'Education for People and Planet': The 2016 GEM Report & The Private Sector

The first and much anticipated Global Education Monitoring (GEM) Report has just been published and it’s an important contribution to the discourse on how we tackle the global education crisis. GEM is the UNESCO-backed body charged with monitoring and reporting progress towards the internationally agreed Sustainable Development Goal (SDG) 4.  SDG4 pledges to ‘ensure inclusive and equitable quality education and promote lifelong learning opportunities for all’ by 2030.

The authoritative report does not disappoint in providing a full assessment of progress towards SDG4, and it builds an irrefutable case around how education drives wider progress across nearly all of the Sustainable Development Goals, with benefits across the social, environmental and economic pillars of People, Planet and Prosperity.

3 Key Facts from the GEM Report:

• On current trends, universal primary completion will be achieved in 2042, universal lower secondary completion in 2059 and universal upper secondary completion in 2084.
• In at least 35 countries, governments spent less than 4% of GDP and less than 15% of their total expenditure on education.
• Aid needs to increase at least six-fold to fill the US$39 billion annual education finance gap, but in 2014, levels were 8% lower than at their peak in 2010. 

For Opportunity EduFinance, the report contains two particularly useful areas of commentary and recommendations: 

1. A stark portrayal of the gap between SDG 4’s targets and the current situation
2. An acknowledgement that partnerships with the private sector are an essential part of addressing that gap.

1. The gap

The scale of the global education crisis is enormous: some 263 million children were out of school in 2014 and the annual funding gap has reached $39 billion. 

Some of the reason for this gap lies in many countries (over 35) spending less than 4% of GDP or 15% of total government expenditure on education – a relatively new global benchmark from the Education 2030 Framework – with many falling well below.  Importantly, however, is that we are not distracted by this fact, and attempt to blame the funding gap on “less committed governments.  Even with increased allocations to benchmark levels, the funding gap remains – government funding alone will not bridge the financing gap. According to UNESCO’s 2011 report Financing Education in Sub-Saharan Africa, SSA countries dedicate an average of 18.3% of total public spending on education and yet, faced with limited revenues and ever-growing populations, they still fall billions short of the necessary education budget.

International aid has traditionally been expected to lead on meeting these shortfalls, but meeting the global $39 billion annual funding gap would require a six-fold increase in international aid for education. The report gives a reality check: 2014 international aid spending was 8% down on 2010 levels, and the GEM report acknowledges that this continuing trend means that such a transformational increase in aid spending is simply not going to happen.

2. What role for the private sector?

The report notes that a debate has continued for years about what role is appropriate for the private sector in education for the developing world, and that ambivalence remains. However its section on Partnerships describes how private finance has come to be recognised as an essential element in meeting funding needs.

Where the Millennium Development Goals (MDGs) assumed that Official Development Assistance (overseas aid) must meet all the funding requirements, the 2015 3rd International Conference on Financing for Development that produced the SDGs acknowledged that all sources of finance – public and private, domestic and international – would be needed, along with a long-term investment perspective.

While outlining ongoing efforts such as the Global Partnership for Education and the Education Cannot Wait fund, the report acknowledges the realization that these bodies have to leverage multi-sector partnerships that include the private sector to meet their objectives. Its recommendations on Partnerships include increasing engagement with the private sector ‘to increase and diversify funding’.

The 2030 SDG Framework for Action, ‘while calling for private involvement in mobilizing additional resources and aiding school-to-work transition, also stresses respecting education as a human right and ensuring that private efforts do not increase inequality.’ Opportunity EduFinance knows from our working experience that these are all simultaneously achievable objectives, if private sector funding is channeled via microfinance institutions and products that reward quality and facilitate better skills and learning outcomes.

Meanwhile the International Commission on Financing Global Education Opportunities, announced at the 2015 Oslo Summit and chaired by UN Special Envoy Gordon Brown, was tasked with exploring a range of financing sources ‘including increased domestic resource mobilization through more strategic aid, non-traditional partnerships, innovative finance and the private sector’. That Commission is also due to report its findings to the UN Secretary General this month and we’ll be keen to hear more.

Next year, the GEM Report will focus on accountability. Opportunity EduFinance contributed some evidence on what works best to achieve this vital attribute and we look forward to another definitive report.

3. Waiting is not an option

In the meantime, we strongly concur with the report that waiting until 2084 (three full generations) to achieve universal access to primary and secondary education is simply unacceptable.  If present trends continue, however, this will be our reality.  If education is to be seen as a human right, we must do what is necessary to ensure that every human is given an opportunity to access education: the GEM Report clearly points to private sector investment as a key part of this.

Since 2012, Opportunity EduFinance partners have funded schools to create an estimated 210,000 new, permanent seats in low-cost education, supported 130,000 families with school fees, and supported the education of more than 1.7 million children.  Current estimated loan loss rates sit at just 1.2%.