NN40, May 2008
Education for Sustainable Development? Or The Sustainability of Education Investment? A Special Issue
Increased Aid for Education in Sub-Saharan Africa: Increased Risk of Aid Dependency?
By Birger Fredriksen, World Bank
Email: Bfredriksen@worldbank.org1. Enrollment growth 1960-2005: A tale of three periods
1960-1980: The Gross Enrollment Ratio (GER) in primary education in Sub-Saharan Africa (SSA) grew from about 40% in 1960 to 80% in 1980, implying an enrollment growth of 230%. This impressive growth meant that enrollment in 1980 exceeded by 25% that implied by the 1961 ?Addis Ababa target? of reaching Universal Primary Education (UPE) by 1980. However, the UPE target was not reached because the population of primary school age almost doubled during this period (20% foreseen).
1980-2000: This was a period of stagnation. The GER declined to a low of 72% in 1992, and only regained its 1980 level of 80% in year 2000. The 70% enrollment growth achieved was just sufficient to keep pace with population growth.
1999?2005: In recent years, strong growth has resumed. Primary enrollment grew by 36% during this six year period, and the GER increased from 80% to 97%.
2. Role of education financing in explaining past enrollment trends
SSA countries? ability to finance education is a key factor explaining the above trends. Education budgets increased annually by only 2.3% during the period 1980-99, i.e., slightly below population growth. This reflects the economic crisis that hit SSA in the mid-1970, resulting in a decline in GDP per capita by 36% during the 1970-1997 period [1]. To substitute for stagnant public budgets, many countries introduced school fees, a cost parents could ill afford. The result was a major ?UPE setback?: The number of countries with a GER above 100% declined from 16 in 1980 (accounting for 50% of SSA?s school age population) to 7 in 1995 (7% of the population, most of which in South Africa).
During the period 1999-2005, total education budgets in SSA increased by 9.2% annually, and school fees were abolished in many countries. The improved public financing is explained by a combination of factors:
? Resumption of economic growth (4.8% annual GDP growth during the 2000-2005 period as compared to 2.1% during the period 1980-1999);
? Increased share of GDP spent on education (from 3.7% in 1999 to 5.0% in 2005);
? Resumed growth in education aid (3.8% annually between 1999 and 2005) as compared to a marked decline in the 1990s.
3. Has the increase in aid led to increased aid dependency?
The international community?s follow-up to the Dakar 2000 Education for All (EFA) conference has focused on mobilizing increased aid to help countries reach the EFA goals. This focus is normal, given the sector?s severe past financial squeeze. Less attention has been given to issues related to risks of aid dependency and to the sustainability of increased aid. However, these types of risks should be explored, not because more aid is not desirable, but because this may help both countries and their partners to better handle the risks, including by using aid more strategically to reduce, or ?grow out of? future aid dependency, or in a way that limits the potential risks associated with such dependency. Risks may range from (real or perceived) external ?interferences? in domestic policies [2] to potential problems arising from depending on (often unpredictable) aid to finance teacher salaries. The following illustrates some issues related to aid dependency/sustainability:
(a) Share of aid in total education budgets. A World Bank study conducted in 2002 to prepare the Fast Track Initiative (FTI) estimated that to reach universal primary school completion by 2015, SSA countries would need increased aid equal to about 42% of their primary education budget in 2015; see Mingat et al (2002). Other studies, e.g., UNESCO (2002), estimated that to reach EFA would require a much higher level of aid. Assuming that 50% of public education budgets are devoted to primary education (the FTI target), the World Bank estimate would imply 21% of the total education budget financed by aid in 2015. Aid levels already exceed this figure in some countries; see UNESCO (2006), p. 95.
The actual development of foreign and domestic funding during the period 1999-2005 (see above) means that the share of aid in total education funding declined from about 21% in 1999 to 15% in 1999 [3]. While rough, these estimates illustrate that measured in this way, the level of ?dependency? depends crucially on the development of domestic funding. Statistically, the high budget growth during the 1999-2005 period is explained by the increase in GDP allocated to education (by about 55%), and by increased economic growth (by about 45%). While there is still some room in many countries for further increase in the share of GDP allocated to education, the dominant factor in the future development of aid dependency will be economic growth.
(b) Some uses of aid create more ?dependency? than others. For the same level of aid, the extent to which aid represents a ?dependency risk? depends on what it finances. For example:
? Increased use of ?budget support? means that the share of teacher salaries financed by aid has increased, and that an abrupt reduction in aid could interrupt regular payment of teachers. In turn, this could pose ?political? risks for the government including strikes, which could affect negatively students as well as the impact of earlier aid. One way to lessen this risk would be to increase aid predictability. However, this would need to be weighted against other objectives such as making aid more ?performance-based?. Another way could be to use aid to finance items where interruption of aid would cause less risk;
? Support for capacity building could impact on ?dependency? in different ways, depending on the type of aid provided. For example, to the extent the long-term resident technical assistance (TA) common in earlier periods [4] tended to substitute for rather than build national capacity, this type of aid tended to increased dependency. On the other hand, strategic use of TA and foreign training to build national capacity (as done in many East Asian countries) [5] could lessen dependency and reduce the need for future aid.
