Skills mismatch threatens economic growth – World Bank

The East African region risks missing its long-term economic growth targets due to a widening disconnect between labour market skills needs and the graduates of higher education institutions, a World Bank report has warned.

In its latest report – Africa’s Pulse – released last week, the World Bank said the region’s workforce is one of the least skilled in Africa, constraining economic prospects.

This is despite heavy investment by the countries – Kenya, Uganda, Rwanda, Burundi and Tanzania – in skills development, and public expenditure on education, which absorbs about 15% of total public spending and nearly 5% of gross domestic product. These are the largest spending ratios among developing regions.

Grim picture

The report paints a grim picture of the quality of graduates coming out of institutions of higher education in the East African region, the majority of which lack employable skills, such as technical mastery, and basic work-related capabilities.

Alarmingly, they also lack basic reading skills – a deficit linked in the report to early childhood malnutrition.

The report notes that in Kenya, for example, “less than 1% of tertiary-educated adults who completed a reading skills test administered by World Bank researchers, achieved levels four or five in proficiency (for example, synthesising or integrating information from multiple texts). More than a quarter were at level one or below, meaning that they cannot enter personal information into a document or identify a single piece of information from a simple text, even when it appears identically in the text.”

The assessment by the World Bank supports the findings of a 2014 survey by the Inter-University Council for East Africa, or IUCEA, which regulates higher education in the East African Community’s five countries.

The IUCEA study showed that Uganda fared worst, with at least 63% of graduates lacking job market skills. It was followed closely by Tanzania, where 61% of graduates were considered to be ill prepared. In Burundi and Rwanda, 55% and 52% of graduates respectively were perceived to be incompetent. In Kenya, 51% of graduates were believed to be unfit for jobs.

The bloc has agreed to open up its borders to a free flow of human capital, with job-seekers permitted to seek employment in any of the five countries. But educationists and labour economists said the poor state of the skills base means an imbalance is looming, with perceptions of the quality of graduates in each of the countries likely to determine the flow of labour.

Catalytic sectors

To achieve greater productivity growth, the World Bank argues that countries must focus on demand-driven technical and vocational education and training, higher education, entrepreneurship, and business training programmes tied to catalytic sectors such as agriculture and manufacturing.

STEM disciplines and technology transfer are emphasised. “Special attention should be paid to science, technology, engineering and mathematics fields, focusing on the transfer and adoption of technology in economies with an enabling policy environment for these skills investments to pay off,” states the report.

Improving the labour market relevance of higher education would require aligning teaching and research activities at public and private universities with market signals, the report notes. Furthermore, governments can offer incentives to set up and strengthen industry-university links, for example, by bringing in intermediaries or providing matching funds.

Nairobi-based development economist Anzetse Were addressed the issue in a recent commentary published in a local daily, arguing that East Africa’s higher education system was drifting into a crisis as the mismatch in skills widens, despite a continued expansion in the sector.

“University administrations compromise the quality of education by accepting students without improving facilities to absorb them and seem focused on financial gain when expanding. As a result, millions of Kenyans are poorly trained and become frustrated graduates who cannot find employment,” she wrote.

“Clearly the education system is creating a mass of young people who do not have the skills required for employment or self-employment. This failure is not only exacerbating the unemployment problem, the region is also failing to leverage the demographic dividend of a young and active labour force.”

Performance-linked funding

Most critically, the World Bank said, public funding of higher education institutions, including technical and vocational education and training or TVET institutions, in the region needs to be linked gradually to performance or performance-enhancing reforms.

Most financing of public TVET and higher education in the Sub-Saharan African region is done on a historical basis, based on inputs (number of staff or salaries), enrolment (for example, cost per student, as in the case of higher education in Kenya and Rwanda), or normative unit costs (for example, student-teacher ratios and prescribed unit costs by discipline, as in Ghana and Nigeria’s higher education).

“These financing mechanisms create little incentive for cost saving, innovation or improving quality and labour market relevance for students. To create such incentives, the ambitious approach is to direct the bulk of the public financing through a performance-based system,” states the report.

“Making TVET relevant to the needs of catalytic sectors requires building gradual but sustained engagement with employers at the local level. In Tanzania, for example, the private sector is increasingly playing an advisory role in TVET through the Tanzania National Business Council; [and] the Association of Tanzania Employers occasionally helps define strategic priorities. Several public private partnerships are now underway in the region to introduce job-related training designed to meet the short-term needs of employers."

Promising programmes such as Educate! in Rwanda and Uganda are also introducing entrepreneurship, work readiness skills and experiential applied teaching methodologies in secondary schools, it notes.