THEWORLDBANK EDTI3 Discussion Paper EDUCATION AND TRAINING SERIES Report No. EDTI3 Educafion Costs and Financing in Africa: Some Facts and Possible Lines of Action Alain Mingat George Psacharopoulos December 1985 Education and Training Department Operations Policy Staff The views presented here are those of the author(s), and they should not be interpreted as reflecting those of the World Bank. Other Available EDT Discussion Papers EDTI General Operational Review B. Searle July 1985 of Textbooks 4 EDT2 Does SENA Matter?-Some E. Jimenez August 1985 Preliminary Results on the B. Kugler Impact of Colombia's National Training System on Earnings EDT3 Higher Education K. Hinchliffe August 1985 in Sub-Saharan Africa EDT4 Planning of Education: G. Psacharopoulos August 1985 Where Do We Stand? EDT5 Evaluation in World Bank B. Searle, ed. August 1985 Education Projects: Lessons from Three Case Studies EDT6 Financing Technical Education C. Lee September 1985 in LDCs: Economic Implications from a Survey of Training Modes in the Republic of Korea EDT8 The Structure of Educational E. Jimenez August 1985 Costs: Multiproduct Cost Functions for Primary and Secondary Schools in Latin America EDT 9 Participation in Schooling: D. Jamison December 1985 Determinants and Learning M. Lockheed Outcomes in Nepal EDTIO Classroom Uses of the J. Friend November 1985 Computer: A Retrospective View with Implications for Developing Countries EDT13 Education Costs and Financing A. Mingat In Africa: Some Facts and G. Psacharopoulos December 1985 Possible Lines of Action EDT17 Childhood Malnutrition P. Moock December 1985 and Schooling in the Terai J. Leslie; Region of Nepal; Child D. Jamison Malnutrition and School Performance in China (Continued on back cover) Discussion Paper Education and Training Series Report No. EDT13 EDUCATION COSTS AND FINANCING IN AFRICA: SOME FACTS AND POSSIBLE LINES OF ACTION Alain Mingat and George Psacharopoulos Research Division Education and Training Department December 1985 The World Bank does not accept responsibility for the views expressed herein, which are those of the author(s) and should not be attributed to the World Bank or to its affiliated organizations. The findings, interpretations, and conclusions are the results of research or analysis supported by the Bank; they do not necessarily represent official policy of the Bank. The designations employed, the presentation of material, and any maps used in this document are solely for the convenience of the reader and do not imply the expression of any opinion whatsoever on the part of the World Bank or its affiliates concerning the legal status of any country, territory, city, area, or of its authorities, or concerning the delimitation of its boundaries, or national affiliation. Abstract This paper presents a sharp contrast between Anglophone and Francophone Sub-Saharan Africa on educational finance. The education financing constraints are more binding in the latter group of countries mainly because of the heavier public subsidies to education. A number of policy alternatives are discussed, the adoption of which may ultimately lead to a higher level of educational investment in the region that would be socially more efficient and equitable. The list of policy options includes: 1) The gradual abolition of universal studenc subsidies, especially in higher education, coupled with selective scholarships and student loans; 2) The reduction of unit costs, without loss of quality, by a better utilization of teacher time, reconsideration of teacher qualifications and salaries and by the increased provision of cost-effective education inputs (such as textbooks); 3) The reallocation of the educational investment mix to increase the share of levels of education that exhibit a higher social payoff and that are socially more equitable. Contents Summary i Introduction 1 The Facts 2 The Reasons of 'High' Unit Costs 9 The Misallocation of Resources Within Education 13 Possible Lines of Action 18 Reduction of Maintenance Subsidies for Secondary and Particularly for Higher Education 19 Review of Resource Allocation Among the Various Education Levels 22 Concluding Remark 30 References 31 Our starting fundamental premise is that reductions in the real resources allocated to education in a region like sub-Saharan Africa would have detrimental effects on the long term development prospects of the countries in the region. The paper presents some &acts on the costs and financing of education in Sub-Saharan Africa and discusses a number of policy alternatives that may lead to improvements relative to the present situation. The Facts - By any standard, economic growth in the African countries has been slow. - When combined with fast population growth, the growth of per capita income in some countries is negative. - The school-age population is the fastest growing in the world. - Education expenditure in the African countries is high, in terms of both the share of GNP allocated to education and the share of education expenditure in the State budget. The latter share is particularly high in the 'francophone' countries. - In spite of this relatively high expenditure effort, school enroilment ratios are substantially lower than in other parts of the world. But primary enrollment ratios are on average appreciably higher in the 'anglophone' countries, whereas higher-education enrollment is twice as high in the 'francophone" countries. The fact that school enrollment ratios are relatively low in the African countries in spite of their substantial effort of education financing is mainly due to the high unit cost of keeping a student in school. This is true for all education levels. In primary and secondary education, unit costs are much higher in the "francophone" than in the "anglophone' countries, while in higher education unit costs are extremely high in both groups of countries in relation to those found in developing countries in other parts of the world. The high unit costs of education in African countries are not attributable either to low teacher-student ratios (which in fact are on the high side in Africa, and particularly so in "francophone" Africa) or to a high quality level of education, but rather to two principal factors: - Teachers' salaries are high in relation to available resources in the region, (on average, between two and three times as high in Africa as in Asia or Latin America and twice as high in 'francophone' as in 'anglophone" Africa in comparison with the situation in developing countries or other regions of the world). - ii - - The State participates in education financing on a very l-rge scale, providing not only capital and operating expenditures but also giving student subsidies the share of which in total outlay rises with the level of education. The State subsdization of education and of pupils or students is particularly pronounced in the "francophone" African countries. Policy Alternatives For reasons of economic efficiency and social equity, countries could gradually abolish student subsidies or even introduce charges to recoup part of the operating expenditures of secondary and higher education establishments. A limited number of scholarships or loans could be selectively provided to students with particularly adverse financial circumstances. The allocation of resources among education levels could be reviewed, to give higher priority to primary education, especially in 'francophone" countries). This priority is justified by considerations of both economic efficiency and social equity. The