(c) What is the comparable advantage of aid over domestic funding? This question should be given more attention in the aid debate to help allocate aid to purposes, levels of education and countries where it can have the greatest impact. Even untied aid is not completely ?fungible? with domestic funding since governments may be willing to procure certain types of inputs (policy advice, technical support, costly but essential equipment) only if aid is available. Over time, many factors have influenced the existing aid allocation; comparative advantage may not have been a prominent one, especially for tied aid. Also, the international and national context in which aid operates has changed considerably in recent years. In short, there is a need to re-examine the comparative effectiveness of current aid allocation and use. For example:
? Given the rapid increase in domestic funding and resumed progress towards UPE, even in a context where EFA remains the overarching priority, is the comparative advantage of aid really to finance teacher salaries and primary school construction (the latter is one of the few areas where populations can contribute in kind) rather than e.g., policy development and investments to help build capacity to produce the type of post-primary skills needed to sustain fast-growing economies? In the same wane: Should more aid be used to stimulate more attention to literacy programs (primarily for women) and ECD?
? Given the rapid changes in the international aid architecture, with greater use of budget support and declining technical competence of many aid agencies, how should aid priorities change to ensure that increased financial aid is accompanied with high-quality technical support? More broadly, there is a need to re-examine whether the overall impact of education aid could not be enhanced by giving more attention to supporting technical cooperation among countries through south-south cooperation and technical networks, and strengthening regional and global technical institutions;
? Many countries have been successful in resuming both economic growth and rapid progress towards UPE. These countries may now be less dependent on aid to maintain their progress towards EFA than some countries which still are far from EFA due to e.g., a low starting point, continued economic stagnation, and civil strife. Should more predictable long-term technical and financing aid be channeled to these ?fragile? countries to help accelerate their progress towards EFA? If so, how would that affect the objective of ?performance-based? aid?
In summary, the aid dependency and sustainability risks associated with increased education aid depend closely on whether the renewed economic growth in SSA can be sustained. In turn, this depends on many factors including whether countries can develop education and training systems that respond better to national economic and social development needs. Countries and aid agencies need to give more attention to how aid can be more strategically allocated and used to achieve this objective. In the end, the more aid can help promote national development, the lower is the risk of aid creating harmful dependency and not being sustainable.
Notes
[1] See World Bank (2000), p. 8. All GDP and aid figures exclude South Africa which in 2005 accounted for 40% of SSA?s GDP, but only 6% of the population of school age and 5% of SSA?s aid for education.
[2] E.g., ?The Government of India refused the offer of substantial amount of aid for primary education until 1993 because of concerns that it would lose sovereignty over policy decisions. Even after that, aid was less than 2% of total expenditures on primary education?, UNESCO (2006), p. 98.
[3] Based on GDP figures from World Bank (2008), and figures on aid and on GDP devoted to education from UNESCO (2007). It is not clear how much of the reported aid is included in the reported GDP spent on education. If all aid is not included, then this would tend to underestimate total education spending and thus overestimate the share of aid in this total. Estimates for the 1981-83 period range from 7% to 13% depending on what is counted, see World Bank (1988), pp. 102-105
[4] In 1981-83, TA constituted 58% of bilateral aid and 44% of total aid, see World Bank (1988), p. 105.
[5] For examples, see Fredriksen and Tan (2008), pp. 18-20.
References
Fredriksen, B. and Tan, Jee-Peng, eds. (2008): An African Exploration of the East Asian Education Experience, World Bank, Washington, DC
Mingat, A., Rakotomalala, R. and Tan, J.P: (2002): ?Financing Education for All by 2015: Simulations for 33 African countries?, African Region Human Development Working Papers Series, World Bank, Washington, DC
UNESCO (2002): EFA Global Monitoring Report 2002, UNESCO, Paris
UNESCO (2006): EFA Global Monitoring Report 2007, UNESCO, Paris
UNESCO (2007): EFA Global Monitoring Report 2008, UNESCO, Paris
World Bank (1988): Education in Sub-Saharan Africa: Policies for Adjustment, Revitalization and Growth, World Bank, Washington, DC
World Bank (2000): Can Africa Claim the 21 Century? World Bank, Washington, DC
World Bank (2008): Africa Development Indicators, World Bank, Washington, DC
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