Policy Paper 36, May 2018 - Aid to education: a return to growth?

The Sustainable Development Goals (SDGs) have set an ambitious target for the international community: by 2030, all young people should be completing secondary school of good quality. The challenge is a daunting one; in 2010–2015, on average only 45% of young people were completing secondary school. More and better financing will be an essential part of any strategy to achieve the goal.

This financing cannot come only from the countries most affected by the challenge; international solidarity is needed. In 2015, the Global Education Monitoring Report estimated that an annual funding gap of at least US$39 billion per year would persist in 2015–2030, even after accounting for an expansion of low and lower middle income countries’ capacity to raise their own revenues for education. Closing the gap would require a six-fold increase in levels of aid. About half of that gap refers to low-income countries, where as much as 42% of education costs would need to be met by external financing (UNESCO, 2015).

The 2015 Addis Ababa Action Agenda provided a global framework for financing the SDGs, including SDG 4 on education. It addresses all sources of finance, but particularly focuses on public and external sources.

On public financing, the Agenda included a commitment to ‘redouble efforts to substantially reduce illicit financial flows by 2030 … including by combating tax evasion and corruption through strengthened national regulation and increased international cooperation’. A further commitment was made to reduce opportunities for tax avoidance through incorporating anti-abuse clauses into tax treaties. Countries also committed to ensuring that ‘all companies, including multinationals, pay taxes to the Governments of countries where economic activity occurs and value is created’ (United Nations, 2015).

On external financing, developed countries committed once again to allocate 0.7% of gross national income to aid. Indeed, the GEM Report estimated in 2015 that the funding gap could be filled if all donors from the Organisation for Economic Co-operation and Development Development Assistance Committee (DAC), as well as selected non-DAC donors, were to meet this target and also allocate 10% of their aid portfolio to basic and secondary education.

This paper provides an update on donor commitments using the latest available data. It also discusses the prospects for the main multi-stakeholder partnerships in external financing in education, a type of initiative that the Addis Ababa Action Agenda recognized as essential. The year 2018 could be an important one for the international education financing architecture.

In February, the Global Partnership for Education secured pledges to replenish its fund for 2018–2020.
Another multilateral partnership, Education Cannot Wait, is consolidating its position as a focus point for the financing of education in emergencies. Finally, the International Finance Facility for Education, an initiative of the International Commission on Financing Global Education Opportunity, is taking shape as a proposal to donors and multilateral banks. The status of these three mechanisms underlines the need for education to be given higher priority in international development cooperation.