Wednesday, September 10, 2008

Full cost recovery in Ghanaian universities – to be or not to be?

By Emmanuel K. Dogbevi


The issue of full cost recovery at Ghanaian universities has become an untouchable subject because of its sensitivity. But as difficult as it is a subject for discussions, it will not easily go away. Sooner than later, it will confront our political leaders, education policy makers, administrators, students, parents and guardians.

It is an unpleasant and uncomfortable subject to touch because, even though, there is a school of thought that believes that its introduction is inevitable - there is fear that its introduction is likely to bring some undesirable consequences on the society, particularly so, on the poor and vulnerable.

Another school of thought however, does not think that it should be introduced at all because this school holds the view that, Government, entrusted with all the powers and rights to control and manage the huge national resources at its disposal has a social contract with the citizenry to provide for the basic needs of the people, including quality affordable tertiary education.

On September 6, 2008, the University of Ghana, Legon, matriculated 11,700 students to begin studies at various levels. These are certificate, diploma, undergraduate and graduate programmes. While some of these freshmen and women are full fee paying students, a few are on scholarships and others are receiving government subventions.

Looking at the current economic situation of the country, the yet to be fully realized implications of globalization and the urgent need for high quality capacity development to meet the country’s need for accelerated development, it has become imperative for stakeholders in education to consider the possibility of tackling this subject as candidly as possible and in all soberness so that a realistic solution can be arrived at.

The matter as it stands now, needs to be resolved once and for all in a comprehensive manner because that would be in the long term interest of the nation. Unfortunately, the ad-hoc and piecemeal approaches to the issue do not seem to have provided the much needed lasting solution to the problem.

This issue usually comes up when the universities begin an academic year and students are asked to pay upwardly revised fees.

Some Aspects of the History of Government Funding of University Education in Ghana

When in 1948, the University College of the Gold Coast was established students were offered virtually free education. According to Appiah Kubi (2005), students even received pocket money. That situation was understandable and desirable because, nine years later Ghana was to attain independence from colonial rule, and an accelerated programme for training Ghanaians to take over the reins of the public service system became necessary.

Moreover, the period immediately after independence made the issue of free education for all Ghanaians even the more attractive because of the socialist ideology that underpinned the development agenda of the Convention Peoples Party (CPP) government led by Ghana’s first President, Osagyefo Dr. Kwame Nkrumah.

But even immediately after the overthrow of Dr. Nkrumah in 1966, the importance of tertiary education came to the fore. One of the policies of the overthrown CPP regime that was given some rethinking was the education policy of the country, particularly, funding of tertiary education.

In 1970, during the Busia regime, a committee was set up to look at future government policy direction for financial support for Ghana’s universities.

Dr. K. A. Busia, the Prime Minister in the Second Republic, was an academic of high repute. He was a former professor of Anthropology at Oxford University, the first Ghanaian Head of the Sociology Department of the University of Ghana, Legon, and a beneficiary of liberal democratic education policies in the West.

Even as a beneficiary of state sponsored education in the West, Dr. Busia’s regime initiated moves to review what then existed in terms of free university education in Ghana. But unfortunately, the Busia regime did not last long, so it is not possible to tell what impact the one time Oxford Professor’s educational policy would have had on university education in Ghana.

It has been over 38 years since the Busia Committee on the future of Government financial support for University education in Ghana was set up, and the issue still remains.

For instance, in 1992, when the government of Jerry Rawlings was faced with the economic decline of the early 1980s and the subsequent effects of the Structural Adjustment Programme, (SAP) of the IMF and World Bank, the Peoples National Defence Council (PNDC), declared its stance on the funding of university education in Ghana in a white paper.

The paper reads in part, “Government alone cannot continue to bear the increasing cost of higher education and therefore, there was the need for cost sharing by all stakeholders.”

However, what the government meant by ‘cost sharing’ was not clear to most Ghanaians, particularly university students of the period. They misread that to mean government’s tacit plan to cut down or probably stop its financial support for university education. And since then the debate has raged on.

