Pays for Education?
education financing changed over the past decade? Almost all
the current financial models in the world bring a variety of
different partners together. Good education depends at least
in part on the quality of those partnerships. In other words,
it is not just a matter of how much money is spent, but how
well it is spent.
Maris O’Rourke of the World Bank admits that the World Declaration
on Education for All did not fully recognize the need for a
plan to mobilize resources a decade ago. “There is a widespread
understanding now that no country is ever going to pull itself
out of poverty or have social or economic growth without educating
its people,” she comments, highlighting the “remarkable strides”
made in this field by countries such as Brazil, China and India.
However, as she puts it, “there was never an overall resourcing
framework or a real understanding of how much finance would
be needed to reach the goal.”
around 63 per cent of the cost of education is met by governments,
with the second largest contribution, 35 per cent, coming from
the private sector: a combination of students, parents, employers,
non-governmental organizations (NGOs), and commercial enterprises.
The final 2 per cent comes from overseas aid programmes. The
central role played by government is clear. “You can’t get past
the sovereignty of governments to allocate their budgets,” says
thematic study on partnerships prepared for the EFA 2000 Assessment
identifies a key point: In developed countries with better tax
systems, governments simply have more money to put into education;
in poorer countries other partners have to play a more significant
role. According to UNDP, tax revenues represent 26 per cent
of gross domestic product (GDP) in industrialized countries
and less than half that in developing countries. In Cambodia,
only 12 per cent of the funding of the ’public’ education system
actually comes from the government. Households and communities
meet 60 per cent of the bill, NGOs and foreign aid account for
18 per cent and politicians donate 10 per cent.
the collapse of central government leads to alter-native, non-formal
arrange-ments. During the civil war in El Salvador, for example,
com-munities realized they could not expect help from the government
and hired their own teachers for schools that had been closed
because of the fighting. This was the birth of EDUCO, a communal
education movement, which, after the war ended, received government
A different example of non-formal education is the Bangladesh
Rural Advancement Committee (BRAC) which operates parallel
to government primary schools and serves around 1.2 million
children. “NGOs have shown themselves to be enormously cost-effective
in education delivery. They often use highly unconventional
approaches to difficult subject areas where traditional methods
have failed”, says Gordon Naidoo, who heads a South Africa-based
off Debt to Fund Education
impact of foreign debt is one of the principal reasons
education budgets suffer.
While investing in education yields major long-term
benefits, governments face pressing short-term demands
for resources to service foreign debt payments. Falling
into arrears has an immediate negative effect on a
country’s ability to raise credit or pay for its imports.
Yet at the global level, there is a strong cost-benefit
argument to be made for writing off at least some
international debt and using those resources to invest
in education, at a time when overseas aid from rich
to poor countries is declining.
The 1996 Heavily-Indebted Poor Countries
debt relief initiative supported by the World Bank
and a group of wealthy countries acknowledged the
social cost of structural adjustment policies. The
G8 meeting of some of the world’s richest countries
in Cologne in 1999 widened its scope. Yet many argue
that debt relief is still moving too slowly, is too
bureaucratic, and is too restricted by special conditions.
Has the role of overseas aid changed? Another thematic study
prepared for the EFA 2000 Assessment, by the Overseas Development
Institute, notes that aid to education, as a proportion of overall
bilateral aid, has remained fairly steady at 15 per cent throughout
the decade, despite the downward trend for overall bilateral
aid. Multilateral commitments to education rose to an annual
peak of US$2 billion in 1994, falling back to US$1.3 billion
in 1998. The study detects a move away from conventional delivery
systems, such as projects and programmes, towards a sector-wide
approach or “policy dialogue and partnership to ensure that
aid is used in accordance with host government policy priorities”.
63 per cent of the cost of education is met by governments,
35 per cent comes from the private sector and 2 per cent comes
from overseas aid programmes.
Different funding partners each have strengths and weaknesses,
and the key to success is to make the best out of their various
assets. Central government funding, for example, is often progressive
(depending on the tax system); it can be used to back a national
curriculum or get more girls into school. Yet it can also be
remote from local realities, or at worst be seen as imposing
unpopular policies or an unpopular language. Community funding,
which is more attuned to local needs, tends to involve parents,
who in turn have a positive influence on school effectiveness.
Some campaigners consider school fees the single most
important barrier to educational access for the poor, while
others feel it is acceptable to mobilize resources from those
who can afford to pay, on condition that access for the poor
is ensured. China has effectively acknowledged that govern-ment
and community-funded systems must run side by side in rural
areas, a policy called “walking on two legs”.
Given the wide variety of funding arrangements around
the world, there can be no single model which is right for everyone.
But a variety of tried and tested models now exist which can
be stud-ied, then copied or adapted to different settings. EDUCO
and BRAC are just two of the more successful examples.
Economic Crisis Strikes
economic crisis strikes education, governments and
communities are distracted into ’taking their eye
off the ball’ as they concentrate on short-term survival.
The 1990 World Declaration on Education
for All urged governments to allocate a greater slice
of the “economic cake” to education. But the size
of the cake itself can shrink overnight, sometimes
Economic crises, whether triggered by
the collapse of monetary systems, austerity policies
or a heavy debt burden, spark a classic vicious circle.
By preventing the development of human capital, they
weaken the economy which may collapse again the next
time commodity prices fall or exchange rates fluctuate.
The “softer” budgets – education, health, and housing
– are often axed first, undervaluing the critical
importance of education for development.
Even a relatively prosperous country
like Costa Rica can be affected. During Latin America’s
“lost decade” in the 1980s, spending on basic education
fell by an annual average of 4.8 per cent between
1980 and 1987. Enrolment rates fell and dropout rates
rose. The East Asian financial crisis of 1997-99 had
a similar impact. In Indonesia, the education budget
plummeted by 12 per cent in 1997/98 and by a massive
30 per cent in 1998/99. To avoid fees, families postponed
school entry for their children.
Some countries managed to keep their
eye on the ball during the hard times. Government
spending on education in Thailand was held constant,
while Malaysia even managed to increase its spending.
In the Republic of South Korea, households actually
spent more on education to compensate for government
cuts. These examples show that if governments and
communities are prepared to plan for the long term,
then providing basic education for all, despite cyclical
economic downturns, is an absolutely affordable proposition.
It just requires the political will to make it happen.