savings from the reduction of state subsidies could be passed on to the development of primary education. The financial resources available for education could be used to greater advantage by improving the internal efficiency of schools and by reducing unit costs without lowering quality. There is scope fof many complementary measures of this kind which, duly coordinated, can together produce desired results: (i) better utilization of teachers' worktime, which does not have to be the same as students' worktime, through reorganization of the school calendar; (ii) restructuring of teacher salaries in various ways, like abolishing fixed pay scales which do not take account of relative scarcities in the labor market; (iii) questioning the necessity that all teachers should have a given set of academic qualifications and (iv) improving the efficiency of resource allocation, both by eliminating specific sources of waste and by developing new educational inputs which, though relatively inexpensive (such as textbooks and other teaching materials) have a large impact on the knowledge acquired by the students, particularly when the existing level of such resources is very low, as in the African case. I. Introduction The evolution of education in Africa over the last quarter century has followed that of other developing countries and can be divided into two phases: (i) A very sharp expansion of the education system up to the beginning of the 1970s sustained mainly by the concept that education is an important factor for economic growth and to a lesser extent by the need to replace expatriates by nationals at the intermediate and higher occupational levels; (ii) a slowdown since the beginning of the 1970s, owing not only to a combination of slower economic and faster population growth but also to the fact that many countries were already allocating an appreciable proportion of GNP to education which they could not afford to increase further because of competing demands from other sectors of the economy. Reflecting the financial constraints they face, today, we are witnessing a clear pause in overall expansion of resources allocated to education in many African countries, even in those countries that have attained only modest enrollment ratios and face strong social pressures to create more school places. In addition, there is much criticism of the quality of educational institutions, as regards both their internal efficiency and the employability of their graduates. Perhaps this is an opportune moment for an objective evaluation attempt of the situation. There are many facets to such an evaluation which are difficult to analyze separately. In this paper we shall deal particularly with the financial dimension of the problem. In the first section a number of facts are presented that serve as background for a quantitative diagnosis of the situation. Section II provides a brief analysis of the major causes of the observed facts. The final Section discusses possible medium term measures to remedy some of the major problems facing education in sub-Saharan Africa. -2- The Facts This analysis focuses mainly on the countries of Sub-Saharan Africa; however, for comparative purposes, the present statistics from other regions of the world. Although Sub-Saharan Africa is usually considered as a unit, it comprises in fact a large number of countries with diverse conditions. Therefore, we have split the regions into two sub-groups of countries that share within each group some common characteristics: "francophone' and "anglophone" countries. We shall also refer to the case of the Ivory Coast, by way of example of an African country where education finance constraints appear to be binding. 1. The Macroeconomic environment is unfavorable. Economic growth in real terms has slowed down in many countries during the last ten years. In terms of growth of Gross National Product (Table 1), the African countries, although behind the countries of South East Asia and the Pacific or of Latin America in this respect, nevertheless exhibit higher average growth rates than those observed in developed countries. However, the impression given by average growth rates can be rather deceiving in that the countries' difficulties have sharpened in recent years. (For example, arrangements within the Paris Club.) Table 1 Income and Population Growth Rates 1960-70 and 1970-81 (Percent) Income (GNP) Population Per Capita GNP Region/Country Group 1960-70 1970-81 1960-70 1970-81 1960-70 1970-81 Sub-Saharan Africa - 'Francophone" 3.8 3.1 2.3 2.7 2.5 0.4 - 'Anglophone' 5.0 4.2 2.7 3.1 2.3 1.1 Asia - South East Asia & Pacific 7.3 7.1 2.6 2.1 4.7 4.9 - South Asia 3.6 4.0 2.3 2.5 1.3 1.5 Latin America 5.0 4.7 2.7 2.6 2.3 2.1 Developing Countries 5.0 4.7 2.5 2.6 2.5 2.1 Advanced Countries 4.9 2.9 1.0 0.6 3.9 2.3 Ivory Coast 8.0 6.3 3.8 5.0 4.2 1.4 Source: Based on World Bank (1983). -4- Population growth compounds the problem of slow ecnnomic growth in the African countries. Population growth rates show no sigx. of slowing down. This situation has at least two consequences: (i) growth of per capita income is extremely low on average, and even negative in some countries, like Senegal or Zimbabwe, and (ii) the already large school-age population is growing, making the potential burden represented by satisfaction of education development needs even heavier. Africa's situation is particularly difficult in comparison with that of other regions of the world where economic growth is higher and/or population growth slower. In the case of the Ivory Cost, its favorable performance in terms of average GNP growth is partly offset by high population growth, so that expansion of per capita GNP, though better than in other countries of the region, remains modest. 2. The education expenditures of the African countries are "high". The factor customarily used to measure the effort made by a country in a given collective function, such as education, is the share of GNP devoted to it (Table 2). Comparison of the various regions of the world reveals no glaring differences except that the level of national effort is substantially lower in South Asia. The African countries, on average, rank high with respect to this statistic. The historical development of this common indicator ("share of GNP allocated to education") is characterized by net growth during the 1960s, followed by stabilization during the 1970s, except in the case of the African countries which continued to expand their effort. (See Eicher 1984.) However, this trend now appears to be discontinued. While the levels attained cannot be truly regarded as the maxima achievable, they are such that competition with other social sectors (like health, infrastructure, etc.) is becoming acute and that it would apparently not be easy to further expand the national education efforts. This becomes even clearer when we consider the share of education in the State budget. As can be seen from Table 2, the percentage share of education in total public expenditure is particularly high in the "francophone' countries of Africa (22.6 percent) and moderately high in the 'anglophone' countries (17.0 percent) relatively to the rest of the world. Table 2 Education Expenditure as a Share of the State Budget and GNP (Percent) Share of Education Region/Country Group in State Budget Share in GNP Sub-Saharan Africa - 'Francophone' 22.6 4.9 - 'Anglophone 17.0 5.2 Asia - South East Asia & Pacific 15.0 4.2 - South Asia 8.8 2.1 Latin America 16.9 4.5 Developing Countries 16.1 4.5 Advanced Countries 9.0 4.9 Ivory Coast 45.0 10.0 Source: Based on World Bank (1983). -6- With regard to the Ivory Coast, the figures indicate that education receives very high priority, accounting for 10% of GNP and 45% of the State budget. These levels make the Ivory Coast practically unique among the developing countries if not in the world. It is clear that for the Ivory Coast it is hardly practicable to expand the education effort any further, a fact that may endanger its further long term growth prospects. 