While it is a fact, that the philosophy of the government of Ghana is to reduce poverty, and attain a general improvement in the welfare of Ghanaians, through investment in human capital which can be achieved through improved access to good quality education, there is general agreement that, this can only be achieved by providing the necessary funding for education, which the government says it does not have.

Speaking at the matriculation of freshmen and women for the 2008/2009 academic year, the Vice Chancellor (VC) of the University of Ghana, Prof. Clifford Tagoe regretted that the University faced the painful task of having to turn down applications of many other qualified applicants, due to constraints on facilities and staff.

He said about one million Ghana cedis was used to re-wire the four traditional halls of residence, namely Akuafo, Volta, Commonwealth, Mensah Sarbah in addition to the renovation of the washrooms of Commonwealth Hall at an estimated cost of GH¢60,000.

The VC revealed that the government of Ghana had signed an agreement with the Chinese for a concessionary loan of $8.2m to support the university with ICT infrastructure to facilitate its Distance Education programme. This is a clear indication that the government does not have the money to invest in ICT at the University.

Indeed, capacity development is crucial for the country’s development as a whole.

At the Accra High Level Forum on Aid Effectiveness which ended on Thursday, September 4, 2008, the issue of building the capacity of recipient nations to manage aid efficiently and effectively came up. And some contributors expressed worry over the falling standards in tertiary education in developing countries. It became evident during the discussions that donor agencies and countries have as a result lost interest in supporting tertiary education in developing countries and this can be seen in the drastic reduction in the quantum of support donors give to the sector.

Since 1987, donors have contributed $65m to tertiary education in Ghana, including $45m from the World Bank for its 1993-98 Tertiary Education Project.

Dwindling budgetary allocation to tertiary institutions

As a result of the general lack of financial resources by the government of Ghana, tertiary education expenditures as a percentage of total government expenditures decreased from 22.2% to 18.7% between 1990 and 1994, although, the total spending level maintained a 10% annual growth rate due to the rapid expansion of total government expenditures. (Penrose 1995:9).

The share of tertiary education expenditures relative to total government expenditures, however, further declined to 11.4% in 1999.

In the face of the challenges, government was determined to reverse the trend.
Government therefore, increased budget allocation to the education sector to 22.5% by 2002.

In spite of this determination, however, in terms of spending level, total government education expenditures declined by a total of 16% between 1994 and 1998. Overall, education expenditures have declined by 4% annually between the same period.

Ironically, while tertiary education enrolment doubled between 1994 and 1998, the share of its budget actually declined.

In 1997, of the total amount required for the running of tertiary education, government provided 61.5% leaving a deficit of 38.5%. However, in 1999 the deficit rose to 40%.
Government meanwhile had decided in 1998 not to continue to pay periodical subventions and grants to cover students’ Academic Facility User Fees and Residential Facility User Fees, because of budgetary constraints.

At this point, students were asked to pay for these, they refused and that led to a clash between students and the government which eventually culminated in a series of boycotts and eventually demonstrations dubbed, “Mobrowa” struggle, which was led by the then SRC president of the University of Ghana, Nii Dowuona.

For instance at one point, increasing enrollment levels and the rising cost of running the universities forced the Council of Vice Chancellors and Principals (CVCPs) to threaten to close down the universities or cut down on admissions until a solution is found.

During the matriculation ceremony of the University of Ghana for the 1999-2000 academic year the then Vice Chancellor, Prof. Ivan Addae-Mensah in his address also did express his frustrations over the dwindling financial support from the government to the university. He also said the university probably would have to cut down on admissions in tandem to the financial and other resources available to it.

Meanwhile, the 1992 Constitution makes it mandatory for government to fund all levels of education, but government has made it clear that it cannot do it alone.

