In 2010, the Task Force on Innovative Financing for Education drew up a report setting out the financing needs of the education sector and suggesting a variety of innovative financing mechanisms. This was designed to encourage global, regional, bilateral and national initiatives.
The Report highlights the importance of education as a development issue. The achievement of education goals (MDGs 2 and 3) would help accelerate the achievement of all MDGs (2+3=8). The Report also highlights the close links between education and economic growth. It recalls that education is a right for all enshrined in Article 28 of the 1989 Convention on the Rights of the Child and Article 26 of the 1948 Universal Declaration of Human Rights.
The Report presents two types of innovative financing mechanisms: the first of those present a broad financing base for raising significant amounts of funds for education, while the second ones have a huge outreach potential.
Nine mechanisms are thus described in detail in the Report.
The International Financial Transaction Tax (FTT) is a 0.005% tax on financial transactions. It could raise about 33 million dollars per year. Local currency education bonds are financial instruments issued by developed countries to mobilize national resources. These funds can be acquired by the government itself, which currently assigns them to higher education, or by private investors and pension funds.
An Education Venture Fund is expected to raise additional resources for education through a wide range of mechanisms in order to invest in initiatives that promote innovation and social entrepreneurship in the education sector. The Fund will also have the possibility to take risks and experiment new programmes.
“Diaspora Bonds” are another potential means of financing. This debt instrument issued by a country to raise financing from its diaspora, can ensure stable and cheap external financing.
Voluntary contributions from migrants may help devote part of the resources from migrants’ remittances to supporting education systems in low-income countries and could benefit from the G8-led process aimed at reducing transaction costs of migrants’ remittances.
Debt-for-education swaps are a mechanism whereby a creditor country cancels a recipient country’s debt against its commitment to use the funds in pre-agreed development programmes. This mechanism will help relieve the public debt of low-income countries and provide new financing for education. France has already implemented a mechanism of this kind through debt reduction and development contracts (DRDCs) in Cameroon, Mauritania and Tanzania.
A sports levy may help support the issue of education on the international agenda. The sports media, as well as the world of football, have a strong potential for mass communication. Many actors in the football sector have already shown interest in philanthropic education initiatives. A soccer levy could raise 48 million dollars. PPPs already exist in the development and health sectors, for example, where they contribute to financing and to the visibility of the issue.
The Report suggests creating a partnership of this kind to mobilize governments, the private sector, international organizations, the media and personalities known to the public around education-related issues.
Micro-donations from individual bank transactions, in the form of voluntary contributions when using credit cards, would allow banks to round up the amounts of all their credit card transactions and give the difference to education programmes in developing countries. If 300,000 people were to participate in this programme, the dedicated amount raised would be 36 million dollars per year.
Given the vastly growing number of new organizations and fragmentation of the development sector, the Report recommends using pre-existing structures such as the Global Partnership for Education (GPE) to centralize resources generated by innovative financing and distribute aid. The GPE’s advantage is that it is similar to all education actors, such as education ministries in recipient countries, international organizations, donors, civil society organizations, the private sector and foundations.
The Report also suggests the next steps to be taken in order to implement all the proposals it contains:
- Give a mandate to an experts’ committee that will meet before the end of 2010 to develop those innovations;
- conduct detailed studies of the different mechanisms proposed;
- organize an international round table under the authority of a recognized public figure to promote education for all;
- organize a follow-up meeting during the year following the publication of the Report.
The “2+3=8” Report is available in English (PDF format) by clicking on the icon below:
29 January 2012