Financing Public Higher Education in Tanzania: Towards a New Model By Johnson M. Ishengoma (PhD) University of Dar es Salaam Faculty of Education Department

Financing Public Higher Financing Public Higher Education in Tanzania: Education in Tanzania: Towards a New ModelTowards a New Model

ByByJohnson M. Ishengoma (PhD)Johnson M. Ishengoma (PhD)University of Dar es SalaamUniversity of Dar es Salaam

Faculty of EducationFaculty of EducationDepartment of Educational Planning and AdministrationDepartment of Educational Planning and Administration

P.O. Box 35048P.O. Box 35048Dar es Salaam, TanzaniaDar es Salaam, Tanzania

E-mail: E-mail: [email protected]/[email protected]

IntroductionIntroduction

The current system of financing (public) The current system of financing (public) higher education in Tanzania is flawed and higher education in Tanzania is flawed and lopsided to such an extent that it has generated lopsided to such an extent that it has generated controversies, partisan debates among controversies, partisan debates among different stakeholders and crises in higher different stakeholders and crises in higher education sector as manifested by perennial education sector as manifested by perennial students’ strikes in public higher education students’ strikes in public higher education institutions and budget deficits.institutions and budget deficits.

Introduction Cont..Introduction Cont..

The Tanzania government-despite of the The Tanzania government-despite of the existence of cost sharing in higher education existence of cost sharing in higher education policy for the past 15 years and its limited policy for the past 15 years and its limited ability to finance public higher education ability to finance public higher education because of many competing needs- still because of many competing needs- still shoulders the burden of financing both public shoulders the burden of financing both public and private higher education through and private higher education through disbursing interest free loans and grants disbursing interest free loans and grants through the Higher Education Students’ Loans through the Higher Education Students’ Loans Board (HESLB) and the Tanzania Education Board (HESLB) and the Tanzania Education Authority (TEA). Authority (TEA).


This paper attempts to provide an alternative This paper attempts to provide an alternative sustainable model for financing public higher sustainable model for financing public higher education in Tanzania in the context of education in Tanzania in the context of development and retention of new generation development and retention of new generation of academics. The paper focuses on financing of academics. The paper focuses on financing public universities and university colleges.public universities and university colleges.


The major thesis of this paper is that while the The major thesis of this paper is that while the Government has the responsibility of financing Government has the responsibility of financing higher education because it is also the higher education because it is also the beneficiary (among many beneficiaries) of beneficiary (among many beneficiaries) of higher education products or outputs, its higher education products or outputs, its financial ability is limited because of many financial ability is limited because of many competing and compelling needs, compared to competing and compelling needs, compared to higher education. This situation calls for a new higher education. This situation calls for a new approach to financing higher education in approach to financing higher education in Tanzania to make it a shared responsibility Tanzania to make it a shared responsibility instead of the current unsustainable approach.instead of the current unsustainable approach.


The paper is organized into four major sections: The paper is organized into four major sections: section one is an introduction; section two briefly section one is an introduction; section two briefly introduces some basic facts about higher education in introduces some basic facts about higher education in Tanzania; section three discusses the current system or Tanzania; section three discusses the current system or mode of financing higher education in Tanzania and mode of financing higher education in Tanzania and problems associated with this current system; and problems associated with this current system; and section four introduces an alternative approach or section four introduces an alternative approach or model to financing public higher education in model to financing public higher education in Tanzania including establishing a Higher Education Tanzania including establishing a Higher Education Banks (HEDUBANK). There are no conclusions or Banks (HEDUBANK). There are no conclusions or recommendations in this paper.recommendations in this paper.

Basic Facts about Higher Education in Basic Facts about Higher Education in

TanzaniaTanzania

Tanzania with the current total population of around Tanzania with the current total population of around 37.6 million people has ( as of November 2008) a 37.6 million people has ( as of November 2008) a total of total of 44 higher education institutions total of total of 44 higher education institutions distributed as follows: twelve (12) public universities distributed as follows: twelve (12) public universities and university colleges/institutes; 21 private and university colleges/institutes; 21 private universities and university colleges; and eleven (14) universities and university colleges; and eleven (14) non-university higher education institutions non-university higher education institutions (including technical colleges, but excluding non-(including technical colleges, but excluding non-university institutions in Zanzibar), most of these university institutions in Zanzibar), most of these currently offering degrees in professional fields. currently offering degrees in professional fields.

Basic Facts about Higher Education in Basic Facts about Higher Education in Tanzania Cont..Tanzania Cont..

