GRIPS Development Forum
Discussion Paper

Educational Finance and Poverty Reduction:
The Cases of Kenya, Tanzania, and Ethiopia

Shoko Yamada
National Graduate Institute for Policy Studies, Japan

March 2005
Discussion Paper No.8

©GRIPS Development Forum

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Educational Finance and Poverty Reduction:
The Cases of Kenya, Tanzania, and Ethiopia

March 2005

Shoko Yamada
National Graduate Institute for Policy Studies, Japan

Educational Finance and Poverty Reduction:
The Cases of Kenya, Tanzania, and Ethiopia

1. Introduction ............................................................................................................................ 1
2. Education Sector Programs in Tanzania, Ethiopia, and Kenya .............................................. 2
2-1. Tanzania........................................................................................................................... 2
2-2. Ethiopia ........................................................................................................................... 3
2-3. Kenya............................................................................................................................... 4
3. Educational Finance ............................................................................................................... 7
3-1. External Influences and Priority Setting.......................................................................... 7
3-2. Practicability of Financial Plans and Efficiency of Distribution..................................... 9
3-2-1. Practicability of Financial Plans at the Centre.......................................................... 9
3-2-2. Efficiency of Resource Distribution ....................................................................... 10
3-3. Teachers’ Salary............................................................................................................. 13
3-4. Private Cost of Education.............................................................................................. 14
4. The Effects of Public Expenditure on Education ................................................................. 16
4-1. Educational Expenditure and Poverty Reduction.......................................................... 16
4-2. Public Expenditure and Educational Indices................................................................. 19
5. Conclusion............................................................................................................................ 24
References ................................................................................................................................ 25

1. Introduction
In the late 1990s, the World Bank and the IMF started to require the preparation of
Poverty Reduction Strategic Papers (PRSPs) by the Heavily Indebted Poor Countries (HIPCs)
as a condition to relieve these countries of the accumulated debt resulting from loans provided
by development partners (donors). Since then, many HIPCs – most of which are in Africa –have prepared PRSPs, and poverty reduction has become a core objective of national
development in these countries. Once the PRSPs have been approved by the World Bank, theIMF, and the aid community, the government will not only be relieved of its debt but it may
also receive increased foreign assistance in a number of important areas. Under the Poverty
Reduction Strategy (PRS) framework, the social service sectors, especially basic (primary andlower secondary) education and primary health care, receive prioritized resource allocationand strategic emphasis by the government and development partners. For example, the Fast
Track Initiative (FTI) is a form of focused assistance by the aid community in the area of
education. It was launched in 2002 to help selected countries (18 first group countries and 5“reserved” countries) achieve universal access to primary education by 2015. Sixteen of the
18 first group countries are HIPCs, and 11 of them are located in Africa. To qualify for FTI
assistance, a country should have completed its PRSPs and established an educational
sector-wide program (SWAP) – a comprehensive program based on the sector development
policy. Therefore, in Africa, the HIPCs, which have already prepared or are currently
preparing their PRSPs, have put emphasis on education, especially primary education, as apriority sector for poverty reduction; these countries currently receive increasing amounts offoreign assistance in priority sectors including education.
Two of the countries which the current paper looks at – Tanzania and Ethiopia – were
nominated for FTI assistance; these countries already have educational (sub-)sector-wide
programs (SWAPs) in place. Another country visited – Kenya – is a slightly different case.
Although it is also a HIPC, the international assistance community decided it doesn’t qualify
for debt relief.1 Also, a long history of corruption makes development partners reluctant tocommit to this country financially. Given such conditions, Kenya’s education sector has
developed with less external influence. Development partners and the Kenyan Ministry of
Education, Science and Technology (MOEST) are currently negotiating to develop an
education sector program. Even though the process is slower than in Tanzania and Ethiopia, in
Kenya, too, education has been given top priority. The Free Primary Education program,which was enacted in January 2003, is a transitional arrangement until the sector development
plan will be prepared and the educational SWAP will be enacted based on the development
1

The loan repayment schedule was relaxed by the Paris Club, the forum of multilateral and bilateralcreditors.
1

plan. The educational policies of these three countries are heading in a similar direction: agreater emphasis on primary education as a pro-poor sub-sector in the area of education. At
the same time, each country has adopted its own framework for the education (sub-)sector
program differently, depending on the structure of educational administration, thegovernment’s attitude toward development partners, the country’s political environment, thelevel of educational development, and other factors.
The purpose of this paper is to investigate the changes and continuities in the
education sector in Tanzania, Ethiopia, and Kenya under the PRS framework in order todetermine, from the point of view of educational finance, how efficiently and effectively an
increased spending on education has contributed to reduce poverty and achieve better
educational outcomes. Education has its own objectives, the most basic of which is to increase
the knowledge level of the population. At the same time, under the PRS framework, it is also
seen as a means to alleviate poverty. This paper investigates whether increased public
spending on education has benefited the poor in these three countries; it also looks at therelationship between increased spending and the outcomes of education.
The next section gives an overview of the education sector programs in the three
countries (in the case of Kenya, a SWAP-preparatory program) and describes the different
modalities used in these countries to involve development partners. I then discuss the questionof efficiency in the financial flow from the Ministry of Finance and Ministry of Education to
the local governments and schools. Issues related to educational finance, such as
decentralization, teachers’ salary, and household expenditures on education will also be
discussed. I will also consider the issue of equity in distributing public resources and theeffects of greater financial commitments of the governments on the quality of educational
service delivery.
Given that I spent only one week in each country, this analysis relies mostly on
secondary sources as well as on a small number of interviews. Because it takes time foreducational changes to become visible, it is too soon to judge the impact of the sector
program approach and other aid modalities on the quality of education. Therefore, the analysis
presented here is not conclusive; rather, it is an attempt to shed light on important issues
which need to be addressed in order to achieve educational objectives and poverty reduction.

