20x200x10= 40K 20x300x10= 60K Cost per device (over 10 700K / 1000 = $700 690K / 1000 = $690 710K / 1000 = $710 years) Cost per device per year 70$ 69$ 71$ Source: Authors’ own estimates. The lifespans of devices and operating systems are influenced by several factors, including maintenance practices, accounting practices, end-of-life updates, and performance capabilities. For example, Android devices’ security upgrades are commonly provided for two to three years, 50 after which they are no longer safe to use, while Microsoft Windows is supported for approximately 10 years. The cost of replacing devices with newer and higher-performance models should also be weighed against the cost of repair or upgrades. Additionally, the lifespan of mobile devices, such as smartphones and tablets, may be shortened by battery degradation and user-induced damage, which is not always covered by warranties. 50 https://security.samsungmobile.com/workScope.smsb https://support.google.com/nexus/answer/4457705?hl=en#zippy=%2Cpixel-pixel-pro-phones. 30 Servers, LCD TVs, and LED video projectors can have a relatively long lifespan of five to eight years, as long as they are maintained in proper environmental conditions. The replacement of servers is often driven by the need for improved performance and energy efficiency, as well as by hardware degradation. Software systems, such as education management information systems and learning management systems, also require frequent updates and fixes, and may need to be fully replaced if they become difficult to manage, obsolete, or unable to expand to add new functionalities over time. Choosing technology based on the total expected costs over its expected usage time is important, to ensure that it lasts and performs as expected. In conclusion, all technology requires maintenance, whether due to software updates, hardware failures, or user-induced damage. Careful consideration of the expected lifespan, cost of maintenance, and performance capabilities should inform the decision-making process for choosing technology. 3.2.3 Integrate Updates and Support Services in Procurement Putting the total cost of ownership model into practice and integrating updates and support services into EdTech procurement ensure long-term sustainability and avoids costly disruptions. One of the most common challenges in EdTech procurement is the failure to take into account the costs of ongoing maintenance, software updates, and technical support. Many governments focus primarily on the initial acquisition of hardware and software, without allocating a dedicated budget for long-term upkeep. This leads to maintenance gaps, where devices become unusable due to software incompatibility, security vulnerabilities, or lack of repairs and software becoming outdated—resulting in premature obsolescence and wasted investments. A more effective approach is to bundle updates, technical support, and repair services as an integral part of the procurement contract, especially for the datacenter and networking equipment. This ensures that hardware remains functional, software remains up to date, and teachers and students continue to benefit from the technology over its full lifecycle. For smaller devices such as computers or video projectors the procurement contract should specify clear warranty conditions (i.e., number of years, for which parts, and for which services) as well as the assurance from the manufacturers that they have authorized service centers in-country that can provide repairs with original spare parts outside of warranty coverage, which will correspond to the majority of problems during the lifetime of the devices. Additionally, structured service agreements, in which governments negotiate for repair services costs upfront, can help distribute costs more predictably over time, avoiding the common occurrence in which devices are rendered non-functional due to the lack of a separate maintenance budget. 31 3.2.4 Annualize Costs and Stagger Investments to Improve Budget Stability and Sustainability in Government EdTech Procurement Following with the total cost of ownership model, governments should prioritize annualized cost analysis over focusing solely on up-front expenditures. However, even when long-term costs are being considered, the traditional procurement model—where large investments (e.g., purchasing computers) are made in a single year, followed by several years of minimal or no investment—creates significant cash flow challenges. This cyclical spending pattern leads to budgetary spikes, where high capital expenditures in certain years are followed by periods of technological stagnation, only to require another major investment when existing infrastructure becomes obsolete. A more sustainable and financially manageable approach is to adopt rolling procurement cycles, a model widely used in the private sector. Instead of making bulk purchases every few years, governments can spread investments over a four- to five-year period, consistently allocating funds to refresh 20–25 percent of the total ICT infrastructure annually. This method not only ensures that technological upgrades occur in a continuous and predictable manner but also improves budget stability by avoiding sudden financial shocks. Beyond its financial benefits, this approach streamlines logistics and deployment: replacing or upgrading only 20 percent of the installed base each year reduces operational complexity and ensures a more manageable rollout. Additionally, governments can choose to implement this strategy by region or by grade level, progressively modernizing specific areas of the country or targeting specific student cohorts each year. By adopting a structured, phased approach to ICT investment, governments can maintain technological relevance, improve budget predictability, and enhance overall efficiency in deployment and asset management. 3.2.5 Purchase Based on Cost-benefit Analysis EdTech can be useful in solving many educational challenges, but it pays to focus on the most pressing challenges and on determining where to get the most impact for the money. Prioritization can also determine how much to buy. Broadly, EdTech investments can target students, teachers, or the central system. Providing teachers with structured lesson plans on devices, a proven approach to improving instruction, can be more cost-effective than providing devices to all students, because there are fewer teachers than students. Where students already have access to devices through a school computer lab or at home, investing in a centralized adaptive learning system may generate higher learning gains than purchasing more devices. Alternatively, system-level investments, such as digitizing data collection and enhancing data analytics, can significantly improve education outcomes by tracking student performance and identifying learning gaps — all without requiring widespread device distribution. 