If properly harnessed, the non-state education sector has the potential to improve access to quality education services for the poor. Significant gaps remain among governments and donors in developing and capitalizing on promising non-state models. Creative new financing mechanisms targeted at the non-state sector are required to help seed robust, potentially scalable models that enhance the quality and affordability of education and ultimately benefit the poor.
The United Nations estimates that, for basic and lower secondary education in low- and middle-income countries (LMICs), an annual USD 38 billion external financing gap exists between what governments can reasonably be expected to fund and what international aid donors are likely to support. Despite a rise in the share of government spending on education in low- income countries – from 2.9% of gross domestic product (GDP) in 1999 to 3.8% in 2011 – a major shortfall in financing for education persists (UNESCO, 2011). Traditional aid, which can amount to as much as one-fifth of education budgets in low-income countries, is in decline – falling from USD 14.4 billion in 2010 to USD 13.4 billion in 2011.
On its side, the private sector has been slow to intercede and expand its role in financing for education in LMICs, a role it has successfully assumed in such arenas as health. Corporations invest 16 times more in global health than in global education. This may be explained by the complexities of education systems such as regulatory uncertainty, a lack of enforced standards and an extended time horizon for investment as well as the fact that, historically education, especially for the poor, has been regarded as a public good governed and financed by the public sector. In that context, the financing gap seems unlikely to be addressed, and indeed may even widen, unless new actors intervene and new financing mechanisms are put in place to advance the status of education.
