Critical Success Factors in Higher Education Finance andHigher Education Finance and Planning: An Institutional Perspective

Prof. Yunus D. Mgaya PhDDeputy Vice Chancellor

(Administration)U i i f D S lUniversity of Dar es Salaam

Introduction

Since its inception in 1961 higher education in Tanzania has undergone massive expansion, with a major expansion in student enrolment

k l h l d dtaking place over the last decade. Enrolment HEIs in Tanzania stood at 117,057

in 2009/10; 13 students were enrolled in 1961.

The country projection in the Vision 2025 is to have 360,000 students enrolled in HEIs asto have 360,000 students enrolled in HEIs as a lower bound by 2025.

Introduction – Cont’d

Despite this massive expansion, funding for public Higher Education Institutions (HEI) in Tanzania has continued to(HEI) in Tanzania has continued to come mainly from the government. Thi i l l d t k h i This is largely due to weak mechanisms of harnessing resources from non-state actors.

Introduction – Cont’d

The changing socio-economic and political climate in the country has led to a progressive decline in the flow ofto a progressive decline in the flow of resources from the government to public institutionspublic institutions.

This has necessitated institutions to diversify sources of financing the planned activities. p

Introduction – Cont’d Although, over 90 percent of the costs of

running higher education in Tanzania (and inrunning higher education in Tanzania (and in the region) are borne by the state, the trend shows that there is a perpetual under-funding f h d h h dof the education sector – higher education

sub-sector, in particular.As a measure to increase enrollment with the As a measure to increase enrollment with the dwindling government budget allocated to education sector, in the early 1980s, Tanzaniaeducation sector, in the early 1980s, Tanzania started to admit students on a fee paying basis, focusing mainly on foreign and institutionally supported studentsinstitutionally supported students.

Introduction – Cont’d

Following the structural adjustment d d b TZ i h lprogramme adopted by TZ in the late

1980s and early 1992 cost sharing was d dintroduced.

Under cost sharing students (and g (families) became responsible for paying for their own transportation,for their own transportation, application, registration, entry examination and student union fees asexamination and student union fees as well as caution money.

Introduction – Cont’d

From July 2005 the government of Tanzania fintroduced student loans system following

establishment of the Higher Education d d ( ) bStudents Loans Board (HESLB) by Act No. 9

of 2004. HESLB covers tuition fees, other academic

fees, room and board for all higher education students whether government or privately sponsored in the public universities or self paying in the private universities.

Introduction – Cont’d This student loan policy dramatically changed

the country’s tuition policy, moving it from a d l k li i hi h ll ddual track policy to one in which all students must pay tuition, albeit deferred as a loan to be repaid once they have finished theirbe repaid once they have finished their studies.

The loan policy allows a student to borrow p ymoney (interest free) through a means-tested procedure.Th hi h d ti fi i d li The higher education financing underlies three overarching themes of the university policy: Quality and the relationship betweenpolicy: Quality, and the relationship between funding and quality in any of its several dimensions;

Introduction – Cont’d

Access, or the search for social equity in who f f fbenefits from, and who pays for, higher

education; and Efficiency, or the search for a cost-effective

relationship between revenues (particularly those that come from students, parents, and the government) and outputs (whether measured in enrollments, graduates, student learning, or the scholarly activity of the academic members).

Sources and Trends of Financing in Higher Learning Institutions inHigher Learning Institutions in Tanzania

Sources: Direct government subvention [Personnel

Emoluments, Other Charges and D l t E dit ] t ll bliDevelopment Expenditure] to all public universities and colleges;Di t bil t l d ltil t l d f di Direct bilateral and multilateral donor funding for specific programmes and projects; Di t l l f di f i tit ti h Direct local funding from institutions such as Tanzania Education Authority, etc;

Sources and Trends of Financing in Higher Learning Institutions in Tanzania – Cont’d

Student financial assistance in the form of scholarships and a loan system for students enrolled in universities andstudents enrolled in universities and colleges; and S lf t d f d b i tit ti Self generated funds by institutions through tuition fees, contract research and consultancy.

