Investing in SDG 4: Quality Education

Specific targets and indicators accompany each SDG to measure progress. Originally intended to guide governments and policymakers, the UN SDGs have also become a powerful framework for businesses, investors, and individuals.

United Nations’ Sustainable Development Goal (SDG) number four is to ensure inclusive and equitable quality education and promote lifelong learning opportunities for all. In short, SDG 4, or Goal 4, is Quality Education.

Education is a pillar that upholds and enables almost all areas of global sustainable development. It’s a core driver in economic value creation and poverty alleviation. Access to quality education and training helps improve employability, productivity, innovation, competitiveness, health, equality, safety and civil involvement. Of all 17 SDGs set out by the United Nations (UN), Goal 4 draws one of the clearest threads throughout, catalysing the rest.

In addition to the opportunity for driving widespread impact, education generates a high social return:

• It’s estimated that every $1 investment in early childhood care and education for the most disadvantaged children generates up to $17 in return. 1
• If every child completed secondary education, global poverty could be reduced by more than half. 2
• A cross-country study calculated that each additional year of schooling improves earnings by 10% per year. 3

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The global investment gap in education

There’s been progress on SDG 4, but it isn’t happening at a fast enough pace. Enrolment and completion rates have improved since the goal was set back in 2015, but progress is slowing down. There’s still a large unmet need to meet – 272 million children were still out of school in 2023. 4

Broadly, education-linked investment is high. It’s estimated that global education expenditure is around $7.6 trillion annually. 5 But, this spend is concentrated in developed markets, and emerging markets face a large financing gap.

As of 2023, across 79 low- and lower-middle-income countries, the UN estimates a $461 billion annual gap in funding needed to reach SDG 4 by 2030. 6 That’s a cumulative $3.7 trillion between 2023 and 2030.

Sub-Saharan African countries represent half of the low- and lower-middle-income countries (41 out of 79) and account for the largest share of the financing gap – $70 billion per year on average. 7

There’s an average national financing gap of $97 billion per year, equal to 2.3% of gross domestic product (GDP). 8 This gap is several times the external resources currently being offered. 9

To maximise impact, investors can target innovative solutions which can reach underrepresented groups, such as women or countries which report a low overall school finishing rate.

Key areas for investment

1. Expanding access through digital infrastructure and connectivity

Target 4.3: By 2030, ensure equal access for all women and men to affordable and quality technical, vocational and tertiary education, including university.

Today, 2.6 billion people – roughly 33% of the global population – still lack internet access. 10 Without connectivity, millions are cut off from the digital learning tools that can help break the cycle of poverty.

Digital tools that support personalised, adaptive learning have been shown to improve outcomes. Just one year of tailored digital instruction can increase learning by the equivalent of a full year of schooling and raise future earnings by around 5.5%. 11 In the long term, there’s an estimated $1,700 in future benefits per student for just $27 per year in costs. 12

Improving accessibility to high-quality educational tools lowers the overall cost burden required to meet SDG 4. Digital education, particularly e-learning, eliminates geographical constraints and reduces the cost of education by leveraging online platforms and resources. Digital literacy itself can reduce the risk of returning to poverty by promoting a wider range of potential non-farm work. 13

Investing in digital infrastructure and connectivity, such as telecommunications, is a scalable way to support SDG 4 and help bridge the digital divide, especially in underserved communities.

Can you guess: How much could global GDP increase if the gender employment gap closed?

2. Improve gender equity in education through mobile learning and edtech

Target 4.5: Eliminate all discrimination in education.

Globally, 119 million girls are out of school. 14 While many countries have achieved gender parity in primary education, the gap widens with age – only 24% of countries have reached parity at the upper secondary level. 15 The impact of this is lasting; for example, as of 2024, women make up 63% of the world’s illiterate adults. 16

Women’s education is strongly linked to economic growth. Greater inclusion in the workforce could boost GDP by an average of 35%. 17 According to the World Bank, each year of secondary education enables girls to increase their adult earnings by up to 25%. 18 Yet economic barriers, safety concerns, and limited infrastructure continue to restrict access for many women and girls.

Technology offers a way forward. Mobile learning platforms that deliver education through phones, tablets, or other devices are making it easier for women to access education on their own terms: flexibly, affordably, and safely.

Empowering women through education creates ripple effects across societies. For impact investors, backing edtech platforms focused on inclusive, low-cost learning and supporting tools that promote flexible skills-based learning can be a powerful lever for change.

3. Using innovative financing options to unlock education

Target 4.3: Equal access to affordable technical, vocational, and higher education

Africa is home to all ten of the world’s youngest countries with 60% of the continent’s population under 25. 19 Sub-Saharan Africa, in particular, is transforming rapidly, with 9 of the 20 fastest-growing economies in 2024. 20 But the region also faces the world’s largest education gap.

By 2050, at least 9 million new classrooms and 9.5 million additional teachers will be needed to meet demand. 21 Without intervention, many young people may be left without access to the education and training needed to participate in their economies and shape their futures.

If Sub-Saharan African countries can provide quality education and employment opportunities, the region could unlock an additional $500 billion in income each year for the next 30 years – equivalent to a third of Africa’s GDP. 22

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However, public investment in education is constrained. Many governments face significant debt burdens. Today, African countries spend more than three times as much on debt servicing as on education. 23 This presents a structural challenge – but also an opportunity for innovative finance to serve as a solution.

Creative financing models, such as debt-for-education swaps, offer a way forward. In December 2024, Côte d’Ivoire completed the world’s first debt-for-development swap with the World Bank, freeing up $384 million in liquidity. 24 Half of the funds will support new school infrastructure, including 30 new schools for 30,000 students, half of them girls. 25 The remainder of the funds will enable the country to secure a Sustainability-Linked Loan (SLL) for investors to engage with.

For impact investors, there is growing potential to support innovative education finance mechanisms that unlock public funding, back education-focused debt relief initiatives in high-growth, young economies, and invest in scalable education infrastructure and vocational training platforms.

Conclusion: Finance as a catalyst for education

Closing the global education gap will take more than public funding alone. Impact investors have a critical role to play in filling the shortfall and unlocking opportunity where it’s needed most.

Some of the opportunities that are well-positioned for impact investors include:

• Expanding digital connectivity to enable affordable e-learning
• Supporting mobile learning platforms that improve equity
• Backing innovative financing models such as debt-for-education swaps in young, fast-growing economies

Each of these pathways delivers measurable social and economic benefits, from stronger learning outcomes to more inclusive growth. By directing capital toward education, investors can play a pivotal role in advancing the SDGs and building a more equitable future while also growing economic opportunity.

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