With projected cuts that could halve education aid to some low-income countries, it is time to consider what we can do better and more efficiently to improve education outcomes despite limited budgets.

The most dangerous thing in many African communities isn’t violence or disease—it’s the silence of empty classrooms. Right now, 272 million children and youth are out of school.

In Africa, the place where I was born, for every 100 children and youth, 28 are out of school- almost twice the rate as in the rest of the world; for every ten children on the continent, only two emerge at the end of primary school able to read and understand what they are reading.

Despite this bleak outlook, there are signs of improvement. Countries have committed to reducing the number of out-of-school children to 165 million by 2030.  Completion rates have been growing steadily at almost one percentage point per year throughout the past 20 years. Learning has improved faster in Africa than in the rest of the world, and even access to technology in education is on the rise. However, much of this progress depends heavily on external financial support. In the poorest countries, aid to education corresponds to 17% of their public education spending, rising to half in some cases.

Countries can, of course, step up, look at improving domestic resource mobilization, prioritizing education and reducing inefficiencies in spending, but the fact remains that sharp shocks in aid for the countries that rely on it the most will hurt. This week, the UNESCO Global Education Monitoring Report showed that aid to education fell sharply in 2024. This trend is expected to accelerate in line with several donors’ announcements of cuts at a scale unseen since the 1990s. Based on current donor portfolios and announced reductions, aid to education could fall by one-third in Madagascar and Mali and by one-half in Chad and Liberia.  These cuts will shrink some countries’ education budgets by half.

In my role as Chairperson of the Commonwealth Youth Council, I represent over 1.5 billion young people from 56 countries across the Commonwealth, and I also work with numerous young people through other networks. We are calling for external financing to be protected for supporting education in the poorest countries.

For every ten dollars that is spent on aid at present, only two go to the poorest countries. Currently, not much less than that (14% of aid) is being spent on scholarships for individuals to study in donor countries; aid which does not directly develop or strengthen the education systems of the countries from which those students come.

With less than five years remaining for the implementation of the 2030 Agenda for Sustainable Development, ineffective education financing has left a $97 billion annual financing gap for low- and lower-middle-income countries to achieve their national SDG 4 targets by 2030. Looking just at low-income countries, half of the cost of reaching their targets is unfunded.

This gap didn’t happen by accident. The latest SDG 4 Scorecard indicates that countries are deviating from their education finance targets, which specify the share of their budgets that should be allocated to education, for example. And donors are not fulfilling their promises either. If donor countries had met their targets of allocating 0.7% of their gross national income (GNI) to official development assistance (ODA) and prioritized education, and in particular basic education, it would have mobilized an additional USD 29 billion per year for education, helping to bridge almost one third of this gap.

These cuts are within a context of growing geopolitical tensions and shifts in the global landscape, which are overshadowing the importance of education as a safe bet for our common future. Educated communities are thriving communities, which I can testify to from the members of the youth councils I represent. When we educate a child, we unlock their potential. When we invest in a young person’s future through their education, we build a stronger world for everyone; a more peaceful world for us to depend on.

As political leaders gather in Seville this month for the IV Conference on Financing for Development, let’s call not only for more robust and sustainable funding for education but also for stronger support to countries, especially the poorest ones, in achieving their education targets. With projected cuts that could halve education aid to some low-income countries, it is time to consider what we can do better and more efficiently to improve education outcomes despite limited budgets.

Young people, particularly those in Africa, will be the most severely affected by these cuts. We stand ready to support in advocating for stronger education systems to be protected. It is time to carefully shift more resources towards multilateral channels and through national budgets for ownership and alignment with countries’ plans. It is also time to shift resources towards system and institutional development programmes and to lower the cost of living, while simultaneously supporting global public goods in education.

It is time to act; our future is at stake.

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As the former European Commissioner for International Partnerships, I have witnessed firsthand both the transformative power of education and the devastating consequences when it is denied. From the child in rural Papua New Guinea who walks hours to reach a school with no books, to the refugee girl in Jordan whose education was interrupted by conflict, and the young person in Uganda whose family cannot afford school fees, they all deserve better.

Yet our commitment to ensure quality education for all by 2030 is hanging by a thread. There are currently 272 million children, adolescents and youth out of school – 21 million more than we previously estimated, according to new figures from UNESCO. In low-income countries, only one in ten students achieve minimum proficiency in reading by the end of primary school. These children are not failing, I hasten to add. We are failing them.

There is no lack of commitment or understanding of education’s importance. What we have is a fundamental breakdown of our financing architecture. Countries have written national commitments to bring down the population of those out of school by 165 million by 2030, but low- and lower-middle-income countries face an annual financing gap of at least $97 billion to achieve their targets. In the poorest countries of this group, half of the cost to meet national education targets remains unmet.

In such contexts, external assistance represents a lifeline. In countries like Gambia and the Central African Republic, international aid accounts for up to half of all public education spending. Yet this critical support system is not only inadequate; it is actively deteriorating.

First, there is a stark mismatch between need and allocation. Only one-fifth of education aid reaches low-income countries, precisely where the financing gaps are most severe. Support for basic education, which covers the formative primary years, is waning and attention shifting to secondary or tertiary education. Meanwhile, we can see an 80% increase in scholarship spending since 2010. This is a worthy investment, but one that primarily benefits middle-class students who can navigate higher education systems, not the millions of children who cannot yet read.

Perhaps most alarming is what lies ahead. A new paper by the Global Education Monitoring (GEM) Report at UNESCO shows that, wrapped up in global politics, aid to education is projected to fall by a quarter between 2023 and 2027. These projected cuts could halve education spending in some low-income countries like Liberia and Chad.

The shift among donors from grants to loans compounds this crisis. Currently, 60% of education aid comes through grants – far more than for most other sectors – but the growing preference for loans threatens this balance. This trend risks adding to the debt burden many countries are already struggling with: 2.1 billion people live in countries that spend more on debt service than on education. How can we ask countries to invest in their children’s future if they are grappling with fiscal survival?

While donations are always welcome, the way they are disbursed is not always very effective. Bilateral aid increasingly bypasses national systems, leaning towards funding projects instead, which are easier to measure, monitor, and account to taxpayers at home. Only 17% of funds from bilateral donors are channelled through recipient governments, compared to 60% from multilateral organizations. In the most extreme examples, such fragmented disbursement means that the number of donors per country is in the high twenties, leaving a huge administrative headache for ministries to manage.

As humanitarian crises multiply globally, donors are understandably redirecting resources to emergency response. Therein lies a misunderstanding, however. According to new research by the GEM Report and Education Cannot Wait, a growing share of development aid is being directed to education in emergencies and protracted crises. In 2021, nine out of every ten dollars being spent on education in emergencies came from development aid. In a time of reduced finances, clarity like this is critical.

