IMF: Invest in education to boost economy

The demographic transition may be the biggest opportunity for the economies of sub-Saharan Africa, but will only be able to enjoy the dividends if they make sufficient investment in education.

The 2024 Fiscal Monitor by the International Monetary Fund (IMF) shows that a percentage increase in education spending can boost medium-term GDP by as much as 1.9 per cent in emerging market and developing economies, on average, by increasing technology diffusion. 

“For every dollar spent on education, as much as $10 to $15 could be generated in economic growth,” the international lender says.

Even so, nearly three in 10 school-age children do not attend school. For primary school students, the completion rate is around 65 percent, compared with a world average of 87 per cent.

Furthermore, the literacy rate for those ages 15 to 24 is only 75 per cent, below the nearly 90 per cent rate in other emerging markets and developing economies.

On top of this, pandemic-related school closures led to learning losses that in some cases reversed years of progress.

One reason for these shortfalls is that government spending on education in sub-Saharan Africa falls short of international benchmarks in several countries.

The median education budget was equal to about 3.5 per cent of the gross domestic product in 2020, which is below the international recommendation of at least four per cent of GDP.

However recent IMF analysis reveals that achieving the key Sustainable Development Goal of universal primary and secondary school enrollment by 2030 may require doubling education expenditures as a share of GDP, including from both public and private funding sources.

Greater spending to improve access is important, but equally important is the effort to ensure that funds are efficiently used.

Indeed, for the median country in sub-Saharan Africa, only 15 per cent of students in primary and secondary school achieve more than the minimum learning outcome, while teacher training rates have fallen steadily for two decades.

Leave a Reply