2. Education Sector Programs in Tanzania, Ethiopia, and Kenya
2-1. Tanzania
As shown in Table 1, the second phase of the Primary Education Development
Program (PEDP, 2001-2006) is currently underway in Tanzania. This program is a2

sub-sectoral SWAP, under which development partners and the government work in
partnership, following a sub-sector five-year development plan. The goals of this program are
to improve access to, and the quality of, primary education and to strengthen the capacity of
the Ministry of Education and Culture (MOEC) to plan, manage, and provide educational
services.
Tanzania is known for its thoroughness in adopting various public sector reforms andnew modalities to deal with development partners. Tanzanian government takes the cause of
SWAP-approach so seriously, which is to minimize the time and administrative burden byharmonizing the funding procedures of development partners contributing to the PEDP. This
attitude of the government has often caused intolerance to foreign assistance whose procedure
is not harmonized – especially those in the form of project, which are not incorporated into
the government structure financially and operationally. Those who provide assistance in theform of stand-alone projects or thematic initiatives (e.g., United Nations Children’s Fund
(UNICEF)’s global initiative for girls’ education) tend to be viewed as uncooperative. Here,the term ‘donor coordination’ is synonymous with the harmonization of funding procedures.
Those who do not participate in pooled funds or direct budget support do not find their efforts
appreciated. Development partners who signed the Memorandum of Understanding with thegovernment for the PEDP pooled fund include Canadian International Development Agency(CIDA), the Netherlands, Norwegian Agency for Development Cooperation (NORAD),
Swedish International Development Cooperation Agency (SIDA), Ireland, Finland, Belgium,
France, and the European Union (EU). The U.K .Department for International Development(DfID)’s position is that by providing direct budget support to the Ministry of Finance, it
supports PRSP priority areas including basic education.
Another sub-sector program – the Secondary Education Development Program(SEDP) – began in 2004. This program is led by the World Bank. Other development partners
are not keen on following their suit, and there has not been much progress in theimplementation of the SEDP as of February 2005.
2-2. Ethiopia
In contrast to Tanzania’s ESDP II, Ethiopia’s Education Sector Development
Program (ESDP) covers the whole education sector. The first phase of this program began in
1997, before the border conflict with Eritrea (1998-2000). However, during the conflict, many
development partners withdrew their assistance. In 2002, as these development partners cameback, ESDP was re-launched. The Ethiopian government and its officials are notorious fortheir toughness in negotiation. In a way, this toughness is interpreted as a sign of strong‘ownership’ by the Ethiopian government of its policy making. However, in my interviews inEthiopia, the staff of the development partners complained about the Ethiopian government’s
3

stubbornness and unwillingness to listen to useful recommendations. The World Bank’s
review of the ESDP also reports cases of difficult negotiations (The World Bank, 2001a, pp.
95-106).
Ethiopia’s ESDP emphasizes technical and vocational education and training (TVET)
and tertiary education, which is in marked contrast to Tanzania, whose program is focused
exclusively on basic education. Although the benchmark allocation of public funds to theprimary sub-sector, suggested by the international aid community to qualify for FTI assistance,
is 67% of the total education budget, in Ethiopia, the percentage of resources allocated toprimary education has been decreasing since the beginning of the ESDP (see Figure 1). (Theactual amount of budget resources is increasing, as does the allocation of funds to theeducation sector as a whole). Generally, investments in TVET are costly, and it is difficult tocatch up with changes in the labour market. Furthermore, it is unclear whether Ethiopia’s
focus on TVET and tertiary education is based on an analysis of the absorptive capacity of thelabour market. This is one of the reasons behind the reluctance of the World Bank and someother development partners to support the government’s policy to strengthen TVET. This isalso the reason for the tough negotiations between Ethiopian government and thesedevelopment partners.
Ethiopia’s ESDP accepts foreign assistance through three channels. The first channel
is the Ministry of Finance and Economic Development (MOFED), which accepts both
earmarked and non-earmarked funds. The second channel is line ministries (including the
Ministry of Education). The assistance through this channel does not go through thebudgeting process of the MOFED. The third category is the assistance in the form of projects
whose funds are appropriated as part of the development budget of the government but which
are handled by independent project implementation bodies. In addition to assistance throughthese official channels, there are projects run by NGOs whose budget is not included in thegovernment budget (the so-called off-budget projects). According to one source at the Oromia
Regional Education Bureau, aside from bilateral and multilateral donors, more than 60 NGOs
run independent projects outside the governmental structure in this region. In December 2004,
the Ethiopian government (MOFED and MOE) signed a memorandum of understanding witha group of development partners (the Netherlands, Ireland, Belgium, SIDA, Finland, and theDfID) for a pooled fund for teacher education. This pooled fund is an example of support
through the first channel.
2-3. Kenya
Since the National Conference on Education and Training in November 2003, theMinistry of Education, Science and Technology (MOEST) has been preparing the Kenya
Education Sector Support Program (KESSP) in collaboration with development partners. Six
4

taskforces have been organized and are working on draft reports on the current situation andissues as the basis for the education sector development plan. The six areas under study are:(1) educational statistics, costs, and finances; (2) increased access to basic education; (3)education sector management; (4) quality of primary education and improvement of theretention rate; (5) expansion and improvement of secondary education; and (6) preparation for
future investments in TVET. In mid-September 2004, the first Joint Review Mission (JRM)
was dispatched with representatives of the development partners and MOEST to monitor
educational progress in different parts of the country. The goal of the JRM was to evaluate theFree Primary Education Program – a transitional program to a full SWAP – and to prepare forthe KESSP.
The development partners which lead others in the development of the SWAP in
Kenya’s education sector are the World Bank and the DfID. They are also planning to create apooled fund specifically for primary education. Because of corruption, development partners
are reluctant to commit to general budget support in Kenya, and even those who are oriented
toward budget support – the WB and the DfID – do not plan a fast transition. Therefore, mostforeign assistance in Kenya’s education sector comes in the form of projects. More than 90%of the development budget of the MOEST in 2002 (approx. 8500,000 Ksh) was assistance inthe form of projects. Development partners active in the education sector include the World
Bank, World Food Programme (WFP), U.S. Agency for International Development (USAID),
Organization of the Petroleum Exporting Countries (OPEC), UNICEF, DfID, Japan
International Cooperation Agency (JICA), EC, Belgium, African Development Bank (AfDB),
SIDA, CIDA, Italy, and Deutsche Gesellschaft fur Technische Zusammenarbeit (GTZ:
German technical cooperation agency). JICA has a successful secondary-level in-service
teacher training project (SMASSE: Strengthening Math and Science in Secondary Education)in Kenya, and it has a large presence in the region. It is co-chairing a donor meeting together
with the DfID.