The upcoming Fourth International Conference on Financing for Development taking place later this week offers a crucial opportunity to address some of these challenges, but only if we are willing to fundamentally rethink our approach.

Don’t think that we don’t have the resources. We do. Just two and a half days’ worth of annual military spending equals the amount going on aid to education per year. But we need political will. The international community must recognize that education financing is not charity, it is an investment in our shared future, and a more peaceful one at that.

The outcome document for this month’s conference that world leaders will be discussing includes a commitment to support adequate financing for inclusive, equitable, and quality education for all. This needs to be carefully monitored. Donor countries have not honoured their commitment to dedicate 0.7% of their gross national income to official development assistance but are also on course to reduce their contribution to levels not seen since 2000. It is never too late to learn from past mistakes, of course. All those working on education in country and at a global level must remind donors to respect the principles of the Paris Declaration on aid effectiveness, especially ownership and alignment.

The outcome document crucially also calls for reforming the international financial architecture and addressing the crushing cost of borrowing. Since 2015, the average share of education in total public expenditure has fallen by 0.7 percentage points, and in middle-income countries by as much as 2 percentage points, under the pressure of rising debt. Such reforms cannot come early enough.

We owe it to the world’s poorest countries to find ways to lower their lower borrowing burdens. Debt-for-education swaps have already been successfully implemented between Indonesia and Germany (2002-2011), Peru and Spain (2006-2017), and Côte d’Ivoire and France (2023). Such innovative methods must be expanded and explored.

The point to understand is that the cost of inaction extends far beyond individual tragedy. Countries with better-educated populations are more resilient, more innovative and more peaceful. They are better equipped to address climate change, reduce inequality, and build sustainable economies. Education is the foundation upon which all other progress depends. The question is not whether we can afford to properly fund education globally. It is whether we can afford not to.

This blog post was originally published in Modern Diplomacy on 1 July 2025.

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There is a growing recognition of the central role of education in responding to increasing needs across humanitarian and development contexts. However, information on the way education in crises is financed remains scattered and incomplete. A new joint policy paper released by Education Cannot Wait (ECW) and the GEM Report, Funding for education in crises: Data in distress, shows that the three main data systems provide only a partial view, making it difficult to monitor resources and coordinate effectively, especially as education interventions draw on both development and humanitarian funding.

The paper highlights the urgent need to harmonize reporting systems to ensure transparency, consistency and impact for global investments in education in emergencies and protracted crises (EiEPC).

Breaking the humanitarian-development divide:

The paper highlights that armed conflict, climate shocks and forced displacement have become persistent features of global crises, with the average length of a humanitarian appeal now being 10 years and protracted crises characterizing 91% of these appeals.

In this context, education interventions increasingly span humanitarian and development programming. Meanwhile, the mechanisms for financing and tracking humanitarian and development funding for education remain largely separate, monitored through distinct systems with different standards.

Drawing on data from the three global databases providing information on aid to education – the Organisation for Economic Co-operation and Development (OECD) Creditor Reporting System (CRS), the UN Office for the Coordination of Humanitarian Affairs (OCHA) Financial Tracking Service (FTS) and the International Aid Transparency Initiative (IATI) – together with country-level education financing case studies, the paper shows that the current fragmentation of these systems limits opportunities for strategic planning, funding alignment and effective advocacy.

The paper stresses that education is one of the most underfunded sectors within humanitarian responses – according to FTS data, only 29% of education funding requests in humanitarian appeals were met in 2024. Looking ahead to 2025, the situation has worsened. A recent analysis by the Global Education Cluster reveals that, due to global funding constraints, the humanitarian system has adopted a process called ‘hyper-prioritization’, which has forced aid agencies to dramatically reduce their ambitions. As a result, the total education funding requested for 2025 has been cut by 33% and the number of people targeted for education assistance has been reduced by 43% – with some countries seeing reductions of up to 90%. Compared to other major humanitarian sectors such as food security, protection, WASH, health and nutrition, education has experienced some of the most severe cuts. These reductions do not reflect a decrease in needs, but a narrowing of the response due to limited resources. This underscores the urgent need for more predictable, transparent and better-coordinated financing for education in crisis settings.

Development aid accounts for increasing shares of funding for EiEPC

At the same time, analysis from the CRS database in the Data in Distress paper indicates that development aid accounts for an increasing share of funding for education in crises globally.  The paper looks across six countries hosting the largest numbers of crisis-affected school-age children and people in need of education assistance to show that similar trends can be seen at the national level. This highlights major gaps between needs and reported funding.

Combining these data, funding for education in crises accounts for an increasing share of total aid to education. Reflecting the increase and length of crises, the analysis found that the share of education in emergencies and protracted crises has increased from 9% in 2017 to 12% in 2023. In countries with humanitarian response plans in place for more than three years, the share rose from 21% to 24% in this period.

But development aid to education set to decline in the coming years

At the same time, overall aid to education is expected to decline. The second paper on education financing released last week by the GEM Report, Aid to education: Time for tough decisions, projects that aid will fall by more than 25% by 2027. Just one fifth of this funding is allocated to low-income countries, where it accounts for 17% – sometimes up to half – of public education spending, making cuts especially damaging. These countries will be hit hardest, with some expected to lose as much as half of their current aid levels despite growing needs. Given that more than half of all low-income countries also issued humanitarian education appeals in 2025, and with the share of humanitarian aid within EiEPC funding declining, those with appeals will face severe financing constraints – putting millions of children’s education at risk.

We need coherent and transparent data to inform investments in education

As some donors now pledge to safeguard humanitarian education funding in the face of broader cuts to official development assistance, greater clarity is needed to determine what is being protected and which areas may still be at risk of underfunding.

The two papers call for urgent reforms to improve aid effectiveness, including shifting more resources to multilateral channels and budget support aligned with national priorities to reduce fragmentation. They also recommend increasing funding through global funds like ECW which can better coordinate efforts, reduce duplication, and support stronger institutional development for more equitable and sustainable education outcomes.

To fix data in distress, increased coordination is needed to align the main reporting systems – the CRS, FTS and IATI – and improve the reporting standards. Ensuring a more comprehensive and consistent tracking of funding for education in crises is crucial to support policymakers and education aid stakeholders in making informed financing decisions across the humanitarian-development .

Building on the findings of this joint policy paper, ECW and the GEM Report will continue to strengthen consolidated analysis of education financing, promote greater transparency and alignment across reporting systems, and advocate for sustained and equitable investments in education in emergencies and protracted crises. In a context of growing needs and constrained resources, this work remains vital to ensure no child is left behind.

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While everyone emphasises the importance of education for both individual progress and national prosperity, investment in education remains woefully insufficient.