32 In cases where developing students’ digital skills is the priority, ensuring access to computers is crucial. However, the deployment model has a major cost implication. Computer labs or shared 1:1 models (where devices are shared between students) are often more cost-effective than full 1:1 models (where every student receives their own device). Carefully considering these trade-offs can significantly reduce costs while maximizing learning impact. For procuring connectivity, a more cost-effective strategy could be to zero-rate educational content through partnerships with telecom operators. Zero-rating means that Internet Service Providers waive data charges when users access specific educational websites, such as ministry of education platforms, online learning resources, or digital content repositories. Compared to connecting schools to the internet, zero-rating offers several cost and operational advantages: • Zero infrastructure costs: Zero-rating leverages existing mobile networks, eliminating the need for physical infrastructure such as fiber optic cables, routers, modems, and ongoing bandwidth and maintenance costs. • Faster deployment: Once an agreement is reached with telecom operators, zero-rating can be deployed almost immediately, whereas connecting schools often involves lengthy infrastructure development. • Wider access beyond school walls: Zero-rating enables students to access educational content from any location, at any time, promoting continuous learning beyond school hours. In contrast, school connectivity confines access to school premises, limiting learning opportunities after school. • Greater control over learning: With zero-rating, governments can negotiate data-free access to specific educational content, ensuring that students engage with curriculum-aligned resources. In contrast, providing full internet access in schools often poses challenges in controlling non- educational usage. Given these advantages, zero-rating educational content can be a cost-effective and scalable solution to expand access to learning resources, especially in contexts where school connectivity infrastructure is limited or costly to deploy. 3.2.6 Aggregate Purchases to Take Advantage of Volume Discounts Centralized procurement can lead to significant cost savings through volume or bulk discounts, particularly for digital content and software purchases, but also for devices and connectivity. Standardization plays a crucial role in maximizing these benefits, ensuring interoperability, and reducing the cost of maintenance and support. Managing multiple standards can be expensive and inefficient, making standardization essential across software, content, and hardware. Even in cases where school districts or education budgets are decentralized, collaboration through buying consortia among school districts, universities, or local administration units can help achieve better pricing and streamlined procurement processes. Approaches such as framework agreements or 33 buying catalogs with pre-negotiated prices can be used (See example from Spain 51). Countries should consider the various EdTech solutions and determine which ones would most benefit from economies of scale. There is also an opportunity for countries that share the same instruction language and similar curricula, especially in science, technology, engineering, and mathematics (STEM) to look for opportunities to share investments in the development of digital content and online learning platforms that can be easily scaled to accommodate students in different locations. A good example of how this could work is well demonstrated by the success of massive open online courses (MOOCs) in which universities and vendors make their courses available to the worldwide population; or Open Education Resources for Science Virtual Lab experiments from Labxchange or PHET. Governments should explore collaboration with other countries to aggregate purchases, share costs, and learn from each other. 3.2.7 Consider Leasing Instead of Owning An alternative to device-as-a-service is leasing, a financing model widely used in HICs to overcome the high up-front costs of purchasing technology. Leasing offers flexible payment options, allowing education systems to acquire devices without large capital expenditures. Broadly, there are two main types of leasing: one where the leasing company retains ownership of the devices, and another where ownership is transferred to the lessee after the lease period. Additionally, other financing options, such as deferred payments or rental agreements, can provide devices bundled with maintenance, technical support, and insurance, ensuring that any damaged or malfunctioning device is replaced without extra cost. These schemes are often accompanied by insurance coverage to protect against damage, depreciation, or theft, further reducing financial risk. Leasing can generate significant cost savings compared to cash purchases. For instance, JourneyEd 52 estimates that monthly lease payments typically range between 2.4 percent and 2.7 percent of the equipment’s list price, depending on credit rating and product type. This translates to potential first-year savings of about 70 percent compared to an up-front cash purchase, and 10 percent to 20 percent savings over a three-year period. Similarly, Insight Financial Services 53 outlines several leasing models that offer different advantages based on the context: • IT refresh/operating lease: Devices are regularly replaced with newer models, ensuring up-to- date technology. • Capital/finance lease: Ownership of the devices is transferred to the lessee after the lease period. • Step-up/deferred payment: Payments start low and gradually increase, allowing more time for budget allocation. 51 https://contratacioncentralizada.gob.es/catalogo. 52 https://schools.journeyed.com/technology-leasing-for-schools/. 53 https://www.ifsleasing.com/education/. 34 • Software financing: The lease covers both hardware and software licenses. • Rental as a service: Devices are provided with full support and maintenance and replaced when faulty. Leasing can be particularly beneficial for governments in LMICs by reducing upfront investment costs, ensuring device functionality through continuous maintenance, and enabling regular technology upgrades—ultimately maximizing value for money in EdTech investments. 3.2.8 Adopt “as-a-Service” Model An alternative to traditional outsourcing is to adopt the “as-a-service” model. The IT industry has been innovative in creating “anything as a service” model following the success of cloud services. Governments could address many of the challenges they face with deploying, managing, operating and maintaining technology as well as having clear and predictable budgets and TCO by adopting these new business models. Cloud services could relieve Governments of the need to purchase and maintain expensive Data Center infrastructure and instead allow governments to focus on the delivery of education services. Cloud services could also speed the roll out of new educational services in an emergency such as happened during the COVID-19 pandemic when schools needed to set up remote learning platforms overnight. Most software can now be consumed as a service (Software as a Service or SaaS) and so can devices through programs such as Device as a Service (DaaS). Many of the major PC manufacturers or large system integrators offer PC as a Service in HICs. These offers bundle a device, software, maintenance, support, and management for one monthly price per device. The use of monthly payments means the provider is prefinancing the device, and this creates issues with credit and risk in LMICs. There are fewer issues with cloud services, because these are usually “pay as you go” or SaaS models with clear subscriptions, a model that governments are increasingly familiar with. For the DaaS model to be more widely used, governments in partnership with donors will need to consider other mechanisms to reduce credit risk and make such models attractive for LMICs. 35 4. Identifying Additional Sources of Funding Another way of stretching the EdTech budget is to increase it. With strained education budgets, governments should explore increasing the share of underutilized sources in the budget, and/or finding new sources of financing outside the traditional avenues. This chapter will discuss these sources in detail. 