ETHIOPIA: Final steps to a funding formula

Ethiopia came a major step closer to implementing a fully functioning funding formula for teaching and learning in higher education, at a conference held in Addis Ababa last month. Participants overwhelmingly endorsed the principles of a funding formula and recommended that the Ethiopian government give it the go-ahead very soon.

One participant summed up the general mood: "We [have] had great expectations since some eight or nine years back...The whole essence of the funding formula relates to empowerment. Risks will be reduced through piloting. Who will be the next to drag their feet? It does not seem to be higher education institutions."

Some 60 participants listened to papers and discussed the final steps in introducing a funding formula for the allocation of a block grant for teaching and learning, at the 13-14 December conference sponsored by the Ethiopian Higher Education Strategy Centre (HESC) and the Centre for International Cooperation, Vrije Universiteit Amsterdam.

Those attending included the presidents and administrative vice-presidents from of all the 22 public sector universities in Ethiopia, and representatives from relevant ministries and from the HESC, among others.

I opened the event with an overview of the funding formula, pointed out that proposals had been overwhelmingly endorsed by university leaders at conferences and workshops in 2004, 2008 and 2009, and outlined the formula's role in funding teaching-related activity, rewarding outputs (student completion and graduation), and assuring institutional autonomy and efficiency while providing accountability safeguards.

It also gives government the financial levers to encourage universities to follow its priorities.

The present funding system provides incentives to universities to maximise expenditure but none to generate income. Institutions go to government with a 'begging bowl' if they get into trouble, and ask for more money.

Under the new formula this will cease. Universities will need to be much more responsible for costs and income. They will be able to save money and invest in, for instance, developing centres of excellence instead of giving savings back to government at the end of the year.

Professor Belay Kassa, President of Haramaya University, and Professor Fekadu Beyene, President of Wollaga University, presented a policy brief for ministers on the implementation of the funding formula on behalf of the sector, showing how the formula would meet Ethiopia's needs and equitably reward universities for their performance.

Beyene said the funding formula had been developed by myself in 2004 based on some preliminary work carried out by the World Bank. An implementation strategy was proposed by a task force, and fine-tuned by Teshome Yizengaw and Ben Jongbloed. The present team has further adapted it to local conditions by mixing and matching the experiences of some other countries to Ethiopia's particular conditions.

Kassa recommended that the policy brief on the funding formula be accepted so that it could be implemented as soon as possible. Demand is growing and so Ethiopia must expand higher education coverage in a sustainable and equitable way: this makes the current financing system of individual, line-by-line negotiations unsustainable.

"The new funding method will make the higher education system more relevant, result-oriented and more aligned to market demand...Though there is strong government commitment to invest in higher education, students are required to share higher education costs: the inefficiencies of the present system would result in higher costs being shared by students," Kassa told the gathering.

He pointed out that universities must be prepared to adapt to an imminent reduction in public funding by diversifying their funding sources and increasing their efficiency. The formula-based funding system would help them to do this.

Capacities and systems will be needed in a funding unit that administers the formula, and in higher education institutions. The funding unit will need to be properly staffed by experts who understand higher education.

Ideally, it will be led by a well-respected academic with very senior leadership experience in a university that includes financial management. The expert skills in the funding unit are key to the support for the sector as a whole.

It is hoped the donor community will support the change. While Ethiopia can manage the introduction of the funding formula without outside help, it would be much better if a major donor could be persuaded to provide funds so that the formula can realise its potential as a modernising instrument for the system. This would add a lot of value.

Universities in Ethiopia have been unanimous in pressing for a block grant based on a funding formula since 2004. They should ask themselves why it has not happened. I think it is because they wait to be told what to do: they have been passive and have not taken the initiative.

Universities were advised at the conference to develop 'bottom up' systems of negotiation, such as professional associations for university administrators to support each other's capacity building and to discuss their concerns as well as 'middle out' structures such as a fully functioning consortium of university presidents.

Current 'whole sector' mass events have their place, especially for establishing awareness of issues, broad agreement and first principles. But they do not fit the detailed negotiations that the next stage requires. If there is a properly funded consortium of public universities that has set up its negotiation structure in advance, universities could influence and speed up the funding formula agenda.

There will be a pilot phase for the funding formula. Many systems and structures would have to be in place for data collection, data auditing, managing communication and risk and budget distribution models at national and institutional levels.

If the sector is to get full value from the pilot, structures, capacity and systems should be in place to allow leadership to be exercised. Universities that sign up for the pilot will need to understand that they are also committing to supporting and mentoring other institutions in the following year and to working with the funding unit to refine the formula.

In the concluding session chaired by Professor Zinabu Gebremariam, Director General of the HESC, institutions unanimously endorsed the policy brief and urged government to make the decision to go ahead with the funding formula as a matter of urgency. All but six of the 22 universities signalled that they would wish to be part of the pilot.

As soon as the formula is implemented, some participants hope that a funding formula for research will be devised. Eventually, others would like to see capital expenditure incorporated into the formula also.

The discussion finished with a heartfelt appeal from participants for swifter progress with implementation. One participant summed this up: "Universities should make clear to the Ministry of Education their keenness and enthusiasm to implement this whole initiative as soon as possible."

Gebremariam concluded by saying he had never before attended an event where all involved had brought such seriousness, strong analysis and positive attitude to issues. "If the policy brief is accepted by ministers, today we will have written an important chapter in the history of higher education in Ethiopia," he said.

* Professor Kate Ashcroft is emeritus professor of education at University of Wales Institute, Cardiff, UK. She has advised on Ethiopian and Zambian higher education, as higher education management adviser to Ethiopia's Minister of Education and the acting director of the Ethiopian Higher Education Strategy Center, and as a consultant on various projects funded by NUFFIC and UNDP. She has written extensively about development issues and is presently finishing a book with Dr Philip Rayner called Higher Education in Development: Lessons from Sub Saharan Africa for IAP Press.

Related links:

ETHIOPIA: University expansion must be sustainable

ETHIOPIA: Dilemmas of higher education massification

ETHIOPIA: Expanding and improving higher education