3. "Low" enrollment ratios Although African countries allocate a large part of their resources to education, enrollment ratios are among the lowest in the world. There also exists a backlog of unsatisfied potential demand for education. Table 3 shows the enrollment ratios for the various levels of the school system. Table 3 Enrollment Ratios and Literacy Rate by Level of Education (Percent) Region/Country Group Primary Secondary Higher Adult Literacy Sub-Saharan Africa - Francophone 46 14 2.4 18 - Anglophone 77 17 1.2 40 Asia - South East Asia & Pacific 87 43 9.1 71 - South Asia 71 19 4.4 25 Latin America 90 44 12.0 83 All developing countries 75 23 6.9 53 Advanced Countries 107 80 22.1 99 Ivory Coast 60 15 1.9 30 Source: Based on World Bank (1983). -7- In "francophone' African countries, the average primary enrollment ratio is below 50 percent; this indicates the magnitude of what remains to be done to achieve the goal of universal literacy (see Lee 1984). This task is even more difficult than it appears because of, first, high internal wastage, repetition and dropouts, and second, the expansion of enrollment must in general involve population groups or geographic areas which are more difficult or expensive to reach. In the 'anglophone" African countries, primary enrollment is on average higher, but the overall education demand is undoubcedly no less strong since it is mainly at the secondary and higher levels. In this connection it is noteworthy that the 'francophone" and the "anglophone" countries have not followed the same process of development with respect to the different levels of education. Thus, whereas primary education is more developed in the "anglophone" countries, (as judged by the higher enrollment ratio), the opposite is the case for higher education the chance that a primary-school graduate will have access to higher education, though not high, is three times as great in the 'francophone" as in the 'anglophone" countries. Thus the low enrollment ratios in Africa at all education levels, combined with observed pressures on the part of students and their families for the expansion of the education system, clearly indicate the existence of unsatisfied demand, the nature of which no doubt varies according to the education level considered. (This point will be documented later in this paper.) Finally - as in the case for all aggregate indicators -- it is important to avoid looking only at the average and to consider also specific situations, which can be distinctly more difficult. Thus, (Cotton 1983) reports an increase in the absolute number of illiterate adults in the 31 least developed countries, most of which are in Africa over the period 1970-80 -8- in spite of the substantial education development efforts accomplished. These countries' school development needs are very large, and their finauscial possibilities the most limited of all. 4. 'High' Unit Costs The fact that in African countries there is a large unsatisfied social demand for schooling in spite of a substantial state finance effort is attributable partly to the population situation but also to high unit costs. Table 4 shows the cost per student in terms of per capita income. Table 4 Unit Costs of Public Education at the Various Levels as Percentage of Per Capita GNP (Percent) Region/Country Group Primary Secondary Higher Sub-Saharan Africa - Francophone 29 143 804 - Anglophone 18 50 920 Asia - South East Asia & Pacific 11 20 118 - South Asia 8 18 119 Latin America 9 26 88 All Developing Countries 14 41 370 Advanced countries 22 24 49 Ivory Coast 21 171 1348 Source: Based on World Bank (1983). - 9 - The observed patterns are as follows: - In all the country groups considered, unit costs rise with the level of education. - At all education levels, unit costs are higher in Africa than in other world regions. This is particularly true in the case of primary education, in 'francophone" Africa, and of both African regions - but particularly the 'francophone' group - in the case of secondary education. In higher education the differences between the two African sub-regions are even more substantial. The unit cost of education in terms of per capita GNP is 2-3 times as high in Africa as in other developing countries in the case of primary education, 2-6 times as high in secondary education, and 7-9 times as high in tertiary education. The situation in the Ivory Coast can be described in more or less the same terms as for Africa as a whole, except that the contrast between education levels is even sharper (compared with the primary-school cost), i.e., the cost of a place is 8 times as high in secondary education and over 60 times as high in university education. The Reasons of 'High" Unit Costs Unit costs are high in the African countries not so much because of a low student-teacher ratio or high quality of education, but because teacher salaries are high in terms of per capita GNP, compared with those in developing countries or other regions of the world. (a) Student-Teacher Ratios Table 5 shows the situation in the various country groups. - 10 - Table 5 Student-Teacher Ratios in Primary and Secondary Education Region/Country Group Primary Secondary Sub-Saharan Africa - Francophone 49 26 - Anglophone 40 21 Asia - South East Asia & Pacific 39 26 - South Asia 45 19 Latin America 31 20 All Developing Countries 36 21 Advanced developed countries 21 14 Ivory Coast 43 26 Source: Based on World Bank (1983). It will be noted that the situation of the African countries is, on average, worse than that in other developing countries or other regions of the world. It follows that the African countries' high unit costs cannot be explained by lower staffing ratios. Within Sub-Saharan Africa, abstracting from the diversity of situations from one country to another, it appears that staffing norms, are clearly less favorable in the 'francophone" than in the 'anglophone' countries. Analysis of the evolution of staffing ratios in Africa (Eicher 1984) shows that, on average, over the period 1970-80 the situation in fact deteriorated, although only slightly, in primary education. Thus, out of 27 countries for which information is available, staffing ratios deteriorated in 17 and remained more or less constant in 5, and thus improved in only 5 cases. - 11 - (b) The Quality of education. It is very difficult to obtain direct information on education quality, particularly for comparative purposes. However, all existing indications point in the same direction: first, the levels of education quality, or levels of cognitive achievement are low; and second, the concrete conditions of education are poor. Thus, Aklilu and Heyneman (1983) stress that 'the most serious error of education planners during the 1960s was perhaps to neglect the quality of education." They note that education expenditure excluding salaries accounts for 14 percent of the operating expenditures of primary schools in the industrial countries, 9 percent in Asia and only 4 percent on average in Africa. Similarly, many observers who have been able to actually