Every government must however, have a justification for funding education, and to a large extent this must be determined by the following factors:

- Nature of economy
- Ideological perception of the country
- The philosophy behind the education system and the values a particular society attaches to education vis-à-vis national development.

And for a developing country like Ghana, whose economic fortunes are unstable, the other national needs compete for scarce resources with education. As a result tertiary institutions have been starved of funding, making it difficult for them to function at full capacity.

Prof. S. K. Agyepong, former Vice Chancellor of Cape Coast University, delivering a paper on “Private Participation in Tertiary Education” at the Pearson-Osae Appreciation Lectures at Accra in November 1998, cautioned that if the problem of funding tertiary education is not addressed quickly, it would lead to the demise of certain academic departments in the existing public universities and other tertiary institutions.

The Principal of Accra Polytechnic in an address during matriculation in January 2000 complained that inadequate government subvention, irregular disbursement of the subventions and the disproportionate contribution by direct beneficiaries as well as industrial and private sector, have all contributed to make the sustained and viable funding of tertiary institutions very difficult and noted that funding remains one of the greatest obstacles and constraints to capacity building of the nation.

Sadly, while education is competing with other sectors of the economy, it is also education that suffers budgetary cuts.

The increasing burden of expanding tertiary education and the fiscal pressures on governments mean that the reliance on tax finance creates a downward pressure on quality. The fact is government subventions have done little to widen access, because the source of this is public tax, which in itself is very regressive.

Meanwhile, from 1990 to 2006, the World Bank has given a total of $4.9 billion in loans for education in Sub-Sahara Africa.

In its Development Report of 1998, The World Bank made the following observations about tertiary education in Africa. The report said, “The development challenge posed for tertiary education in Africa is in one important respect, more daunting than that posed for lower education and that rare growth for public resources for the educational sector as a whole in mostly developing countries, is unlikely to keep pace with growth of the population.”

The World Bank report blamed the scarcity of funding for tertiary education throughout the sub-region on the tragic consequences of economic downturn and the concomitant constriction in public budget that has seriously undermined the quality of education in Africa’s universities.

In the World Bank’s view therefore, to stem the tide, African governments must implement the following recommendations:

1. Fee paying
2. Elimination of allowances
3. Rationalization of programmes and faculties
4. Assigning to non-public sources the full cost of housing and other welfare services provided to students and staff.
5. Reduction of non-teaching staff in other to save the universities from collapse.

In a similar World Bank Report on higher education in Pakistan, the Bank expressed concern about the over dependence of universities on federal grants.

The Bank’s concern was due to the fact that the over reliance on the local authorities has left many universities under-funded. The universities received only 30% of their budgetary needs, less than 70% of what they needed to sustain the universities.

As a result of this shortfall, the universities have been forced to run at deficits, and this has eventually affected the quality of university education, consistent planning, standard of achievement, and invariably affecting the expenditure per student.

Meanwhile, the World Bank, which is the largest source of external finance for education in developing countries, accounting for a quarter of all external support since 1963, intends to cut its support despite contributing about $19.2b over the past 32 years in more than 100 countries.

Currently, the total volume of lending to support education in developing countries is about $2m a year. This is because the Bank’s lending for university and Polytechnic education which peaked at 36% of the total lending in the mid 1980s has fallen to 26%, a clear indication that support is being reduced as a condition for social and economic aid.

The World Bank also argues that, the increasing public spending on education is not necessary in many cases because of the enormous potential of efficiency gained at current levels in developing countries.

This argument seems to suggest that developing countries have attained a certain amount of expertise over the years to run their economies and manage their own affairs, and therefore, there is no need to educate many more of their citizens at the tertiary level.

Even though, public education in Africa has the lowest enrolment ratio than any region of the world, it still represents the greater share of the Gross National Product of 42% of the African economy.

Other sources of funding higher education

Making an argument for the importance of and other sources of funding higher education, Barr (2005), makes the point that tertiary education is no longer a consumption good enjoyed by an elite, it is an important element in national economic performance and a major determinant of a person’s life chances.

