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FEATURE STORYDecember 12, 2023

Demographic changes and fiscal constraints threaten the future of education in low-income countries

Education finance watch

A new World Bank-UNESCO report shows that a projected increase of the school age population in Africa will strain government financing for education and threaten countries’ ability to provide quality education for children and youth. In contrast, in other countries, particularly in Asia, declining school-age populations will free up financing for education.

Education Finance Watch 2023 (EFW), an annual report on the global state of education financing jointly produced by the World Bank, the Global Education Monitoring (GEM) Report, and the UNESCO Institute for Statistics (UIS), explores the challenges of demographic changes on education financing and learning outcomes. It shows that government education spending has not kept pace with the need to address post-COVID-19 learning losses and that development assistance to education has fallen.

“The magnifying glass consistently falls on sub-Saharan Africa,” says Luis Benveniste, Global Director for Education, World Bank. “We do not need to wait for any further cues to step up our financial support to the region in the remaining years to 2030 so that education opportunities there do not backslide. Progress is inclusive or it is incomplete. The future we envision for 2030 must encompass the entire world, leaving no one behind.”

The report shows that lower income countries with the highest population growth rates are projected to experience a decline in per-capita public education spending between now and 2030. For instance, Sudan will likely face a continuous decrease of per-capita education spending if they are not able to reverse their past trends and increase allocation to education in order to keep up with the school-age population growth rate, which is projected to rise by nearly 30 percent in the next 10 years.

On the other hand, populous countries in South Asia, such as India and Sri Lanka, will experience a decline in their school-age population growth from now to 2030, freeing up finance available per child.

The report also shows that average education investment per student in the richest countries (United States dollar (US$11,655) is thirteen times the education spending in middle-income countries (US$890), and two-hundred times the spending in low-income countries (US$56).

Therefore, households in low- and lower-middle-income countries are left to bear a significant amount on education, covering over one-third of total education spending. Even where primary education is proclaimed free, families carry substantial costs for school attendance. Expenses are high for enrolling children in private schools, increasing by up to 10 times in comparison to the cost of public schools in countries such as Ethiopia and Tanzania.  

Meanwhile, official development assistance, an important funding source for education for low-income countries, fell by 7 percent from 2020 to 2021. Development assistance represents 13 percent of total education funding in low-income countries.

The good news? Countries with lower education spending and efficiency are expected to see the largest learning gains from increased education financing. This is promising news for low-income countries. If government per-capita education spending in low-income countries were to increase by 30 percent (US$56 to US$73), then these countries would mitigate learning loss by more than 1/3 of a year’s worth of schooling. This is a necessary but not sufficient step to ameliorate pandemic-induced learning losses.

“In all countries, particularly those with relatively lower income, the level, efficiency, and equity of education spending is often inadequate to reach learning goals,” says Harry Patrinos, Senior Adviser in the World Bank’s Education Global Practice. “However, more money will not fully solve this.”

The report stresses that in the current climate of increasing inflation, high debt to GDP ratios (in many countries), and falling development assistance (particularly to low-income countries) spending smarter is the imperative and urgent next step.  More education spending does not necessarily lead to better education outcomes. An efficient use of resources should also be the focus, especially in countries facing fiscal constraints and demographic challenges.  By focusing on reforms that, for example, help deploy teachers efficiently, support effective teaching practices and procure textbooks sustainably, countries can go a long way in ensuring quality education for all.

The report also recommends a preference for funding foundational learning (literacy and numeracy) at the basic – especially primary levels – and making intergovernmental transfers more efficient and equitable by basing general- and specific-purpose transfers on a per capita basis. This recommendation comes against a backdrop of insufficient global spending on education, demographic shifts, and ongoing fiscal constraints, particularly in countries with less income.

Investing in people through education was the topic of a closed-door session of finance ministers together with World Bank Senior Managing Director Axel van Trotsenburg, World Bank Chief Economist Indermit Gill, and World Bank Vice President for Human Development Mamta Murthi during the October 2023 World Bank – IMF Annual Meetings in Marrakech, Morocco. During the “Financing Education in Times of Polycrisis” session, participants shared country experiences and challenges in managing the level and efficiency of education investments under strained public finances, while facing the urgent need to recover and accelerate learning.

“When we are talking about all these multiple crises, this [education] is a crisis that we can manage, if we have enough political will to stay focused and the willingness to pay for it, and that is because we owe these children,” said van Trotsenburg at the event.

Gill stressed that, “A scandalous imbalance exists in levels of government spending on education across the world: the richest countries spend more than $8,000 per student per year. The poorest manage just $54.”

The Minister of National Education, Preschool and Sports for Morocco, Chakib Benmoussa, emphasized that, “transforming education requires additional funding and resources, but they need to be allocated to what really makes a difference.”

While Seedy Keita, Minister of Finance and Economic Affairs, The Gambia, said that “Investment in education is investment in long-term human capacity. We feel it is a national duty to invest in education, and we will see the future dividends of these returns.”

Murthi reinforced this in her closing remarks at the event:

“The quality of education that students receive in many low- and middle-income countries remains poor. And too many children are out of school.  We are working with all partners to help governments in spending enough money on education and spending it well – so that funding goes to the right interventions and to the students most in need,” Murthi said.


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