visit classrooms in the region report that the condition of the teaching equipment is in many cases very poor, while there is an acute scarcity of school textbooks (Heyneman, 1980, 1983). Added to this, the repetition and dropout rates are in many cases very high (although factors other than the quality of education help to explain this state of affairs). We thus obtain a clear impression that the quality of education in Africa tends, on average, to be low. This situation will have to be taken into account in considering possible cost control measures. (c) Teacher salaries. Table 6 compares data for various regions (using a slightly different nomenclature from that used in the previous tables) on teachers' salaries in primary education in terms of per capita GNP. - 12 - Table 6 Primar_ School Teachers' Salaries in Per Capita Income Terms by Region, 1978 Region/Country Group Relative Teacher Salary Africa 6.7 - West 10.8 - East 5.5 'Francophone' Africa 11.5 Asia 2.5 Latin America 2.4 Ivory Coast 7.5 Source: Eicher (1984). The differences are striking. They are directly comparable with those observed in unit costs. While salaries in East Africa, and parttcularly the "anglophone" group of countries, are about double those in Latin America or Asia, (in per capita GNP terms) substantial differences are also observable within Sub-Saharan Africa, where in "francophone" countries offer teacher salaries areabout double on average relative to those in "anglophone" countries. It is difficult to pinpoint the reasons for this situation. Certain factors do, of course, come to mind, such as colonial heritage and the role of teachers' unions, which are particularly powerful in "francophone" Africa. However, it has to be stressed that the particular situation of Africa in relation to other regions of the world, and of "francophone" in relation to anglophone" Africa, applies not only to teachers 'but also to civil servants' salaries in general (Table 7). - 13 - Table 7 Average Salaries of Central Government Civil Servants in Per Capita GNP Terms, by Region Region Salaries in Units of Per Capita GNP Africa - 'Francophone' Africa 9.6 - 'Anglophone" Africa 4.6 Asia 2.9 Latin America 3.1 Source: Heller and Tait (1983). The Misallocation of Resources Within Education We shall argue that the structure of education financing in Africa is both socially inefficient and inequitable. One way to assess the situation in this respect is to compare the rates of return to different levels of education. Table 8 shows the private and social rates for the three education levels for 44 countries, grouped by region or development level. The social rate of return for a given education level is calculated by comparing incremental gains associated with that education level (in relation to those associated with the next lower level) with the aggregate costs (direct and opportunity costs) borne by the various participants in its financing (state and individuals). The private rate is calculated by a similar method except that it takes account only of the costs borne by individuals. It follows that the greater the degree to which the State contributes to the financing of education (school running expenses, student scholarships, welfare subsidies, etc.), the greater the margin by which the private rate of return exceeds the social rate. The social rate of return is a factor than can help the countries decide on optimal allocation of resources to the various education levels, while the private rate of return measures the incentives to individuals to obtain a given level of education. - 14 - Table 8 Private and Social Rates of Return, by Region and Type of Country (Percent) Primary Secondary Higher Region Private Social Private Social Private Social Africa 29 29 22 17 32 12 Asia 32 16 17 12 19 11 Latin America 29 44 20 17 23 18 All Developing Countries 29 27 19 16 24 13 Intermediate Countries 20 16 17 14 17 10 Advanced Countries - - 14 10 12 9 Source: Psacharopoulos (1981). Table 8 shows that (i) the social rates of return are higher in primary education than at the other education levels, with higher education showing the lowest social rate of return, and (ii) the discrepancy between social and private rates increases with rising education level, the increase being especially marked in the African countries. Since it is the size of the private returns that provides the incentive to individuals to invest in education, it follows that individual behavior patterns are not oriented in a manner conducive to economically efficient utilization of national resources. To this situation of social inefficiency in resource allocation must be added that of social inequity, since: (i) primary education, which can be regarded as both a fundamental right of the individual and a sound economic investment, could be further expanded, in particular considering its low unit cost relative to other levels of education and (ii) State subsidization of students tends to be greater the higher the education level, i.e., the more likely that, on average, the students come from a better socio-economic background and could afford to bear a greater share of the cost of their studies - 15 - and, again on average, will realize higher incomes during their active lives and could therefore reimburse to the community at least part of the financial support they received while they were studying. These undesirable social welfare effects with respect to efficiency and equity stem to a large extent from the structure of education financing at the various levels. Three topics need to be explored: (i) What percentage of school expenses are borne by the users? (ii) How different types of student assistance (maintenace, transportation, accommodation, foods, etc.,) relate to family financial resources or academic achievement? (iii) To what extent different types of educational subsidies (scholarships, study allowances, etc.) are reimbursable, and in what circumstances? Unfortunately, there exist few studies or data to answer these questions for specific countries, and the evidence is even more scanty for Africa. The contrast pointed out previously between the 'francophone" and the .anglophone' countries can continue to serve as a useful typology. Thus, it seems that the practice of not requiring payment of school charges or setting them at symbolic levels is more typical of the 'francophone' countries (reflecting the situation in France), while the imposition of school charges at non-negligible levels (in terms both of sharing of actual school expenditure and the family budget exists in at least a number of 'anglophone" countries (following the Anglo-Saxon example). Moreover, although little evidence is available on this subject (Birdsall and Orivel 1983, Tan, Lee and Mingat 1984). It appears that demand for schooling is not very sensitive to school charges (to the extent, of course, that they remain within reasonable limits); this would be all the more true if school charges served, for example, to improve the quality of the school or to bring it geographically closer to where families live. - 16 - The contrast between "francophone' and "anglophone" countries of Africa can be extended to the case of pupil/student aids in kind or in cash. Table 9 shows the share of scholarships and other welfare (expenses in secondary and higher education budgets for selected regions. Table 9 Share of Scholarships and Social Expenditures in Secondary and Higher Education Budgets (Percent) Secondary Higher Region Education Education Africa - 'Francophone' Africa 