Sources and Trends of Financing in Higher Learning Institutions in Tanzania – Cont’d

TrendsP i t 1980 th hi h d ti b Prior to 1980s the higher education sub sector was a one-tier system with only public owned institutionsowned institutions.

However, as a result of economic hardship of 1980s and the implementation of the WB/IMF p /driven SAPs in mid-1980s there was more engagement of the private sector in the provision of higher education in the countryprovision of higher education in the country.

Currently there are 11 public universities and university colleges and more than 19 privateuniversity colleges and more than 19 private universities and colleges in Tanzania.

Sources and Trends of Financing in Higher Learning Institutions in Tanzania – Cont’d

About 75 percent of the candidates are enrolled in public universities.

Financing of higher education through public funds encompasses both public and private institutions through the provision of a means-tested, interest free loan to students.

This arrangement has led to increased accessThis arrangement has led to increased access to higher education by more students.

Direct government subvention

Figure 1 shows the total government di b f h Hi hdisbursement to some of the Higher learning institution for the period 2008 to 2010.

UDSM has been receiving the largest g gshare of the total allocation. There has been a significant increase inbeen a significant increase in government subvention to almost all the public universities.the public universities.

Direct government subvention –Direct government subvention –Cont’d

Figure 1: Distribution of disbursement for the period 2008 to 2010 to HEI2008 to 2010 to HEI

40,000,000,000 

45,000,000,000 

25,000,000,000 

30,000,000,000 

35,000,000,000 

5 000 000 000

10,000,000,000 

15,000,000,000 

20,000,000,000 

‐

5,000,000,000 

Total Disbursement   2008 Total Disbursement   2009 Total Disbursement   2010

Direct government subvention –Direct government subvention Cont’d

It is noted from Figure 2 that almost all universities have registered a significant increase in the enrollment with theincrease in the enrollment with the UDSM and the relatively new University of Dodoma (UDOM) taking the leadof Dodoma (UDOM) taking the lead. This reflects the government resolve to i th ll t t th hi hincrease the enrollment at the higher learning institutions.

Direct government subvention –Direct government subvention Cont’d

Figure 2: Distribution of the number of students enrolled Figure 2: Distribution of the number of students enrolled in the public HEI for the period 2007 to 2009

8,000 

9,000 

10,000 

4 000

5,000 

6,000 

7,000 

1,000 

2,000 

3,000 

4,000 

‐

Total Enrollment   2007 Total Enrollment   2008 Total Enrollment   2009

Direct government subvention –Direct government subvention Cont’d

Ideally government subvention ought to be related to the volume of activities within institutions. However, in practicewithin institutions. However, in practice this has not been the case. UDSM has been receiving relatively small amountbeen receiving relatively small amount of funds from the government

d t th Hi h L icompared to other Higher Learning Institutions as depicted in Figure 3.

Direct government subvention –Direct government subvention Cont’d

Figure 3: Per Capita disbursement to HEI for the period 2006 to 2009period 2006 to 2009

25,000,000

15,000,000

20,000,000

5,000,000

10,000,000

0

Per capita Disbursement 2006 Per capita Disbursement 2008 Per capita Disbursement 2009

Direct government subvention –Direct government subvention Cont’d

What is observed shows us that whatever higher education financing strategy is developed aeducation financing strategy is developed, a fundamental reality acknowledged is that the level of government financial support for higher education is

l ffi i h fi i lnot currently sufficient to ensure the financial sustainability of the system as it currently exists. Therefore, reforms in financing of higher educationTherefore, reforms in financing of higher education shall still target largely public funds but in ways that encourage institutions to be competitive and improve institutional performanceinstitutional performance.

International Donor Support

For many years international donor support has assisted the development of higherhas assisted the development of higher education in Tanzania. Many of the buildings and infrastructure in Many of the buildings and infrastructure in pioneer higher education institutions have been erected through direct and indirectbeen erected through direct and indirect donor financial support.