4.1 Maximize Use of Universal Service Access Funds USAFs are an underutilized resource for EdTech financing, with significant untapped potential. While USAFs have already been used to fund the purchase of ICT for education in several countries, a 2013 GSMA study of 64 funds found that $11 billion remained unused (GSMA 2013). A more recent report by the World Wide Web, Alliance for Affordable Internet and UN Women found that across all 37 USAFs in Africa, unspent funds total an estimated US$408 million (Thakur and Potter 2018). USAFs offer a sustainable source of funding for EdTech initiatives, because they are regularly replenished through mandatory annual contributions by service providers. This funding could support the costs associated with connecting schools to the internet or provide a portion of the funding necessary for digital technologies or their maintenance which is so critical to ensure optimal use but often not available. Ensuring effective usage of USAFs requires transparency, accountability, and strong stakeholder collaboration. Partnerships between the ministry of education, the ministry of ICT, telecom regulators, and service providers are essential to streamline fund allocation and maximize impact. 4.2 Scale up Device Loan Schemes with Guarantee Schemes Loan schemes, backed by government guarantee funds, can unlock additional funding by reducing the risk for lenders and the up-front financial burden on households acquiring devices. Consumer financing in LMICs has made significant strides but remains underdeveloped, because financial institutions often limit access to credit due to risk-based assessments, considering small, fast- depreciating assets like learning devices as high-risk investments. As a result, lenders are either reluctant to offer credit for device purchases or charge high interest rates to protect themselves from potential losses. Microfinance models, such as the one pioneered by Grameen Bank in the 1970s, 54 which do not require collateral to obtain credit from the bank, may be a viable option for purchasing EdTech, especially devices, for low-income households. Additionally, new innovations by local startups, such as M-Kopa, demonstrate how asset financing models can be leveraged to provide microloans for EdTech devices. Originally focused on solar energy financing, M-Kopa has expanded into smartphone, appliance, 54 https://grameenbank.org.bd/about/introduction. 36 and asset financing, using a pay-as-you-go model that allows low-income customers to purchase products through small, flexible installment payments (Kene-Okafor 2022). This same model could be applied to EdTech, enabling students and families to acquire learning devices without the burden of upfront costs. Both traditional financial institutions, which are often more risk averse and new innovative FinTech companies could be encouraged to lend for EdTech by developing programs with government or donor backed guarantee schemes. The World Bank has supported various financing mechanisms to improve access to essential devices, particularly for students and low-income households. For example, in Senegal, the Sama PC program was established to provide computers at an affordable cost for all students in public universities (World Bank 2013) (see Table 4.1). More recently, in Rwanda, part of the World Bank’s funding was allocated to capitalize a device affordability fund and operationalize related financing schemes, further expanding access to critical technology for key user groups (World Bank 2021). Table 4.1: Examples of Microloans Combined with Guarantee Funds Country Funding Details Senegal - Sama Students can either pay in full upfront or in monthly installments over 12 months ($10–$16, PC (World Bank depending on the model) at a subsidized price. The Digital Solidarity Fund of Senegal and the 2013) World Bank provide these subsidies. Students also receive technical assistance if needed. The World Bank funding serves as a guarantee fund to encourage commercial banks to offer credit to students, reducing their risk in case of defaults (World Bank 2013). Burkina Faso – Launched in April 2020, the "One Student, One Computer" program aims to improve internet Partial Subsidy access and digital learning for bachelor's degree students. The government covers 60% of the of Student’s cost, investing CFA1.9 billion to provide 10,013 computers, while the World Bank subsidizes Computing an additional 8,000 computers. Students pay the remaining 40% via direct payment or loans Device (Ecofin through the National Fund for Education and Research (FONER) or the National Centre for 2020) Information, Educational and Vocational Guidance, and Scholarships (CIOSPB). The contract was awarded to Horizon Informatique SA, and the government plans to distribute 50,000 computers in total. Scaling Solar- A Scaling Solar is a World Bank program that brings together a suite of World Bank Group model for services under a single engagement aimed at creating viable markets for solar power in each EdTech client country. The “one-stop-shop” program aims to make privately funded grid-connected financing 55 solar projects operational within two years and at competitive tariffs. World Bank support includes: • Advice • Simple and rapid tendering • Fully developed templates • Competitive financing and insurance • Risk management and credit enhancement Sources: World Bank (2013); Ecofin (2020); World Bank Group, Scaling Solar. 55 Scaling Solar. 37 4.3 Utilize Advance Market Commitments to Support the Development of More Sustainable EdTech The fragmented nature of the EdTech market presents a major opportunity for LMICs to use Advance Market Commitments (AMCs) to drive large-scale investment and innovation. When individual governments and school systems manage their own procurement processes, funding structures, and technology priorities, demand is often dispersed. However, if governments collaborate to align their EdTech priorities, they can create unified demand, leverage collective bargaining power, and attract sustainable financing to drive the development of purpose-built education technologies. AMCs provide guaranteed funding and demand certainty, reducing financial risk for market players and incentivizing investment in EdTech solutions designed specifically for education. Through AMCs, donors, philanthropic foundations, corporate sponsors, and governments commit funds in advance, lowering the total cost of ownership by reducing up-front, update, and maintenance costs, making solutions more sustainable and scalable. Without long-term financial commitments, market players hesitate to invest in EdTech development. Past initiatives like One Laptop Per Child’s $100 laptop, 56 Intel Classmate PC, 57 and SMART’s interactive whiteboards 58 sought to create education-specific solutions; but without predictable sales, sustaining and updating such innovations proves difficult. By guaranteeing demand, AMCs could drive investment in adaptive learning platforms, structured lesson plans, improved assessments, AI tutors, and data-driven solutions, making these tools more accessible and cost-effective. Beyond individual technologies, AMCs could also help re-imagine education service delivery, leveraging technology to expand access, improve quality, and lower costs at scale. AMCs have been successfully applied in global health, notably in the vaccine market, to overcome market failures and drive large-scale innovation, 59 and could similarly be applied to innovation in Edtech. They could accelerate investment in technologies that address learning poverty, which affects up to 70 percent of children in LMICs and, left unaddressed, could result in US$21 trillion in lost lifetime earnings—equivalent to 17 percent of today’s global GDP (World Bank 2022). 