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Education funding

Find out why there is a global gap in education funding and how this threatens the goal of all girls and boys getting a quality primary and secondary education. Developing countries do not have enough resources. Aid from international donors is dropping and is not targeted to where it will have most impact.

A summary of funding issues

A good education system needs investment. This investment benefits not just individuals but also supports countries to make progress in areas like improving health, creating a sustainable economy and protecting the environment.

But many developing countries, despite their efforts, simply do not have sufficient resources to provide all girls and boys a full cycle - 13 years - of quality education from pre-primary through to secondary school.

At the same time, aid from international donors is dropping and is not targeted to where it will have most impact.

The funding gap

Almost 90% of the cost of education in developing countries with low and lower-middle incomes is met by the countries themselves. That still leaves a funding gap that needs to be plugged by donors.

The Global Partnership for Education has calculated that, in total, $39 billion a year is needed to provide quality pre-primary, primary and secondary education to all children by 2030.

But funding from donors is inconsistent and uncoordinated. And donor aid is going down. Despite slow but steady increases in aid for basic education from 2002 to 2010, since 2010 it has fallen every year.

This is not simply due to smaller aid budgets. Since 2008 donor investments in health have risen by 58% while investments in education - which is vital to support awareness of health issues - dropped by 19%. So the resources exist but are being invested in basic education.

The top five multilateral contributors to basic education also reduced their share of total aid to basic education from 2005 to 2015.

Example: In 2011, the World Bank’s International Development lending to basic education was at nearly the same level as in 2002 in absolute terms.

Funding doesn’t go where it is most needed

The lack of financing is worst in the poorest countries and in fragile or conflict states where education funding has always been inadequate and education remains a low priority.

The sharpest decline in donor aid for basic education has been in sub-Saharan Africa, home to over half of the world’s out-of-school children, where donor contributions to at least 12 African countries have been cut by $10 million or more since 2010, according to the UNECSO Global Education Monitoring report 2013/14.

Example: Despite making significant progress by getting more than three million children into school since 2000, total donor aid to Ethiopia has declined from over $200 million in 2007 to less than US$50 million between 2008 and 2013. More than three million children, the hardest to reach, remain out of school.

Multilateral institutions could also do better and target to those countries with the largest numbers of out-of-school children and populations who are hardest to reach.

Example: In 2011, the World Bank provided 20% - the smallest share - of its total aid to basic education to low-income countries. More than 70% of funding went to countries with less than 20% of the out-of-school population

More funding is needed for education in emergencies

Record numbers of attacks on schools, natural disasters, wars and the largest refugee crisis since World War II have increased the funding needs for education in emergencies by 21% between 2010 and 2015.

But at the same time funding for education in emergencies has almost halved - down by 41% - since 2010. In 2015 less than 2% of humanitarian aid to help people who in crisis situations went to education.

There’s now an annual gap in humanitarian funds of nearly $8.5 billion.

The Education Cannot Wait fund

The Education Cannot Wait fund is the first global fund to prioritise education in humanitarian action.

The fund - launched in May 2016 - provides a mechanism through which governments, humanitarian organisations and others can collaborate to rapidly meet the educational needs of millions of children and young people in emergencies.

It aims to raise almost $4 billion to provide with quality education to more than 13.6 million children and youth over the five years from its 2016 launch - and then to reach 75 million children in crisis situations by 2030.

Its first investment came in September 2016, when it was announced $42 million will give almost 1.5 million children in conflict-hit Chad, Syria and Yemen access to a quality education over the next two years.

The Education Commission

The Education Commission - a distinguished group of global leaders, academics, business leaders and economists - unveiled The Learning Generation report in September 2016 after a year of research, consultations and analysis.

It said bold action and radical funding could see every child in the world getting a quality primary and secondary education by 2030 - and avoid a looming global education catastrophe.

The commission said its proposed measures will increase the number of qualified high school graduates in low and middle-income countries from 400 million to 850 million by 2030 and to 1.2 billion by 2040. The numbers in the lowest-income countries will rise from just eight million to 80 million.

It proposed a staged plan that includes:

  • Every country to see education as an investment in the future and raise spending in low-income countries from 3% of national income today to 5% of national income.
  • Mobilising the combined resources of the international institutions. No country committed to reforming and investing should be denied the chance to deliver universal education due to lack of funds.
  • A "Financing Compact" between developing countries, donors and multilateral institutions - under which overall aid will rise to $35 a year per child by 2030, significantly less than $1 a week.

The International Financing Facility for Education (IFFEd)

In March 2017, a group of major charities and organisations called on the G20 summit in Hamburg, Germany, in July to help launch a new way of funding education.

The Education Commission’s proposed financing plan is based on the principle that the primary responsibility for financing pre-primary, primary and secondary education lies with domestic governments. That would cover 97% of all the costs.

But this would still mean additional funding is needed. The commission recommended setting up an International Financing Facility  for Education (IFFEd). It would be operated by a Multilateral Development Bank (MDB) and could mobilise $10 billion or more annually in additional resources for education by 2020.

The idea involves the World Bank and regional development banks raising their allocations to education from 10% to 15%. 

It also seizes on a timely opportunity. The World Bank is getting back $150 million that it lent to poor countries in the 1970s, 1980s and 1990s. That money can then be used to increase loans on low interest rates to low-income countries whose education systems are underfunded.

There are other financial methods in the IFFEd that would help the money go to where it's most needed and mirror the funding approach taken to global debt and vaccinations.

But it would come with conditions. Countries whose education systems are performing poorly won't get this money unless they have a workable plan to raise the standards.

There are four key areas for action in 2017:

  • The G20 leaders ask the World Bank, multilateral development banks and international donors to establish the new IFFEd that will unlock $10 billion or more a year for education by 2020.
  • Countries still need to invest more - including increasing their budgets for education from 4% to 5.8% of GDP by 2030.
  • Donor countries will have to increase ODA (official development assistance) and commit 15% of their aid to education, targeting the countries most in need.
  • Other efforts to fund education must be supported - including $2 billion per year for the Global Partnership for Education by 2020 and fully financing the Education Cannot Wait fund for humanitarian emergencies.
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