In 2006/07 total student enrollment in both In 2006/07 total student enrollment in both private and public universities and university private and public universities and university colleges and institutes was 49,967, with public colleges and institutes was 49,967, with public universities enrolling a total of 39,218 students universities enrolling a total of 39,218 students or 78.4% of the total students. Private or 78.4% of the total students. Private universities, despite of the fact that they universities, despite of the fact that they outnumber public universities, enrolled a total outnumber public universities, enrolled a total of 10, 749 (21.5%) of the total student of 10, 749 (21.5%) of the total student population.population.

Basic Facts about Higher Education in Basic Facts about Higher Education in Tanzania Cont..Tanzania Cont..

Despite the liberalization of the higher education Despite the liberalization of the higher education sector, participation and admission rates and general sector, participation and admission rates and general gross enrollment ratio in higher education in gross enrollment ratio in higher education in Tanzania are still low compared to neighboring and Tanzania are still low compared to neighboring and other SADC countries implying the low capacity of other SADC countries implying the low capacity of the higher education sector to enroll more students the higher education sector to enroll more students because of limited funding. Table 2 shows available because of limited funding. Table 2 shows available data on gross enrollment ratios in higher education in data on gross enrollment ratios in higher education in Tanzania and in some other selected African Tanzania and in some other selected African countries for the year 2004. countries for the year 2004.

Table 2: Gross Enrollment Ratios in Higher Education for Table 2: Gross Enrollment Ratios in Higher Education for Selected Sub Saharan African Countries, 2004 (%)Selected Sub Saharan African Countries, 2004 (%)

Country Country GERGER

Tanzania Tanzania 1.01.0

Kenya Kenya 3.03.0

UgandaUganda 3.03.0

BurundiBurundi 2.02.0

RwandaRwanda 3.03.0

MozambiqueMozambique 1.01.0

BotswanaBotswana 6.06.0

AngolaAngola 1.01.0

LesothoLesotho 3.03.0

ZambiaZambia 2.02.0

SwazilandSwaziland 5.05.0

NamibiaNamibia 6.06.0

South AfricaSouth Africa 15.015.0

ZimbabweZimbabwe 4.04.0

Source: GUNI (2007) Higher Education in the World 2007 Table IV 1.5 pp. 383-384

Current Higher Education Funding Formula/Model Current Higher Education Funding Formula/Model

and Its Limitationsand Its Limitations Financing of public higher education in Tanzania in the Financing of public higher education in Tanzania in the context of cost sharing policy is (ideally) supposed to be a context of cost sharing policy is (ideally) supposed to be a shared responsibility between different stakeholders and shared responsibility between different stakeholders and beneficiaries of higher education products. The Government is beneficiaries of higher education products. The Government is not only financing public higher education institutions not only financing public higher education institutions through subventions to cover recurrent and capital through subventions to cover recurrent and capital development budgets; but is also financing tuition-dependent development budgets; but is also financing tuition-dependent private higher education institutions and students enrolled in private higher education institutions and students enrolled in privately sponsored programs in public universities through privately sponsored programs in public universities through the HESLB and the Tanzania Education Authority leading to the HESLB and the Tanzania Education Authority leading to inequities in higher education financing. Despite of the inequities in higher education financing. Despite of the existence of a plethora of beneficiaries of higher education existence of a plethora of beneficiaries of higher education products, their contribution to higher education remains products, their contribution to higher education remains insignificant mainly limited to welfare costs.insignificant mainly limited to welfare costs.

Towards a New Model/Approach of Financing Towards a New Model/Approach of Financing Public Higher Education in TanzaniaPublic Higher Education in Tanzania

Although in the Tanzanian context it is almost Although in the Tanzanian context it is almost impossible to propose a viable model or framework impossible to propose a viable model or framework for financing higher because of intense and deliberate for financing higher because of intense and deliberate politicization of financing of higher education and politicization of financing of higher education and because of the entrenched mindset of “free higher because of the entrenched mindset of “free higher education” among the majority of Tanzanians, education” among the majority of Tanzanians, unfortunately including the educated, this paper unfortunately including the educated, this paper proposes the proposes the market modelmarket model which seem to have been which seem to have been successful in Kenya and Uganda higher education successful in Kenya and Uganda higher education sectors. sectors.

Towards a New Model/Approach of Financing Towards a New Model/Approach of Financing Public Higher Education in Tanzania Cont..Public Higher Education in Tanzania Cont..

