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Innovative Financing for Improved Access to Education

by: admin

April 28, 2016

In 2010, the Government of Pakistan introduced Article 25-A in the Constitution of Pakistan which declared that the “state shall provide free and compulsory education to all children of the age 5 – 16 years in such a manner as may be determined by law”. While this was a very positive step in the right direction, roughly 5 years later, the government is still struggling to make good on its promise – the commitment levels are high but spending remains low.

Even though the government is cognizant of its responsibilities to provide free and compulsory education – reflected in its long standing target, first set in 1992, of spending 4% of GDP on Education – it is a mammoth task, one that they are not fully equipped to take on by virtue of inefficient resource allocation and lack of sufficient funding for the education sector. The lack of funding continues to remain one of the main obstacles to ensuring 100 % enrollments.

Historically, Pakistan has spent only around 2 % of its GDP on education which is the lowest in the region. Table 1 below shows other countries in the region with similar economic status or common social scenario that spend much more.

Table 1: Country wise comparison of percentage of GDP spent on Education

Country Year % of GDP on Education
Pakistan 2014 2.5
Nepal 2014 4.7
Bhutan 2014 6.0
Afghanistan 2014 4.6

Source: http://data.worldbank.org/indicator/SE.XPD.TOTL.GD.ZS/countries/BD?display=default

For Pakistan to fill this financial gap it is imperative that they turn to innovative methods of financing education. Complimentary to traditional ODA and existing government spending, this type of financing is more predictable and stable than ODA and includes mobilizing domestic and international financing. Creative leveraging of existing funding and revenue streams can produce impactful outcomes that supplement traditional sources. Countries like India, El Salvador and Indonesia have already started using creative means such as CSR mandates, “sin tax” (tax on tobacco), and debt-swaps etc. to finance their education sectors.

For Pakistan, a country that has access to vast natural resources, using revenues from untapped natural resources for education is one way of financing education. For instance, the gold and copper mines of Reko Diq in Baluchistan have an estimated worth of $500 billion to $100 trillion. Even a small percentage of these revenues directed towards the education sector will give the Government much needed access to additional funding.

Another avenue that Pakistan can use to increase literacy and education in Pakistan is using the new China Pakistan Economic Corridor (CPEC) to its advantage. This project is just the thing Pakistan needs to spur its human development and economic growth. Crossing 5 provinces, it is said to bring in an estimate of $45 Billion in the next 15 years. Public and private domestic financing as well as external financing from China present an opportunity for Pakistan that can lift the political economy of education to new heights.

Pakistan has great potential to be a successful nation. It has access to vast resources, which if used wisely can ensure that all children across Pakistan have access to quality education. What is needed at this point is commitment not only from the government but also citizens of Pakistan. It is high time that we stop relying on the traditional sources of funding and start exploring innovative financing options.

The time to act is now!

Izzah Meyer – Manager Policy, Research and Action

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