Innovative funding models can sustain higher education

Declining funding from governments in the last decade and economic recession are among the factors driving the need for African universities to find creative mobilisation models for funding, according to an African expert.

Building the capacity of higher education managers to find solutions to funding and financing gaps is needed as the future of many African economies looks bleak, according to Peter A Okebukola, professor of science and computer education at Lagos State University, Nigeria.

Speaking during a webinar on financing models for higher education in Africa organised by the Association for the Development of Education in Africa through its working group on higher education and hosted by the Association of African Universities on 6 October, Okebukola said it would be good if more people could attend universities as it leads to higher income and greater civic participation, but funding was a critical issue.

The gap analysis

Both grants, which did not have to be repaid, and interest-bearing loans could be innovatively tailored to fund universities, said Okebukola.

He noted that in terms of the pre-1960s colonial funding models in Africa, the colonial master provided a grant to the university and only a few students would benefit.

After the independence of many African countries, leaders saw the need to provide access to more students and they lowered the barriers to access by providing funds. African governments looked towards higher education as a public good. A university degree would benefit society by adding to the skills of the population which, in turn, improved the economy and increased tax revenues.

However, economic decline across Africa has seen gross domestic product declining and numbers of students increasing.

In 1991 there were 2.7 million students enrolled in African universities. By 2015 there were 13.1 million, reflecting a 16% annual enrolment growth rate.

“We have challenges because enrolment rates have outstripped financing capabilities. There is insufficient application of funds by both the government and higher education institutions,” he said.

As a result of underfunding Africa accounted for only 0.06% global gross expenditure in research and development. A few countries were spending the highest sum on public expenditure per student, among them Swaziland, Botswana, Lesotho, Malawi and Guinea-Bissau.

According to Okebukola, there had been varied responses to the decline in funding on the part of universities.

Innovative options

In a book titled Towards Innovative Models for Funding Higher Education in Africa edited by Okebukola and published by the Association of African Universities in 2015, tertiary education in Africa needs funding policies that ensure its sustainability while at the same time provide incentives to promote more equitable access and position higher education institutions towards meeting the needs of the economy.

The book examines five cases studies for funding education in Ghana, Kenya, Nigeria, Senegal and South Africa where, in each case, the majority of university funding comes from the government.

Okebukola said different countries had adopted different models in response to the funding needs of their higher education systems.

Ghana was using a combination of earmarked grants for higher education to implement activities critical to national development, performance-based funding to provide incentives to institutions to implement programmes, and loans and bursaries.

Kenya’s government established a university fund in 2012 to drive teaching and research.

Nigeria, which has one of the most expansive higher education systems in sub-Saharan Africa with 618 institutions (141 universities) and enrolment of close to 2 million students, established the Tertiary Education Trust, or TET, Fund in 1992 to boost its 'envelope' system. In terms of this system, the government calculates the cost for goods and services for the entire public sector and the TET Fund receives an allocation from this budget.

Senegal was using performance contract funding whereby the state and the World Bank allocated CFA21.5 billion (US$35.6 million) for the period 2012-16. After negotiations with universities, the government allocates a master budget to each university for its performance contract. The budget includes shifting the cost of public higher education from tax revenues to tuition paid by students.

This approach helps meet development objectives, empowers credit administrators and ensures transparency and accountability. The system also improves efficiency of the institutions, their administrative independence and accountability and harmonises their objectives with those of government, said Okebukola.

South Africa pursues a goal-oriented and performance-related funding model through the National Research Foundation to encourage growth in teaching and research.

Three models

Okebukola said among the models universities could consider were the access-equity-cost-sharing model which demands the lowering of financial barriers to higher education while ensuring equity in sharing of the funding burden by different stakeholders based on ability to pay. “It means that you won’t need to be rich to attend university; a child from affluent families will need to pay a little bit more,” he said.

The contextualised formula-funding model could fund universities based on consideration of individual cases. For instance, an established institution like Ibadan University with more professors will need more funds, said Okebukola. Also under consideration was the state of physical development and the desire to encourage programmes in science and technology with potential to accelerate impact on Nigeria’s socio-economic development. A university would be rewarded for efficiency in teaching, research and community service, and competition would be encouraged among universities, leading to the evolution of centres of excellence.

The host-proprietor-university-user funding model implies that all beneficiaries of the university contribute to funding the university. This model blends funding from the community, university and government.

Okebukola said in spite of the potential of these funding models, higher education was in a challenging position. Government grants diminished by the day on account of unfavourable economic climates. Nigeria was in a recession and South Africa was grappling with addressing the fees fiasco.

Okebukola said free education was good if a country could afford it, but if it was not affordable, some kind of discussion was needed.

“You have to pay, even if it’s a token. If you want quality let some people pay for it,” he said.