Low- and lower-middle-income countries, which are furthest away from achieving Sustainable Development Goal 4, face an annual funding gap of US$97 billion. For these countries, external assistance accounts for 17% of their public education spending, rising to as high as half in some cases.

Aid is vital in supporting educational progress worldwide, especially in the poorest and most vulnerable countries.

However, changes in the international environment are leading most donor countries to assign a lower priority to development assistance, and to make matters worse, donor priorities appear to be shifting away from education.

The Global Education Monitoring report’s latest analysis, published this week, reveals that aid to education fell sharply in 2024, with deeper cuts expected by 2027, marking the steepest decline since the 1990s.

As Standing Rapporteur for Education for the European Parliament’s Committee on Development, I recognise that finding the funds to adequately finance our collective ambition to provide quality education for all is a significant challenge.

However, if we are to close the gap between our development aspirations and the financing required to meet them, we must approach this moment as an opportunity. Doing so will require action to increase the transparency, credibility, and predictability of development cooperation.

This has been the focus of my participation in the Fourth International Conference on Financing for Development (FFD4) in Seville this week, which we must urgently build on to close the education financing gap.

Since the independence of African states, an estimated $6 trillion has been invested in developing countries to promote economic and social progress. While some progress has been made, it often remains invisible to European citizens. In sub-Saharan Africa, development lags behind that of other regions. Despite being the largest recipient of Official Development Assistance (ODA)—over $60 billion annually—the region still faces the highest rates of hunger (1 in 4 people), adult illiteracy, and extreme poverty (45%).

Sub-Saharan Africa is now the only region where the number of out-of-school children is increasing. While areas like South Asia have made significant strides since the 1960s, structural challenges—conflict and instability, corruption, and weak governance—persist. These factors undermine public confidence in development assistance in both donor and low-income countries, and despite commitments to improved reporting and transparency, the results remain unclear to the public.

We urgently need a strategy to restore trust in development assistance by improving the visibility of donor funding, ensuring its efficient use, and ensuring that recipient countries share responsibility for the results that external assistance is intended to achieve.

A long-term investment, public funds, governmental responsibility

The decline in public financing for development, especially for education, is deeply concerning. Education is a long-term investment—returns aren’t immediate, but by the mid-term, they are substantial. In this sector, private financing cannot replace public funds; it can only complement them. The education sector requires predictable funding for long-term planning.

The current shift toward market-oriented development cooperation must be accompanied by continued investment in basic education. Alarmingly, the share of aid going to basic education fell from 40% in 2016 to 30% in 2023.

Across Africa, there are 600 million children for whom education is essential to securing their future and that of the countries in which they live. This is an urgent challenge that requires an immediate solution.

Africa’s fast-growing, youthful population presents not only a challenge but a huge opportunity for economic and social advancement, and education is the key to unlocking it.

Lasting economic growth needs a solid basis

Basic education which delivers foundational literacy and numeracy skills lays the groundwork for vocational training and skills development. Initiatives like the EU’s Global Gateway must go beyond infrastructure and include education and training.

Since 2021, major donors like France, Germany, the United Kingdom, and the World Bank have decreased the share of their development assistance being spent on education.

The European Union remained the only large donor increasing its support for education, allocating 10.2% of its foreign assistance to the sector. In parallel with the decrease in the share of education financing across other donors, we can observe a shrinking commitment to basic education.

This is exacerbated by a lack of alignment between education and training and job creation. Two-thirds of African countries lack national vocational training plans. A robust mechanism is needed to monitor and align education outcomes with employment strategies. We need to support Africa to do everything possible to avoid losing the potential of the human capital carried by its youth. With opportunities – education and jobs in a  secure environment –  provided for youth in Africa, we can ensure that funding for education, infrastructure and economic investments will have a local impact, and will ensure that young people have the opportunity to realise their potential and contribute to their country’s national development.

Cuts and new actors

The European Union and its Member States contribute around 42% of global aid. Whilst cuts will reduce the overall volume of aid, there are grounds for optimism at the role of new actors.

Though smaller in volume, Central and Eastern European countries bring a fresh approach to partnerships, especially in education.

For example, Hungary, through the Hungary Helps Programme, has supported education and vocational training in 10 countries. Strategic cooperation with local organisations, such as churches, ensures direct ownership of communities, accountability, and commitment to responsibility.

Development aid must support national resource mobilisation

There is a growing trend of channelling education aid through international organizations rather than directly through governments. Too often, external aid fills budget gaps rather than driving genuine development. This is not in the long-term interest of either donor or low-income countries.

Education financing must recognize domestic efforts and use ODA as a catalyst, encouraging governments to take political and budgetary responsibility. In times when debt burdens may exceed public service spending, ODA alone isn’t the solution.

Given that the education funding gap is estimated to be 97 billion annually, it would be misleading to believe that in the current circumstances, ODA financing alone will be able to fill the gap. Joint efforts are needed: well-designed public-private partnership, domestic resource mobilisation in partner countries, and strategic use of ODA and debt relief.

We are working to agree on these priorities in the European Parliament, and I hope that this can be the basis for a shared agenda for donor states across Europe and beyond.

With a political consensus on the continued importance of development assistance, the value of aid for education, and agreement on how to use it most effectively, we can act in solidarity to deliver the promise of a quality education for all.

Contact: gyorgy.holvenyi@ep.europa.eu 

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A couple of years ago, we showed that modest changes in high-income countries’ official development assistance could make a difference. One of the four we highlighted was for this spending to increase by 0.4 percentage points (from 0.3% to 0.7%) of their gross national income. This would help reduce low- and lower-middle-income countries’ total financing gap to get these children to school by one third.

Yet the world is far from perfect. And the only commitment rich countries have just made this week in The Hague was to increase the amount they spend on weapons by 2.4 percentage points (from 2.6% to 5%) of their gross domestic product (GDP). The entire annual amount of aid to education is equivalent to just two and a half days’ worth of military spending.

Today a new paper we publish shows that not only are donor countries not increasing official development assistance by 0.4 percentage points, to fulfil a commitment they have been failing to meet since 1970, but they are on course to decrease aid by 0.1 percentage point, a fall as rapid as the one last observed in the 1990s.

Aid to education is in fact projected to fall by a quarter between 2023 and 2027, which is almost twice as much as we estimated just a few weeks ago.

What is new?

The blog we published in April contained all announcements that a select group of high-income European countries and, especially, the United States had made in early 2025. There is no news in that respect. But the new piece of information presented in the paper is that there are now clear signs that aid to education had already fallen by 12% in 2024 before even the new budget announcements had been made.