5

Table 1: Education sector in Tanzania, Ethiopia, and Kenya

Coverage of Education Sector
ProgramAid modalities in education
sector programs
Abolition of primary school
fees
Education expenditure aspercentage of GDP
Share of primary education in
the recurrent expenditure on
education (FTI benchmark:67%）(see Figure 1)

Tanzania
PEDP (primary education）(2001-)−harmonization offund disbursement procedure
is advancing rapidly
SEDP（secondary）−will start
within FY2004
a. General Budget Support
b. Sectoral Budget Support(SEDP)
c. Pooled Fund
(d. Projects)

Percentage of female students inthe total enrolment
Pupil-teacher ratio (PTR)

Japanese assistance in education
sector(as of FY 2004）

ESDP（sector-wide）（2002）

Under preparationa. General Budget Support
b. Pooled Fundc. Projects

Under preparation (at this moment
almost all external assistance is in theform of project)

has always been free2003

see Table 2
60.3% (1999/00)→71%
3(2002/03)

66.7% (1996/7)→54.4%
8(2001/02)

70% (1990)→70% (2001)(According to PEDP report,
after the abolition of school
fees in 2002, GER increased4by around 30%)
48.2% (2001) →48.5%
4(2003)
3
46 (2001) →57 (2003)
7

Primary completion rate

Kenya

2001

2

Gross Enrolment Rate (GER)

Ethiopia

55.6% (1996/7)→57.76%
9(2000/01)

2

33% (1990)→62% (2001)

95% (1990)b →88% (2000)
5→104%（2003)

39.8% (1990) →40.6%
1(2000)
1
6
36 (1990) →65(2001)

48.7% (1990) →49.5 % (2000)

7

54% (2001)

46% (2001)

Schoolmapping/micro-planning（Phase II completed, final
report under preparation as ofMarch 2005）(JICA-development studies)
Education sector coordinator（donor coordination）

Participatory Basic Education
Improvement Project（Nonformal education in
Oromia region（JICA-technicalcooperation project)(2004-on-going）
Education sector coordinator(donor coordination)

Primary school building
construction in Dar es Salaamcity (in-kind) (completed)11

31 (1990) →33 (2000) →39
5(2003)
45.8（1989)→57.0（2003）
5（8th grade）
Strengthening of Mathematics andScience in Secondary Education
Project（SMASSE）（JICA-technicalcooperation project）（Phase II
on-going）
African Institute for Capacity
Development （JICA-technicalcooperation project and in-kindassistance）（on-going）
Several technical cooperation projects
in higher education in the past

Equipments for distancelearning (in-kind and dispatchof experts) (on-going)
Schoolmapping/micro-planning in
Oromia region(Jica-development studies)(agreement signed)
Note. 1 – From EFA Global Monitoring Report 2003/4, by UNESCO, 2004.
2 – From World Development Indicators, by the World Bank, 2004.
3 – From Tanzania public expenditure review FY 03, by the World Bank, 2004.
4 – From Joint review of the primary education development plan (PEDP): Final report, by United Republic of
Tanzania, 2003a.
5 – From Kenya: Strengthening the foundation of education and training in Kenya, by the World Bank, 2002.
6 – From Education in Ethiopia: Strengthening the foundation for sustainable progress, by the World Bank, 2004a.
7 – From Human development indicators, by UNDP, 2004.
8 – From Ethiopia focusing public expenditures on poverty reduction, by the World Bank, 2001c.
9 – From Public expenditure review 2003, by Republic of Kenya, 2003.

6

3. Educational Finance3-1. External Influences and Priority Setting
In Table 2, the difference between the budget deficits before and after theforeign-assisted grants shows the size of foreign assistance spent to cover the government
budget deficit. The bigger the difference, the more the government depends on foreignassistance to meet the basic requirements to maintain its structure. Even though there are
year-by-year fluctuations, one can observe some characteristic patterns in each country. Of thethree African countries, Kenya is the least aid-dependent, probably because of the reluctanceof development partners to make financial commitment to this country. The difference
between the deficits before and after the grants was less than 1% of GDP in 1997, 1998, 1999,
and 2001; the maximum aid dependence was 2.85% of GDP in 2000. Tanzania is the mostaid-dependent country, and its dependence is increasing. The budget deficit covered byforeign assistance in this country increased from 2.7% of GDP in 1997 to 4.5% in 2002.
Ethiopia’s dependence on external assistance is also growing, although to a lesser extent thanthat of Tanzania (from 1.5% of GDP in 1997 to 2.7% in 2002). It is difficult to estimate theexact amount of foreign assistance directed to the education sector, especially since there aremany off-budget resources flowing into the sector. However, in the case of Tanzania andEthiopia, whose PRSPs indicate education as a priority sector, it would be safe to conclude
that the general patterns in relationship with external assistance also apply to the education
sector.
In this vein, Kenya is an interesting outlier. Even though it is least dependent on
external assistance, it has devoted a considerably greater proportion of public expenditures to
education than the other two countries. Kenya also has a slightly different pattern of resource
allocation among the sub-sectors of education than the other two countries. Kenya allocatesless to primary education and more to TVET and secondary education (see Figure 1). Thispattern may indicate the kind of choices in the education sector a government would makewhen there is less external interference.
Both Tanzania and Ethiopia have been increasing public expenditures on education in
the past few years. Within the education sector, the priority is clearly on primary education. In
Tanzania, allocations to primary education increased from 60.3 to 74.7% of total educational
expenditure between 1999/2000 and 2000/01, and they remain at a level above 70%. Ethiopia
also allocates a large proportion of funds to primary education. The difference between
Ethiopia and Tanzania is that Ethiopia has recently increased its allocations to tertiary
education and TVET and reduced its allocations to primary education. The Ethiopian
government has shown strong will to promote TVET and tertiary education, even though it
had to face rather strong opposition from the World Bank and some other development partners.
7

Table 2: Foreign assistance and public expenditure on education
Educational
Budget Deficit as % of GDP
GDP real growth
expenditure (as Ed expenditurerate (%)(as % of GDP)
Before grants
After grants% of public
expenditure)
1997
2.4
-2.45
-1.61
1998
1.8
-0.15
0.52
36.90
1999
1.4
0.43
0.97
37.10
6.2
Kenya
2000
-0.2
-4.8
-1.95
29.10
5.8
2001
1.24
-3.17
-2.43
31.70
6
2002
1.12
-3.36
-1.75
28.70
6.8
Note. From Public expenditure review 2003, by Republic of Kenya, 2003.
1997
3.3
-1.7
1
1998
4
-2.3
0.3
1999
26.40
4.7
-3.1
-0.9
3.1
Tanzania
2000
21.60
4.9
-5.8
-1.6
3.3
2001
27.02
5.7
-4.5
-1
3.4
2002
28.34
6.2
-4.9
-0.4
4.4
Note. From Tanzania public expenditure review FY 03, by the World Bank, 2004.
From Joint review of the primary education development plan (PEDP): Final report, by United Republicof Tanzania, 2003.
1997
-2.1
-0.6
1998
3.5
-3.2
-2
11.50
1999
0
-6.3
-4.5
9.60
3.2
Ethiopia
2000
2
-7.7
-6
13.90
4
2001
7.3
-5.6
-3
17.00
5
2002
5.5
-7.7
-5
Note. From Ethiopia focusing public expenditures on poverty reduction, by the World Bank, 2001c.
GDP real growth rates are from World Factbook, CIA, 2004.
Figure 1: Share of recurrent expenditure by sub-sector
100%
80%
60%
40%
20%
0%
1996- 1997- 1998- 1999- 2000- 2001- 1999- 2000- 2001- 2002- 1996- 1997- 1998- 1999- 200097
98
99
00
01
02
00
01
02
03
97
98
99
00
01
EthiopiaPrimary