The market model for higher education The market model for higher education financing is proposed in the context of two financing is proposed in the context of two major trends that have characterized the major trends that have characterized the changes in higher education sector in Tanzania changes in higher education sector in Tanzania since the 1990’s when the Government since the 1990’s when the Government liberalized the provision of higher education: liberalized the provision of higher education: these are some limited privatization of public these are some limited privatization of public higher education and the emergence of the higher education and the emergence of the private higher education sector. private higher education sector.


The market model also advocated by Oketch (2003) The market model also advocated by Oketch (2003) and Lamptey (1994) stresses the injection of the and Lamptey (1994) stresses the injection of the market principles and market driven approaches into market principles and market driven approaches into the financing of higher education to make it the financing of higher education to make it completely self-financing. While Oketch views completely self-financing. While Oketch views marketing model of financing higher education in marketing model of financing higher education in terms of terms of financial diversificationfinancial diversification and and partial partial privatization of public universitiesprivatization of public universities; Lamptey ; Lamptey advocates for the adoption of the contemporary advocates for the adoption of the contemporary marketing concepts of marketing concepts of productproduct, , price, place price, place andand promotionpromotion (the 4 P’s) in higher education. (the 4 P’s) in higher education.


The market model for financing public higher The market model for financing public higher education in Tanzania is justified when we education in Tanzania is justified when we consider higher education sector to be consider higher education sector to be composed of market segments and therefore it composed of market segments and therefore it can be marketed using an effective marketing can be marketed using an effective marketing mix through opening up dialogue with mix through opening up dialogue with potential markets ready to finance higher potential markets ready to finance higher education because they are beneficiaries and education because they are beneficiaries and consumers of higher education products.consumers of higher education products.


In the context of Tanzania the market is also In the context of Tanzania the market is also justified in the larger context of the market justified in the larger context of the market economy which has been adopted since late economy which has been adopted since late 1980’s in wider context of improving the 1980’s in wider context of improving the efficiency, accountability and quality. This efficiency, accountability and quality. This proposed model is guided by three principles: proposed model is guided by three principles: shared costs, equity and human resource shared costs, equity and human resource development.development.


While the market model of financing higher While the market model of financing higher education has been criticized and branded as education has been criticized and branded as academic capitalism driving universities into academic capitalism driving universities into entrepreneurial competition (Levidow, 1998); the entrepreneurial competition (Levidow, 1998); the model if cautiously adapted can turn around the model if cautiously adapted can turn around the finances of Government and donor dependent public finances of Government and donor dependent public higher education institutions. The model has worked higher education institutions. The model has worked at Makerere and Nairobi universities and there is no at Makerere and Nairobi universities and there is no reason why it should not work in Tanzania’s public reason why it should not work in Tanzania’s public higher education institutions. The components of the higher education institutions. The components of the proposed model are summarized in Table 6.proposed model are summarized in Table 6.

Proposed Model for Financing Public Higher Proposed Model for Financing Public Higher Education in TanzaniaEducation in Tanzania

Market Segment in Market Segment in Rank Order Rank Order

Financing Mode Financing Mode Cost/Budget Item Cost/Budget Item Level of Level of Financing in % Financing in %

(Annually) (Annually)

1. Higher Education 1. Higher Education Institutions Institutions

Revenue diversification Revenue diversification and privatization of and privatization of services; contracted services; contracted

research & consultancy; research & consultancy; sale of patents; sale of patents;

enrollment of privately enrollment of privately sponsored students sponsored students

1,2, & 4 1,2, & 4 1=5%1=5%

2=5%2=5%

4=100% 4=100%

2. Students and their 2. Students and their ParentsParents

Cost sharing Cost sharing 3 3 100%100%

3. Government 3. Government Direct subventions to Direct subventions to HEIs; introduction of HEIs; introduction of

an education levy an education levy

1, 2 1, 2 1=95%1=95%

2=95%2=95%

4. Private 4. Private Sector/Potential Sector/Potential

Graduate Employers Graduate Employers

Direct donation to Direct donation to responsible institutions, responsible institutions, student and professorial student and professorial

chairs sponsorships; chairs sponsorships; sponsorship of sponsorship of

contracted research contracted research

1 1 Variable Variable

Proposed Model Cont..Proposed Model Cont..Market Segment in Market Segment in Rank Order Rank Order

Financing Mode Financing Mode Cost/Budget Cost/Budget ItemItem

Level of Financing in Level of Financing in % (Annually)% (Annually)

5. External Donors 5. External Donors Direct grant to higher Direct grant to higher education institutions, education institutions, faculty, departments, faculty, departments, bureaus etc. bureaus etc.