23.0 43.0 - 'Anglophone" Africa 14.0 14.0 Asia 4.0 4.0 Source: Acharya (1982). There are striking differences between the three groups of countries considered. In the "francophone" countries public subsidization is notably higher than in Asian developing countries. Moreover, the special situation of "francophone" Africa is particularly marked in the case of higher education, where such expenses account, on average, for nearly half the education budget. In countries like the People's Republic of Congo, the Central African Republic and the Ivory Coast, scholarships and social expenditures amply exceed teaching expenditures, in monetary terms, at the higher level. In terms of per capita GNP, student scholarships represent on average 120% in the Ivory Coast, 160% in Senegal, 700% in Mali and the Central African Republic, and 800% in Niger and Upper Volta. - 17 - In this respect it is worth noting that private education is appreciably more developed in the 'anglophone" than in the 'francophone" countries of Africa. Table 10 Private School Enrollment by Level and Region, 1965-79 (Percent) Primary Secondary Region 1965 1970 1975 1979 1965 1970 1975 1979 Africa - 'Francophone' Africa 34 29 25 22 37 36 25 24 - 'Anglophone' Africa 47 37 40 40 36 44 43 47 Asia 14 - 13 - 44 - 29 - Latin America 14 - 13 - 39 - 33 - Source: Tan (1983). Note: Private as percent of total enrollment. Table 10 highlights the difference between the "anglophone" and the "francophone" countries in this respect. Thus, as of the latest available information, private education was about twice as well developed in the "anglophone" countries. Looking at changes over time, we observe a reduction of the share of private enrollment in both groups of countries in the case of primary education, but the most notable difference refers to secondary education. Whereas in 1965 the "francophone" and "anglophone" countries had comparable proportions of secondary-level pupils enrolled in private education, by 1980 there has been a sharp decline in the share of private education in the "francophone" countries and an appreciable rise in the "anglophone" countries. These observations round out the picture that public authorities clearly tend to participate less in the organization and financing of the school system in the "anglophone" countries than in the 'francophone" African countries. - 18 - The foregoing are the major factual characteristics relating to education financing in African countries. Although the information is in many respects incomplete and imperfect, a number of points have been sufficiently well documented to prompt reflections that can serve as guidelines for decision making with respect to future education policy. There certainly exist a variety of arguments for or against, more or less subsidized education systems in terms of efficiency, equity, ideology, politics, educational quality or flexibility of education institutions. But we can only note that when the affordable limit of State financing is reached, it might be useful to consider developing private education, for which public expenditure per pupil-place is either zero or lower than in public education. tI. Possible Lines of Action It should be clear from the above description that African education systems face severe problems. Some of these problems are difficult to resolve in the medium term because of the constraints imposed by macroeconomic conditions. Ne-vartheless, there might be scope within these constraints for action that could produce tangible results even in the short term, thereby expanding the development of education without the need to inject new funds. The education systems of the various African countries, and the countries themselves, present such a diversity of specific situations that it is impracticable to propose a set of actions that could be implemented equally well in each country. Moreover, the various countries do not necessarily pursue the same socia.l objectives. In light of these reservations, the main recommendation that is perhaps applicable to all, is that they could act to strengthen their capacity to manage education systems more efficiently. The word 'manage' is not used here in abstract terms, but rather refers to the development of the - 19 - capacity to observe situations, to analyze them and to organize rational and coordinated decision-making for the various levels and components of the education and training apparatus. Within this framework, specific areas can be suggested for consideration by African countries, particularly the 'francophone" ones. Thus, the following points could receive special attention and be evaluated against the background of the specific situation of each country: - Reconsideration of State subsidies toward education for greater efficiency and equity, for example by reducing student maintenance grants in secondary and particularly in higher education or even introducing school fees. - Re-examination of the allocation of resources between the different education levels, resulting to the establishment of new relative investment priorities. - Reduction of the unit costs of education by enhancing internal efficiency and by revising the teacher salary structure. Let us briefly examine each of these three points in turn. 1. Reduction of maintenance subsidies for secondary and particularly for higher education. What are the advantages and disadvantages of measures of this kind? In the area of efficiency, many arguments can be put forward. Reducing subsidies to individuals would give students a higher incentive to choose responsibly among alternative education options. Some reduction in enrollments could no doubt be expected, though it is known that aggregate demand - 20 - is not very sensitive to increases in the cost of studies, especially when the private rate of return is already high. On the other hand, we could also expec an improvement in the internal efficiency of the education system (lower drjpout and repetition rates), since the student aid systems may attract students with low aptitude or motivation who would tend more than others to refrain from registering. In terms of external efficiency, increasing the cost of the studies (by reducing subsidies) will lead students to pay more attention to labor market signals and make them more "investors' and less 'consumers", and in general help improve the linkage between education and the labor market. Finally, the resources saved by reducing student subsidies at the highest education levels could be used to further develop primary education whose unit cost is much lower and the social returns much higher. Such reallocation raise both the real level of the country's education investment and the overall rate of return on education expenditures. With regards to equity, there are many arguments for and against reducing subsidies. However, the logic of maintaining student subsidies is the result of superficial analysis, and the arguments based on equity in fact speak just as convincingly for abolishing the system of aids as at present organized or at least radically modifying the method of subsidizing educational systems. Let us elaborate. In the area of education, 'equity' has two components. The first is the equality of opportunity, meaning that the education opportunities of individuals shall depend essentially on their personal abilities (their aptitudes and their efforts) and not on their parents' ability to pay, their geographic location or the ethnic group to which they belong. The second component of equity is