SecondaryTanzania
University

TVET

Teacher training

Kenya
Administration

Note. From Tanzania public expenditure review FY 03, by the World Bank, 2004.
From Ethiopia focusing public expenditures on poverty reduction, by the World Bank, 2001c.
From Public expenditure review 2003, by Republic of Kenya, 2003.
From Education Sector Development Programme (ESDP): Consolidated National Performance Report,
2002/3, by the Ministry of Education, Ethiopia, 2004a.

8

In a way, the overall level of aid dependence and the patterns of prioritization among
the educational sub-sectors reflect the magnitude of external influence behind the decisions
about policy and resource allocation. Tanzania, which is most rapidly increasing its relianceon foreign financial assistance, does not confront external agencies and adopts the prescribed
modalities and SWAP most faithfully. Ethiopia, which is said to express strong ‘ownership’ ofpolicies and which does not easily succumb to external pressure, depends less on foreignassistance than does Tanzania. The controversy here is that although the international aid
community states that it welcomes the expression of ‘ownership’ by the governments of therecipient countries, the expression of ‘ownership’ may mean non-compliance with theprescriptions of the funders.
3-2. Practicability of Financial Plans and Efficiency of Distribution
The three countries commonly allocate a large proportion of public expenditures tothe education sector. However, even if there is prioritized budget allocation at the stage ofpolicy-making, unless it is executed as planned and the funds are distributed to the end
beneficiaries of the educational system, the effects of increased resource allocation would still
be limited. At the central government level, the smaller the gap between the budget and theactual spending, the more accurate the implementation of the plan. However, when the gap isbig, there is a high probability that the policies expressed in the PRSP and Medium-Term
Economic Framework (MTEF) are at variance with the actual implementation. Also, acrossdifferent cost items, there are wide variations of the level of budget execution, which implies
the imbalanced implementation of policy intentions. Furthermore, there are many instances
when local spending units such as regions, districts, and schools, do not spend funds on
indicated purposes. There could be many reasons for such re-appropriation (ormis-appropriation) including corruption, inappropriate accounting and reporting, and theemergence of urgent needs for funds. In any case, the bigger the leakage, or deviation, offunds in the process of fund allocation from the centre to the actual spending units, the lessefficient the financial flow. When there are many vectors between the centre and a spending
unit, the efficiency varies according to the degree of accountability and the capacity of thecentral and local government bodies (Reinikka & Smith, 2004).
3-2-1. Practicability of Financial Plans at the Centre
This section compares the budget and the actual spending on education in the three
countries. In Ethiopia, the recurrent budget is spent nearly 100%, and the development budget
is spent 55%. Public Expenditure Reviews cite a low level of execution of grants fromdevelopment partners as a main reason for the low execution rate of the development budget9

(The World Bank, 2004b, p.44; 2001c, p.25). Foreign assistance funds except for those
deposited directly into the MOF account (general budget support) are included in thedevelopment budget. 2 The budget for primary education, a sub-sector which is highly
aid-dependent, was executed only 66% in FY 2003, but the level of budget execution for lessaid-dependent sub-sectors was higher (secondary, 88.2%; tertiary, 89.2%) (The World Bank,
2004b, p. 48). In Tanzania, low execution of foreign assistance funds was also observed in thePEDP. While the government budget was executed 88-89% between 2002 and 2004, theassistance funds were executed 65, 74, and 72% in 2002, 2003, and 2004, respectively(REPOA & the Ministry of Finance, 2005, p. 12). It is unclear, however, which side of theactors – the development partners or the government – is responsible for this low execution
rate. In Kenya, the recurrent educational expenditures exceeded the budget by 111% in
2003-2004. Half the ministries spent more than 100% of the budgeted recurrent expenses,
while some ministries (e.g., the Ministry of Agriculture, Environment and Water Resources
and the Ministry of Civil Work) spent as little as 50% of the budget. On average, the recurrent
budget of the Kenyan government is executed 99% (The World Bank, 2003, p. 160). Although
the execution rate of the educational development budget is lower than that of the recurrent
budget (76%), it is higher than the average execution rate of development budget for all theministries (41.4%). Educational services are labour-intensive, employing many teachers; themajority of recurrent expenditures are spent on salaries. At the same time, because thepayment of salaries is at the heart of accountability between the government and teachers, thelevel of execution of budgeted ‘personal emolument’ funds is high. The issue of teachers’salaries will be discussed in greater detail later.
Public Expenditure Reviews in Ethiopia and Tanzania point to a big gap between the
mid-term budget plan in the MTEF and the actual budget prepared each year in thesecountries. One reason for this gap is that the government’s plans – such as MTEF and PRSP –exceed its capacity to finance the planned activities and to absorb foreign assistance (GOE,2004; GOT, 2003a). In the case of Ethiopia, whose plans are too unrealistic, the PER has
suggested that the country narrow its strategic focus, for example, to the provision ofuniversal access to the first cycle (four years) of primary education instead of to all eight
years, or to reaching only the “accessible poor” living in relatively highly populated areas
which are close to cities (GOE, 2004, pp. 24, 48).
3-2-2. Efficiency of Resource Distribution
The financial flow does not end with the execution of the budget at the Ministry of2This way, the items which are generally considered recurrent, such as the cost of teaching and learningmaterials or maintenance of facilities, are included in the development budget when they are funded bydevelopment partners.
10

