THE FUNDING GAP, 2: How donors can meet their pledges

In 2000, rich countries promised that no country seriously committed to achieving Education for All by 2015 would be thwarted because of lack of resources. The promise has been repeated at every summit for the past decade, but projections in this year’s Education for All Global Monitoring Report show that on current trends, there will still be 56 million out of school in 2015.

What will the outlook be at the G-8 summit in Muskoka in June? (Photo: Department of Foreign Affairs and International Trade, Canada)

In the first part of this three-part post we urge G-8 countries to use their summit in Canada in June to bridge the Education for All funding gap. Here we set out how they might do that via a “fair shares” arrangement – and how individual donors might meet their individual commitments.

Since we launched the 2010 GMR, concerns have been raised over the size of our cost estimates for the aid needed to close Education for All financing gap. The headline number – around $16 billion for 46 low-income countries – is large. True, it pales into insignificance when measured against the cost of bank bail-outs. But with many donors facing acute budget pressures, G-8 political leaders need to know what a “Gleneagles plus” commitment on education will cost.

Unpacking the $16 billion figure helps to address that question. Table 1 provides a snapshot of the financing gap and a scenario for closing it. It starts by subtracting current aid ($2.7 billion) and the financing that falls under other aid budget heads, such as health, nutrition and social protection ($3.3 billion).

The lower part of the table then breaks the remaining financing gap into two parts. It assumes that concessional aid will have to increase by about $7.9 billion through three routes: meeting the Gleneagles commitment, increasing the share of education aid directed to basic education in the poorest countries, and increasing commitments to these countries. Looking beyond concessional aid, we assume that about $2.3 billion can be mobilized from new sources of finance.

Table 1: The aid financing gap – and a scenario for closing it (46 low-income countries)

The G8 summit in June in Muskoka, Canada, matters for an obvious reason. Without the active involvement of the countries at the table, the Education for All financing gap will not be closed. But what might a “fair shares” arrangement look like – and how might individual donors meet their commitments?

Figure 2 might help to inform the negotiating process. Briefly summarised, and parking the technical details, it is based on an assumption that G-8 countries collectively cover a share of the aid financing consistent with their share of donors’ national income – and that the costs within the group are again shared on the basis of national income.

The gaps between 2006/2007 aid commitments and the circles marked on the graph show far how each country would have to go to meet its “fair share.” And the figure illustrates how much of the gap could be closed by acting on the 2005 Gleneagles commitment and increasing to 50% the share of education aid going to basic education in poor countries.

Figure 2: Closing the education for all financing gap – a “Gleneagles plus” scenario for the G-8

Here are some of the “fair share” headlines:

  • Germany needs to make available another $594 million annually – a target it could reach almost entirely by increasing the weight attached to basic education in poor countries.
  • The $391 million that France needs to mobilize would be delivered by meeting the Gleneagles commitment and reprioritizing in favour of basic education and poor countries.
  • Canada and the United Kingdom are close to the target.
  • For the United States, a “fair shares” commitment would translate into about $2.6 billion in extra aid, over and above the Gleneagles commitment.
  • Japan could only meet the target through aid redistribution in favour of low-income countries and additional aid of $399 million.
  • Italy’s position reflects a long-term neglect of education, coupled with a sustained failure to meet commitments made at G-8 and European Union summits.

It should be stressed that this scenario is intended for illustrative purposes. Other burden-sharing arrangements are possible. For example, donor prioritization might dictate a case for some countries attaching more weight to education than, say, to health or water, on the basis of expertise.

Similarly, the weak overall performance of donors like Italy may require other countries in the G-8 and beyond to step up to the mark. The bottom line, though, is that G-8 leaders have a collective responsibility to move further and faster in closing the financing gap.

One technical caveat is necessary. Figure 2 does not capture the full cost of going the final mile. Bilateral donors will also have to direct increased resources through multilateral aid, notably the World Bank’s International Development Association (IDA). We estimate the G-8 share at about $1.5 billion.

With negotiations on the replenishment of IDA now under way, the Muskoka summit could send an important signal. Moreover, because IDA has a far stronger focus on basic education in the poorest countries than the bilateral programmes of countries like Germany, France and Italy, it could act as a vehicle for redistribution.

In many ways the G-8 has become a quaint anachronism that has been overtaken by the rise of the G-20. Some commentators predict that the Canada event will be its swan song. What better legacy to leave than a deal that puts millions of kids into school? This, after all, is an area in which the G-8 can still make a difference.

In the third part of this three-part post we focus on the other sources of funding for Education for All that also need to be explored, including non-traditional donors, philanthropic foundations and innovative financing.


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