income distribution within society, e.g., given a set of initial conditions, inequality of income increases when more is given to those who already have more. - 21 - (a) Looking at this second component of equity, the arguments are clearly in favor of abolishing subsidies. As documented earlier, the higher the education level (particularly university education), the larger are the subsidies (they are low or zero in the case of primary education). This means that subsidies are more directed to individuals who are already financially privileged. Higher education students are in fact privileged in three mutually complementary ways: (i) by financing their studies the community concentrates its resources on a small number of individuals; thus, on average about 20 percent of the resources allocated to education is concentrated on students who represent less than 2 percent of their age cohort; (ii) the students tend, on average, to come from privileged socio-economic backgrounds (disproportionately high representation within the total population, in relation to the size of the group, of children of civil servants, of salaried employees in the modern sector or of urban families in general), and (iii) the beneficiaries of education at the higher levels are also potentially privileged in the sense that they will enjoy higher incomes during their active lives and could therefore afford to reimburse the community for at least part of the financial support they received while they were studying. (b) Looking now at the other component of equity, i.e. equality of opportunity, it might be thought that the subsidies tend to foster progress by giving access to education to pupils or students who otherwise would have to give up the idea of getting an education because they could not afford it. This argument cannot in fact be sustained, for two reasons. First, we have to distinguish between subsidies given to students in general by reason of their student status (i.e., irrespective of their individual or family characteristics) and subsidies given selectively to students whose family situation is financially adverse. Second, and this needs to be stressed, if - 22 - some students have difficulty in financing their studies because of their present financial situation, it is also reasonable to suggest that, instead of a scholarship, they could receive loans which would spread the financial burden of the studies over a longer time period when the ex-students will be working as university graduates earning relatively high incomes and therefore being able to repay the loan. Overall, therefore, the "equity' arguments reinforce rather than diminish the "efficiency" arguments in favor of re-examining the financing/subsidy system of education. The overall indications are clearly on the side of reducing the subsidies in secondary and higher education and transferring the funds to primary education, where they would be used more efficiently and be distributed among a wider population, to the benefit of less privileged social groups. Assuming that it were decided to retain aid in kind (subsidizing student living expenses ar in cash (scholarships), it might be highly preferable to limit eligibility for them to students who are at a particular disadvantage because of their parents' income, wealth or their geogranhic location. In addition to abolishing or sharply reducing student subsidies, the possiblity could be considered of requiring students to defray part of educational costs (or at least of operating costs). Generally speaking, the arguments cited in favor of reducing or abolishing student subsidies apply also to the introduction of school charges at the same education levels. From this standpoint the situation of private education can be examined and consideration given to promoting it. 2. Review of resource allocation among the various education levels. It is important to ensure that, within the financial constraints, which differ from country to country, the allocation of resources between the various types and levels of education is consistent with national goals and social investment - 23 - priorities. These goals are similar to those examined previously, i.e. maximum efficiency of education expenditure and enhanced social equity both in terms of access to education and income distribution. Efficiency itself has various components and with different dimensions: economic (productivity, economic growth), social (development of national feeling and unity, particularly in the case of countries with frontiers that appear to be arbitrary in relation to geography or to ethnic distribution), and cultural. Finally, a further important argument, supplementing efficiency and equity, is social demand and response to the unanimously shared aspiration for universal literacy and basic education that tend to be regarded as a fundamental right or basic need of each individual. Analyzing the allocation of resources between education levels and types essentially poses the question of what changes are desirable in the next few years in light of the observed present signals and the level of development of each educational level. Education systems especially in Africa have often been planned on the basis of forecasting the manpower "needs' of the productive (modern) sector of the economy. While it is now clear that this analysis might appear to be useful in some particular narrow cases or for certain specific occupations (e.g., forecasting the number of firemen), it has a limited use for organizing the education system in the future for the following reasons: (i) economic growth forecasts, on which the manpower forecasts are based, are overall unreliable, and sectoral forecasts even more so; (ii) there is no fixed skill job structure within any sector leading to a given skill production, including fire fighting (e.g., substitution between fireman, fire engines, water sprinklers and installed fire alarms). Also, large differences in employment and skill mixes are observable in time and country space; (iii) there is not really any fixed or normative relationship between a given job and the schooling - 24 - characteristics of those who hold it; (iv) it is not possible to arrive at a statement that such and such skill level is 'needed' in additional numbers, since there are other alternative goals to be satisfied in which the resources could possibly be used more efficiently; (v) the manpower requirements approach usually puts the emphasis exclusively on the modern organized employment sector which, though undoubtedly important, is at the same time limited, with regard to the generally low percentage of the active population employed in it in developing countries. Moreover, by addressing itself exclusively to the wage-earning sector, the technique disregards the fact that education is also an important factor in productivity in agriculture and in the informal sector of the economy (Jamison and Lau, 1982); (vi) finally, many assessments of manpower forecasting methods based on more than 20 years of experience in a number of countries have revealedsubstantial errors. (Debeauvais and Psacharopoulos, 1984, Ahamad and Blaug, 1973). In light of the proven weakness of this method of planning and of the difficulty of proposing any expedient operational alternative to arrive at the desired structure of the school system that is appropriate for a given time period, it might be preferable to adopt a less rigid strategy which places greater emphasis on a more continuous planning process, by (i) building greater flexibility into the education system; (ii) regularly and systematically monitoring the functioning of the labor market and the conditions of entry into it by graduates from the school system, and (iii) putting greater emphasis on such arguments as efficiency of resource allocation, repercussions on equity, and paying attention to the social demand for education (see Psacharopoulos 1984). Although it cannot be developed here in any great detail, a desirable path does appear clearly to emerge for improving the treatment of these problems - 25 - and for making choices concerning changes and continuous adaptation of education systems. Although the situation in Africa differs from one country to another, it would appear that the following general suggestions merit study by the countries, each in the context of its own options and its own special conditions. 