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Africa: Education on the Brink

AfricaFocus Bulletin
Apr 29, 2009 (090429)
(Reposted from sources cited below)

Editor's Note

"Investments in education and training were signaled in the G20 Communique as a priority to stimulate the economy - and as a key strategy to get out of the global recession. However, these warm words about education were focused on the G20 countries themselves -- and most of the children out of school around the world are in low income countries (LICs)." - Global Campaign for Education

With the International Monetary Fund gaining new prominence and new resources following last month G20 summit in London, debate is intensifying on to what extent promises for reform in the institution are illusory. In a report released last week, the Global Campaign for Education looked at the implications for education, concluding that so far policy changes by the Fund in response to the global recession are more cosmetic than substantive.

This AfricaFocus Bulletin contains a press release and excerpts from the full report, which provides a detailed analysis of the impact of IMF policy mandates on the education sector in developing countries.

For the full report and more about the Global Campaign for Education (GCE). visit http://www.campaignforeducation.org The site also includes additional reports, including recent reports on West Africa and GCE evaluation of the latest multilateral "Education for All" meeting.

For a more general analysis of the role of the IMF in the current crisis, see the latest (April 24) bulletin of the South Centre, available in PDF format at http://www.southcentre.org It includes an article by Centre director Martin Khor, "The G20's Mistake: Boosting the IMF without Reforming It."

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Many thanks to those of you who responded to the most recent appeal for voluntary subscription payments to support AfricaFocus Bulletin. If you haven't yet, and are able to do so, please help AfricaFocus reach more people with reliable information on Africa. Send in a check or pay on-line through Paypal or Google Checkout. See http://www.africafocus.org/support.php for details.

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New AfricaFocus Website Feature

I often come across articles or other information sources worth recommending to readers "fyi," but am able to cite only a few of them in an AfricaFocus Bulletin. I'm starting a page on the AfricaFocus website to put quick notes and links to some of the others - sort of a "mini-blog." Check it out at http://www.africafocus.org/fyi/recent.php It won't be updated every day, but if enough readers find it useful, I'll probably expand it.

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Make or Break: IMF's new lease on life must benefit Education for All

Global Campaign for Education Press Release

25th April 2009

http://www.campaignforeducation.org

[Contact: Alex Kent +27-76-428-5390 or alex@campaignforeducation.org

The Global Campaign for Education, founded in 1999, brings together major non governmental organizations (NGOs) and teachers' unions in more than 120 countries. GCE promotes access to education as a basic human right and raises public awareness to create the political will for governments and other leaders in the international community to fulfil their promises to provide at least a free, public basic education for all children.]

The Spring Meetings of the World Bank and International Monetary Fund (IMF) are a 'make or break' moment for whether the G20 deal will benefit the millions of children and adults struggling to get an education, according to a new policy report from the Global Campaign for Education (GCE). "Education on the Brink" shows that without significant changes to the IMF architecture and removal of conditionalities, the poorest nations will remain unable to lift themselves out of recession. Education systems will be left to languish without desperately needed funds and the teacher workforce, already squeezed, is likely to face further pressure. The future of millions of children and illiterate adults now rests on whether the new cash injection given by the G20 to the IMF is accompanied by a substantive overhaul of macroeconomic policy frameworks, say GCE members.

"A good education is everyone's human right, essential for individual growth as well as the economic growth of every nation. Paying teachers is not a luxury expenditure, nor is it optional. There's not a single IMF worker who got to their position without a good education and a bunch of great teachers. Everyone should have this chance, and that means making the resources available to recruit, train and pay teachers", commented Kailash Satyarthi, GCE President.

There are 75 million children out of school and 776 million illiterate adults today. Yet, educated and healthy people have the best opportunities to participate in and make lasting contribution to their societies. Investment in education is thus the strongest line of defence for any country's economic survival and comeback. A person's earnings increase by 10% for of each year of schooling they receive translating to a 1% annual increase in GDP if good quality education is given to the entire nation. With estimates of unemployment increasing by 30 50 million in the developing world, and 200 million more people being pushed into extreme poverty, it's crucial that funding education is not constrained.

Whilst rich countries have launched fiscal stimulus packages to promote economic growth, this luxury is denied to poor nations. As long as IMF conditions continue it is unlikely that the poorest countries will be able to build on the fragile gains made in education over recent years. Poor countries must be allowed the flexibility in macro economic policy to continue the good work they've started. Children waiting at the school gates should not be left out because of the short sightedness of global institutions. It is crucial that the IMF carries out the review on loan conditionalities in poor countries that has been promised by Dominique Strauss Kahn. Richer countries should insist that the new mandate and lease of life they have given to the IMF is accompanied by a real commitment to reform the institution.

