The annual financing gap to achieve SDG 4 targets is almost $100 billion

By Yuki Murakami, GEM Report

Slow progress between 2015 and 2020, further challenged by the COVID-19 pandemic, has put the world off track to achieve the global SDG 4 targets of universal pre-primary, primary and secondary education by 2030. Costing the achievement of these targets, as we attempted twice before in 2015 and 2020, is therefore no longer relevant, as these are unattainable by the original deadline.

However, in the past two years, countries have established more realistic, if still ambitious, targets on selected SDG 4 indicators: the SDG 4 benchmarks. According to their benchmarks, low- and lower-middle-income countries aim to increase participation rates in early childhood education from 71% to 85% and more than halve their out-of-school rates between 2020 and 2030. We worked on costing up achieving these benchmarks in a new paper as a reality check for the ministers of education and finance meeting at the World Bank/ IMF Spring Meetings this week; given the political will is there, we must find the funds to support it.

Our calculations found that achieving these national SDG 4 targets by 2030 still involves rapid cost increases, which even optimistic assumptions of domestic revenue mobilization cannot match. We estimate that there will be an annual financing gap of $97 billion on average in the 79 low- and lower-middle-income countries between 2023 and 2030, or 21% of the total cost.

The financing gap makes up 21% of the total cost of achieving countries’ SDG 4 targets

The average financing gap for countries’ SDG targets is $26 billion (or 50% of the total cost) in low-income countries and $71 billion (or 17% of the total cost) in lower-middle income countries. Sub-Saharan African countries account for the largest chunk of the gap: $70 billion per year on average. This is perhaps not surprising given that it is the region with the furthest distance to travel with 20% of primary school age children and almost 60% of upper secondary school age youth not in school.

A few interesting facts emerged during the modelling exercise. We found that the number of pre-primary educators needs to triple in low-income countries and double in lower-middle income countries by 2030 for countries to reach their targets. Additionally, the number of primary school teachers will need to increase by nearly 50% in low-income countries.

A few updates were made to our costing model from the last time, notably changes reflecting a lower-than-expected GDP growth in low-income countries; a slight increase in projected numbers of students by 2030; updated classroom construction costs; and faster than expected convergence towards pupil/teacher ratio targets. Worth noting is that our calculation did not include the potential cost implications of COVID-19, which are as yet unclear.

Of course, if aid were to increase generously, and equitably, a considerable part of this gap could be covered. If DAC aid donors were to pledge 0.7% of GDP to aid as per their commitments and prioritize education in their total aid portfolios, basic and secondary education within their aid to education portfolios, and low- and lower-middle-income over upper-middle-income countries, an additional $29 billion would be raised, filling almost a third of the gap.

Fulfilling aid commitments and prioritizing basic education in the poorest countries could fill almost a third of the SDG 4 financing gap

As it is, however, the long-term stagnation of aid in donor countries’ budgets does not present a cause for optimism. Some donors are better at targeting their aid to those most in need, as the below graph, available in an interactive format on our SCOPE website shows, which means others need to follow.

The United Kingdom, for instance, allocates 10% of its total aid to education, but the share of this that it is spending on basic education has fallen from a peak of 81% in 2006 to 46% in 2021; the share it allocates to low-income countries fell from 35% in 2010 to 15% in 2020.

Outside of this, countries will also need to weigh how to finance quality education for all children relative to other emerging priorities such as digital transformation, an issue tackled in the paper which will be covered in an upcoming blog.

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