Policy Forum on Funding Research in IHE in Eastern and Southern Africa Luckson M Kaino

1. Policy Forum on Funding Research in IHE in Eastern and Southern Africa Luckson M Kaino

2. Overview of the presentation • An overview of IHE funding in Africa • Trends in funding of IHE in African countries • Funding model in South Africa • Funding system in EU higher education • Entrepreneurial funding model • Hints towards a function for a workable funding model

3. An overview of funding in IHE in Africa • Since independence, the majority of countries in Sub Saharan Africa have funded higher education through a variety of ways. • These have included government student loans and scholarships, private foundations, families and households funding, local and international scholarships etc. • Governments however, have been and remain the main source of funding for higher education in many countries if not all. • The increasing demands on government revenues and the growing number of institutions of higher education across the continent, call for a closer examination of the structure of funding for high education in order to develop norms and formulae of how to ensure funding achieves expected goals, outputs and outcomes of higher education.

4. Without developing scientific norms for funding higher education institutions, very few countries will be able to attain their long term development goals or their commitments under the Millennium Development Goals. • At the moment; • funding is more skewed towards teaching and administration and research does not get a fair share of budget allocations • The absence of funding formulae with norms and benchmarks for funding various components of the activities of higher education institutions is causing problems in their capability to contribute to knowledge creation in order to become relevant to national and regional development objectives

5. The rapid growth in the number of students is a challenge to the sustainable financing of higher education. Africa has maintained its public investment in higher education over the last 15 years or so, allocating approximately 0.78 percent of its gross domestic product (GDP) and around 20 percent of its current public expenditure on education. • However, during this period, the total number of students pursuing higher education tripled, climbing from 2.7 million in 1991 to 9.3 million in 2006 (an annual average rate of 16 percent), while public resources allocated to current expenditure in education only doubled (an annual average rate of 6 percent). The situation is even more dire in the poorest countries in Africa, which allocate approximately 0.63 percent of their GDP to higher education

6. The decline in public expenditure per student is having an adverse impact on the quality and relevance of education programs. Africa is the only region in the world that has experienced a decrease in the volume of current public expenditure per student (30 percent over the last 19 years). • Universities are finding it increasingly difficult to maintain a teaching staff, lecture halls are overcrowded, and buildings are falling into disrepair, teaching equipment is not replenished, investment in research and in training for new teachers is insufficient, and many teachers must supplement their incomes by providing services to the private sector.

7. International aid in support of higher education in Africa is on average US$600-700 million annually, or one-quarter of all international aid to the education sector in Sub-Saharan Africa. • This relatively low share reflects the current emphasis given by most donors on the development of basic education and the achievement of Education for All. • In addition to the small amounts of aid, two main factors limit the impact of aid. • First, only 26 percent of aid to higher education goes directly to African universities and research centres. The remainder is provided through scholarships abroad or is accounted for by directly imputing student costs in the donors’ universities. • Second, aid is highly fragmented, owing partly to the lack of donor coordination.

8. Funding patterns in IHE in Africa • In most countries, budgetary practices remain largely traditional. University operating budgets use the previous year(s) as a baseline and make incremental changes based on general considerations such as the country’s economic performance, government revenues, inflation rates, or institutional growth. • The budget discussions are limited to fine-tuning the internal distribution of these fixed allocations among staff salaries, student services, staff development, and operational expenses. • There are, in addition, other problems in budget management, such as the lack of transparency in decision-making, fragmentation in budget responsibilities and the absence of measures for curbing out-of-control budgets in higher education.

9. However, some countries, have adopted innovative budgetary practices and are beginning to move away from historically based budgets. In countries such as Kenya and Rwanda, the budget frameworks have based on cost per student. Other countries, such as Nigeria and Ghana use normative unit costs derived from prescribed student-teacher ratios by discipline and the recommended cost of goods and services for a teaching unit by discipline. • For investment, some countries, such as South Africa, implement funding contracts linked to teaching and research outputs specified in government-approved plans. Various governments, such as Ethiopia, Ghana, Mozambique, and South Africa, supplement the core budgets of universities with competitive funds to stimulate qualitative improvements, research, and partnerships.

10. In Ethiopia and Kenya, some universities have embarked on revenue diversification to get alternative funding such as the establishment of business ventures. However, experts warn that entrepreneurial activities unrelated to higher education should be a matter of concern, as they may distract the universities from their core missions.

11. Faced with inadequate public financing, the share of private resources in higher education financing is expanding. The contribution from households accounts for approximately one-quarter of national expenditure (state and households) on higher education. • It varies widely according to country, ranging from less than 10 percent in Mali, Chad, and the Republic of Congo to more than 50 percent in Uganda and Guinea- Bissau. • However, household financing of higher education is relatively low when compared to household investment in other levels of education (30 percent of national expenditure in primary education and more than 45 percent in lower secondary education). This situation can contributes to inequality in the education system, with the introduction of selection based on family resources well before a student’s entry into higher education.

12. Evidence from a recent study in Malawi shows that most university students in Malawi come from the upper-economic or upper middle-economic classes, which defies the argument for government-sponsored tertiary education for all.

13. Student fees funded through student loan schemes administered directly by the government departments have also been affected by budget cuts from time to time leading to disquiet and strikes on campuses and forcing IHES to take drastic measures such as preventing students in arrears from sitting for examinations or withholding their results until they oblige.