In his opinion therefore, the expansion that is taking place internationally is both necessary and desirable.

Nicholas Barr is a Professor of Public Economics at the London School of Economics.

He agrees though, that higher education is costly, and that it faces competing imperatives for public spending. Its financing therefore is important and immensely sensitive, politically.

Despite the problems, widespread agreement exists on two core objectives of strengthening quality and diversity, both for their own sake and for reasons of national economic performance. And improving access, again, for both efficiency and equity reasons. If it is not possible to rely wholly on public funding, it is necessary to bring in private finance but in a way that do not deter students from poor backgrounds.

As a result of technological change, we now have more universities, more students and greater diversity of subject matter. Thus the myth that all universities are identical and should be funded equally is no longer sustainable.

Barr argues further that mass higher education requires a funding system by which institutions can charge different prices to reflect their different costs and missions.

He also believes that higher education creates benefits that transcend individual benefits in terms of growth, social cohesion and transmission of values. Thus tax payer subsidies are rightly part of the landscape.

However, he was quick to add that, students also receive significant (often substantial) private benefits. It is therefore both efficient and fair that they bear some of the costs.

Meanwhile, he is making this argument in the face of the belief that is held by people in developing countries that education is a right and should be financed by the state. He goes on to say however that, the fact that something is regarded as a right does not mean that it should be financed by the state. For instance, access to nutrition is a basic right yet nobody argues that it is wrong to charge for food.

Indeed the moral imperative is not about instruments, (e.g. Prices) but about outcomes, i.e., that a bright person should be able to go to the best school irrespective of his or her financial circumstances.

Another argument he makes is that if it is unfair to ask students to pay more of the cost of higher education, it is even more unfair to ask non-graduate tax payers to do so.

However, it is a fact that there are a lot more students who cannot afford to pay for higher education.

Some of the Ways Out

Well designed students loans can be one of the ways out of the situation. The loans should be substantial enough to cover tuition and where possible, living expenses.
The loan should be so designed that it has an inbuilt insurance against inability to repay.

Repayments should be made alongside income tax to protect the lender from the risk of making an unsecured loan.

Barr suggests that income-contingent repayments should be established. Repayment should be calculated at x% of borrower’s earnings, and collected alongside income tax when the borrower has worked for x number of years after graduation.

Industry can also come in to fund tertiary education, because industry is also a beneficiary of higher education. It is possible for instance for two or more related industries to pull their resources into a fund to provide funding for specific programmes in tertiary institutions.

Even though, there are a number of Education Funds, they do not seem adequate enough to cater for the large army of entrants into our tertiary institutions, and most importantly the Ghana Education Trust Fund (GETFund). This fund has brought some amount of relief to government funding but a lot more needs to be done.


If most people cannot afford to pay for the full cost of tertiary education because of the obvious widening gap between the rich and the poor in the society, the society will not be able to replenish its dying work force. The human resource base of the country will dwindle and subsequently, it will affect all other aspects of the society.

Even though, this is speculative, it is likely that students who are unable to pay for the full cost of their education may end up without any training and therefore, be unable to find jobs. These citizens out of frustration may be forced into anti-social acts, which may be considered a lucrative means of making money.

Parents with more than a child in tertiary education will be severely constrained and it is likely to affect family budgets with its attendant problems of broken marriages and streetism.

The universities would also be faced with a high rate of student indiscipline, because already, one of the factors for indiscipline on campus can be traced to the fact that students pay for AFUF and RFUF. Some students are reported to have defaced university property because they believe that they have paid for them.

The time to think seriously of pragmatic and lasting ways to resolve this matter of full cost recovery is now. All stakeholders should approach it dispassionately and where possible examples of successful implementation of similar programmes in other parts of the world can be adopted to suit the Ghanaian situation.

It is now or never, because it won’t be long before, the untouchable subject forces itself on the country and when it does many casualties than anticipated would be left in its trail.

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