11 Variable Variable

6. Financial 6. Financial Institutions and Institutions and Banks Banks

Creation of Higher Creation of Higher Education Loans Bank to Education Loans Bank to replace HESLB. Students replace HESLB. Students and their parents can and their parents can borrow money to pay for borrow money to pay for tuition and related costs at tuition and related costs at a market interest rate a market interest rate

Variable Variable Variable Variable

7. Alumni 7. Alumni Direct donations to Direct donations to institutions to establish institutions to establish Endowment & Trust Endowment & Trust Funds Funds

1 & 31 & 3 Variable Variable

KEY: 1=Capital Development; 2=Direct Training Costs; 3=Students Direct Costs; 4=Other Administrative and Personal Emoluments Costs.

Towards the Establishment of the Higher Education Towards the Establishment of the Higher Education Bank: A New Financing of Higher Education Bank: A New Financing of Higher Education

StrategyStrategy One of the critical components of our proposed model One of the critical components of our proposed model is the establishment of the Higher Education Bank is the establishment of the Higher Education Bank (HEDUBANK) by private investors to replace the (HEDUBANK) by private investors to replace the Higher Education Students Loans which appears to Higher Education Students Loans which appears to be ineffective and offers interest free loans which are be ineffective and offers interest free loans which are unrealistic in the market economy in which the higher unrealistic in the market economy in which the higher education sector is operating. This proposed Bank can education sector is operating. This proposed Bank can give loans to higher education institutions at an give loans to higher education institutions at an interest rate to be determined. Currently, there is one interest rate to be determined. Currently, there is one private commercial bank (Azania) which provides private commercial bank (Azania) which provides limited education loans to parents. limited education loans to parents.

Towards the Establishment of the Higher Towards the Establishment of the Higher Education Bank Cont..Education Bank Cont..

The idea of an education bank has worked very well The idea of an education bank has worked very well in Nigeria. The Nigerian Education Bank in Nigeria. The Nigerian Education Bank (EDUBANK) was established in 1993 after the (EDUBANK) was established in 1993 after the Nigerian Student Loans Board was resolved due to its Nigerian Student Loans Board was resolved due to its gross failure in recovering student loans amounting to gross failure in recovering student loans amounting to NGN 400 million (US$ 3.34) by the time it was NGN 400 million (US$ 3.34) by the time it was dissolved (Ishengoma, 2002: 16). The roles of the dissolved (Ishengoma, 2002: 16). The roles of the Nigerian Education Bank are: (a) to serve as Nigerian Education Bank are: (a) to serve as intermediary in Nigeria’s credit market; (b) harness intermediary in Nigeria’s credit market; (b) harness private sector resources for the funding of education; private sector resources for the funding of education; and (c) take over part of the government’s and (c) take over part of the government’s educational funding responsibilities.educational funding responsibilities.


The specific functions of the Nigerian Bank are: (a) The specific functions of the Nigerian Bank are: (a) student lending; (b) lending for publishing books; (c) student lending; (b) lending for publishing books; (c) leasing educational equipment; (d) project financing; leasing educational equipment; (d) project financing; (e) funds mobilization; and (f) provision of advisory (e) funds mobilization; and (f) provision of advisory services for educational purposes (Chuta, 1998: 426). services for educational purposes (Chuta, 1998: 426). The Bank is fully subscribed to by the Federal The Bank is fully subscribed to by the Federal Government of Nigeria. The Bank also provided Government of Nigeria. The Bank also provided loans to university faculty for sabbatical leave and loans to university faculty for sabbatical leave and attendance at conferences abroad and for book attendance at conferences abroad and for book publishing. publishing.


The proposed model supported by a special The proposed model supported by a special higher education bank is definitely an ideal higher education bank is definitely an ideal and a viable strategy for financing of higher and a viable strategy for financing of higher education in Tanzania to develop and retain education in Tanzania to develop and retain the next generation of academics and for the next generation of academics and for stemming both internal and external brain stemming both internal and external brain currently adversely impacting capacity currently adversely impacting capacity building and human resource development in building and human resource development in public higher education institutions in public higher education institutions in Tanzania. Tanzania.

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Financing Public Higher Education in Tanzania: Towards a New Model By Johnson M. Ishengoma (PhD) University of Dar es Salaam Faculty of Education Department