This is based on the first-ever analysis of the International Aid Transparency Initiative (IATI) database, a standard that was introduced in the late 2000s but whose use has expanded. While it has considerable disadvantages relative to the standard data published by the OECD, there is sufficient evidence that it matches the long-erm trends of donors accounting for at least half of total aid to education.

Global education aid is projected to fall by one quarter

Why is that important?

There has been a growing sense that aid has been losing in importance. It is true that grants, of which aid is a major component, have declined rapidly as a share of low- and lower-middle-income countries’ GDP in recent years. For a group of 31 countries in Africa, Asia and the Pacific, grants fell from 3.5% to 2% of GDP (and the median share even more, from 3.3% to 0.9% of GDP). For example, grants as a share of GDP fell from 1.7% to 0.2% in Ghana (-88%), from 6.4% to 0.9% in the Lao People’s Democratic Republic (-86%), from 5.8% to 1.3% in Malawi (-78%), from 3.5% to 0.4% in Mali (-89%) and from 6.8% to 0.8% in Vanuatu (-88%).

Yet the volume of aid is still sizeable in low-income countries and equivalent to 12% of their total education spending, or 17% if household spending is excluded.

Debt calls for more, not less support

Aid is also important in a context where public budgets are under pressure. Globally, public education expenditure has fallen by 0.4 percentage points as share of GDP and by 0.7 percentage points ass share of total public expenditure since 2015. The falls are larger in middle-income countries, which are more exposed to the growing public debt.

While countries are not yet in the situation they faced in the 1980s and 1990s, when they lost two decades of education development as a result of structural adjustment programmes, the same point could be reached in a few years if trends continue and no mitigating measures are taken.

The upcoming conference in Seville is calling for a new development-oriented debt architecture. If the previous debt crisis left one lesson, it was the need to not let the debt crisis fester. Procrastination and poor choices of international financing institutions inflicted unnecessary pain on social development.

Will the International Conference on Financing for Development change aid policies?

The role of aid as a pillar of international cooperation is under threat, alongside other pillars of multilateralism. The question is whether shrinking aid budgets will force tough but overdue choices so that aid can serve national development objectives much better than in the past.

Aid has been increasingly delivered in ways that bypass national systems, especially by bilateral donors who channel only 17% of aid through recipient governments, compared to 60% by multilateral donors. As aid to education is projected to decline, the paper recommends shifting more resources:

1. Through multilateral channels, while ensuring less earmarking of aid
2. Through national budgets, in order to reverse the trend towards project-based aid
3. Toward system strengthening, in order to build institutions instead of achieving short-term results
4. Toward lowering the cost of borrowing, while building a new development-oriented debt architecture
5. Toward global public goods in education, which are most at risk in a time of aid cuts

Join us in amplifying the messages from the papers by showing this presentation to your networks, by sharing these social media resources and downloading the reports.

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After all, during the previous debt crisis in the 1980s and 1990s, education and other social sectors were dramatically affected. Primary completion rates in Africa did not recover their 1984 levels for another 20 years due to public expenditure cuts that were part of structural adjustment programmes.

Selected measures of primary completion, sub-Saharan Africa, 1970–2020

Source: World Bank WDI (gross intake rate) and VIEW website (completion rates)

This fear explains why debt relief and innovative mechanisms for reducing debt servicing are high on the agenda at the Fourth International Conference on Financing for Development taking place at the end of this month.

A range of factors had increased the vulnerability of many countries, which was exposed during the COVID-19 pandemic, which called for increased public spending. The share of lower income countries in debt distress or at high risk of falling into it increased from 21% in 2013 to 59% in 2021. While it fell to 53% in 2024, it means that more than half of countries are still in that difficult position.

In the 78 countries eligible for International Development Association concessional loans, interest payments on debt have quadrupled in a decade, reaching USD 35 billion in 2023. More than one third of their external debt involves variable interest rates that could rise suddenly. In 2020–22, there were 18 sovereign defaults across 10 countries, more than at any time over the past two decades. Meanwhile, high debt burdens are constraining the ability of these countries to borrow. New external loan commitments dropped by 23% to USD 371 billion in 2022, and new loans have become more expensive and less accessible.

Source: IMF Economic Outlook (2023) (2009–14) and IMF Independent Evaluation Office (2025) (2015–22).

The impact of debt on education

Debt has outpaced income growth in low- and lower-middle-income countries. As shown in the 2024 Education Finance Watch, the gross national income (GNI) in low-income countries rose on average by 33% between 2012 and 2022, while the combined external debt stock rose by 109%. In lower-middle-income countries, the GNI rose on average by 21% while the combined external debt stock rose by 46%.

Debt constrains countries’ ability to fund education. Interest payments outpace education expenditure in many countries. Rising interest payments have coincided with a decline in the share of government budgets allocated to education in countries like Ghana and Zambia. Interest payments are equivalent to 43% of education spending per capita in low-income countries and 48% of education spending per capita in lower-middle-income countries.

Yet external borrowing can be critical for education financing, particularly in countries whose domestic resources may be insufficient. Borrowing for education can be a sound investment if it leads to improved economic outcomes by producing a more educated population, which increases productivity and earnings, which in turn can help the country to repay its debt.

Interest payments have outpaced education spending growth in many countries

Source: Author estimation using EFW2024 database and UNCTAD data.

Learning from our mistakes. What does the 1980s debt crisis teach us?

In the 1980s, debt to official creditors was rescheduled but arrears accumulated: structural adjustment packages reduced public service employment, eliminated food subsidies and cut social expenditure. For every 1% increase in external debt-to-exports, there was a 0.33% fall in public education expenditure; public spending on education was highly volatile, and more volatile than health spending.

In 1996, the Heavily Indebted Poor Countries (HIPC) Initiative led to complete debt relief of USD 59 billion. This was extended through the Multilateral Debt Relief Initiative in 2005; countries developed poverty reduction strategy papers, introduced social sector policy reforms and increased social expenditure. Debt relief helped countries get their education development trajectory back on track.

Compared to the 1980s debt crisis, today’s crisis is not yet as severe. During the peak of the previous debt crisis in 1994, the median country’s debt-to-GDP ratio was 72% while it was only 33% at the end of 2021. Debt-to-export ratio was 318% in 1994 but 137% in 2021. At current trends, though, there may be a return to 1990s’ debt ratios by 2030.

Moreover, the two crises differ significantly in the composition of the debt. The share of domestic debt in total debt, which was less than 20% in the mid-1990s, had grown to 35% by 2021. There was a lower risk to exchange rate depreciation but a bigger risk of systemic crisis.

Also, external debt is more diversified, which affects the scope of potential solutions. Official creditors (Paris Club) accounted for 39% of total debt in the mid-1990s, which was mainly in concessional terms. But their share fell further from 28% in 2006 to 10% in 2020, while the share of China and non-Paris Club creditors increased from 8% to 22% and that of commercial creditors from 10% to 19%. These borrowing agreements sometimes lacks explicit information on the exposure of indebted countries to risks.