60 56 OLPC – More than a laptop. 57 Latest Intel® Education Tablet and Intel® Classmate PC Help Transform Learning and Teaching: Intel Corporation (INTC). 58 SMART Boards for classrooms enhance collaborative learning | SMART Technologies. 59 https://fiftrustee.worldbank.org/en/about/unit/dfi/fiftrustee/fund-detail/amc. 60 https://thedocs.worldbank.org/en/doc/e52f55322528903b27f1b7e61238e416-0200022022/original/Learning- poverty-report-2022-06-21-final-V7-0-conferenceEdition.pdf. 38 4.4 Increase Philanthropic Investment in EdTech Private philanthropic organizations are increasingly becoming major contributors to development aid. According to the Organisation for Economic Co-operation and Development (OECD), between 2010 and 2020, total philanthropic flows for development rose from US$5.8 billion to US$9.6 billion annually, reflecting a 65 percent increase over the decade (OECD 2023). 61 During the period 2018– 2020, philanthropic giving averaged US$8.7 billion per year, led by the Bill & Melinda Gates Foundation. Preliminary data suggested a continued upward trend in 2021, with total giving exceeding US$10.8 billion, reflecting the sector’s growing relevance even amid pandemic-related disruptions. See Figure 4.1. Figure 4.1: Growth of private philanthropic flows for development, 2009–21 (US$ billion, 2020 prices) Source: OECD (2023). Note: BMGF = Bill and Melinda Gates Foundation; CRS = Creditor Reporting System. Although most philanthropic finance has historically been directed toward the health sector, education has also emerged as a key area of investment. According to OECD data, between 2018 and 2020, education received a substantial share of philanthropic development finance, ranking alongside agriculture and governance among the top-funded sectors (Figure 4.2) (OECD 2023). Given that philanthropic organizations often channel their funding through third parties such as private sector partners, multilateral agencies, and NGOs, they are well positioned to act as catalysts for EdTech innovation. They can support early-stage innovations in digital learning, with a commitment to scale those that demonstrate cost effectiveness and strong value for money. Additionally, they can lead the establishment of AMCs for high-potential EdTech solutions and incentivize private sector investment in underserved areas where the return on investment may be uncertain or perceived as low. 61 https://www.oecd.org/en/publications/private-philanthropy-for-sustainable-development-2018-20_0164439d- en.html. 39 Figure 4.2: Sectoral Distribution of Philanthropic Giving (2018–20 average, US$ million) Source: OECD (2023). Note: BMGF = Bill and Melinda Gates Foundation. There is strong precedent for philanthropic collaboration acting as a catalyst for digital transformation. A notable example is the Partnership for Higher Education in Africa (PHEA), which was instrumental in accelerating the creation of National Research and Education Networks in Africa through the funding of the “Bandwidth Consortium” and jumpstarting e-learning initiatives at major universities in Africa (Lewis, Friedman, and Schoneboom 2010) (see Table 4.2). PHEA mobilized funds over a decade through a consortium of seven major private foundations, including the Carnegie Corporation, Ford Foundation, Rockefeller Foundation, and the Hewlett and Mellon Foundations (Figure 4.3). Table 4.2: Partnership for Higher Education in Africa Contributions to ICT (2000–10) ICT Initiative PHEA Total Bandwidth Consortium (BWC) $8,610,562 Bandwidth Management Training $661,383 AAU Regional Education & Research Unit (supporting NRENS) $727,900 Individual NRENs $3,940,000 Educational Technology Initiative $6,726,500 Total: $20,666,345 Source: PHEA (2010). Note: AAU = Association of African Universities; NREN = National Research and Education Network. This collaborative model allowed foundations to pool resources, align around shared goals, and sustain impact over time—an approach that is directly applicable to scaling EdTech in LMICs today. More recently, the EdTech Hub, backed by the United Kingdom’s Foreign, Commonwealth & 40 Development Office, the Gates Foundation, UNICEF, and the World Bank, builds on this model by funding research and policy insights to guide effective, equitable EdTech investments. Other examples of private foundations with significant investments in EdTech include: • The Gates Foundation 62, which has been a major player in the field, investing in programs and initiatives aimed at using technology to improve education access and outcomes. For instance, the foundation has invested in programs that promote the use of data and technology to personalize learning and improve teacher effectiveness. • The Mastercard Foundation 63 is one of the leading private foundations with significant investments in education technology (EdTech) across Africa. It supports large-scale initiatives aimed at expanding digital learning, teacher training, and access to online platforms, especially for youth and marginalized communities. Through programs like Young Africa Works, the Foundation funds EdTech innovations that enhance employability and transform educational systems. The Foundation has also partnered with Carnegie Mellon University to Drive Youth-led Digital Transformation in Africa. 64 • The impact investment firm Omidyar Network 65 has invested in EdTech startups that aim to make education more accessible and affordable, such as BYJU's, a leading online education platform in India. • The Jacobs Foundation, a Swiss philanthropic organization, has been a leader in this field, providing funding and support to organizations and initiatives working to advance the use of technology in education. Through its Learning EdTech Impacts Funds initiative (LEIF), the Jacobs Foundation has committed to advancing evidence-based EdTech investments. 66 By providing critical early-stage funding, the foundation helps to de-risk investments in the sector and encourages other investors to follow suit. This, in turn, can help to drive the development of innovative Edtech solutions and bring them to scale, leading to a greater impact for children and young people around the world. • Telefónica Foundation and “la Caixa” Foundation funded ProFuturo, an education innovation program based in the use of technology. The Foundation has created several global public goods including a Digital Competencies Self-Assessment Tool and a learning management system. 67 Additionally, corporate social responsibility initiatives can also play a role in funding edtech solutions. For example, the philanthropic arms of Google, Intel and Microsoft have invested in programs aimed at improving computer science education or increasing digital skills training. 62 https://www.gatesfoundation.org/our-work/programs/global-growth-and-opportunity/global-education- program. 63 https://mastercardfdn.org/en/what-we-do/focus-areas/digital/. 64 Carnegie Mellon University Africa (CMU-Africa) | Mastercard Foundation. 65 Omidyar Network – Bending the arc of the digital revolution toward shared power, prosperity, and possibility. 66 Unlocking the impact of EdTech - Jacobs Foundation. 67 ProFuturo. 