Two demographic worlds, one aid system built for neither

Key reasons to read this article

• What happens when a young continent reaches its demographic turning point just as the money to educate its future workforce starts to disappear?
• Aid cuts can shut down schools and learning centers for children already displaced by conflict and crisis.
• If aid can no longer meet every need, who gets priority? Children in crisis, countries facing demographic upheaval, or the priorities of donors?
• Developing countries are expected to fill the financial gap while debt interest is already consuming more than their education budgets.
• The demographic pressures are changing more quickly than the aid system. Can development finance adapt?

Africa’s working-age population will almost double by 2050, rising from 849 million to 1.56 billion and accounting for 85% of the entire expected global increase. Over the same period, the number of people aged 60 and over in Latin America and the Caribbean will rise from 98 million to 183 million, representing one in every four residents. These two regions are moving in opposite demographic directions at speed. Meanwhile, the financing intended to help them to prepare is moving in a third direction: down.

This contraction has not been gradual. Official development assistance from OECD donors fell to US$174.3 billion in 2025, a 23.1% drop from 2024 in real terms and the largest annual decline ever recorded, returning aid to the level it stood at when the 2030 Agenda was adopted. Measured against donor income, it slipped to 0.26% from 0.34% a year earlier against a longstanding commitment of 0.7%.

Bilateral aid to sub-Saharan Africa fell by 26.3% in 2025 and is projected to fall a further 11.6% in 2026, the third consecutive year of decline. Latin America and the Caribbean (LAC) are also on a downward trajectory. Aid disbursements to this region fell by about 14% in 2023 compared to 2022, with the OECD identifying 2023 as the year when the previous upward trend started to reverse direction.

Whether an architecture that was built in a more generous fiscal era can absorb that shock is now a live question. Beza Tesfaye, Monitoring and Evaluation Specialist at Education Cannot Wait, the United Nations global fund for education in crises, believes it can but she mentions two provisos.

The first is commitment. “While progress has been made, the international community should remain focused on SDG 4, achieving education for all, as a human right and a key investment in global prosperity and stability,” she told DevelopmentAid. “This applies to both donors and African governments, who should prioritize education financing.”

The second is prioritization. “We must not forget those most at risk of missing out on education: children affected by crises such as conflict, climate-induced disasters, and epidemics. External financing is particularly critical in these contexts.”

The dividend is not automatic

Tesfaye argues that the demographic trend in Africa could actually be good news that tends to be framed as a threat. Africa’s working-age population is expanding while fertility rates are falling in many countries, creating the conditions for a demographic dividend: the growth boost that arrives when the working-age population becomes proportionally larger than the population depending on it.

The dividend, though, is conditional on absorption. “Africa faces a serious risk: ensuring quality education and jobs for the children and youth entering the labor force,” she said. “In this context, education is clearly one of the most important investments in Africa’s future.”

The returns provided by education are among the most durable in development economics. World Bank research covering 1,120 estimates across 139 countries found that an additional year of schooling raises a person’s future earnings by roughly 9%, a figure that has barely shifted since the 1950s and is higher, rather than lower, in low-income countries.

The money is moving the other way

Education financing is contracting more quickly than early projections anticipated. UNESCO’s Global Education Monitoring Report initially estimated that aid to education would fall by a quarter by 2027. The latest evidence puts the likely reduction to be 30% against 2023 levels, and the report is explicit about where the money is going instead: defense, debt servicing after COVID-19 and energy crises, and the green transition.

UNICEF has put a figure on the near-term effect. A US$3.2 billion drop in education aid, with nearly 80% of it traceable to three donor governments, would push six million more children out of school by the end of 2026, increasing the global out-of-school figure from 272 million to 278 million. Around 290 million more would remain enrolled while the quality of the education they receive will decline.

Domestic budgets cannot absorb the shortfall

The standard response is that national budgets should fill the gap and, while that principle has never been in question, the feasibility is.

“Governments are the primary duty-bearers for education and account for the largest share of education spending,” she said. “But African governments face significant fiscal pressures, one of the most critical being external debt servicing.”

