Financing Public Higher Education in Tanzania: Towards a New Model By Johnson M. Ishengoma (PhD) University of Dar es Salaam Faculty of Education Department of Educational Planning and Administration P.O. Box Dar es Salaam, Tanzania

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

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

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

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

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

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

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

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

Table 2: Gross Enrollment Ratios in Higher Education for Selected Sub Saharan African Countries, 2004 (%) CountryGER Tanzania1.0 Kenya3.0 Uganda3.0 Burundi2.0 Rwanda3.0 Mozambique1.0 Botswana6.0 Angola1.0 Lesotho3.0 Zambia2.0 Swaziland5.0 Namibia6.0 South Africa 15.0 Zimbabwe4.0 Source: GUNI (2007) Higher Education in the World 2007 Table IV 1.5 pp

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

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

Towards a New Model/Approach of Financing Public Higher Education in Tanzania Cont.. The market model for higher education financing is proposed in the context of two major trends that have characterized the changes in higher education sector in Tanzania since the 1990’s when the Government liberalized the provision of higher education: these are some limited privatization of public higher education and the emergence of the private higher education sector.

Towards a New Model/Approach of Financing Public Higher Education in Tanzania Cont.. The market model also advocated by Oketch (2003) and Lamptey (1994) stresses the injection of the market principles and market driven approaches into the financing of higher education to make it completely self-financing. While Oketch views marketing model of financing higher education in terms of financial diversification and partial privatization of public universities; Lamptey advocates for the adoption of the contemporary marketing concepts of product, price, place and promotion (the 4 P’s) in higher education.

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

Towards a New Model/Approach of Financing Public Higher Education in Tanzania Cont.. In the context of Tanzania the market is also justified in the larger context of the market economy which has been adopted since late 1980’s in wider context of improving the efficiency, accountability and quality. This proposed model is guided by three principles: shared costs, equity and human resource development.

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

Proposed Model for Financing Public Higher Education in Tanzania Proposed Model for Financing Public Higher Education in Tanzania Market Segment in Rank Order Financing Mode Cost/Budget Item Level of Financing in % (Annually) 1. Higher Education Institutions Revenue diversification and privatization of services; contracted research & consultancy; sale of patents; enrollment of privately sponsored students 1,2, & 4 1=5%2=5%4=100% 2. Students and their Parents Cost sharing 3100% 3. Government Direct subventions to HEIs; introduction of an education levy 1, 2 1=95%2=95% 4. Private Sector/Potential Graduate Employers Direct donation to responsible institutions, student and professorial chairs sponsorships; sponsorship of contracted research 1Variable

Proposed Model Cont.. Market Segment in Rank Order Financing Mode Cost/Budget Item Level of Financing in % (Annually) 5. External Donors Direct grant to higher education institutions, faculty, departments, bureaus etc. 1Variable 6. Financial Institutions and Banks Creation of Higher Education Loans Bank to replace HESLB. Students and their parents can borrow money to pay for tuition and related costs at a market interest rate VariableVariable 7. Alumni Direct donations to institutions to establish Endowment & Trust Funds 1 & 3 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 Bank: A New Financing of Higher Education Strategy One of the critical components of our proposed model is the establishment of the Higher Education Bank (HEDUBANK) by private investors to replace the Higher Education Students Loans which appears to be ineffective and offers interest free loans which are unrealistic in the market economy in which the higher education sector is operating. This proposed Bank can give loans to higher education institutions at an interest rate to be determined. Currently, there is one private commercial bank (Azania) which provides limited education loans to parents.

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

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

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