1. Greater emphasis could be placed on primary education. This is at one and the same time (i) economically efficient, bearing in mind that primary education tends to yield a very high social return, that it enhances productivity in a wide range of activities, and that literacy fosters further learning on the job or during working life in general, (ii) equitable, i.e., having regard to the characteristics of those who will not receive other types of education, and (iii) socially desirable, i.e., with regard to the relatively low levels of primary schooling in a number of countries, particularly in 'francophone' Africa). It will be necessary, however, to ensure that the mechanisms for regulating access to secondary education are efficient, in the sense that the development of primary education does not exert excessive pressure to expand secondary education. Since in most countries thedemand for secondary education is high, a dual approach could be taken, in which a price mechanism (increasing the cost of studies by reducing subsidies and possibly by introducing school charges) is combined with systems of rapid off-school vocational training effectively linked to employment opportunities, of the kind described under point 2 below. 2. Specialization could be deferred until basic education is completed and/or it can be acquired on the job. The changing character of the economic situation and the adoption of new production techniques make it essential that the school system, particularly in technical secondary and in higher education, is not rigidly organized and be able to adapt to changes in - 26 - job conditions. It is therefore highly preferable to develop a broad technical culture and to leave narrow specialization towards the end of formal training. Moreover, it is known that technical education, as commonly organized, is not only expensive but may largely be out of line with the specific needs of production, so far as one can judge from employers' statements, employees' salaries, or the absorption of graduates by the labor market (see Psacharopoulos and Loxley, 1984). The net result is that the rate of return on any substantial development of formal technical education is probably a matter for concern. Having regard to these reservations, this may be an appropriate time tc amine the question of whether formal education is the best place to acquire very specific job skills or whether the system could not provide for these to be acquired within an enterprise before and/or during employment. The first two sections of these 'thoughts for action" dealt with changes in the structure of education financing and of the education streams themselves. It is now necessary to consider also the way education works from the financial standpoint, by examining possible measures for controlling unit costs. 3. Education costs could be reduced by improving the internal efficiency and monitoring teacher salaries. Reduction of unit cost is a necessity for all countries but especially for those at the lowest end of the per capita income spectrum. In the case of some African countries it has been shown that for some of them it would be very difficult and would take a very long time to achieve full enrollment in primary education without a reduction in unit cost (Lee, 1984). The avenues for action are a priori numerous, since unit cost is the resultant of a large number of elements of education organization. However, while reducing unit cost is an appropriate goal, it is necessary also to bear in - 27 - mind the repercussions that such reductions could have on education output and quality; this calls for reductions based on cost-benefit analyses rather than arbitrary, across the board cuts, made as if they offered only financial advantages and had no repercussions on teaching. We shall consider here only the operating costs of education establishments. This does not mean that capital costs (buildings, etc.) are unimportant; however, it has to be borne in mind that capital costs occur in principle only at the time of construction of school plant, whereas operating costs recur every year and it is they that in fact cause the most serious concern. (Capital costs represent only 10 percent of the total social cost of education which includes the foregone earnings of students). A priori we can consider three groups of major factors that affect the unit cost by breaking it into two elements: one representing the share of teacher salaries, the other representing non-salary teaching expenses (books, materials, apparatus), eliminating from the analysis the welfare expenses referred to earlier. Next, we can break down the salary share of unit cost into two main factors: average teacher salary, and average pupil-load per teacher. It is clear that (i) the higher the average teacher salary, and (ii) the lower the number of pupils he looks after, and (iii) the greater the amount of teaching material at his disposal, the higher will be the cost per pupil. Against this general background, let us examine the possibilities for reducing unit costs per pupil. (a) It is clearly not desirable to reduce non-salary teaching costs (Heyneman, 1983); they have in fact fallen during the last ten years, in relative and in some cases in absolute terms, and are now very low and probably in many cases inadequate. On the contrary, cost-efficiency analyses have shown that increasing these expenses would have beneficial effects and that their economic efficiency is frequently high (Heyneman and Loxley, 1983). - 28 - (b) But one could monitor the utilization of teacher time. The scope for action here is in fact greater than appears at first sight. We may reasonably say that, on average, staffing ratios are already high in the African countries, particularly the 'francophone" countries, to the point that hardly any savings would be possible under this heading. While this is no doubt relatively true, particularly with teaching expenditure at uch low levels, it would be less true if the facilities available to the pupils were better. Moreover, the variable 'time' merits study, in the sense both of pupil time and of teacher time. There are no persuasive reasons why the pupils' short school hours, which are justified by their age, ability to assimilate knowledge and attention span, should also apply to teachers, whose physical capacities are different and who could be asked to accept hours of work more in line with those of workers in other sectors. A number of possible scenarios come into consideration, depending in particular on the specific possibilities for implementing them. They include changing the number of working days a year or the number of working hours a