Beyond the Classroom: How Egypt’s Education Budget Powers Economic Growth

Updated 9/7/2025 9:00:00 AM

In today’s world, where knowledge and innovation primarily drive economic growth, the strategic allocation of public funds to education is paramount. Egypt, a nation with a young and rapidly growing population, has recently demonstrated a significant commitment to this principle.

In the latest fiscal year, the budget for education recorded a substantial increase, moving beyond a simple line item to become a centerpiece of the government's long-term economic strategy. Yet, within this constrained envelope, the government announced a notable 20.1% increase in education spending, reflecting a renewed emphasis on the sector’s transformative potential.

Still, challenges remain around the sustainability of funding, whether increased spending will translate into improved educational outcomes, and economic impacts will be effectively monitored over time. Addressing these issues is critical to maximizing the sector’s ripple effects on the economy.

Constitutional Budget Mandates and Reality

Egypt's 2014 constitution mandates that the state to allocate no less than 6% of its gross domestic product (GDP) to education, with at least 4% dedicated specifically to pre-university education. In fiscal year (FY) 2024/2025, the government proposed, and parliament approved, an EGP 295 billion education budget, equivalent to 1.7% of GDP and 5.3% of total government expenditure, according to Human Rights Watch (HRW).

Despite this gap, recent government announcements indicate a significant increase in education spending, with a 20.1% budget growth. This includes targeted allocations of EGP 4 billion to hire 160,000 part-time teachers, EGP 6.9 billion for school textbooks, EGP 500 million in pre-university education incentives, and EGP 7.2 billion for meal programs benefiting 15.6 million students.

Sahar Mohamed Abdel-Haleim, an economic expert and assistant professor at the British University in Egypt (BUE), tells Arab Finance: “Raising education spending by 20% represents an expansionary fiscal policy designed to inject additional funds into the economy and stimulate overall demand.”

Meanwhile, public investments in education reached around EGP 53.305 billion, making up around 5.76% of the EGP 925.9 billion total public investments in FY 2023/2024, according to the Ministry of Planning, Economic Development, and International Cooperation.

The ministry also reported that education accounts for 42% of public investments in the FY 2024/2025 plan. Looking forward, Egypt outlined an EGP 63.4 billion budget for educational services in FY 2025/2026, Minister of Planning Rania Al-Mashat stated during a plenary session of the House of Representatives in April 2025.

The Egyptian government is further working on boosting private sector investments in education. “To encourage private sector investment in education, governments need to lower entry barriers, provide targeted incentives, and foster partnerships that align public priorities with private capabilities. Establishing a clear and transparent regulatory framework is essential to building investor confidence,” according to Abdel-Haleim.

To stimulate investment in education and training, the General Authority for Investment and Free Zones (GAFI) has dedicated a section of Egypt's Investment Map to highlight opportunities in the sector. In collaboration with other state entities, GAFI also offers additional incentives, including the possibility of granting educational projects a 'golden license.'

At the same time, the General Authority for Educational Buildings is actively working to attract investment to establish 1,000 new schools that are both financially and structurally viable. This move aims to meet the strong demand for educational services driven by Egypt's growing population.

Education as an Economic Engine

Education spending in Egypt goes far beyond the classrooms, serving as a dynamic driver of economic activity and job creation. Saber Shaker, an international economics professor at Helwan University and former consultant at UN-HABITAT and USAID, emphasizes this interconnected impact: “Every pound allocated to schools multiplies across the economy. Textbook demand drives the paper sector, school meals stimulate food processing and agriculture, and new classrooms energize the construction industry.”

Notably, food-related spending carries one of the highest multipliers, generating more than four jobs across the wider economy for every direct job created in the sector. This highlights education’s broad ripple effects on local economies.

Moreover, “higher teacher pay raises disposable income, encouraging greater household spending on necessities such as housing, food, and transportation. Similarly, greater demand for textbooks benefits publishers, printers, and related industries, generating more jobs and investment opportunities. Funding school meal programs also creates revenue for local food suppliers and supports employment in catering and food services,” Abdel-Haleim explains.

Abdel-Haleim further explains that “in the long run, education spending builds the foundation for sustainable growth by strengthening human capital, encouraging innovation, enhancing productivity, and promoting social cohesion. It improves labor productivity by equipping workers with better skills, knowledge, and competencies, making them more adaptable and innovative.”

For his part, Economist Ahmed Zayed explains the significance of education investment in developing economies like Egypt. He notes that education spending tends to have a medium-term multiplier between 1.3 and 2.0, as enhanced labor market outcomes emerge when better-educated cohorts enter the workforce.

Moreover, he contrasts this with infrastructure spending that usually produces a strong but shorter-term boost, and subsidies, which typically have weaker economic multipliers due to their consumption-focused nature. For Egypt, Zayed stresses that the success of the recent 20% increase in the education budget hinges on “strengthening quality inputs, such as teacher training, curriculum materials, and digital learning infrastructure, so the long-term benefits outweigh the initial fiscal cost.”

“The single most important factor is to ensure that additional funds are directed toward improving learning quality, not just expanding access. Only measurable gains in skills and knowledge will translate into higher productivity and sustainable economic growth,” Zayed says.

From Access to Achievement

While increased education spending in Egypt signals a positive commitment, significant challenges remain, foremost among them the sustainability of funding. As Shaker cautions: "While allocations are rising in nominal terms, education spending remains only about 1.5% of GDP, far below the 6% mandated by Egypt’s constitution.”

“With fiscal consolidation under the IMF program and revenues under pressure, there is always a risk that future cuts could hit areas like school infrastructure or nutrition programs," he adds. Ensuring consistent and sufficient funding amid economic constraints is crucial to maintaining progress in this vital sector.

Beyond funding, the effectiveness of education spending depends on rigorous monitoring and evaluation across multiple dimensions. Zayed outlines a comprehensive framework focused on three interlinked levels:

Inputs and efficiency: Tracking how much of the budget reaches schools and how it is allocated to vital resources such as textbooks, laboratories, digital tools, and improved pupil-teacher ratios.
Learning outcomes: Measuring tangible improvements in standardized test performance (such as Egypt’s TIMSS results), literacy and numeracy rates, and digital skills proficiency.
Labor-market results: Evaluating graduate employment rates, wage premiums, and reductions in youth unemployment to capture real returns on education investment.

Additionally, Zayed advocates for results-based budgeting, which ties a portion of funding to measurable improvements in learning. This approach enhances accountability and ensures resources are used effectively.

Addressing the tension between quality and quantity further underscores the sector’s challenges. Shaker emphasizes, "Quantity, however, is not quality. To ensure real impact, Egypt must track what children learn, not just how many attend. That means stronger teacher training, credible assessments like TIMSS and PISA, and transparent reporting on dropout rates, attendance, and learning outcomes."

Only by rigorously tracking and improving educational quality can the increased budget lead to meaningful futures for Egypt’s youth.

Egypt's recent boost in education spending reflects a vital recognition of education as a cornerstone of economic growth and social development. While the constitutional mandate allocating 6% of GDP to education remains unmet, the government's 20.1% budget increase and targeted investments signal a strategic commitment to harnessing education's transformative potential.

By Sarah Samir