"Education is a long term investment with long term gains. Yet the Fund insists on rigid macro economic conditions to ensure short term financial 'stability' defined only on their terms. Funding for education, from both domestic budgets and aid, must be substantial, long term and predictable, so that education ministries can employ, train and pay the teachers that are needed to teach their citizens", said David Archer, GCE Board Member.

At the same time, the $16 billion in external financing needed annually to reach 'Education for All' must be made available, for the long term and in a predictable way.

"The world's poorest were not the cause of the financial storm battering the globe, yet they stand to lose the most in this global crisis. The money needed for education is a drop in the ocean of the hundreds of billions allocated for current bank bailouts, it must be made effectively available to allow everyone, no matter their age, to have the chance of a good quality education", commented Maria Khan, GCE Board Member..


Education on the brink

Will the IMF's new lease on life ease or block progress towards education goals?

Global Campaign for Education. April 2009

[Excerpts only. For full text, including references, visit http://www.campaignforeducation.org]

Introduction

...

To date the most significant global response to the global recession has been the meeting of the G20 in London in March 2009. Leaders at the G20 Summit emphasized their commitment to implementing national fiscal stimulus packages to maintain high spending levels and buoy global trade levels. National fiscal stimulus packages could help to protect and expand spending on education -- as they have in countries like the US and UK. Indeed, investments in education and training were signaled in the G20 Communique as a priority to stimulate the economy - and as a key strategy to get out of the global recession. However, these warm words about education were focused on the G20 countries themselves -- and most of the children out of school around the world are in low income countries (LICs).

For LICs, the main response from the G20 was to make funds available to them through the International Monetary Fund (IMF).

The following specific pledges were made:

  • $250 billion to be created in Special Drawing Rights (SDRs), a conditionality-free allocation of the IMF's reserve currency. Sadly only 7.5 percent of this ($19 billion) seems to be available for LICs. Despite the ability for richer countries to reallocate these to LICs it is unclear which of them, if any, will.
  • $500 billion in funding pledges (for the IMF), $250 billion available now and $250 billion to be approved later. It is unclear what part of this will reach LICs and if it does, what conditions may be attached.
  • $6 billion in "concessional finance" for the poorest countries to be generated by IMF gold sales. However the agreement on how the gold would be sold is yet to be taken as are the conditions under which the funds would be available to LICs. The sums likely to be available for LICs are much smaller than the huge sums used by rich countries for the bailouts of banks and to protect their economies. Nevertheless, thanks to the efforts of some, there certainly appears to be an opportunity to mobilise some funding for LICs, who amidst the crisis, may not be able to have a credit line elsewhere.

The question to raise however is which conditions will be attached to this funding. The lessons from history show how expanded lending by the IMF after previous recessions forced harmful economic policies on LICs that actually inhibited growth and damaged education and health sectors. Given that the richest countries have now rejected much of this economic orthodoxy (for example suspending public sector borrowing targets and concentrating on economic stimulus packages) it is vital that all countries are allowed to make similar choices. Education and health advocates have raised serious concerns over the years about how the IMF's traditional macroeconomic conditions have undermined rather than facilitated investment in education. If these conditions are continued it is unlikely that LIC governments will be able to design their own fiscal stimulus packages that will maintain education spending in the same way as most of G20 countries are planning to do for themselves. Unfortunately in the last summit, the G20 did not condition their support to the IMF on reform to these conditions.

Indeed, it seems that the motivation of some of the new countries sitting at the G20 table was to get a greater say in the governance of the IMF (breaking the dominance of G8) - and not enough attention was paid to the need for wider reforms of the IMF.

This new investment in the IMF seems to have given it a new, expanded role. Before the global financial crisis the organisation was struggling to define its role in the world and there were serious questions raised about its legitimacy. Now the IMF not only has the resources to reassert its authority over macroeconomic policies in LICs but it also has an effective monopoly over the control and stewardship of the financial resources intended to spare countries the worst pain of the current global downturn.

There are some promising signs. The Managing Director of the IMF, Dominique Strauss Kahn has emphasised the need for reform and has promised a significant review of the conditionalities attached to loans to LICs. This paper will explore whether these signals and agreements between the IMF and LICs made since the September 2008 financial crisis are sufficient to make education advocates optimistic for the future.

The first section of this report makes the case for investment in education, specifically in teachers, as a key part of the response to the recession in LICs. Section 2 outlines the obstacles to expanding investment in education -- and scrutinises how the traditional policy conditions and recent policy changes made by the IMF affect education. Section 3 then looks at the promises of change and the new instruments being developed. Has there been any change in practice in the IMF's approach since the global recession became clear in September 2008? Section 4 asks whether aid can be part of the solution and explores how the IMF policies impact on aid to education. Finally we draw conclusions and lay out recommendations for the future.