41 4.5 Donor Funding for Global Public Goods (in addition to AMCs and direct funding) Bilateral and multilateral donor funding has the potential to play a transformative role in developing global public goods for EdTech and driving the creation of AMCs. Beyond providing direct aid to governments for education and EdTech, donors can fund freely accessible, reusable, and scalable solutions that benefit all countries, regardless of their economic standing. These global public goods have the power to bridge financial gaps, accelerate digital learning adoption, and foster long-term sustainability in education systems. This approach could align with the principles of open-source software development, where knowledge is shared and collaboratively developed, leading to greater innovation and impact. Examples of global public goods developed with donor funding include: • The Global Digital Library, 68 comprised of open-access learning content • Labxchange 69, created at Harvard University it offers high quality OER for science and mathematics content, animations and simulations • PHET 70, developed at University of Colorado, offers high quality OER STEM simulations • Geogebra, 71 free mathematics tools and simulations. • The Compendium of Lesson Plans, 72 which aims to provide teachers with a centralized repository of high-quality, adaptable, and customizable educational resources. • OpenEMIS, 73 a free and open-source software platform for education management and information systems. It is designed to support countries in collecting, analyzing, and reporting education data to inform decision-making processes and improve the quality of education. OpenEMIS is funded by international donors and is managed by the UNESCO Institute for Information Technologies in Education with support from the OpenEMIS Community of Practice. • Open Learning Exchange, 74 an open-source platform that provides educational content and tools to teachers and students in low-income countries. The Open Learning Exchange provides access to high-quality educational resources, enabling teachers to create effective learning experiences for their students and ultimately, improve learning outcomes. • Global Learning XPRIZE, 75, a five-year, $15 million competition that “challenged teams from around the world to develop open-source, scalable software that empowers children to teach themselves basic reading, writing and arithmetic within 15 months.” 68 https://digitallibrary.io/. 69 https://www.labxchange.org/. 70 https://phet.colorado.edu/. 71 https://www.geogebra.org/. 72 https://www.worldbank.org/en/topic/teachingandlearning/brief/compendium-of-structured-lesson-plans 73 OpenEMIS – Better data. Better education. 74 Open Learning Exchange | Moving from education to learning. 75 https://www.xprize.org/prizes/global-learning. 42 4.6 Impact Bonds The use of Impact Bonds, also known as “pay-for-success” financing, in the field of Edtech has been explored by the Brookings Institution as a potential funding mechanism (Gustafsson-Wright, Gardiner, and Putcha 2015). This innovative financing approach leverages private investment to finance initiatives aimed at improving social outcomes such as education. The returns are based on results being achieved, making this a form of results-based financing (Osborne and Gustafsson-Wright 2020). According to the Center for Global Development, development impact bonds, like social impact bonds, are results-based contracts in which private investors provide prefinancing for social programs and public sector agencies pay back investors their principal plus return if these programs succeed in delivering social outcomes. 76. Some examples of education social impact bonds with some EdTech solutions include: • The Junior Code Academy Social Impact Bond, 77 which was launched in Portugal in 2015, with the aim of testing the impact of computer programming education on primary school students’ logical thinking skills and academic performance. The program, which was a partnership between the Calouste Gulbenkian Foundation, the Lisbon City Council, Academia de Código, and Nova School of Business and Economics, showed positive results, with students exhibiting improved logical reasoning abilities and exceptional performance in Portuguese and mathematics. As a result, the Lisbon City Council reimbursed the Calouste Gulbenkian Foundation 25 percent of the initial investment. • The Quality Education India Development Bond, 78 which was launched in India in 2018 with the aim of improving learning outcomes in language and math. The bond focuses on teacher training, literacy and numeracy learning among primary school children from marginalized communities in India. As a result of the DIB, two of the partners, Pratham InfoTech Foundation and Education Initiatives developed Mindspark, a pedagogy-based adaptive learning software to close learning gaps. The investor, UBS Optimus Foundation, received a return of 8 percent on its investment. 79 • Educate Girls Development Impact Bond, in 2015 - the Indian government was the first in a developing country to launch an education impact bond (Boggild-Jones and Gustafsson-Wright 2018). • Kenya Education Endowment Fund 80 and other organizations have been using social impact bonds to fund projects that aim to improve the educational outcomes for disadvantaged children, including the use of Edtech solutions. 76 https://www.cgdev.org/page/investing-social-outcomes-development-impact-bonds- 0#:~:text=Development%20Impact%20Bonds%20(DIBs)%2C,investment%20than%20a%20debt%20investment. 77 http://maze-impact.com/wp-content/uploads/2018/05/RESULTADOS_TIS_EN_v2.pdf. 78 Home - Quality Education India DIB. 79 Media Release - Quality Education India DIB. 80 https://www.kenyaeducation.org/. 43 • The Impact Investment Institute 81 in the United Kingdom aims to encourage Foundations in invest their funds to social projects with impact through impact bonds. 4.7 Training Funds Skills funds, based on training levies and taxes, have become increasingly popular in many countries as a means of financing human capital development and workforce skills. These funds have been leveraged to support TVET programs. However, their potential for financing digital skills development and teacher capacity building in the education sector remains largely untapped. A recent UNESCO study identified more than 75 countries operating training funds and found that over US$17 billion is raised annually from among 45 levy-financed national training funds (Table 4.3) (UNESCO 2022). 82 Most of these funds are in LMICs. Table 4.3: Spotlight on Levy Schemes in 75 Countries SDG Region Frequency Countries Sub-Saharan Africa 26 Benin, Botswana, Burkina Faso, Central African Republic, Chad, Côte d’Ivoire, Congo, Equatorial Guinea, Gabon, Gambia, Guinea, Kenya, Malawi, Mali, Mauritania, Madagascar, Mauritius, Namibia, Niger, Nigeria, Senegal, South Africa, Tanzania, Togo, Zambia, Zimbabwe North Africa and 6 Algeria, Jordan, Morocco, Oman, Tunisia, Yemen Western Asia (suspended) Eastern and South-east 5 Republic of Korea, Malaysia, Mongolia, Singapore, Thailand Asia Oceania 3 Australia, Fiji, Marshall Islands Latin America and the 16 Barbados, Bolivia, Brazil, Costa Rica, Dominican Republic, Caribbean Ecuador, El Salvador, Guatemala, Honduras, Jamaica, Nicaragua, Panama, Paraguay, Peru, Uruguay, Venezuela (Bolivarian Republic of) Europe and Northern 19 Austria, Belgium, Québec (Canada), Cyprus, Denmark, America France, Germany, Greece, Hungary, Iceland, Ireland, Italy, Luxembourg, Netherlands, Poland, Slovenia, Spain, Switzerland, United Kingdom of Great Britain and Northern Ireland Total: 75 Source: UNESCO (2022). Note: SDG = Sustainable Development Goal. In some countries, these funds are supported by mandatory contributions from employers, which are then used to finance training programs that match the needs of the labor market (Norton and Norton 2018). Some examples include: 81 https://www.impactinvest.org.uk/project/endowments-with-impact/. 82 https://unesdoc.unesco.org/ark:/48223/pf0000384184. 