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Education Plus Development

It’s Time to Reverse Declining ODA to Education

Katie Smith and Liesbet Steer

For education aid, we need to restore the spirit of the early 2000s if the SDGs are to get off to a good start.

The recently released 2013 aid data by the OECD’s Development Assistance Committee (DAC) shows a further decline in education aid for the third consecutive year. Basic education suffered in particular; while total overseas development assistance (ODA) rose by 11 percent in 2013, aid to basic education declined by 7 percent.

A Hot-Cold Attitude toward Education

Looking more closely at the numbers over the past 10 years shows a marked shift in prioritization. In the first half of the decade, aid to education grew twice as fast as overall aid; while in the latter half of the decade, education aid grew much slower than overall aid. This “hot then cold” attitude towards education stands in stark contrast with support to health, which has consistently outperformed overall ODA growth throughout the decade.

Figure 1. Trends in Total and Sector Allocable Education and Health ODA over the Decade (2002-2013)

total oda

The declining support to education is puzzling at a time when global surveys consistently show that support for the sector is critical for successful development. In the UN’s My World Survey education was voted as the issue that mattered most by 4.7 out of 7 million voters. The World Bank Country Opinion Surveys also show that education is ranked top among sectors by governments seeking to borrow from the World Bank. Several major studies in recent years have also shown the importance of education for achieving non-education development goals.

Interestingly, the de-prioritization of education in aid portfolios is driven most strongly by a decline in funding for education by multilateral donors. While total multilateral aid increased by 146 percent over the decade, multilateral aid to education increased by a lower 102 percent, and multilateral aid to basic education aid fell by 18 percent.

The decline in basic education aid raises questions around where and how scarce aid dollars could be most effectively spent, even within the education sector. Recent evidence on rates of returns continue to highlight that social returns for pre-primary and primary education are greater than for higher levels of education. At the same time, higher levels of education have much stronger private returns. This suggests public spending (from governments or donors) should ideally be focused on improving access and quality of education at lower levels, with much more selected interventions focused on system strengthening, support for marginalized groups, or specific higher education fields with high social returns. We agree with others however that much better longitudinal evidence is needed to assess benefits of early education that only occur much later in life. The lack of such rigorous data is education’s Achilles heel.

A Need for Donors and Other Actors to Help Fill the Financing Gap

At the Brookings Institution we are working on a number of reports to get a deeper understanding of the level and quality of spending on education by national governments, donors, and private actors. The optimal levels of different types of financing will need to be determined based on each country’s development goals and financing contexts (including domestic revenue capacity and access to alternative sources of finance). What is clear, however, is that national governments and in particular low-income countries are struggling to raise the necessary financing for education from their own revenues.

The UNESCO Global Monitoring Report recommends developing-country governments spend 6 percent of their GDP on education, or 20 percent of government budget if revenues equal 30 percent of GDP. Most developing countries, and in particular low-income countries, fail to achieve these financial targets (see Figure 2). Only a few countries (shown above the curve) have the right mix of government revenue and education spending to achieve the financial targets. While quite a few countries spend more than 20 percent of their budgets of education, most do not mobilize enough revenue to be able to achieve education goals. Many countries often heavily subsidize higher education, often at the expense of lower levels of education.

Figure 2. Government Revenue as a Percent of GDP versus Education Spending as a Percent of Government Expenditures, Most Recent Year (2008-2010)

Authors

K

Katie Smith

Former Research Analyst - Global Economy and Development, Brookings Institution

education spending

This suggests there is a clear need for aid and other sources of finance to fill gaps and for aid to play an important role in supporting basic education. Of all sector allocable overseas development assistance going toward education, the current share put toward basic education is only 24 percent. This clearly falls short of what is needed.

A Roadmap for Boosting Education ODA

We must seek to better understand why current donor investments in education—and in particular basic education—are falling short of needs and expectations. Along with Geraldine Baudienville in 2009, I have looked at this issue before. We identified possible drivers in that study, the three most important of which were:

  1. Lack of prioritization and leadership. While many donors—including multilateral agencies—have made strong public statements about the importance of education, they have not been backed by aid commitments. Given that aid agencies are increasingly decentralized, implementing central priorities will require clear incentives. The sector also lacks a visionary narrative. Such a narrative has been created more successfully in others spheres, such as in climate change through their recent Global Commission on the Economy and Climate.
  2. Failings in aid architecture. Lack of donor coordination, ineffective division of labor, and unpredictability of aid have limited the scale and effectiveness of donor support to education. The lack of strong global coordination is a particular problem for the education sector. A lack of innovative approaches to raising and delivering financing are also hampering progress. Donor financing can address funding gaps directly, but perhaps more importantly it can help leverage the mobilization and allocation of domestic resources that are by far the most important sources of financing in education. Opportunities may also have been missed to engage with new players, such as private actors, in part due to ongoing ideological debates around the role of those actors in the delivery of basic education.
  3. Poor evidence and use of evidence in advocacy. Our 2009 study highlighted that the evidence-based case for education has not been made strongly enough. While data on education systems and outcomes has improved significantly over recent years, in part due to the increasing number of rigorous evaluations, several types of evidence continue to be missing—including reliable and consistent estimates of funding needs (many education country plans do not include cost estimates) analysis of different cost recovery and financing arrangements and evidence on the impact of education interventions on learning outcomes or other socio-economic benefits later in life.

Close to 60 million children of primary age remain out of school, and an estimated 250 million children are lacking basic reading and writing skills. This must be urgently addressed if the world still seeks to achieve the Sustainable Development Goals it will be setting in 2015. We need all hands on deck—including those of the international community.