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Overview

Education is a human right, a powerful driver of development, and one of the strongest instruments for reducing poverty and improving health, gender equality, peace, and stability. It delivers large, consistent returns in terms of income, and is the most important factor to ensure equality of opportunities.

For individuals, education promotes employment, earnings, health, and poverty reduction. Globally, there is a 9% increase in hourly earnings for every extra year of schooling. For societies, it drives long-term economic growth, spurs innovation, strengthens institutions, and fosters social cohesion.

Developing countries have made tremendous progress in getting children into the classroom and more children worldwide are now in school. But learning is not guaranteed, as the 2018 World Development Report (WDR) stressed.

Making smart and effective investments in people’s education is critical for developing the human capital that will end extreme poverty. At the core of this strategy is the need to tackle the learning crisis, put an end to Learning Poverty, and help youth acquire the skills they need to succeed in today’s world.

Education systems across the developing world are now experiencing the worst crisis in the last century.  With the spread of COVID-19, more than 160 countries at the end of March 2020 mandated some form of school closures, impacting at least 1.5 billion children and youth. Education systems around the world continue to grapple with the complex decisions of when and how to reopen.

Even before the COVID-19 pandemic, this global learning crisis was stark. The learning poverty indicator, created by the World Bank and UNESCO Institute of Statistics and launched in 2019, gives a simple but sobering measure of the magnitude of this learning crisis: the proportion of 10-year-old children that are unable to read and understand a short age-appropriate text. In 2019, before COVID hit, an alarming 53% of children worldwide failed to reach this basic bar of proficiency in reading and comprehension, putting the Sustainable Development Goal 4 targets in jeopardy. In Sub-Saharan Africa, the figure reached up to 90% in many countries. 

COVID has made this dark situation even more grim. COVID-related school closures are forcing countries even further off-track to achieving their learning goals.  As seen from previous health emergencies, the impact on education is likely to be most devastating in countries with already low learning outcomes, high dropout rates, and low resilience to shocks. Education systems face a triple funding shock, with COVID-19 expected to put significant strains on household and donor funding that will only add to its effects on government funding. Due to learning losses and increases in dropout rates, this generation of students stand to lose an estimated $10 trillion in earnings, or almost 10% of global GDP, and countries will be driven even further off-track to achieving their Learning Poverty goals – potentially increasing Learning Poverty levels to 63%.

Education Finance

Compounding this situation, despite additional funding needs, two-thirds of low- and lower-middle-income countries have cut their public education budgets since the onset of the Covid-19 pandemic, according to the joint World Bank – UNESCO Education Finance Watch (EFW)

In comparison, only one-third of upper-middle and high-income countries have reduced their budgets.  These budget cuts have been relatively small thus far, but there is a danger that future cuts will be larger, as the pandemic continues to take its economic toll, and fiscal positions worsen.  These differing trends imply a significant widening of the already large spending disparities seen between low- and high-income countries.

According to EFW, prior to the COVID-19 pandemic, in 2018-19, high-income countries were spending annually the equivalent of US$8,501 for every child or youth’s education compared to US$48 in low-income countries. COVID-19 is only widening this huge per-capita education spending gap between rich and poor countries.

EFW stresses that the education finance challenge is not only about mobilizing resources, but also about improving the effectiveness of funding. Unfortunately, recent increases in public education spending have been associated with relatively small improvements in education outcomes. 

Countries and the international development community must invest more and invest better in education systems and strengthen the link between spending and learning and other human capital outcomes.

Last Updated: Oct 22, 2021

BROCHURE

The World Bank
SLIDE SHOW Oct 12, 2021

Ending Learning Poverty and Building Skills: Investing in Education from Early Childhood to Lifelong Learning

The World Bank is the largest external financier of education in the developing world. We support education programs in more than 100 countries and are committed to helping countries increase access to quality education at all levels, reduce Learning Poverty, and develop skills, by putting in place education systems that assure opportunities for all.

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