Finance. There is still a long process to follow to direct allocated funds from the centre tospending units at the local level. A recent trend in educational finance in low-income
countries is to disburse the funds for teaching and learning materials and for the maintenanceof facilities directly to schools (or as close as possible to schools) in the form of capitation
grants3. This approach is used to reduce the number of intermediaries, and it reflects therealization that vertical disbursement from the centre has been a cause of financial leakage
and that in many cases schools could receive only a small part of the funds they were entitled
to. This approach to school-based financial management delegates the authority fordecision-making to the schools, and it is considered effective in meeting the needs of the end
users of educational services. The DfID is a strong promoter of direct disbursement to schools
in the three countries studied. It is a way to ensure that its financial support at the macro level
reaches the end beneficiaries and contributes to alleviating poverty. In other words, the DfID
tries to increase the impact of its assistance at the macro level by supporting also thedevelopment of the capacity of schools as spending units and monitor the flow of funds.
In Tanzania, Public Expenditure Tracking Surveys (PETS) were conducted to assess
the amount of resources directed from the centre to the schools (REPOA & the Ministry of
Finance, 2005; REPOA & the Economic and Social Research Foundation, 2001). The surveys
have shown that the government has failed to unify the management of the PEDP funds in the
Basic Education Development Committee and that the funds are disbursed through threechannels: the Ministry of Finance, the Ministry of Education and Culture, and the President’s
Office – Regional Administration and Local Government (PO-RALG). In addition, the funds
from the PO-RALG are disbursed either through regions or directly to the district councils.
Such diversity of disbursement routes and different schedules of disbursement among
different channels cause misappropriation and misreporting at the local level (REPOA, 2005,
pp. 24, 33). In Tanzania, some part of the capitation grants is disbursed to schools as cash andpart is retained by the district councils to procure textbooks.4 In 2002, 50% of the capitation
grants disbursed from the centre were recognized at the schools and recorded. In 2003, thisfigure increased to be 68%. However, when the disbursement of capitation grants is broken
down into the parts of cash disbursements and in-kind provision (e.g., textbooks), it becomes
clear that while cash reaches the schools at a rate of 80% (after an average of two years),
textbooks reach the schools at a much lower rate. In fact, it is reported that after the beginningof the PEDP and despite increased enrolment, the number of textbooks per student has
decreased (REPOA, 2005, p. 42).
3

A capitation grant is calculated by multiplying the per-pupil cost by the number of pupils in each school,
and it is disbursed to the school as a gross amount. For example, in Tanzania, the capitation grant per pupil is$10 including the cost of textbooks and school maintenance.
4
From FY 2004/05, schools receive the full amount in cash and procure textbooks by themselves. But at
the time of the PETS survey, textbooks were still procured by the district councils.
11PETS in the education sector in Kenya are still in the preparatory stage. At the 279
schools surveyed, 20% of all registered teachers are ghost teachers, and the leakage in the
disbursement of personal emolument funds is high (Nafula Kimalu, Kiringai, Owino, Manda,
and Karingi, 2004, p. 49). On the other hand, Nafula, et al. claim that there is no leakage offunds other than personal emolument funds, because all other funds are disbursed directly toschools (pp. 52-3). However, it is unlikely that there is no leakage at all. Also, from theinterviews I conducted at the MOEST and Ministry of Local Government, I assume that the
disbursement mechanism of educational funds should be much more complex than all funds
other than teachers’ salaries are sent directly to schools. It is hoped that an earnest PETS will
present more detailed picture of financial flow in Kenyan education sector.
In Ethiopia, schools must have two bank accounts, one for teaching and learningmaterials and the other one for facility maintenance. However, in reality, many schools have
only one account, for teaching and learning materials, which is closely monitored by the DfID.
What is noteworthy about Ethiopia is a report claiming that there is very little leakage andmisappropriation of resources (The World Bank, 2004b, p. 25). It is also said that teachers’
absenteeism is almost non-existent in this country. This can be attributed to the highaccountability of teachers and educational administrators. There is no way to prove this claim,
though, because no PETS have been conducted in Ethiopia.5 Ethiopia’s management ofeducational resources is the most decentralized among the three countries. For example, theratio of central to regional educational expenditures in 2003/04 was 34:66 (The World Bank,
2004b, p. 35). However, capitation grants are unlikely to be included in the regional
expenditures because they are directly disbursed from the centre to the schools. Therefore, thecentre-region ration provided in the Public Expenditure Review does not necessarily provide
the comprehensive picture of the decentralization in educational finance.
In all the three countries, the route of disbursement is multiple, and it is difficult tograsp the whole picture of educational finance. Even so, the PETS conducted in Tanzania
show that the leakage of funds has decreased between 2002 and 2003. This means that closemonitoring and guidance of financial management at the district and school levels canimprove the efficiency of the flow of financial resources. However, at the local level,
education offices often appropriate resources across budget items to meet urgent financial
needs such as school construction. For example, the PETS conducted in Tanzania show quite
a few cases of over-appropriation of development grants for school construction andunder-appropriation of capitation grants. The policy to decentralize authorities for
decision-making and financial management to allow more flexibility in the field cansometimes contradict to the demand for efficiency in financial management (REPOA, 2005, p. 58).
5

According to the Global Corruption Report, the rating of Ethiopia is declining. This could affect theefficiency of educational financial flow, too, as corruption will increase the leakage in the process of
disbursement (Transparency International, 2004).
12

Also, the current drive to maximize the amount of resources to be received by theschools may weaken local educational administration. Currently, the districts have a limited
budget under their discretion. Salaries account for the majority of recurrent expenditures
allocated to local governments, while the non-salary recurrent budget, which can be spent ontransportation or equipment to monitor and maintain educational service delivery, is marginal.
The absence of a development budget makes it impossible for the local governments to attend
to the educational needs of the population which does not have access to schools. The
disbursement of more grants to existing schools does not necessarily ensure equity. Schools
with higher enrolment receive more capitation grants, while smaller schools or remote areas
which do not have schools are left at the mercy of the local governments. However, whenlocal governments do not have enough development grants, they cannot open new schools or
extend educational services to populations which are not currently served. Also, many
development partners such as the DfID direct capitation grants to the provision of teaching
and learning materials; this means that school maintenance still tends to rely on contributions
from parents and communities. I will later discuss the high private cost of education, which is
expensed by households.
Furthermore, the extent of resource leakage varies across districts and schools(REPOA, 2005, p. 37). According to Reinekka and Smith, this is because of the difference inthe districts’ and schools’ ability to collect information and negotiate with the external bodies
including the government education offices (pp. 39-40). Bigger schools have bigger PTAs,
which can formulate the wishes of the whole organization and appeal to the outside world.
With such PTAs, district education offices are more accountable than with small PTAs, andthere is less leakage in disbursement. Reinekka and Smith also pointed out that when the
average household income increased by 10%, the leakage of resources to schools decreased (p.
40). If the size of the schools’ and parents’ income affects the effectiveness of the flow of
public expenditures, as Reinekka and Smith suggest, more detailed studies should be
conducted of the financial flow and its leakage to make public expenditure on education
pro-poor.
3-3. Teachers’ Salary
In all the three countries visited, teachers’ salary constitutes the lion’s share ofrecurrent expenditures. In both Kenya and Tanzania, it makes up approximately 80% ofrecurrent expenditures (Kenya, 78% in FY 1997/98; Tanzania, 81% in FY 2003; no data wereavailable for Ethiopia) (The World Bank, 2002; Lambert and Sahn, 2002, p. 128). Because of
the expansion of basic education, the gross salary bill is increasing in all the three countries.
At the same time, an individual teacher’s salary in these countries is not low compared to thatof other public servants. For example, in Ethiopia, the salaries of non-teaching staff in13

