FTI Finance Working Group

1
FTI Finance Working Group
2
Focus Areas

• Review of methodologies for assessing education
  financing needs global and country level
• Case studies on alternative delivery models

3
Focus Areas

• Tracking Aid Flows to Education testing a
  methodology to account for donor contributions to
  EFA
• Looking at the relationship between budget
  support/SWAPs and education outcomes

4
Aims of BS/SWAP Study

• To look at the relationship between BS/
• SWAPs and education outcomes
• To contribute education sector dimension to macro
  analysis on mix of aid instruments
• To draw on newly emerging evidence on shift to
  programmatic aid
• To propose follow up action for more definitive
  conclusions

5
Framework for Assessing Aid Instruments

• Cost-benefit approach compared aid types
  according to agreement on
• Policy negotiation costs are higher where there
  are more donors less consensus, benefits are
  greater where Govt has clear policy but is aid
  dependent
• Use of aid earmarking can distort macro
  discussion on public expenditure, earmarking is
  better-suited to less aid dependent countries
  accompanied by domestic funding commitments
• Procedures parallel donor procedures encur extra
  transaction costs do they yield better
  performance cost benefits?

6
Key findings on budget support

• Education Outcomes
• Country reviews suggest BS has supported
  increased more effective spending on primary
  education more access equity
• BS can finance recurrent costs offers more
  predictable funding effective for lowering
  costs, funding cost barriers to families
  extending enrolment to hard-to-reach children
• Sector policy dialogue is key it focuses donor
  govt attention on strategic policy issues BS
  donors must remain engaged
• Basket/pooled funds are next best solution to BS
  but study suggests performance is more mixed

7
Financing flexibility

• BS permits better resource balance
• By linking education budget share to wider macro
  prioritization of allocation and reform issues
• Between salary non-salary budget, recurrent
  investment spend
• Low per pupil spend across multiple sites
  characterizes Primary Ed lends itself better to
  BS than project modality in terms of cost
  effectiveness transaction costs
• Non-government routes are important, notably for
  extending UPE to marginal groups. But need for
  subsidy means Government budget will remain the
  dominant funding source for sustainable UPE.

8
Scaling up

• EFA requires long-term indicative commitments.
  BS is suitable mechanism for channelling the
  major increase in recurrent costs required by
  most FTI countries to achieve education gender
  MDGS
• Funding should be on plan preferably on
  budget

9
Conclusions DFID perspective

• Study confirms BS as preferred delivery mechanism
  effective for scaling up expansion of education
  system
• Our experience shows that bottlenecks remain in
  system there is need for targeted interventions
  to strengthen capacity delivery mechanisms
• Our experience shows that non-state providers
  play an important role in system delivery
  innovation this can where possible should be
  integrated within the sector plan

10
Ideas for Follow Up

• Comments welcome!
• Collaborate at country level to review adapt
  aid modalities arrangements
• What are partner government views on choice of
  aid instrument and getting aid on plan and on
  budget?
• What actions are required of donors to better
  align aid to national plans and budget?