Making education financing go further: Disrupting the status quo to do more

If we, as global community, are serious about building a more peaceful, sustainable and equitable future for all, investing in education is not an optional choice; it is the foundation.

But this foundation is far from stable. Between 2023 and 2030, the average annual financing gap for low- and lower-middle-income countries to reach their national SDG4 targets amounts to a staggering $97 billion per year.  

With national budgets reeling from the pandemic, spiraling debt and shifting priorities of donors and country Governments, education budgets are under a major strain. In nearly half of lower-income countries, education budgets have been downsized with on average 14% since 2020. In addition, aid to education decreased by 7% from 2020 to 2021, while the share of aid allocated to education in aid budgets reached its lowest point historically, with only 7.9% of sector allocable ODA dedicated to education in 2022. 

In this current resource-constrained environment, we need to be disruptive not just in how we scale financing but also in how we engage a more diverse range of partners and create new mechanisms to make sure every dollar invested in education is well spent and goes further.  

This is exactly what the GPE Board of Directors, which met in Berlin in early June, asked us to act on in the coming months. 

We launched the GPE Multiplier to incentivize more and better investments in education. Over the last three years, $900 million of Multiplier funds have reached 45 countries, unlocking over $3.5 billion in investments in education. 

Both partner countries and co-financers see the Multiplier as highly relevant and value its ability to catalyze funding, address funding gaps and extend the reach and impact of program activities. For instance, in Ethiopia, GPE approved a $20 million Multiplier grant in 2021, which in turn has mobilized $55 million in co-financing. This funding has contributed to a single $80 million program to integrate refugees into Ethiopia’s education system. 

The success of the GPE Multiplier has shown that the sector can crowd in additional financing from a broad range of existing and new partners, such as development banks, philanthropic foundations, and the private sector.

For example, our work through the Arab Coordination Group Smart Education Financing Initiative (SmartEd) is leveraging $850 million to dramatically scale up education financing to common member countries of the Islamic Development Bank and GPE. To mobilize more private sector financing for public education, GPE is matching $40 million in contributions from the Jacobs Foundation/UBS Optimus together with other foundations and businesses, to create an $80 million education program for Ghana.  

The Multiplier has even had successes in complex contexts of fragility and conflict. In Ukraine, as fighting intensified in early 2023, this severely disrupted children's education. GPE matched over $25 million in grants and in-kind support from Microsoft, Google and UNESCO, mobilizing more than $51 million in education assistance for Ukraine.

The successes resulting from the Multiplier in addressing funding challenges led us to lean more vigorously into innovative finance for education and develop other instruments to support partner countries. In Côte d’Ivoire, GPE supported through its Debt2Ed mechanism a $77 million debt swap transaction with France and helped leverage $182 million in new financing for education programs from a range of partners. We want to scale up this instrument to more countries facing high debt burdens.

The GPE Multiplier has succeeded beyond our initial hopes, exceeding the leveraging target of $3 billion in 5 years (we reached $3.5 billion in three years). Driven by the ambitions of our Board, we will continue to work with partners, including through the SDG4 High Level Steering Committee, to push our collective thinking and explore new options and instruments of innovative finance, for example, impact bonds, debt swaps or ways to de-risk education investments.

Innovative financing is no substitute for governments increasing domestic financing, meeting ODA commitments, or tackling the reforms that are badly needed to create more fiscal space to invest in education. However, based on the principle of additionality, it can help stretch scarce resources further. With the scale of the learning challenge ahead of us, we need to be more creative and coordinated than ever.

GPE stands ready to work with all education sector stakeholders to drive the innovative financing efforts and provide the much-needed support to countries facing fast growing populations and low capacity for education investments.