Worlds of Education

Credits: World Bank Photo collection
Credits: World Bank Photo collection

The new compact on domestic financing for education

published 15 December 2017 updated 15 December 2017
written by:

The replenishment events of major global funds tend to be donor-dominated affairs, but on 2nd February 2018 the replenishment of the Global Partnership for Education (GPE) promises to be different. For the first time ever a replenishment conference will take place in Africa – hosted by Senegal – and on this occasion the financing commitments made by developing country governments to their own citizens will be as important as pledges made by donors.

Education is different to other sectors. You cannot finance progress on education with short term, unpredictable aid – because education is a long term investment that yields long term returns – and the major costs that need to be covered are the salaries of professional teachers.  Aid to education becomes valuable to the extent that it can leverage predictable and sustainable domestic investments.

Civil society organisations have come together to seize the opportunity presented by the GPE replenishment, agreeing a compact on domestic financing of education. This compact calls on developing countries to make early pledges to increase financing for education from their own budgets – as a means to leverage greater commitments from donors. It calls for governments to agree such pledges at the highest level, with approval from by Heads of State, Ministers of Finance and national parliaments, making sure all commitments are included in relevant annual budgets and medium term expenditure documents.

At the last GPE replenishment, developing countries pledged over $26 billion of new funding (compared to just $2.1 billion pledged by donors), but too many of those pledges lacked credibility so this time we are calling for all commitments to be based on agreed baseline figures, with clearly expressed targets and a commitment to track and report on pledges over time in a fully transparent way. This is essential for accountability – a crucial issue that has been highlighted by the latest Global Education Monitoring Report.

There are many different ways in which developing countries could formulate a credible pledge to increase financing for education. GPE has tended to focus only on pledges that involve increasing the share of the national budget being spent on education (towards at least 20% of national budgets). Unfortunately GPE is encouraging governments to calculate the share of the budget after debt servicing has been taken off – which has the undesirable consequence of making the burden of debt invisible. We ought to be looking at the percentage of total government spending allocated to education, before debt servicing, so that we can see more clearly the extent to which repaying debt is undermining spending on education.

However, the share of the budget spent on education is not the only indicator that should be valued. Somecountries already spend 20% of the budget on education but still lack the resources needed to guarantee quality public education as they have a very low tax base. For this reason, we want to encourage governments to also consider making credible pledges to expand their domestic tax base in progressive ways (targeting a tax to GDP ratio of at least 20%). This could be achieved in many ways, for example by clamping down on aggressive tax avoidance, by ending what the IMF term as ‘harmful tax incentives’ or by introducing new earmarked taxes for education.

However as the Paradise Papers show, aggressive tax avoidance is a global issue and some of the solutions for developing countries to expand their revenue require globally coordinated action. Gordon Brown has recently called on the G20 to take action to close down tax havens but we also need to end the control of the OECD over global tax policies and support the creation of democratic inter-governmental body that is fully resourced and empowered to set and enforce global tax rules. In the longer term we will need to explore the potential of a global wealth tax as proposed by Thomas Piketty or a financial transactions tax (as proposed by the EU).  Developing countries that prioritise spending on education in their own national budgets stand to gain enormously from global progress on tax justice and should add their voice to calls for fundamental reforms.

The compact on domestic finance of education also encourages developing country governments to consider making pledges to increase the sensitivity of education budgets– paying greater attention to equity and inclusion. Too often education budgets are skewed in favour of elites and fail to target sufficient spending on basic education or specific measures to support girls or increase the inclusion of children with disabilities.

Regardless of how much money is allocated to education it will not deliver change unless it arrives in practice. Transparency International have documented some shocking forms of corruption in education and if we are to reduce this we need to increase the independent scrutiny of education spending to make sure funds truly arrive on the frontline in schools, especially in disadvantaged areas. Action to ensure budgets are transparent and that funds are tracked independently (including with help from civil society) can help to ensure that new resources are converted into real delivery on the ground.

The compact on domestic financing ends by calling on developing country governments to adding to the collective voice for education - using any sub-regional, regional or international forums to come together and vocalise their support for greater investment in education. The moral power of developing country governments showing their own deep commitment to education could help to make the GPE replenishment a truly momentous event – but the struggle for sustainable financing of education will need to continue long after delegates have left Dakar.

The opinions expressed in this blog are those of the author and do not necessarily reflect any official policies or positions of Education International.