Innovative Financing for Tertiary Education in Sub-Saharan Africa

Group Submission Type: Formal Panel Session

Proposal

Between 2000 and 2018, access to tertiary education doubled in Sub-Saharan Africa (SSA). Despite this, it continues to have the lowest regional enrolment rate in the world, at only 9%. Improved access to tertiary education benefits the individual (improved productivity, income, health, etc.) and society as a whole with increased tax revenue, economic growth, knowledge creation, research and development, improved public health, lower rates of crime and better social cohesion. Recently research has reinforced that attainment of tertiary education in SSA strongly impacts social mobility), especially since the returns to tertiary education are the largest for the poorest 40 per cent of the population.

Despite tertiary education's individual and social benefits, the sector remains highly inequitable in access and perpetuates an “elite system”. Trends in access to tertiary education have reproduced social inequity rather than reducing it. Data from 28 countries in the region shows that in three-fourths of the countries, individuals from the top two wealth quintile occupy nearly 80% of spaces in tertiary education, and individuals from the poorest households are five times less likely to enrol than individuals from the wealthiest households. Individuals’ socioeconomic background, household wealth and parental education remain the best indicators of access to tertiary education. Both direct and indirect costs remain a significant barrier for students from poorer households accessing tertiary education.

In 2018, 23.3% of government expenditures on education were devoted to tertiary education, yet government allocations are often insufficient to meet the growing demand. Few countries in Africa have the ability to increase their public financing of tertiary education as their tax base is generally weak, and it is difficult to raise the share of the budget dedicated to tertiary education when there is also a significant demand for access to primary and secondary education.

Tuition fees have increasingly become an accepted necessity for providing tertiary education and addressing the lack of public funding. In addition to government and public financing, sources of tertiary education finance include i) parents/ caregivers and households; ii) the students themselves; iii) individual and institutional donors; and iv) income-generating activities of the academic institutions. However, available student financing has its shortcomings. For example, existing scholarships and bursaries are predominantly oriented towards the top one per cent of performers or the most in need and disproportionately give advantage to students from higher income households. Additionally, governments often lack the resources to lend to students or the financial structures and data to manage large-scale student loan programs. Commercial bank loans are often out of reach of low and middle-income students, especially those with limited means to prove collateral, credit history or family incomes. This makes student financing unobtainable for many. Therefore, innovation in student financing programs in SSA is necessary to bridge the financial gap and increase accessibility to available financing to a broad segment of students.

This panel presents research and financing initiatives that address the equity challenge in tertiary education in Sub-Saharan Africa. Learnings from the research presented here help understand how and under what conditions could innovative financing mechanisms tackle the challenge of addressing the financial barrier to access tertiary education for disadvantaged populations. The cases presented here discuss interventions in Kenya and Rwanda, but the lessons could be applied to a broader range of countries in the region and beyond. This research aims to inform the debates on strategies for financing equitable tertiary education like student loans, scholarships, subsidies, graduate taxes, etc.

Sub Unit

• Economics and Finance of Education SIG

Chair

• Arushi Terway, NORRAG

Individual Presentations

• Affordable Student Loans: The Lending for Education in Africa Partnership - Joseph Di Silvio, The Palladium Group

• Income Share Agreement for Rwanda: The case of Chancen International - Batya Blankers, Chancen International Rwanda Ltd

• The Challenge of Equity and Finance in Tertiary Education in Sub-Saharan Africa - Allan Kimaina, University of Cape Town

Discussant

• M. Najeeb Shafiq, University of Pittsburgh