primary education average 3.7 times the per capita GDP, whereas teachers receive between
6.8 and 8 times the per capita GDP. In secondary education, the non-teaching and teaching
employees’ salaries is 4.6 times per capita GDP and 11.8 times per capita GDP respectively(see Table 3).
It is well-known that in Kenya, teachers’ salary is high. According to the World Bank
(2002), teachers’ salary tripled between 1995 and 2000; teachers in Kenya currently enjoy thehighest salary among all public servants.6
Table 3: Average annual salary of teachers (in multiples of nominal per capita GDP)*

EthiopiaFirst cycle of primary education

Second cycle of primary

Secondary education(grades 1-4)

education (grades 5-8)

(grades 9-12)

6.8

8

11.8

Kenya
6
9
Note. *Including basic salaries and allowances** No comparable data are available for Tanzania.
From Kenya: Strengthening the Foundation of Education and Training in Kenya, by the World Bank,
2002.
From Education in Ethiopia: Strengthening the Foundation for Sustainable Progress, by the World Bank,
2004a.

The dilemma faced by these countries is that they have to maintain a certain level ofsalary to retain good teachers. Major administrative problems in education regarding theteaching force have long been high turnover and a lack of teachers willing to take up positions
in remote areas. To retain teachers, their salaries should be maintained at a competitive level.
Also, in many developing countries including the three countries visited, improving
educational quality is another major goal of basic educational programs, along with the goalof increasing public access to education. Along with efforts to increase the absolute number ofteachers, there have been efforts to upgrade uncertified teachers and tighten employment
criteria to improve the quality of education. These efforts are also likely to increase the salary
bill. In sum, even though local educational offices suffer from a lack of non-salary funds anddespite strong pressure from development partners to streamline educational finances, thegovernments face other pressures, which prevent them from reducing the salary bill.
3-4. Private Cost of Education
Many developing countries have abolished fees for basic education; however,abolition of school fees does not always result in free education. In the three countries visited,
6

The data show the average salaries of professional and clerical staff. The average for the professional staff
only might be higher than the average for the teachers.
14the educational systems depend heavily on sharing the cost of school maintenance with thehouseholds. Regardless of the importance of household cost sharing, however, it is difficult toobtain a comprehensive picture of the private cost of education in any country. Figure 2 shows
the schooling costs covered by the government and those covered by the households,
calculated from sample studies in the three countries. The percentage of costs borne by thehouseholds in Tanzania and Ethiopia is 28.2 and 24.5%, respectively. 7 In Kenya, thehouseholds’ share of the total costs per pupil exceeds 60%. These data of Kenya come from ahousehold survey conducted in 1997, or before the abolition of school fees. According to The
World Bank report, 49% of household expenses in 1997 were school fees (The World Bank,
2002). If so, theoretically, household expenses on education after the abolition of fees in 2003
should be halved. However, the Kenyan Public Expenditure Review of 2004 reports that thehousehold share of per-student educational costs is still around 60% (Republic of Kenya,

Figure2: Share of schooling costs per student (primary)
100%
80%
60%

Household
Gov't

40%
20%
0%
Tanzania

Ethiopia

Kenya

Note. Data on Tanzania are from the World Bank’s survey conducted in 1998, cited in
Incidence of public spending in the health and education sectors in Tanzania, byLambert and Sahn, 2002. In M. Christian (Ed.), Education and health expenditure andpoverty reduction in East Africa, pp. 115-193.
Data on Ethiopia are from a survey of 11.973 households conducted by the World Bank.
From Education in Ethiopia: Strengthening the Foundation for Sustainable Progress, by
the World Bank, 2004a.
Data on Kenya are from a household survey conducted in 1997, cited in Kenya:
Strengthening the Foundation of Education and Training in Kenya, by the World Bank,
2002.
Reference. Percentage of private costs in per-pupil educational expenditures in otherdeveloping countries: Zambia, 80% (1990); Peru, 38.2% (1998, primary andsecondary) (From EdStats, by the World Bank, 2004).
7

In Tanzania and Ethiopia, the share of school fees in the total household expenses on education was 7 and20%, respectively. In Tanzania, these data were collected before the fees were abolished. Ethiopia has not
charged school fees for decades according to an official statement.
15

2004). If this is true, the abolition of fees may not have reduced the financial burden on thehouseholds. To determine the real impact of fee abolition on the households, we need moresurveys. In places where schools face a constant lack of resources, abolition of fees without
subsidies to compensate for the loss of revenue may result in hidden charges on parents under
the name of “contributions”. The psychological effect of fee abolition is not negligible. Partly
because of the impression that schools have become more accessible than before, enrolment
after fee abolition tends to increase. However, this psychological effect should be consideredseparately from the substantial impact on the household expenditures. We should be able tosee the substantial effects of fee abolition on the households by analyzing the latest household
surveys, although any rigorous analysis has not been done by anybody yet.8 Also the fee
abolition is not necessarily a pro-poor arrangement in the sense that the rich households also
benefit from the universal abolition of fees.