Finding solutions

Some recent developments aimed to reduce the load, such as the Debt Service Suspension Initiative triggered by COVID-19 and the G20 Common Framework for Debt Treatment in 2020. The latter struggled with implementation, with only Chad succeeding in requesting debt treatment. Some countries have carved out solutions, with Ghana reaching a USD 3 billion agreement with the IMF after defaulting in 2022, and Zambia arranging a three-year grace period on interest payments after defaulting in 2020.

Solutions include debt restructuring, debt relief, debt swaps and debt-for-development. Effectively applied, they can alleviate immediate financial pressure, allowing resources to be redirected toward education and other social spending. But they can be complex and time-consuming. For example, debt restructuring may not lead to long-term fiscal stability.

Debt swaps forgive or reduce a portion of the debt in exchange for a commitment to invest. However, they need to meet criteria, considering the initial debt position and the swap’s likely effects on debt sustainability; the net financial gains for the debtor; debt management capacity and commitment to transparency; and finally the opportunity costs for debtor and donor.

Good candidates for debt swaps have a sustainable long-term debt outlook but are experiencing temporary liquidity pressures. This is usually in smaller economies, where swaps can smoothen debt repayment profiles and improve liability management. It is also important to ensure that spending commitments are aligned with development goals and strategies. And these financing mechanisms must be complemented by other actions: domestic resource mobilization, efficient spending, effective public financial management and more.

The recently released draft outcome document of the Financing for Development conference in Seville calls for a new intergovernmental process on sovereign debt to bring the voices of developing countries into international norm setting on debt. And it recommends ‘setting up a new debt facility to work on scaling up debt swaps and other tools to help countries that need more fiscal space’. We hope this blog explains why that is important.

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Aid as percentage of gross national income, selected donor countries, 2018-2027

Source: GEM Report SCOPE website https://www.education-progress.org/en/articles/finance-aid

Among these countries that were exceeding the target just a few years ago, the United Kingdom was the first to reduce its ODA spending from 0.7% to 0.5% of GNI in 2021, before announcing in February 2025 that this share would go down further to 0.3% by 2027. Germany announced steep cuts in 2023 while additional cuts were made to the federal ministry of development cooperation budget from €11.2 billion in 2024 to €10.3 billion in 2025, although levels to education are not to be affected.

The Netherlands, whose aid spending levels were close to the 0.7% target, also announced in February that it would reduce spending on international development by 30%, from 0.62% of GNI in 2024 to 0.44% in 2029. Belgium announced it will cut aid by 25% over the next five years. In December, the parliament of Switzerland approved cuts of USD 124 million to the 2025 budget and USD 363 million to the 2026–28 financial plan for bilateral and multilateral development cooperation, including its education contributions to UNESCO and the Global Partnership for Education. It plans to shut down development initiatives in Albania, Bangladesh and Zambia by 2028. In France, a decree in February 2024 cut aid by EUR 742 million, while a finance bill in 2025 reduced ODA budget appropriations by a further 37%.

Last but not least, the United States, which is the largest bilateral donor to education, has suspended 83% of its aid, which correspond to the portion administered by the United States Agency for International Development , since a stop work order in January. On top of confirmed cuts by Belgium, France, Germany, Sweden, Switzerland and the United Kingdom, if the suspended United States aid is confirmed, then the total loss would be equivalent to 14% of the latest recorded aid to education levels.

Total direct aid to education, 2011–2023, and projections, 2024–2027

Source: GEM Report team estimates based on OECD CRS (2025), European Parliament (2025), Dyer (2025), Chadwick (2025), Focus 2030 (2025), Venro (2024), Bollag (2024), SEEK Development (2024), Belga (2025), House of Commons (2025) and Swissinfo (2025).

How will these cuts affect low-income countries?

In low-income countries, aid accounts for 12% of total education spending, including household contributions. In Niger, Rwanda and Sierra Leone, the share of aid is about 20%, while in the Central African Republic and The Gambia it reaches 50% of total education spending.

Those education systems that are particularly exposed to aid from donors who have announced significant cuts will therefore experience a large negative impact. In relative terms, it is expected that aid to education will fall by half in Chad and Liberia, and by one third in Madagascar and Mali. In absolute terms, aid to education levels will fall by USD 33 million in Ethiopia, 35 million in Rwanda and 51 million in the Democratic Republic of the Congo. Expressed as a share of total aid spending, the cuts represent 18% in Rwanda, 48% in Liberia and 19% in Somalia.

Estimated impact from announced cuts on aid to education in low-income countries by country

Note: The estimated absolute loss in million US dollars appears in brackets next to the country name.
Source: GEM Report team estimate based on OECD CRS data.

• Read our interactive story on SCOPE, where you can interact with our data on aid to education.
• See all our resources on education finance.

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We know that investing in education pays off in the long run—for individuals over their entire lives and for entire societies. But we also know that when it comes to financing education, the devil is in the details: governments need to invest in education adequately, efficiently and equitably to get the most value from what they spend.

The latest Education Finance Watch (EFW) report from the World Bank and UNESCO shows that during the last decade, total education spending by governments, households and donors globally has increased steadily. But this rise has not led to major increases in allocations per child, especially in poorer countries with growing populations. Indeed, globally, total education spending per child has not increased.

If it’s tricky for high-income countries to ensure effective education spending, it’s a colossal challenge for lower-income countries, which face a double bind: investing in education will be a significant, if not decisive, factor in eradicating poverty and building resilience to crises, but these very same problems of poverty, debt burdens and crises prevent these countries from investing at the levels required to change their development trajectories.

The learning and skills crisis only deepens this dilemma, with students not learning foundational skills and not being equipped to meet the needs of the labor market, which puts pressure on education systems to level students up and drains their capacity for broader investment and reform. Additionally, the combination of the COVID-19 pandemic’s lingering financial repercussions and escalating global debt has limited countries’ ability to invest more in education.

The EFW report shines light on the state of education financing, so that countries, donors, partners and communities can take informed action. Since 2021, this collaboration between the World Bank, the Global Education Monitoring (GEM) Report team and the UNESCO Institute for Statistics (UIS) has tracked trends in education spending, examining how much countries invest in education and how these investments align with their development needs, particularly in low- and middle-income countries, which face the most severe challenges.