1. The Case for Education

"[The] last thing a government should do in the middle of a recession is to cut back on spending", US President Barack Obama

The human right to education has been affirmed since the writing of the Universal Declaration of Human Rights, and has been re-asserted in countless international conventions and treaties as well as in most national constitutions. The Education For All (EFA) and Millennium Development goals (MDGs) set in 2000 are the latest targets keeping the world's states on track to fulfilling this responsibility. In the context of the present global financial crisis there is a better case than ever for making accelerated progress on delivering on this fundamental right.

Increased public investment in education is an obvious and key strategy for helping countries to endure and emerge from the global financial crisis. ... The benefits of education itself - as a first-line of defense in and a solution to economic downturn - and as a high-return, long-term investment - are touted by wealthier governments as a key domestic policy and budget item. Unfortunately nowhere in the global bailout actions and stated plans is there a call for - nor a commitment to - the reforms to education financing that are needed to approach, let alone meet, EFA goals by 2015.

Education provides one of the smartest, most cost-effective and most equitable strategies for long-term sustainable development. ...

...

Studies have consistently shown that more schooling is associated with improved economic performance at both an individual and societal level. A person's earnings increase by 10 percent for each year of schooling they receive, translating to a 1 percent annual increase in GDP if good quality education is offered to the entire population. ... Sadly current IMF growth forecasts focus on a 3 to 5 year period and fail to include any longer term growth returns - leading to a systemic under-representation of the economic benefits of education investment (which come over an 8 to 15 year period, when children who leave school enter the workforce).

This restricts many countries in Sub-Saharan Africa from following the education expansion that worked so well for the South East Asian economies in recent decades.

Aside from the long-term benefits of investing in education, it also makes sense in the short-term given the need to stimulate economic growth. ...

Hiring more teachers is in fact an effective economic strategy to help countries reverse the negative impacts of the financial crisis. Expanding numbers of public servants such as teachers and health workers puts money in people's pockets and provides jobs for the unemployed across both rural and urban areas....

The Squeeze on Teachers

Education is one of the soundest investments any country can make. Yet policies and practice over the past decades have ventured away from financing and building a trained teacher workforce, which in turn has opened the door for on-going attacks on the teaching profession. Teachers are expected to teach subjects outside their core competency, to be held accountable for students' performance and improving learning outcomes despite having little or no training and working in classrooms with PTRs as high as 78:1 -- and often over 100:1 in rural areas. They are also increasingly required to fulfill these duties as informal employees with lower pay and less employment stability than public sector employee teachers traditionally have. UNESCO projects that 18 million new teachers need to be trained and employed between now and 2015 if all the 75 million children out of school are to gain access and all children are to be taught in manageable class sizes (of 40:1) which enable quality and positive learning outcome. ...

Financing a national education system includes financing the recurring costs of training, hiring and retaining skilled people to teach future generations. Full funding to close the global education financing gap (currently estimated at $16 billion) is one of the best forms of crisis-response aid wealthy donor governments can make to LICs, and should therefore be at the forefront of policy makers' agenda. It is significantly less than the sums invested in recent months by a number of G8 countries in single banks ... Yet the world's teachers, and their role laying a foundation for human welfare, let alone economic recovery, are conspicuously absent from global leaders' recent crisis-response rhetoric and the policies aimed at the world's poorest countries.

...

Education vs macroeconomic stability goals: the case of Malawi

Malawi has an unacceptably high PTR, currently 78:1, and in many rural areas well above 100:1. Not only is there a teacher shortage, but many teachers have received limited 'fast-track' training when thousands were hastily introduced into the system to cope with exponential enrollment following the introduction of free primary education in 1994. Currently 12 percent of primary school teachers are untrained, and 14 percent are either contract or volunteer teachers. This dire teacher situation means that learning outcomes are far from satisfactory and drop-out rates very worrying, as only 32 percent of boys and 27 percent of girls complete their primary education cycle. While a sudden rise in enrolment will present a government with difficult challenges in terms of providing a sufficient amount of teachers (especially trained professionals), Malawi had to face particularly stringent macroeconomic and budgetary constraints, undergoing several IMF austerity programmes. Despite facing a sometimes difficult financial situation with very high inflation at the end of the 1990s, a worsening HIV/AIDS prevalence rate and a food crisis in 2002, the Government had to assure overly restrictive targets such as bringing down inflation to 5 percent and fiscal deficit to less than 1 percent. A limit of 7 percent of GDP was imposed on the wage bill as part of the PRGF arrangement, but following pressure from civil society education advocates, the IMF agreed to remove it as a condition for loans in early 2008. However this has not translated into an increase of the projected wage bill.

...