4. The Effects of Public Expenditure on Education
The above section looked at efficiency in the distribution of educational funds, which
are disbursed from the centre to the schools. For the purpose of assessing the effect ofincreased educational expenditures, now I will focus on the extent to which public
expenditures contribute to achieving the original objectives of financial prioritization ofprimary education. First, I will discuss the relationship between public expenditures on
education and poverty reduction by using the data of “benefit incidence analysis”. These data
provide a perspective to assess the degree of benefits the poor population derived from public
spending on education. I will then discuss the relationship between educational expenditures
and the outcomes of educational services such as increased enrolment and better quality ofeducation.
4-1. Educational Expenditure and Poverty Reduction
A basic assumption of the Poverty Reduction Strategic Papers (PRSPs) is thatprioritised resource allocation to social sectors, including education, will reduce poverty. This
assumption, however, will only hold if this financial prioritization by the central governmentis proved to benefit the poor. In this section, I will discuss the issue of equity in publicresource allocation for education. For the sake of global comparison, I will use data obtained
not only from the three countries visited but also from other countries of the African continent
8

The latest household surveys were conducted in Tanzania in 2000/01 and in Ethiopia in 2004. Kenya is
about to start a new survey.
16

as well as from developing countries in other parts of the world.
Figure 3 shows educational expenditures of five income groups, from the poorest to
the richest, in Tanzania, Ethiopia, and Kenya. Nearly 40% of Tanzania’s public expenditureson primary education goes to the richest quartile of the population. In Ethiopia, the richest
quartile of the population benefits the most from public expenditure on secondary education.
The poorest quartile benefits the least from public expenditure on primary education in
Tanzania and on secondary education in Ethiopia and Kenya. It should be noted, however,that these data were collected before the introduction of educational sector-wide programs(SWAPs) in these countries. Therefore, while these findings help understand thesocioeconomic structure of the three countries, they cannot be used to evaluate the impact of
the PRSP, sector programs, and aid modalities which have been introduced under the Poverty
Reduction Strategy (PRS) frameworks. The latest household budget survey was conducted in
Tanzania in 2000/01 and in Ethiopia in 2004. A similar survey is being prepared in Kenya. By
analyzing the results of these latest surveys, we can better understand the relationship between
prioritized resource allocation within the PRS framework and the benefits the poor derivefrom the allocated public resources. In particular, Tanzania has the most advanced education
sector program (PEDP) among the three countries; in this country, the efficiency of

Figure 3: Benefit incidences of educational expenditure in three countries
40%

Share by income level

35%
30%
25%
20%
15%
10%
5%
0%
Tanzania

Ethiopia

Kenya

Tanzania

Primary education
PoorestSecond quartile

Ethiopia

Kenya

Secondary education
Third quartile

Fourth quartile

RichestNote. From “Incidence of Public Spending in the Health and Education Sectors in Tanzania,” by S.
Lambert, & D. Sahn, 2002. In C. Morrisson (Ed.), Education and Health Expenditure and Poverty
Reduction in East Africa, p. 130.
From Kenya: Strengthening the Foundation of Education and Training in Kenya, by the World Bank,
2002, p. 61.
From Education in Ethiopia: Strengthening the Foundation for Sustainable Progress, by the World
Bank, 2004a, p. 104.

17

capitation and development grants distribution to schools is also increasing (REPOA &Ministry of Finance, 2005). It is therefore interesting to know how the distribution of benefits
has changed since the introduction of the PEDP.
Table 4 shows the distribution of the level of public expenditure on education acrossdifferent income groups. The benefit incidence method, according to which the data in Table 4
calculated, takes the unit cost in the provision of educational service and imputes this on thebasis of number of enrolment to the individuals of different income groups. The tablespecifically compares the percentage allocated to the poorest population with that to therichest as an indication of the equitability of resource distribution. The smaller the difference,
the more equitably the public resources are distributed in a country’s educational system. To
illustrate the situation in the three countries studies in a global picture, the benefit incidencesof these countries are listed with those of other African countries and of low-income countries
around the world. Among the three countries, Tanzania gives the biggest share to the richest
quartile, which is 2.9 times that of the poorest quartile; this country is followed by Ethiopia(1.9 times) and then Kenya (1.2 times). Among all the African countries shown in the table,
Madagascar is the least equitable in its resource distribution (the richest in this country gain
5.1 times more than the poorest). From Table 4, we can see that there are few countries inwhich the poorest population benefits more from public expenditure on education than therichest (the exceptions in this table are Uruguay, Columbia, Romania, and Panama). We needto take into account the fact that the data are not current. We would also need to realize thatthese data are not segregated into sub-sectors. If they are analyzed by sub-sectors, the picture
could be different. What is clear from Table 4, however, is that increased allocation of
resources does not guarantee that the poorest population will benefit from these resources,
unless arrangements are made to ensure equity.

18

Table 4: Benefit Incidence of Public Expenditure on Education (all levels)(%)
Share of Public Expenditure Share of the richest as
Year ofthe multiple of theCountry
Survey Poorest quartile Richest quartile
poorestAfricaSouth Africa
1993
21.1
23.4
1.1
Kenya
1992-3
16.7
20.7
1.2
Ghana
1992
16.4
20.8
1.3
Malawi
1994-51625
1.6
Ethiopia
1999-00
15.2
28.9
1.9
Rwanda
2000
15
28
1.9
Uganda
1992
13
32
2.5
Cote d'Ivoire
1995
13.5
34.8
2.6
Tanzania
1993
13
38
2.9
Guinea
1994
8.5
26.9
3.2
Madagascar
1997
7
36
5.1
Other low income countries
Uruguay
1998
27.6
14.7
0.5
Columbia
1992
23
14
0.6
Romania
1994
21.5
17.1
0.8
Panama
1997
19.8
17.5
0.9
Jamica
1992
18
21.8
1.2
Peru
1994
14.8
22.1
1.5
Morocco
1991
14.8
22.8
1.5
Ecuador
1994
15
26.8
1.8
Kirghiz
1993
14.1
26.5
1.9
Indonesia
1989
15
29
1.9
Pakistan
1991
14.3
29.1
2.0
Guyana
1993
14.5
32.1
2.2
Laos
1993
12
34
2.8
Vietnam
1991
12.2
35.4
2.9
Kazakhstan
1996
8.4
26
3.1
Armenia
1996
7
29
4.1
Nepal
1996
10.5
46
4.4
Nicaragua
1993
9.1
40.1
4.4
Note. From Education in Ethiopia: Strengthening the Foundation for Sustainable
Progress, by the World Bank, 2004a.
From EdStats, by the World Bank, November 2004.

