Financing for Education: Let's Make Aid Redundant
On 26th June in Brussels the Global Partnership for Education (GPE) is seeking to raise $3.5 billion in a replenishment event, to support low income countries with good plans to achieve progress towards education goals. Replenishing this global pot is important, but even more important is for the GPE to harness increases in domestic resources for education - which can raise substantially more money and which is much more sustainable. Indeed GPE hopes to secure $16 billion in domestic pledges from developing countries. But more could be done. All of us working today in the education aid business should be seeking to make ourselves redundant over the coming ten or twenty years by supporting the creation of sustainable domestic financing of education. To be effective we need to focus in four areas, on increasing 4 S’s:
Increasing the share of the budget to education
GPE encourages governments to commit between 15 and 20% of national budgets, or between 4-6% of GDP for education – but needs to be much stronger in refusing to support any country that reduces its own spending on education against either of these indicators. In 2001 of the 49 countries presently supported by GPE who have credible data, 35 of them spent less than 20% of their budget on education. Shockingly 5 of these countries spent under 10% (DRC, Eritrea, Nigeria, Pakistan and Zimbabwe). It is shocking, but perhaps not surprising, that some of the countries with the biggest education challenges are spending the least on education: shocking because these are precisely the countries that need to spend more; unsurprising because the lack of spending is probably a key reason for their failure to make more progress. GPE funding should always be helping to leverage increases in domestic spending – rather than plugging gaps left by deliberate government inaction.
Increasing the overall size of government budgets
Some countries are already spending a reasonable share of their budgets on education but in too many of these contexts the size of the government budget overall is much smaller than it could or should be. In these cases, simple steps to increase the size of the budget can massively increase the domestic resources available for education.
Governments can do this by increasing tax to GDP ratios and one of the easiest ways to do this is to stop giving away harmful tax incentives. ActionAid estimates that $138 billion annually is given away unnecessarily in harmful tax incentives to multinational companies by developing countries. Governments can also do more to challenge aggressive tax avoidance. ActionAid’s report "Sweet Nothings" on Associated British Foods in Zambia showed that aggressive tax avoidance by just one company deprived the Zambian government of funding that could have provided primary education for 48,000 children.
Strengthening tax revenue authorities should be a priority for aid. Indeed, one study showed that for every $1 spent in aid spent to support tax systems $350 in tax revenue was raised. Unfortunately under 0.1% of aid is presently spent on supporting tax systems.
Increasing the sensitivity of the budget to policy priorities
Some governments in Africa continue to invest a disproportionate percentage of their education budget on tertiary education which benefits a small (but powerful and vocal) elite. A more progressive and sensitive approach involves targeting spending to re-dress disadvantage – for example, investing in social protection /cash transfers for the poorest, spending more in primary (a benchmark of 50% of spending to primary education makes sense in low income countries) and investing more in inclusive education, to bring children with disabilities into school. It is interesting to note here the work of Pasi Sahlberg from Harvard University who shows that countries who invest sensitively to make their education systems more equitable make significant progress in improving overall learning achievement. This contrasts with education systems which target improving their position in global league tables – where progress is rarely made and performance often drops. GPE should be rewarding countries that are pursuing greater equity.
Increasing the scrutiny of the budget
Perhaps most important of all is that we need to ensure that there is independent scrutiny of education budgets. If people are not confident that budgets allocated will be properly spent it is hard to advocate for more resources. There are many positive examples of national and local budget tracking, of community audit groups tracking school budgets and of budgets being posted on school walls to ensure full transparency. These are crucial for ensuring that governments are held to account by their own citizens rather than feeling accountable to external donors.
By focusing on increasing these 4 S’s GPE can make a transformative contribution, helping to build long term sustainable education systems that will be adequately financed long after GPE has left the scene.