THE FUNDING GAP, 3: Innovative financing

Projections in this year’s Education for All Global Monitoring Report show that on current trends, 56 million children will still be out of school in 2015. Donors need to stop talking and start delivering on their education aid promises – a point that the UNESCO Director General has repeatedly stressed.

In the first part of this three-part post we urge G-8 countries to use their upcoming summit in Canada to bridge the Education for All funding gap.

In the second part of this post we set out how they might do that via a “fair shares” arrangement – and how individual donors might meet their individual commitments.

Here we focus on the other sources of finance for Education for All that also need to be explored.

“Non-traditional” donors could be one avenue for mobilizing resources. South Korea, along with Saudi Arabia and other Arab states, could provide leadership in this area. South Korea has two distinctive advantages. First, as the host of the next G-20 summit in November, it is well placed to ensure that education figures on the agenda. Second, if there is one country that demonstrates the potential for inclusive education to act as a force for economic dynamism, poverty reduction and human development, it is South Korea.

Philanthropic foundations are another potential source of finance and innovation. They have played a key role in developing international health initiatives, mobilizing resources and galvanizing political support. By contrast, corporate philanthropy in education has been limited and fragmented, with an undue emphasis on individual projects.

Innovative financing also has a role to play. We have recently seen a proliferation of proposals from governments, non-government organizations and think tanks calling for a levy on financial transactions. Even small levies can deliver big money in markets characterised by high turnover. For example, a 0.005% tax on currency transaction could generate $33 billion. Extending the levy to wider financial transactions has the potential to push that figure up to $376 billion.

Such levies would have to be carefully designed. But as Jeff Sachs and others have argued there is a powerful economic and political case for moving in this direction – and the IMF is currently considering a range of options. Moreover, new political coalitions are emerging as powerful advocates for levies on financial transactions. One thing is clear: using even a small part of the proceeds from taxes on financial transactions to aid children’s education could give a powerful impetus towards the 2015 Education for All goals.

On a more modest scale, the 2010 Global Monitoring Report advocated a levy of 0.4% on the commercial marketing revenues of the major European football leagues. We estimated that the resulting income could put half a million children in school each year to 2015. This is something that a pre-World Cup education summit could take up.

There is no shortage of good ideas on innovative financing. But as in other areas, advocates for education have been slow to shape the agenda – and the education sector has been largely bypassed.

This needs to change. With aid budgets coming under mounting pressure as donors grapple with fiscal deficits, high unemployment and spending demands at home, innovative financing offers another, potentially dynamic, vehicle for increasing aid funding. Initiatives developed by Chile and France and other countries highlight the political momentum now gathering pace.

While innovative financing is not, as some donors appear to imagine, an alternative to meeting aid commitments, it is a powerful supplement. And we need to ensure that support for education is part of that supplement.



  1. The problem is not really external funding, at least in South Asia, but the need to create national capacities in terms of economic growth, relevant fiscal policies etc, to sustain EFA efforts. Otherwise external aid would create an EFA bubble, to collapse once external aid will have ceased; Not to mention i) the extreme versatility of aid options decided by the donors..ii) the political dependency created by external aid !
    Kenneth King and Keith Lewin have very well analysed the problem of aid and sustainability.

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