14. A researcher in Tanzania suggests the establishment of a dedicated bank to guarantee the financial sustainability of the education sector. The researcher suggests the establishment of the Higher Education Development Bank that should adopt a public-private partnership model and replace the Higher Education Student Loans Board, which has been ineffective in loan disbursement and recovery. The researcher argues that the proposed bank would provide loans to students at commercial, market-value interest rates for tuition fees and related costs as well as to institutions for capital development and other activities.

15. Funding model in South Africa • The South African funding framework adopted 1997 constitutes Block funds, Institutional factor funds and Earmarked funds (Pillay 2004, South African Ministry of Education, 2002).

16. Block funds • These are funds that are given to each institution to cover (a) research activities that are tied to output (b) teaching based on proposed fulltime employment equivalents (FTEEs) which are also determined according to student numbers and estimated student contact hours (c) institutional support. • The most important aspects of the South African funding framework is that research funding is based on outputs (publications and postgraduate supervision which are accounted for post facto; teaching funding is based on inputs (student numbers, student hours and staff FTEEs). Each of the research activities such as publications and research supervision are given a norm or weight. In postgraduate supervision there are different norms for masters, and doctoral degree supervision. Doctoral supervision is given greater weight because of the duration and rigor it takes and its importance in human capital development at national and institutional level. Each research output is given a benchmark in quantitative and qualitative terms.

17. Teaching support is input and output based. Student numbers on entry and graduation are taken into account and the funding framework has in-built incentives to encourage enrolment and rates of graduation without lowering standards under the national qualification framework. Each teaching activity is assigned a norm and weightage and in the allocation of funding 70% goes to teaching inputs and 30% to outputs. The funding for each year is based on the outputs and outcome of the previous year or two consecutive years.

18. Institutional factor funds • These are subsidies that compensate IHES for costs. They include incentives that compensate institutions for enrolling students from previously disadvantaged groups; the agreed staff costs based on full time equivalents (FTE). The proportion of students based on the input and output rations according to the national funding grid. These subsidies cover mainly teaching inputs and not teaching or research outputs. • However, it is noted that • Enrolment of students from previously disadvantaged groups is still a problem because many of these students do not qualify to enter programmes that require mathematics, science and technology subjects. These students are poorly prepared at school level. South Africa is one of the countries performing poorly in mathematics and science not only in Africa but in the world as well.

19. Earmarked funds • The South African framework has a third stream of funds earmarked for special activities such as student financial aid, foundation programs, curriculum innovation, guarantees and interest or redemption payment and capital development activities. These are funds provided on request and have to be justified. However foundation programs have to be included in the teaching support and the funding grid because of their importance in upgrading learning capabilities for students from historically disadvantaged communities. • Some universities have embarked on Community Engagement (CE) projects that constitute millions of Rands to research on disadvantaged groups and interventions • We can call this aspect as the ‘third-mission’ of the university to serve the community (apart from the ‘first mission’ of teaching ‘second mission’ of research

20. Overall the South African funding framework is far more comprehensive than that applied by the majority of countries in the region. The major advantages of such a framework are that they encourage predictability and provide scientific mechanisms for making funding decisions. They can reduce stresses in relations between governments and IHES and encourage output and outcome based funding.

21. What are the incentives for lecturers and professors in the production of masters and doctoral graduates? For 1 masters output (graduation) the supervisor R30,000 (about US$3000) and for a doctorate R60,000 (about US$6000)-an incentive for fast throughput for masters and doctorates • What are internal assessment criteria for annual incentives? • Integrated Performance System (IPMS) is used in a number of universities in South Africa. The annual assessment for each member of staff is based on Teaching and learning,Research, Academic leadership, Community Engagement and Academic Citizenship and contracts are signed between a member of staff and the supervisor. Good performers above 3.0 on a Likert scale (1 to 5) are rewarded up to US$3000 or more if the performance is excellent. • There are some lessons to learn from the South African framework. It comes close to funding formula applicable in a number of Western European countries.

22. Entrepreneurial funding model • The entrepreneurial model of an academic institution suggests the role of the universities not only to provide teaching and carry out research, but also to contribute directly to social and economic growth of the society (Etzkowitz, 2002). The triple helix model (of academic-industry-government relations) by Etzkowitz, et al (2000) outlines the entrepreneurial paradigm that describes an “entrepreneurial university” as the one that encompasses a ‘third-mission’ of economic development in addition to the ‘first-mission’ of teaching and the ‘second’ of research. The ‘third-mission’ model involves both internal development of the university and external influences on academic structures associated with the emergence of knowledge based innovations.

23. The funding function • Y=F(X1,. X2,…Xn) =a + b1X1 + b2X2 + b3X3 +b4X4 +………+ bnXn • X1 can be costs for staffing, X2 for teaching, X3 research, X4 teaching materials, X5 community service, X6 repairs & maintenance, etc • X1, X2, X3……..are Independent variables • Y is the value of the Dependent variable (Y), what is being predicted or explained • a (Alpha) is the Constant or intercept • b1 is the Slope (Beta coefficient) for X1 • X1 First independent variable that is explaining the variance in Y • b2 is the Slope (Beta coefficient) for X2 • X2 Second independent variable that is explaining the variance in Y • b3 is the Slope (Beta coefficient) for X3 • X3 Third independent variable that is explaining the variance in Y • Etc How can this function involve entrepreneurial aspects for an “entrepreneurial university”?

24. THANK YOU / AMESEGNALEHU AND I WISH YOU A NICE STAY IN ADDIS