The Education Finance Watch 2024 reveals five key findings on the state of education finance:

1. Spending is rising, but it’s still not enough to address the learning crisis, especially in low- income countries: Global education spending has been on an upward trajectory over the past decade, signaling strong commitment from governments. Both low-income countries and lower-middle-income countries have increased annual education spending more rapidly than wealthier ones. However, in many low-income countries, even those that have reached education spending targets recommended for their GDP level, absolute levels of funding remain too low to guarantee adequate student learning. As of 2022, annual expenditure per child in low-income countries amounted to no more than $55 (or Purchasing power parity (PPP)$172) (see figure below).

2. But spending more is not enough without attention to efficiency and equity: Although total education expenditure has increased since 2010, education spending per child has largely plateaued, reflecting global demographic shifts. A clear correlation exists between increased financial investment in education per child and improved educational performance, especially in low-income countries. Nonetheless, low-income and lower-middle income countries often struggle to allocate educational funds efficiently, which can undermine the impact of their spending. To improve educational outcomes, governments must spend more efficiently in ways that differ depending on context. But the building blocks are the same everywhere: enhancing public financial management to allocate resources to the most cost-effective programs; promptly addressing local needs; and improving school management to optimize teacher performance and the best possible use of available resources. For instance, evidence from Brazil, Colombia, Indonesia and Uganda shows ways to boost student achievement through budget-neutral policies, such as granting more spending autonomy to subnational governments and reducing teacher absenteeism.
3. While the absolute amount of education aid is high, its proportion of total development aid has declined: Globally, total education aid reached a record high of $16.6 billion in 2022, up from $14.3 billion in 2021, a real-term annual growth of 16 percent. Nevertheless, the share of total development aid allocated to education fell from 9.3 percent in 2019 to 7.6 percent in 2022, reflecting donors’ shift in funding priorities to energy, support for Ukraine, and health care in response to the COVID-19 pandemic. By 2022, official development assistance accounted for 12.2 percent of education funding in low-income countries (versus 13 percent in 2021) and just 0.29 percent of total education funding globally.
4. Debt is putting a strain on education: In the past 10 years, in developing countries, interest payments on public debt have increased faster than government education spending. Some low and lower middle-income countries allocate nearly the same per capita resources to debt servicing as they do to education. Innovative financing mechanisms for short-term relief, such as debt restructuring, debt swaps, and debt-for-development agreements must be complemented by sustained domestic resource mobilization, efficient spending, effective public financial management, and robust economic growth to ensure that their populations can receive quality education.
5. We need more and better data reporting: While about 7 in 10 countries publish key education financing data, the absence of disaggregated data by expenditure type or education level makes it difficult to monitor education financing effectively. While we were able to access more household-level data for the 2024 EFW than in previous years (five times more data points), there is still a dearth of available post-pandemic data, especially from poorer countries where households spend much more out of pocket on education in relative terms. Without the data needed to understand the problem in all its complexity, policymakers are stymied in coming up with effective solutions.

We encourage countries, partners, donors and communities to use these findings as a starting point for action and to continuously improve their data collection, reporting and analysis practices. Every education stakeholder, including our own organizations, can and should prioritize education finance and allocate resources where they will have the greatest impact. This way with better, more accurately informed investments in education, we can improve learning outcomes for all.

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There is some good news on global aid for pre-primary education, which has for decades been the forgotten child of the education development sector.

Between 2021 and 2022 it rose by 40% from 2021 and 2022, reaching $282m, the highest since records began in 2022, and up from $157 million in 2019.

The increase looks so impressive that it’s tempting to think that international donors have at last seen the light on the importance of properly funding pre-primary education.

If only that were the case. There is a caveat, in fact several caveats, to this welcome news, which is revealed in research for the global children’s charity Theirworld by the Research for Equitable Access and Learning (REAL) Centre at Cambridge University, drawn from the most recent OECD DAC data.

Firstly, this increase was very largely driven by a single donor, the World Bank (International Development Association) which invested $181m, almost two-thirds of the total. And although spending on pre-primary education is moving in the right direction, it still only represents a fraction – 1.4% – of the international community’s spending on education. For bilateral donors, this share was just 0.4%.

This is far below the international target agreed by 147 UN member states and partners at UNESCO’S Early Childhood Care and Education Conference in Tashkent in 2022 that 10% of education budgets (whether for donors or governments) should be devoted to pre-primary.

Investment in education may be higher than ever but pre-primary funding has not kept pace with funding for primary, secondary, and tertiary education. Donors spend 21 times more on higher education than on pre-primary education in 2022.

Moreover, three donors account for 80% of early years education finance. Only two, UNICEF and the Global Partnership for Education, have met the 10% target.

The funding for preschool education is also unpredictable.  Over the past several years, there has been no strategic or predictable investment from bilateral donors for early childhood education.

A teacher’s report on donors’ performance on pre-primary aid would be nothing more than the old-fashioned ‘could do much better’.

The youngest learners in the poorest countries are caught in an underinvestment trap: many low-income countries lack the resources to significantly scale-up their early years systems, which is reflected in the alarming statistic that in low-income countries only one in five children are enrolled in pre-primary education. Donors meanwhile tend to focus on middle-income countries where education systems are already likely to be more robust. The result is that the millions of the world’s poorest, most marginalised children are receiving little or no investment at a critical point in their lives.

Donors are not only letting down these children, but also failing to acknowledge and act on the evidence. Years of research has shown that the best way to break the cycle of poverty is quality early years interventions. We know that the first five to six years of a child’s life are a period of remarkable brain development, during which the foundations for learning, behaviour and health are established.

We also know that when governments and donors invest in the early years, health outcomes improve, incomes rise, economies grow and societies become more cohesive. Every $1 invested in early childhood care and development by a government can lead to a return of as much as $17 for the most disadvantaged children.

Early years interventions can help narrow the wide gaps in outcomes and opportunities

between children from higher and lower socio-economic backgrounds, and the gender gap between boys and girls. Across sub-Saharan Africa, every dollar spent towards tripling preschool enrolment would yield a $33 return on investment.

A global commitment was made in Sustainable Development Goal 4.2 to ensure by 2030 that ‘all girls and boys have access to quality early childhood development, care and pre-primary education so that they are ready for primary education’.

The solution is there – meeting the 10% target. If the World Bank continued to increase its financing for preschool towards the 10% benchmark, it could mobilise upwards of a quarter of a billion dollars annually. If all donors met this target, it would represent a more than $2 billion annual investment in preschool finance without increasing overall aid budgets.

Bilateral donors and partner countries must seize the opportunity to utilise existing multilateral systems of finance to advance investments in the early years, and work with education-focused institutions such as GPE, Education Cannot Wait and the new International Finance Facility for Education, which should have its first operational grants approved before the end of the year.

The broader story of pre-primary aid is one of progress, albeit from a very low base. Awareness of the importance of pre-primary investment is growing. Momentum is building, not least behind Theirworld’s Act For Early Years campaign calling for investment in our youngest children, particularly those trapped in poor countries or neighbourhood.

