Aid to education reached an all‑time high in 2016

A new policy paper released by the GEM Report shows that aid to education has reached its highest level since records began. Between 2015 and 2016, it grew by US$1.5 billion, or 13%, to a record US$13.4 billion. This is a breath of fresh air for the sector, which had suffered six consecutive years of falling down the list of donor priorities.

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aid to education has reached its highest level since records beganWhere has this change come from? The paper, Aid to education: a return to growth?’ illustrates that two-thirds of the increase came from more aid to basic education, which covers pre-primary, primary and lower secondary education. The United States, the United Kingdom and the World Bank account for almost half of aid to basic education. By contrast, in terms of the share of national income allocated to aid to basic education, Norway is at the top of the donor scoreboard, for example spending twelve times more than the United States in relative terms.

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While fewer than one in two young people finish secondary school, good results are within reach. If all developed countries and some emerging economies committed, like Norway, to allocate 0.7% of their national income to aid and 10% of their aid portfolio to education, then the funding gap for achieving universal secondary completion could be filled.

But why are the poorest children’s education still not being prioritised?

Nevertheless, these changes in aid levels still show few signs of prioritisation of education in countries most in need. Less than a quarter of basic education (22%) went to low income countries in 2016, in comparison to 36% in 2002. The share going to the least developed countries, meanwhile, has increased slightly from 31% to 34% – yet is still well below the peak of 47% reached in 2004.

The shortfall reflects the disappointing long-term decline in the share allocated to sub-Saharan Africa, which is home to half of all out-of-school children worldwide, and yet continues to slip down donors’ list of priorities. The region used to receive half of the total aid to basic education, but it has received a smaller and smaller share of the pot for seven years in a row, reaching just 24% in 2016. Part of the decline is explained by the increase in the share of aid that is unallocated by region. This includes aid channelled through the Global Partnership for Education.

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There is also a need for more external financing for education in lower middle income countries

While much of the finance gap for low income countries could be bridged by reforming current aid allocations, and re-directing aid to basic and secondary education, this would not address the considerable education challenges facing lower middle income countries.

Erwin S. EmbuscadoThe paper finds that more than a third of the aid allocated to lower middle income countries comes in the form of concessional loans but that the cost of non-concessional credit deters many countries from borrowing for education. Indeed, the share of education in World Bank non-concessional loans fell from 8.2% in 2012 to 4.7% in 2017.

Reducing the cost of borrowing for education and expanding the capacity of development banks to lend is the crux of the proposal to establish an International Financing Facility for Education (IFFEd), which would target lower middle income countries, and which was recently supported by Antonio Guterres, UN Secretary-General, and Gordon Brown, UN Special Envoy for Global Education.

The GEM Report paper argues that while the IFFEd is an important mechanism, a lot more needs to be done to ensure that financing would be spent where it is most needed, and that the funds it frees up are new funds, and not old money renamed. It is also crucial that it operates in conjunction with the other multilateral financing institutions, the Global Partnership for Education (GPE), which targets low income countries, and Education Cannot Wait (ECW), which focuses on education in emergencies.

2016 onwards a turning point for education?

sdg4The 2016 increase in aid to education is welcome even if it is well below the level identified as necessary to cover the cost of reaching the ambitious SDG 4 targets as calculated by the GEM Report in 2015. What is critical now is that increased funding levels from donors need to be sustained for several years just to make up for the stagnation over 2010–2015.  We know that ODA in 2017 has decreased by the small amount of 0.7% compared to the previous year but hope that the share of education in total aid can continue on an upwards curve to keep it firmly on donors’ list of priorities.

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