Domestic financing

GPE helps partner countries improve the volume, equity and efficiency of domestic financing for education.

Government resources are the most important source of education financing in low and lower-middle income countries.

GPE focuses on leveraging more and better domestic financing as the most significant and sustainable form of financing for education.

Objectives

Objective 2 of GPE 2025, the partnership's strategy, states that GPE will "mobilize coordinated action and financing to enable transformative change".

Within this objective, improving the volume, equity and efficiency of domestic budgets for education is a priority area for GPE 2025. The challenge is not only about mobilizing resources, but also improving the effectiveness of spending on education. It means ensuring that public finance is:

  • equitable: allocated and spent to reach the most marginalized, and
  • efficient: every dollar spent goes as far as possible to improving learning.

On average, GPE partner countries spent 18% of total government expenditure on education in 2019.
COVID is increasing a huge annual financing gap to reach SDG 4 by one third, from $148 billion up to almost $200 billion.

GPE's operating model includes incentives and requirements aimed at improving domestic financing for education to transform systems. Most GPE implementation grants use results-based financing to drive the delivery of transformative programs.

GPE also recognizes the need to engage in strategic dialogue with ministries of Finance and support strong communication between Finance and Education ministries.

Improved accountability for spending and demonstrating convincing results is a key step towards stronger dialogue between ministries of Education and Finance.

More information

GPE 2021-2025 Financing Campaign
Under the political leadership of President Uhuru Kenyatta of Kenya, GPE is asking partner countries to make political commitments at the Global Education Summit to reach the most vulnerable and leave no child behind by:

  • protecting domestic finance to education to pre-COVID levels
  • increasing education budgets towards the 20% global benchmark or beyond,
  • committing to policy areas, including equity and efficiency.

Volume

More than two-thirds of resources for education in low and lower-middle income countries come from domestic public expenditure.

GPE assesses national education financing against internationally agreed benchmarks and helps build capacity to track the use of domestic finance and improve the availability of data to support transparency and accountability.

The global benchmark of 20% of domestic budget allocated to education remains central in country-level dialogue and advocacy. This should be complemented by a broader dialogue on fiscal space.

Equity

Although education access has improved, too many children in school are left behind in learning, reflecting systemic inequities and inefficiencies. Children who achieve basic literacy skills by age 10 in low and lower-income countries are more likely to come from wealthier urban families, reinforcing patterns of poverty and disadvantage.

By monitoring domestic financing through an equity lens, governments can ensure that education spending reaches the most marginalized children, schools and regions.

Read more: Nepal's Equity Index

Efficiency

By addressing systems inefficiencies such as high repetition and dropout rates, procurement waste and inefficiencies in teacher management and distribution, partner countries could save up to one-third of their education budgets.

Given constrained fiscal space, compounded by the COVID-19 crisis, squeezing the most out of every dollar and ensuring its impact becomes even more important.

Read more: Tanzania - Making financing work better

Impact of COVID-19

The economic impact of the COVID-19 pandemic is straining national economies and budgets, risking decades of progress on education. The economic downturn is likely to affect education financing for years and education budgets are not expected to grow at the same rate as before the pandemic.

  • A number of lower-income countries have cut their public education budgets since the onset of the pandemic
  • Aid to education could fall by up to $2 billion by 2022 – and it could take 6 years to get back to 2018 levels.
  • Household spending, a significant contributor to education financing in lower-income countries and for the poorest families in those countries, is expected to drop as COVID causes an additional 93 million people to fall into poverty, resulting in increased dropout rates.

Millions of children risk returning to even more under-resourced learning environments as governments bear the additional costs of reopening schools safely, exacerbating existing inequities.

To build back better, more resilient and equal education systems after COVID, we need smart investments in education, including protecting and improving domestic financing to pre-COVID levels and beyond. Education is critical to the COVID response and recovery.

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