44 • Kenya –The National Industrial Training Authority (NITA) collects a training levy of 50 Kenya shillings per employee per month, with a cap of up to 200 percent of the employer contributions. This fund is used to reimburse approved TVET programs (UNESCO 2017). • India - National Skill Development Corporation, 83 a PPP between the Ministry of Skill Development and Entrepreneurship and various industries, has established the Skill India initiative, which is funded through a combination of government and industry contributions. The initiative aims to provide training and upskilling opportunities for workers in various sectors, including information technology, through a network of training providers and industry partners. 84 • European Union - the European Social Fund 85 (ESF) provides funding for skills development initiatives, including those aimed at improving digital skills. The ESF is funded by contributions from EU member states and is designed to support employment and social inclusion. Through the ESF, member states can access resources to invest in initiatives aimed at improving the skills of their citizens, including those related to digital skills. • United Kingdom - the apprenticeship levy 86 was introduced in 2017 to provide funding for apprenticeships and other skills development initiatives. The levy is a tax on employers with an annual payroll of over £3 million, and the funds collected are invested back into the skills development sector. The UK Government has used the apprenticeship levy to support the development of digital skills, including the creation of new apprenticeships and the establishment of training programs for businesses and individuals. These examples demonstrate the potential of skills funds, based on training levies and taxes, to finance digital skills development and teacher capacity building programs, while also providing a sustainable source of financing for human capital development in LMICs. As training could greatly benefit from EdTech, these funds have the potential to finance EdTech deployments targeted at skills development. 4.8 Unlock the Billions in Private Sector IT Companies’ Cash Reserves Private sector IT companies, especially those listed on stock exchanges, hold massive cash reserves, yet their financing services are mostly limited to HICs (Krantz 2023). Many of these companies have financing arms or partnerships that provide loans or leases for IT equipment, which they manufacture for enterprises and school district customers. Examples abound in the United States and other HICs with well-developed credit markets: • Apple Financial Services has a financing program for schools 87 83 https://nsdcindia.org/. 84 Skill India Digital Hub (SIDH) - Upskilling, reskilling, career growth and lifelong learning. 85 ESF_The_european_social_fund_EN.pdf. 86 https://www.gov.uk/guidance/pay-apprenticeship-levy. 87 https://education-static.apple.com/education-financial-services/AFSEducationFlyer-February2023.pdf. 45 • Cisco Capital provides flexible financing options for infrastructure including for educational institutions 88 • HP’s integrated financial services are available for higher education institutions 89 • Lenovo Financial Services may be available to education institutions 90 Expanding IT financing to LMICs could unlock new opportunities for EdTech adoption. However, IT companies may hesitate due to the financial and political risks associated with these markets. A potential solution is de-risking investments through partial guarantees from donors and private foundations, export credit from IT companies’ home countries, and political insurance on sovereign guarantees from entities such as the Multilateral Investment Guarantee Agency (MIGA). Although complex to establish, such a system could be a win-win for all stakeholders. Governments could access essential technology, donors could amplify their impact, and IT companies could tap into new markets while putting idle capital to productive use. This approach could bridge the digital divide and drive educational transformation in LMICs. 4.9 The Giga Model While not a funding source, the Giga initiative for school connectivity, 91 led by UNICEF and the International Telecommunication Union (ITU), advocates for a self-sustaining business model that does not rely on external (not-for-profit) financial support. 92 To offer school connectivity in a sustainable manner, the model recommends the following four elements: • Technology: Which refers to the decision about the technology to be applied, balancing both the quality desired and the availability of funding. • Cost structure: Comprised of both up-front and ongoing expenditures, which are affected by regional characteristics, as well as by decisions made regarding technology, operating model, and funding structure. • Funding structure: Considers the source of funding for the project of school connectivity, with various options emerging from the combination of commercial, government, and community- based funding. • Operating model: The arrangement to execute, build, operate and maintain the infrastructure; it varies in terms of the roles taken by different parties (e.g., government, communities, service providers). 88 https://www.cisco.com/c/en/us/buy/payment-solutions.html. 89 https://h20195.www2.hp.com/v2/GetDocument.aspx?docname=4AA7-4736ENW. 90 https://www.lenovo.com/us/en/services/pc-services/education/?org. 91 https://giga.global/. 92 Giga (https://gigaconnect.org/) is an initiative launched by UNICEF and ITU in September 2019 to connect every school to the Internet and every young person to information, opportunity, and choice. 46 Giga partnered with Boston Consulting Group to review case studies of seven countries 93 where the initiative is at work and drew the lessons learned to improve the low levels of school connectivity around the world (GIGA and BCG 2021). The main takeaways from this analysis include the following: • Optimize locally: Divide countries into homogeneous areas to find optimal funding models. This holds true, especially for countries with large differences in gross national income per capita. • Combine funding models: Apply multiple funding models where possible to minimize funding gaps, especially for developing countries where the funding gaps are larger. • Merge electrification and connectivity: Consider providing internet as well as electricity (and other utilities) for off-grid communities. • Affordability is key: Ensure schools (and communities) can sustainably pay for connectivity so that long-term connections can be established. • NGOs empower communities: Indefinite NGO funding is not sustainable, but NGOs can play important roles in the mentorship and training of communities, leading to long-term sustainability. • Reforms enable sustainability: Reforms are necessary for many countries to promote long- lasting transformation. These include legal and cultural reforms, as well as changes in the Service Provider landscape. One of the practical examples of the Giga model at work can be found in Uzbekistan where the Giga team together with the Uzbekistan government and a local telecom services provider began implementing a scalable solution - “connectivity hubs”- through which internet is accessible to the community using schools as a hub (Giga 2022). 