Similarly many institutional programmes and Similarly many institutional programmes and projects are supported by international donors.donors.

International Donor SupportInternational Donor Support –Cont’d

For many years now the UDSM has been receiving support from the Royal Norwegianreceiving support from the Royal Norwegian Government, Carnegie Corporation of New York, Rockefeller Foundation, Sida-SAREC,

d d ld kFord Foundation, World Bank, DANIDA, etc. UDSM like many other HEI in Tanzania are

aware that the external donors’ role can onlyaware that the external donors’ role can only be strategic and for a defined period.

This kind of funding is often competitive and This kind of funding is often competitive and institutions have to prepare proposals and argue a strong case for funding.

Self Generated Funds Internally generated funds as a source of

financing of higher education include:financing of higher education include: private tuition fees,

business profits business profits, investment incomes net revenues from contract research teaching and net revenues from contract research, teaching and

consultancy, joint venture endeavours, j , fund raising in support of both academic and

administrative functions, etc.

Self Generated Funds –Cont’d

The University of Dar es Salaam has been fmeeting more than 80% of the operational

expenses from internally generated funds. This is an area that needs to be strengthened

further, more so given that the Government subvention has been declining year by year despite the increase in enrollments.

Private Sector Financial Support The Government is faced with a challenge to expand

the resource envelope for funding public expenditurethe resource envelope for funding public expenditure, hence innovative approaches ought to be sought.

Experiences from other countries with respect to p pfinancing HE show that government revenue could be increased significantly through efficient or increased targeted taxationtargeted taxation.

Examples of targeted taxation include graduate tax, education levy and special telecoms education levy. y p y

Private Sector Financial SupportPrivate Sector Financial Support –Cont’d

Graduate tax Graduate Tax may be collected as

specific tax intended to improve higher p p geducation in Tanzania.

This may be collected from all This may be collected from all Tanzanian employees who are in the public and non-public sectorspublic and non public sectors employment.

Private Sector Financial SupportPrivate Sector Financial Support – Cont’d

Education levy Ought to be paid out by private sector

that directly benefit from the manpowerthat directly benefit from the manpower from the HEIs. It is rightly assumed th t i th i tthat, in one way or another, private sector benefit from the product of HEIs either now or in future.

Private Sector Financial SupportPrivate Sector Financial Support – Cont’d

Telecommunications levy It could be charged at monthly nominal rate It could be charged at monthly nominal rate on subscribers of mobile phones; can be tolerated but yield a substantial sum oftolerated but yield a substantial sum of money that could augment higher education financing funds.

l h b For example, at the current subscription levels, collectable funds range from TAS 19.2 billion annually at a nominal rate of TAS 100billion annually at a nominal rate of TAS 100 per subscriber to TAS 96.3 billion at a rate of TAS 500 per month.

Private Sector Financial SupportPrivate Sector Financial Support – Cont’d

PhilanthropyUDSM has established an Advancement Office which UDSM has established an Advancement Office which is charged with searching for funds from individuals and corporate organizations within and outside the p gcountry.

Corporate bodies or individuals (alumni, etc.) have not been a significant source of funding for highernot been a significant source of funding for higher education both at corporate and individual levels.

Individual wealth has been rather limited and Individual wealth has been rather limited and corporate charitable giving has not been encouraged.

Private Sector Financial SupportPrivate Sector Financial Support – Cont’d

It can be confidently stated that with its almost 50 years of existence UDSM can be said to have enoughyears of existence UDSM can be said to have enough critical mass of Alumni both within and outside the country.

We need to reach out and mobilize resources through activities of the Advancement Office. Though private sector is an important component of Though private sector is an important component of financing higher education, this is an area which the University of Dar es Salaam in particular has not y ptapped to optimal level given her long existence.

End of PresentationEnd of PresentationTHANK YOU FOR YOUR KIND ATTENTION

Thank you for your kind attention.

THANK YOU FOR YOUR KIND ATTENTION