The evidence supports this. In 2023, for the first time, sub-Saharan African countries collectively spent more on debt interest than on education. African governments were on course to make US$89 billion in debt payments in 2025, well above the roughly US$60 billion the continent received in development assistance in 2023. Analysis published by the LSE’s Africa blog puts the resulting squeeze in plain terms: African education budgets fell from an average of 3.9% of GDP in 2008 to 2.9% in 2023.

When budgets are stretched thinnest, external financing is no longer merely supplementary. “External aid is especially critical in crisis and emergency settings, where governments often lack the capacity and resources to stretch further,” Tesfaye explained, listing refugee influxes, climate-induced disasters and internal conflict.

Where the need concentrates

Education Cannot Wait’s 2026 global estimates put the number of school-aged children and adolescents whose education has been disrupted by crisis at 258 million across 87 countries, with 93 million of them being out of school entirely. That is an increase of 21 million in 18 months and roughly 148 million of those children, close to 60%, are in Africa, according to the report.

What happens when financing for children’s education stops mid-stream is not hypothetical. “The impact of withdrawing funding pre-emptively is devastating,” she said, describing accounts from partners during a visit to Somalia in February. When education funding was cut, “temporary learning centers, mostly supporting displaced learners, could no longer function and were eventually shut down.”

The cost of stopping is not the same as the cost of never starting. Children who leave a temporary learning center in a displacement setting do not wait outside for it to reopen.

Does demography drive allocation?

Here Tesfaye’s answer is more measured than the question invites. Practice varies: “Different donors take different approaches to deciding how much funding goes where.” Her own fund is pooled, drawing contributions from several donors and allocating them to countries “primarily through a needs-based methodology”.

Needs-based is not the same as demography-based. It is also not the same as allocation that is driven by historical relationships and political cycles, which is the more common criticism of bilateral programming. The distinction matters for anyone building a pipeline. Pooled, needs-weighted funds are the channel most likely to track where children actually are, but they are not where most of the money sits.

The trade-off donors are actually making

It is tempting to read all this as a contest between an ageing region that needs pensions and long-term care and a young region that needs schools and jobs. Budget documents do not support that reading. When the United Kingdom cut its aid budget from 0.5% to 0.3% of gross national income, the stated purpose was to fully fund an increase in defense spending, not social protection at home. The competition is between development assistance and security budgets in an unstable global order, not between two vulnerable populations.

LAC’s challenge is different but no less structural. As its population ages, governments face rising demands for health care, pensions and long-term care. At the same time, external financing is becoming less available. While Africa faces the opposite demographic pressure, the same financing constraint exists.

That reframing changes what advocacy has to argue. Making the case for a young continent against the claims of an ageing one is an argument nobody can actually win.

What education buys that budgets do not count

Tesfaye is careful not to overclaim the peace dividend, which is a familiar temptation in this sector. Education “isn’t only about increasing income,” she commented. Schools bring children from different backgrounds, and their families, into contact with one another. They are places where tolerance, conflict resolution, communication and civic engagement can be learned.

“While research finds a correlation between education and peace, suggesting low education may be one of several risk factors for conflict, the causal relationship remains unclear,” she said. “Still, there is a real opportunity to strengthen social cohesion and peace through education, if it’s done intentionally.”

That last condition is the expensive element. Intentional design requires planning horizons, evaluation capacity and institutions that outlive a single budget cycle. But those are the first things to go when funding contracts.

ECW’s own answer is Hope Starts Here, the campaign it launched this month, seeking US$600 million to reach 10 million more children over four years ahead of a replenishment conference in Geneva on 5 November, hosted by Switzerland. Nearly 40% of the target has been mobilized so far, Tesfaye confirmed.

Set against 258 million children in crisis, the sum is modest. Set against a working-age population that will add more than 700 million people by 2050, it barely registers. The question is no longer whether Africa’s demographic transition is an opportunity. It is whether anyone is still funding the part that can turn it into one.