94 4.10 Summary Comparison of Additional Sources of Financing This section consolidates the various innovative mechanisms explored throughout Chapter 4 into a comparative overview, highlighting their relative advantages and disadvantages, and positioning them based on their funding potential and the complexity involved in unlocking them. As previous sections have shown, no single source is a silver bullet. Instead, each financing option offers a different balance of accessibility, scale, and suitability, depending on the country’s context, institutional capacity, and financing landscape. Table 4.4 summarizes the core advantages and disadvantages of each funding source, offering a snapshot of the opportunities and trade-offs they present. Figure 4.3 visually maps these funding sources across two critical dimensions—potential scale of funding and complexity to unlock—to help policymakers identify which mechanisms are most viable and strategic for achieving their EdTech investment goals. 93 Rwanda, Sierra Leone, Brazil, Honduras, Indonesia, Nigeria, and Kenya. 94 https://giga.global/sustainable-school-connectivity-in-uzbekistan/. 47 The comparison provided here aims to guide policymakers in selecting and blending financing mechanisms that best fit their EdTech goals, ensuring both feasibility and long-term sustainability. Together, this comparison aims to support informed decision making and the design of blended financing strategies that are both feasible and sustainable. Table 4.4: Advantages and Disadvantages of Additional Sources of Funding Funding Source Advantages Disadvantages 1. Universal Service • Readily available & recurring annual • Bureaucratic delays, underutilized in Access Funds (USAFs) replenishment many regions • Can fund broadband, devices, and • Restricted to connectivity projects in content many countries • Segregated from government budgets • Focused mostly in underserved / rural areas • Requires collaboration between ministries 2. Device Loan Schemes & • Reduce up-front costs for students • High risk of non-repayment or Guarantee Funds • Attract private sector financing difficulties in collection, especially • Scalable for different education levels when information is not digitized and • Can reduce risk for credit providers policies are not in place. • Revolving fund which supports new • Require government-backed beneficiaries over time guarantees • Repayments can take a very long time when they depend on beneficiaries having income 3. Advance Market • Encourage private investment & • Require long-term financial Commitments (AMCs) innovation commitments • Lower costs via bulk purchasing • May favor large firms over small • Standardizes solutions innovators • Challenges of aligning multiple countries to agree on the same solution 4. Philanthropic • No repayment required (grants) • Often short-term & unsustainable Investment • Supports innovative projects & pilots • Dependence on donor priorities • Bridges public funding gaps • Not always scalable for nationwide impact 5. Donor Funding for • Enables large-scale & cross-country • Highly competitive & limited Global Public Goods solutions • Often comes with restrictions • Supports research & policy • Can lead to fragmented, short-term development projects • Can help in emergencies (e.g., COVID- 19) 6. Impact Bonds • Tied to measurable educational • Complex setup, requires legal outcomes expertise • Brings in private investors • Slow disbursement (funds depend on • Ensures accountability & efficiency results) • Can lead to focus too much on measurable outcomes only 48 Funding Source Advantages Disadvantages 7. Training Funds • Leverage workforce & industry • Often limited to job-related training budgets • Relies on corporate willingness to • Can support teachers’ continuous contribute professional development including • Can be hard to sustain if policies do digital skills not include collection enforcement • Encourage lifelong learning mechanisms 8. Private Sector IT Cash • Large untapped funding source • Hard to secure investment in Reserves • Align CSR with education providing financing / loans in higher- • Access to cutting-edge tech & risk areas expertise • Companies may need incentives (e.g., tax breaks, guarantees) • Risk of vendor lock-in 9. Giga Model • Focuses on school internet • Requires multi-stakeholder connectivity cooperation • Supported by UNICEF & ITU • Primarily infrastructure-focused • Scalable across multiple countries • Needs government buy-in and identifying sources of funding for sustainability because initiative doesn't provide funding. Source: Authors’ own analysis Note: CSR = Corporate Social Responsibility Figure 4.3: New or Under-utilized Sources of Funding: Funding Potential and Level of Complexity Source: Authors’ own estimation. 49 Figure 4.3 provides a comparative analysis of the additional funding sources discussed in this chapter, based on their funding potential and the complexity of accessing them. The Y-axis represents the amount of funding potential that these sources of funding offer, ranging from small to large, while the X- axis represents the level of complexity in accessing these funds, from low to high. The top left quadrant (green) includes High-Funding, Low-Complexity mechanisms like USAFs, device loan schemes with guarantee funds, and philanthropic or private foundation funding. These sources are considered more accessible because they offer substantial funding potential, are often regularly replenished through levies or taxes, and are relatively straightforward to unlock. In many cases, these funds have already been earmarked for education, technology, or inclusion-focused purposes, reducing the need for extensive justification or negotiation. As such, they leverage existing structures and institutional relationships, making them some of the most practical and efficient options for governments seeking to scale EdTech initiatives quickly and sustainably. The top right quadrant (orange)—High Funding, High Complexity—features funding mechanisms such as AMCs, private sector cash reserves, and the Giga Model. These sources hold transformational funding potential, but their complexity is high, stemming from the need to coordinate across multiple actors, jurisdictions, and use cases. A defining challenge in this quadrant is the aggregation of demand across borders or sectors—for instance, aligning procurement standards, data systems, and investment priorities across schools, telecom operators, or ministries. Achieving such alignment requires not only legal and financial harmonization, but also robust governance structures capable of managing risks, enforcing accountability, and sustaining engagement over time. These efforts often involve lengthy negotiations, customized structuring, and significant up-front technical support, making these mechanisms powerful but slower and more resource-intensive to implement. The bottom left quadrant (orange)—Low Funding, Low Complexity—includes mechanisms such as direct donor funding to global public goods. These sources are typically grant-based, relatively easy to unlock, but have low funding potential. They are often aligned with international development priorities such as basic connectivity, teacher training, or foundational digital tools. However, while their administrative simplicity makes them useful for pilot programs or targeted interventions, the overall funding envelope is usually limited. These funds are often short-term, project-specific, and tied to donor-driven priorities, making them insufficient for scaling national EdTech systems. Nonetheless, they can catalyze innovation, support research and policy development, or cover initial start-up costs, especially in contexts with limited domestic resources or constrained fiscal space. The bottom right quadrant (red)—Low Funding, High Complexity—captures funding mechanisms such as impact bonds and training funds. These models are often complex to design and operationalize, requiring regulatory alignment, legal structuring, and multi-stakeholder negotiations. Despite their innovation and potential to fill niche financing gaps, they generally offer limited funding potential, especially relative to the effort required to unlock them. Many of these mechanisms are unproven at scale, and their implementation is often slowed by compliance burdens, fragmented incentives, and the need for technical expertise. As such, while they may be suitable for targeted or experimental initiatives, they are typically less attractive as primary financing tools for large-scale EdTech transformation. This figure serves only as a general guide; country-specific contexts, financial market sophistication, and regulatory environments can influence how these funding sources function in practice. A source categorized as small-scale or complex in one country may be more accessible or scalable in another. 