3.1 Are There New Trends in IMF Arrangements with LICs since September 2008?

A detailed look at all currently active IMF arrangements with LICs which have had a review since September 2008, when the financial crisis hit, show that contractionary targets are still a key element of IMF arrangements. ...

[for example] 43 percent of countries are expected to bring their deficit down to below 3 percent, which is the European Union common rule on fiscal deficit. In the current economic context, most European countries will be breaking that rule themselves.

The UK is currently projecting to run a deficit over 10 percent of GDP in 200945, with the US projecting 13 percent of GDP for the same period. In a context where most rich countries are pursing these expansionary policies, 48 percent of LICs with IMF arrangements are expected to decrease their deficit in the face of what many say is the worst economic crisis the world has seen since 1929.

Looking into more details at four countries facing a crisis in education, it is clear that IMF advice is still highly stringent in terms of macroeconomic targets. [see full text for cases of Sierra Leone, Mozambique, Senegal, and Burundi.]

...

In the run up to the G20 Summit, on March 24, the IMF employed both a press release and a conference call with civil society advocates to announce that changes to its concessionary lending are on track and that conditionality for LICs has changed. However, a careful look at the proposed changes clearly shows that only structural conditions are meant to change, not macroeconomic ones. ,,,

What the examination above suggests is that this overhaul appears to be more cosmetic than substantive. The same macroeconomic conditions that have constrained education spending for years remain in place for LICs. ...

If the hundreds of billions of dollars going into the IMF are to be used effectively, there is an urgent need for a radical overhaul of the macroeconomic policies promoted by the IMF. ,,,This discredited package needs to be questioned as a whole. The mood and tone of the G20 summit was that of an end to the Washington consensus, but currently its decisions may fuel its expansion with devastating effects across the developing world. By the time of the next G20 summit the IMF and the G20 must detail how they will avoid this.

LICs need to be able to prioritise investment in education and health -- and shape their macroeconomic policies in ways which will facilitate achievement of those development goals. At present, policies are back to front: macroeconomic policies are defined first without regard to these goals -- and education and health ministries have to make do with the limited funds that are available. Fundamentally it should be for national governments to set their economic policy -- but with IMF conditions most are left with little room to manoeuvre.

...

5. Conclusions

The big winner from the G20 meeting in London in March 2009 seems to have been the IMF. It positioned itself as the agency best able to help countries weather the impact of the global financial crisis. It presented itself as flexible and open, willing to change some of the controversial conditions it imposed in the past.

The LICs and the fight against global poverty could also be big winners -- but only if the G20 and the IMF make key changes to the planned implementation.

This review by GCE of what the IMF has done since the global financial crisis took hold shows that little has yet changed in practice. LICs will benefit little from the hundreds of billions of dollars announced at the G20. They may have access to some new money, but if present trends continue, that money will come with conditions attached that actively undermine investment in education. There is an urgent need to hold Dominique Strauss Kahn to his word and ensure that a fully comprehensive review of IMF macroeconomic conditions imposed on LICs leads to real change. Poor countries should be given the fiscal space necessary to sustain and expand their investment in education. Indeed, such investment should be seen as an integral part of the response to the present crisis, yielding both immediate benefits and long term economic growth. As many rich countries move towards spending their way out of the recession through investing in education, poor countries, where the need is greater, should be encouraged in the same direction.

...

The present crisis, whilst creating potential threats for investment in education, also presents a window of opportunity. Macroeconomic policies that have been entrenched for decades will need to be reviewed as part of the overhaul of the global financial system. Securing progress on education should itself be seen as an indicator of stability and as a sign of a sound economy which is investing in the future, as well as a way to make progress in other goals and protect the most vulnerable. At present, education spending is all too often seen by the IMF and Ministries of Finance as consumption, in part because by its nature, it is made up mostly of recurrent spending, such as on teacher salaries. This mind-set needs to change and the IMF needs to promote education as an investment and factor in the growth it creates and be proactive in advocating for strategic increases in education spending in response to the financial crisis, most notably in the trained teachers that underpin any effective education system.

...

Civil society actors in every LIC have a key role to play in opening up a dialogue with their Ministries of Finance about possible alternative macroeconomic policies. Discussions about the shape of the national economy should not take place behind closed doors, between the IMF and Ministries of Finance -- but should be transparent and open to public scrutiny and debate. National education coalitions need to link with other civil society actors to promote such debate, building collective understanding and economic literacy. As well as arguing for a greater share of the national budget to be dedicated to education, we need to ask fundamental questions about the size of that national budget as whole.


AfricaFocus Bulletin is an independent electronic publication providing reposted commentary and analysis on African issues, with a particular focus on U.S. and international policies. AfricaFocus Bulletin is edited by William Minter.

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