But donors, aid agencies and governments need to show much greater determination to stand up for those who are too young to express for themselves how they have a critical need for a good early education and a healthy, safe beginning to life.

Around the world there are 175 million children, almost half of all pre-primary-age children, not enrolled in preschool. Putting that right will benefit not just them but all of us.

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Apart from the lifelong educational benefits from building foundational learning, ripple effects from this Year of Education will be felt across other areas too, from health to climate change and overall sustainable development.

There is one pressing challenge that may stand in the way: the size of Africa’s education funding gap

New GEM Report research shows that African countries require an additional $77 billion annually to achieve their national SDG 4 benchmarks and accommodate more than 100 million students by 2030. This represents over 80% of the total annual global financing shortfall of $97 billion in low- and lower-middle-income countries. And yet, despite this urgent need, the Africa edition of the Education Finance Watch just released, in partnership with the UNESCO Institute for Statistics (UIS) and the World Bank, shows that aid to education in sub-Saharan Africa plummeted by 23% in the last recorded year.

Our research has shown that learning outcomes are lowest in countries spending the least per school-aged child.  For this to happen, however, countries must ensure the financing of their education systems matches their ambitions.

There is clear commitment among many countries to improve education outcomes for children. The Africa version of the annual SDG 4 Scorecard just released by the GEM Report and the UIS, the new way of measuring progress towards SDG 4, shows what African countries have committed to achieve as expressed through their national SDG 4 benchmarks and how likely they are to achieve their targets.

By 2025, African countries intend to halve their primary out-of-school rates to 11%, and to ensure that 46% are reading with proficiency at the end of primary school.  They have also committed to ensuring that 79% of teachers will be trained at the pre-primary level and 85% at the primary level.

However, the scale of the challenge is notable

Currently one in five children of primary school age are out of school on the continent, and at most one in five children achieve minimum proficiency level in reading at the end of primary education. Sub-Saharan Africa is the only region worldwide not to have achieved gender parity in enrolment at any level in the education system.

The Africa edition of the SDG 4 Scorecard shows that one in five countries in Africa are making fast progress towards their out-of-school national benchmarks, for instance, yet as many countries have made no progress at all.

The desire for this Year of Education to be a success against the scale of the challenge calls for more resources. Three in four countries on the African continent are not meeting both international benchmarks for education spending – of spending at least 4% of GDP and at least 15% of total government budgets on education. The median annual education spending per capita has stagnated throughout the past decade, reaching US$92 in 2021.

All children are born to learn but, without adequate investment and targeted interventions, Africa risks wasting their potential and perpetuating cycles of poverty.

The GEM Report is working hand in hand with governments on the continent through its Spotlight series on foundational learning in partnership with the AU and the Association for the Development of Education in Africa. This partnership is shining a light on positive practices that can serve as a strong example for where progress can be found for the continent.

School-feeding programmes in Rwanda, teacher communities in Ghana, mother-tongue instruction policies in Mozambique and early-grade assessments in Zambia are just some of the policies this research has shown are making a difference.

Resources can also be spent more effectively when results are tracked

To show policies are making a difference on learning, good data are needed. Yet, at present, what success in learning outcomes this year will look like will be hard to assess given that 76% of countries do not have enough data, a challenge widely discussed two weeks ago with many representatives from the continent at the UNESCO Conference on Education Data and Statistics.

However, collecting data on learning is costly.  Many countries have received external support to monitor learning. But it is fair to say that this has not yielded tangible results. Support has been fragmented, lacking a vision of how to develop capacity and institutions that serve ministries of education and, ultimately, this continent.

Domestic financing for countries’ own agendas will ensure that the progress is nationally shaped, tracked and determined. This will bring an evidence-based approach to the upcoming review of the implementation of the Continental Education Strategy for Africa and the development of a new transformational strategy for the continent for 2026 and beyond.

The pressing challenge facing Africa is clear: bridge the gap between educational aspirations and realities. With concerted efforts to mobilize resources, strengthen data systems, and prioritize equitable education during this AU Year of Education, Africa can unlock its full potential and pave the way for a brighter future for generations to come.

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Earlier this month we participated in a high-level panel on education at the IMF-World Bank Annual Meetings in Marrakech bringing finance ministers around the table to discuss education spending not as a cost but as a critical enabling investment for the progress of societies.

Protracted education crisis in all its dimensions

Across the world, education today is in crisis. It is a crisis of equity and inclusion, as millions of children remain out of school and deprived of the opportunities to learn. Recent UNESCO figures show that the number of children that are out of school has increased to 250 million.  To ensure countries reach their commitments to reduce this number, we would need to enrol a child in school every 2 seconds between now and 2030.

At the same time, it is a crisis of education outcomes in terms of both quality and relevance. Learners who do have access to schooling are not even learning the basics in literacy and numeracy, let alone 21st century capacities to fully engage in their communities, express their ideas and talents, and contribute positively to their societies.

The year 2023 marks the mid-term of the implementation of our commitment to the Sustainable Development Goals. SDG 4 remains alarmingly off-track. If education is left unattended, it will undermine our efforts tackling global challenges and future crises.

The COVID-19 pandemic further exacerbated the education crisis and inequalities, not only between countries and education systems, but also between different learner groups, disproportionately affecting the most vulnerable. This generation of students risks losing US$ 21 trillion in potential lifetime earnings in present value, or the equivalent of 17 per cent of today’s global GDP.

There is a massive shortage of qualified teachers to provide quality education and training, with UNESCO figures pointing to a global shortage of 44 million teachers, leaving the quality of learning in the classroom under pressure.

Shrinking national education budgets

Whereas it is urgent now more than ever that we invest more and better in education, the opposite is largely true in practice leaving low- and lower-middle-income countries facing an alarming annual financing gap of close to US$ 100 billion until 2030 to reach their education targets.

Against this backdrop, the UNESCO-World Bank Education Finance Watch 2023 shows that overseas development assistance to education fell by 7% from 2020 to 2021, while countries are trying to fill in the gaps, stopping the stagnation of spending on global education budgets during the pandemic, and increasing contributions again in 2021.

All told, however, it is not enough. Households still account for a sizable share of total education spending in low- and lower-middle-income countries, accounting for 37 and 36 percent of the total, in 2021.

Cuts in national education spending are being made to find resources for other matters, rather than expanding the fiscal space to guarantee sustainable resources to finance education. We are now therefore witnessing a race to the bottom; we took a wrong turn, and must stop this race, shift gears and reverse to get back on track.

This is not just a question of insufficient investment but also a question of unequal investment. With 10% of the world’s school-age population, high income countries account for almost two thirds of global investment in education. At the other extreme, low and lower-middle-income countries face the daunting task of educating 75% of the world’s school age population with less than 10% of the global investment in education.