50 Therefore, policymakers and stakeholders should adapt these to their local financial and regulatory conditions to determine the most effective funding mix for EdTech development. 51 5. Conclusion Adopting innovative financing approaches is essential for ensuring that EdTech initiatives can be sustainably deployed and scaled in LMICs. While traditional financing models have helped expand access to education, they are often insufficient to meet the growing demand for digital learning and infrastructure. This chapter offers a structured set of questions that educators, policymakers, and ministries can ask to assess their financing strategies and optimize funding for EdTech investments. To maximize the impact of EdTech financing, ministries should consider the following key questions: 1. Are We Aligning Our EdTech Investments with National Education Goals? • Are our investments in EdTech aligned with clear learning objectives, particularly foundational, socio-emotional, and digital skills? Section 3.1.1 • Are we engaging key stakeholders—teachers, school leaders, and local communities—to ensure that investments in EdTech translate into meaningful learning outcomes? Section 3.1.4 • Do we have a clear financing strategy that supports long-term digital learning integration? Section 3.2 2. Are We Investing in Capacity Building and Procurement Efficiency? • Are we investing in teacher capacity building and integration support programs to ensure effective use of EdTech tools in the classroom? Section 3.1.5 • Are we improving procurement processes to avoid inefficiencies, such as slow disbursements or overpriced contracts? Section 3.2 • Are we sure the technology we are purchasing is the best choice for learning experiences we are trying to support? Section 3.1 • Have we trained procurement officers to evaluate EdTech investments based on long-term value rather than short-term cost? Section 3.2 3. Are We Fully Using Our Existing Education Budget? See Chapter 3 • Have we conducted a thorough analysis to optimize spending on EdTech within our current budget? Chapter 3 • Are we leveraging cost-effective procurement models, such as bulk purchasing, leasing, or “as-a- service” models, to reduce costs? Section 3.2 • Have we considered innovative budgeting strategies like total cost of ownership analysis to avoid hidden costs, and phased deployment approaches to avoid cash flow issues and ensure long-term sustainability? Section 3.2.2 4. Are We Maximizing the Potential of Underutilized or Nontraditional Funding Sources? See Chapter 4 • Are we taking full advantage of USAFs for broadband and EdTech investments? See Section 4.1 52 • Have we explored philanthropic contributions, donor funding, or impact bonds to supplement government resources? See Section 4.4, Section 4.5, Section 4.6 • Are we encouraging private sector engagement through partnerships, corporate social responsibility initiatives, results-based financing, or co-investment models? See Section 2.2.3 and Section 4.8 5. Are We Effectively Engaging the Private Sector? • Have we established incentives for private sector participation, such as tax breaks or co- financing arrangements? See Section 4.8 • Are we considering outsourcing EdTech management and support services to specialized private sector providers to ensure long-term sustainability? Section 2.2.2 • Have we explored AMCs as a mechanism to attract private investment in EdTech development? Section 4.3 6. Are We Monitoring and Evaluating Our Investments for Impact? • Are we using data-driven decision making to measure the effectiveness of EdTech investments? See Section 3.1.3 • Have we implemented feedback loops to assess what works and make necessary adjustments? See Section 3.1.1 • Are we ensuring that funding is tied to measurable learning outcomes rather than simply acquiring technology? See Section 3.1.1 and Section 3.2 The future of education depends on our ability to innovate—not just in technology but in how we finance and deploy it. Ministries of education must recognize that EdTech is not just an accessory to learning but a fundamental enabler of equitable, high-quality education. The financial strategies of the past—piecemeal investments, reliance on donor support, and procurement without sustainability planning—are no longer sufficient. A well-planned, multi-sector approach that leverages new funding mechanisms, strengthens procurement practices, and ensures efficient spending will allow governments to bridge the digital divide and create lasting impact. By looking for answers to the questions outlined in this chapter, ministries can move from ad hoc investments to a strategic, future-proof approach to financing EdTech. The questions presented here serve as a roadmap for governments to evaluate their current financing strategies and identify opportunities for optimization. Only through decisive action, collaboration, and a commitment to sustainable investment can we ensure that EdTech becomes a driver of inclusive and transformative learning for generations to come. 53 References Antunes De Carvalho, F. J. 2022. Devices for Education Knowledge Pack (English). 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The State of Global Learning Poverty: 2022 Update; available at https://thedocs.worldbank.org/en/doc/e52f55322528903b27f1b7e61238e416- 0200022022/original/Learning-poverty-report-2022-06-21-final-V7-0-conferenceEdition.pdf 58 World Bank and UNESCO. 2024. Education Finance Watch 2024. Washington, DC; Paris. World Bank and UNESCO. Available at https://www.worldbank.org/en/topic/education/publication/education-finance- watch 59 ABSTRACT Digital technologies are increasingly important for delivering inclusive, resilient, and high-quality education, yet financing their effective deployment remains a key constraint in many low- and middle-income countries). This paper examines the scale of investment needed to achieve universal digital learning against the backdrop of constrained education budgets. It highlights common challenges ministries face, including limited fiscal space, underutilization of available funds, and inefficiencies in procurement practices. Drawing on global case studies and the World Bank’s EdTech principles, the paper outlines a practical framework for innovative financing that combines two strategic approaches: (1) stretching existing budgets through improved planning, cost-benefit analysis, and procurement reform; and (2) mobilizing additional funding from underleveraged sources such as Universal Service Access Funds, philanthropic capital, and blended finance. The report offers actionable recommendations to help ministries of education make smarter, result-oriented EdTech investments and build partnerships that enhance long-term impact and sustainability. The team acknowledges the financial support received from the Mastercard Foundation.