week and various alternative scheme of teaching and of school curricula. (c) Finally, one could consider changes in the pay of teachers. Here again, several different types of measures can be weighed against each other in light of the specific situations of the various countries. The most drastic course would be to decree cuts in teacher salaries on the argument that they are highest in Africa in relation to per capita GNP, in relation to those in comparable countries in other regions of the world, and particularly high in the "francophone' countries, where they are nearly double those in the .anglophone' Africa. - 29 - However, this type of measure also has its limitations. First, and for obvious political reasons, the reduction can only be gradual and spread over time. Secondly, it would be easier to reduce teacher salaries if teachers were already a highly privileged group in terms of salaries and in relation to other groups with more or less comparable characteristics, such as civil servants. But this is certainly not the case, and if teachers in 'francophone' Africa are better paid than their counterparts in "anglophone" Africa, so are civil servants. Thirdly, there is a danger that reducing relative teacher salaries could reverse the incentives to become a teacher or to perform one's task as well as possible. Also, the effects may not be the same among the various subjects in secondary education. While the effects can be expected to be limited in the case of literary subjects, they may be greater in the case of scientific subjects, in which there are recruitment difficulties because of competing demands from the labor market. In that connection, the practice of proposing pay scales regardless of relative labor-market scarcities could also be re-examined. (d) In addition to these possible measures affecting teacher salaries, other possibilities offer themselves for reducing average salary cost per teacher, particularly altering the qualification of the teaching body. This is a matter of direct trade-off between the quality of the teacher, measured by his academic qualifications, and the number of pupils the country can afford to enroll in school within the constraints of a given financial budget. Thus, while teachers of high academic level are probably better qualified to exercise their profession, here again the decisions must be weighed carefully and the resources used as efficiently and equitably as possible. Specifically, the enrollment gains that can be achieved by using teachers with lower academic levels (and lower salaries) need to be weighed against the loss in terms of - 30 - knowledge acquired by the pupils. In some cases the conclusion could be that the loss in terms of knowledge acquired by individual pupils is much more than offset by the gain in enrollment within a given budget. Concluding Remark This last point illustrates the difficulty facing educational policy makers in most countries. Every decision involves tradeoffs between highly desirable outcomes. For example, one would like to have a higher level of enrollment, better paid teachers, higher levels of cognitive achievement, and free education. This review of the African case shows that decisions on relative priorities have to be made. Unfortunately such decisions are often based on intuitive impressions rather than quantitative assessments of the pros and cons of a contemplated policy. This ad hoeness is mainly due to the lack of more detailed information on education systems, relative to what commonly exists in developing countries. Thus, a priority should be the improvement of the data base for policy decisions in education, especially in Sub-Saharan Africa. - 31 - REFERENCES Acharys, M. (1982), Issues in Recurrent Costs in Social Sectors, Employment and Income Distribution Division, Development Research Department, The World Bank. Aha-ad, B. and Blaug, M., The Practice of Manpower Forecasting, Elsevier, 1973. Aklilu Habte and Heyneman, S. (1983), 'Education for National Development: Prospects, Vol. XIII, No. 4 World Bank Activities." Birdsall, N. and Orivel F. (1983), Demand for and Willingness to Pay for health and Schooling in Mali, Country Policy Department, The World Bank. Colton, S. (1983), Education in the Least Developed Countries - Problems, Priorities and Programes, Division of Educational Policy and Planning, Unesco. Debeauvais, M. and Psacharopoulos, G. (1984), 'Forecasting the Needs for Qualified Manpower - Towards an Evaluation", in K. Hinchliffe, ed. The Practice of Manpower Planning Revisited, I.I.E.P., Paris. Eicher, J.C. (1982), 'What Resources for Education', Prospects, Vol. III, No. 1. Eicher, J.C. (1984), Educational Costing and Financing in Developing Countries with Special Reference to Sub-Saharan Africa, World Bank Staff Working Paper, No. 655. Heller, P. and Tait, A. (1983), Government Employment and Pay: Some International Comparisons, Fiscal Affairs Department, International Monetary Fund - Occasional Paper No. 24. Heyneman, S. (1980), 'The Evaluation of Human Capital in Malawi' World Bank Staff Working Paper No. 420. Heyneman, S. (1983) 'Education During a Period of Austerity: Uganda, 1971-1981" Comparative Education Review, Vol. 27, pp. 403-13, October. Heyneman, S. and Loxley, W. (1983), 'Effects of Primary School Quality in Academic Achievement Across 29 High and Low Income Countries", American Journal of Sociology, Vol. 88, May, World Bank Reprint No. 268. Jamison, D. and Lau, L. (1982), Farmer Education and Farm Efficiency, Johns Hopkins University Press. Lee, R.H. (1984) Universal Primary Education: An African Dilemma, Education Department, The World Bank. -32- Psacharopoulos, G. (1981), 'Returns to Education: An Updated Internetional Comparison", Comparative Education, Vol. 17, No. 3. Psacharopoulos, G. and Loxley, W. (1984), Diversified Secondary Education and Development, The World Bank. Psacharopoulos, G. (1982), Is it Worth Spending in a 'High Cost"Country?, Education Department, The World Bank. Psacharopoulos, G. (1984), 'On the Assessment of Training Priorities in Developing Countries: Current Practice and Possible Alternatives', International Labor Review, (September - October). Tait, A. and Heller, P. (1981), International Comparisons of Government Expenditures: A Starting Point for Discussion, Fiscal Affairs Department, International Monetary Fund - Occasional Paper, No. 10. Tait, A. and Heller, P. (1983), Government Employment and Pay: Some International Comparisons, Fiscal Affairs Department, International Monetary Fund, Occasional Paper, No. 24. Tan, J.P., Lee, K.L., and Mingat, A. (1984), User Charges in Education: Willingness and Ability to Pay in Malawi, Staff Working Paper,No. 661. The World Bank. Wolff, L. (1983), Controlling the Costs of Primary and Secondary Education in Eastern Africa: A Review of Data and Policy Options, Education and Human Resources Division, Eastern Africa Regional Office, The World Bank. World Bank (1981), Accelerated Development in Sub-Saharan Africa. World Bank (1983), Comparative Education Indicators, Education Department. Zymelman, M. (1982), Educational Expenditures in the 1970s, Educati%a Department, The World Bank. Unesco, 1983, Statistical Yearbook, 1983. Other Available EDT Discussion Papers EDT20 Lending in Primary R. Romain November 198$& Education: Bank Performance Review, 1962-1983 EDT21 Teacher Training: A Review W. Haddad November 1985 of World Bank Experience EDT22 Institutional Development J. Auerhan, et al. November 1985 in Education and Training in Sub-Saharan African Countries