The Marrakesh dialogue

Recognizing the importance of discussing issues around prioritization, strategic planning and financing, the SDG 4 High-Level Steering Committee called for a periodic dialogue between ministers of education and finance, launched at the IMF-World Bank 2023 Spring Meetings in Washington and continued at its Annual Meetings in Marrakech.

There we exchanged with 13 finance ministers from various countries in Africa, Asia-Pacific and Latin America on the challenges they face when it comes to education financing, and the various trade-offs they face vis-à-vis allocating resources between sectors.

As Indermit Gill, the World Bank Chief Economist underscored at the meeting, the unequal distribution of educational investment translates into a dramatic reproduction of global educational inequality, as the amount of resources each country can invest per school-age person greatly diverges. Roughly, per capita spending in education is over US$ 8500 per year in high-income countries, but only US$ 300 in lower-middle-income countries and merely US$ 50 in low-income countries. Domestic inequalities only compound the problem.

Without exception, all ministers indicated that government budgets are under pressure, and that, due to global crises, resources become thinly spread between different priorities. However, many ministers also mentioned that post-COVID budget allocations to sectors such as health, infrastructure, and security have substantially increased, without any significant effort to widen the fiscal space for education.

Education tends to be seen as business as usual, and countries balance increases in some sectors with austerity measures reducing social and education investment aimed at balancing the budget. Only a few countries see the transformative power that education can have in the long term on their country.

Our response to the finance ministers was clear: these trade-offs are rather focused on the short term. Although bringing marginal positive effects, countries should put investments in education at the front and centre of their fiscal policy and spending priorities.

Critical for this dialogue between financial and education authorities is the understanding that education has proved to be an investment with one of the highest rates of return, let alone a critical investment for achieving all 17 SDGs. Over forty years, income per capita is estimated to be 23% higher in a country with more equal education.

Shifting the narrative

The dialogue that needs to take place globally – and more importantly at domestic level – should not centre around the alleged trade-offs between sectors with competing resource interests, but rather needs to be structured around the complementarities of such investments.

Questions of strategic financing for the future must include considerations of the long-term impact of such investments and their significant rates of economic return, which calls for renewed efforts at expanding the fiscal space through ambitious and progressive tax reforms, a better handling of critical debt issues and other innovative finance mechanisms. We must have education at the heart of this dialogue.

Simply put, the lack of adequate investments in education implies the de-facto bankruptcy of our society, not only looking through the lens of economic development, but also on other fronts, human well-being, social coexistence in an increasingly diverse context, our living environment, global peace and security, and the full enjoyment of a good and meaningful life.

We therefore need to be making better and smarter choices of how and where we invest, ensure value for money in the long run, and not shy away from making bold real transformative investments in education, going beyond the “financing as usual” case.

To conclude, if we are to unlock the transformative power of education to tackle global challenges and inequalities and promote a more dynamic, fair and sustainable development, we must do three things:

1. We must invest more in education: increasing not only the national and public effort as reflected in percentages of GDP and domestic budgets but increasing real per capita investment in education.
2. We must invest more equitably in education: making sure that the most vulnerable 40% of potential learners in every country has access to quality and relevant education.
3. We must invest more efficiently in education: taking advantage of what we already invest and magnifying its results through proven methods of effective teaching, assessing, and learning.

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Education is not only a fundamental human right but also a key investment in human capital that translates into economic growth and other development outcomes. Keeping children in lower-income countries in school longer is one of the best global investments that can be made. Returns to education, particularly at higher education levels, are highest in low-income countries.

The World Bank and UNESCO latest Education Finance Watch (EFW) report offers some encouraging news: government spending on education in low-income countries as a percentage of GDP rose from 3.2 percent in 2018 to 3.6 percent in 2021, at the height of the global COVID-19 pandemic. While still below the international benchmark of 4 percent of GDP, for the first time, government spending on education accounted for over half of all spending on education in these countries.

Nevertheless, official development assistance (ODA) to education, which accounts for 13 percent of spending in low-income countries, shrank by 7 percent and households continue to bear a large burden of education costs (over one-third).

International aid has stagnated

Despite international calls for more education financing, the portion of international aid allocated to education has stagnated in recent years, reaching a low point of 9.7 percent in 2013 and 2015, a point it returned to in 2020-2021. Donors, not surprisingly, funneled money towards health during the pandemic.

Figure 1. Education takes a back seat: Widening disparity in funding priority with health

Share of education sector in comparison to health in sector-specific ODA, 2002-2021

Note: Amount is disbursement base
Source: Own estimates based on the OECD CRS database (2023)

At the same time, just 30 percent of direct aid to education among the ten largest donors to low-income countries in sub-Saharan Africa went straight to recipient countries; the remainder was channeled through donors’ aid agencies, international and domestic NGOs, and multilateral organizations.

An important concern is also that, as pandemic-induced school closures exacerbate the learning crisis, and governments and households face ongoing inflation, a significant amount of aid committed to education has remained unspent: Since 2017, $1.7 billion in aid commitments to education have not been disbursed.

How can education financing be better spent?

Except for low-income countries, government spending as a percentage of GDP declined in all country income groups in 2021.

The amount a country spends on education per child is the most direct measure to assess whether sufficient resources are devoted to education. While it is difficult to establish a benchmark for the cost of ensuring quality education in different countries and contexts, comparisons are informative. Since 2012, government spending per capita has increased in countries of all income levels, but high-income countries, in part due to decreases in their school-aged populations, have improved spending per child more (by an impressive USD $1,008 per child) than low-income countries (by just USD $14 per child) whose school-aged populations continue to expand.

Figure 2. In 2021, government education spending as a share of GDP increased only in LIC

Note: Estimates on spending as a percentage of GDP include interpolated values. Interpolation used to fill in missing data and ensure a comparable sample of countries in all periods.
Source: Author estimates using the EFW2023 database

Increasing education spending per capita is imperative. While more education spending will not necessarily lead to better education outcomes, learning is lowest in countries spending the least per school-age child. Low- and lower-middle-income countries exhibit striking variation in demographic change: In countries where population growth continues, securing increasing financing for education on a per capita basis will become more important, and more challenging. In countries with shrinking school age populations, opportunities to invest more in the education of each child offer opportunities to raise learning outcomes without disrupting the bottom line.

In a current climate of increasing inflation, high debt-to-GDP ratios in many countries, and falling ODA, particularly to low-income countries, targeting education spending to the children currently receiving the least is the imperative and urgent next step. Doing so could mitigate pandemic-related learning loss, helping build the foundational skills needed to grow human capital and sustain economies into the future.

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