4-2. Public Expenditure and Educational IndicesFigures 4, 5, and 6 show trends in the access indicator (i.e., the primary grossenrolment rate) and in the quality of education in the three countries. Ten years is not longenough for educational indicators to show a dramatic change. However, the trends in the
educational indicators in the three countries, together with the patterns of public expenditure,
show a certain pattern. Although there are many indices that can be used to assess the qualityof education, for the purpose of cross-national comparison, I use pupil-teacher ratio (PTR),
cohort transition rate, and gross enrolment rate (GER), because these indices are commonly
19

Figure 4: Access to and Quality of Education in Ethiopia
70%
60%

Gross Enrolment Rate
Pupil-Teacher Ratio
Cohort Transition Rate

50%
40%
30%
20%
10%
0%
1993-4 1994-5 1995-6

1996-7 1997-8 1998-9 1999-00 2000-01 2001-02 2002-03

Note. From Education Management Information System (EMIS), Education Statistics Annual
Abstract 2002/3, by the .Ministry of Education, Ethiopia, 2004b.

available for the three countries.
Ethiopia shows most visible trends. Its GER increased from 20.5% in 1993/4 to61.6% in 2001/2. Alongside this steep increase in the GER, the indices showing the quality ofeducation have declined. The number of pupils per teacher (PTR) increased from 51 in 1998/9
to 63 in 2001/2. This means that teachers now have to attend to more students, since theexpansion of teaching staff has not caught up with the increased enrolment. As a result, thequality of education a teacher can provide is low. Also, the cohort transition rate has dropped
from 43 to 34% between 1997/8 and 2001/2. The cohort transition rate indicates thelikelihood that a student can reach a certain grade (e.g., 5th grade) without dropping out or
repeating a grade. When the cohort transition rate drops, it means that, with the same publicfunds as before, government yield less students who proceed the education in the designatedyears, as it spend more for people who repeat or/and drop out. It is less cost efficient in thefinancial term because the resources spent for students who later fail are considered waste.
Ethiopia is a clear example of a country where a rapid growth of the chances to accesseducation resulted in the deterioration of the quality of education, and in effect, reduced theinternal efficiency of the educational service.
Figure 5 shows that after the introduction of the PEDP in Tanzania, the GER, which
has been consistently around 70%, increased steeply to more than 100%. However, the PTR isalso slowly increasing, which means that the quality of education has declined, at least
temporarily. As for the cohort transition rate, no data have been available for many years,
which makes it impossible to do timeline analysis and cross-national comparisons. From the20

available data, we can see that the cohort transition rate remained at around 80%, which isrelatively high, both before and after the introduction of the PEDP.
Figure 5: Access to and Quality of Education in Tanzania
120%

Gross Enrolment Rate
Pupil-Teacher Ratio

100%

Cohort Transition Rate

80%
60%
40%
20%
0%
1993-4 1994-5 1995-6 1996-7 1997-8 1998-9 1999-00 2000-01 2001-02 2002-03

Note. From Basic Statistics in Education. 1993-2003, by the United Republic of Tanzania, 2005.

Figure 6: Access to and Quality of Education in Kenya
120%

Gross Enrolment Rate
Pupil-Teacher Ratio

100%

Cohort Transition Ratio

80%
60%
40%
20%
0%
1993-4 1994-5 1995-6 1996-7 1997-8 1998-9 1999-00 2000-01 2001-02 2002-03

Note. From Report of the Sector Review and Development, by Ministry of Education, Scienceand Technology, Kenya, 2003.

Kenya’s characteristics are the consistency of its indices over time and its high GER.
The increase in the GER above 100% in Kenya in the last two years can be explained by thecommitments made to the education sector by development partners and by the introduction21

of the “Free Primary Education” program, which was enacted in January 2003. As I explained
earlier, Kenya has been the least aid-dependent country among the three countries, and thepatterns of its resource allocation to educational sub-sectors are different from those in theother two countries. In Kenya, relatively less resources are allocated to primary education andmore to TVET and secondary education. The peculiarity of Kenyan education is also seen in
the indices of access and quality. The GER is relatively high, and the average class size has
been kept low.
Under the PRS framework, the goal to increase access to primary education has been
given top priority. Therefore, in HIPCs (Heavily Indebted Poor Countries), especially highly
aid-dependent ones, the primary GER is increasing rapidly. However, the effectiveness ofeducational services should be assessed from various aspects--not only that of access, but also
those of quality, balance among sub-sectors, and other factors.
Table 5 shows educational indicators and public expenditures on education (perGDP) in African countries including the three countries studied. Figure 7 plots therelationship between public expenditures and the Education Index9 taken from Table 5. From
Figure 7, it is difficult to tell whether there are any clear patterns in the relationship between
public expenditures and the Education Index. For example, among the three countries, Kenya
spent twice as much of its GDP on education as Tanzania, but their Educational Indexes are
not very different. Also, while in both Ethiopia and Tanzania, educational expenditures are
increasing, this does not guarantee better educational outcomes, although it could be one
factor contributing to the improvement of educational indices. Many researchers have pointed
out a weak co-relation between public expenditures and educational indices (e.g., Roberts,
2003; Yaqub, 1999). In sum, in the three countries studied, increased public resources coupledwith strategic prioritization and fee abolition contribute to enhancing the incentives of thebeneficiaries and to a short-term increase in access to education. But the expenditures
themselves cannot be said to be the main factor leading to improved educational indices. It isalso unclear whether the short-term effect of an increased GER will last long.

9

Education Index is one of the human development indicators developed by the UNDP. It is calculated
based on the adult literacy rate and the primary, secondary, and tertiary gross enrolment rates.
22

Table 5: Education indicators and public expenditure on education in African countries
GDP per capita
Education index(PPP US$) 2002

Adult literacyrate(% of those
aged 15 andabove) 2002

Net primaryenrolment rate
2001/2 (%)

Educational
expenditure aspercentage of GDP
1999-2001(%)

Zimbabwe
2400
0.79
90.0
83
10.4
Lesotho
2420
0.76
81.4
84
10.0
Kenya
1020
0.74
84.3
70
6.2
South Africa
10070
0.83
86.0
90
5.7 *
Algeria
5760
0.69
68.9
95
5.1
Egypt
3810
0.62
55.6
90
4.8
Togo
1480
0.62
59.6
95
4.8 *
Ethiopia
780
0.39
41.5
46
4.8
Malawi
580
0.66
61.8
81
4.1
Ghana
2130
0.65
73.8
60
4.1
Tanzania
580
0.62
77.1
54
3.4 *
Angola
2130
0.38
42.0
30
2.8
Uganda
1390
0.70
68.9
n/a
2.5 *
Botswana
8170
0.76
78.9
81
2.1
Zambia
840
0.68
79.9
66
1.9
Sudan
1820
0.52
59.9
46
1.4
Nigeria
860
0.59
66.8
n/a
0.7 *
Lower
developing
1307
0.49
52.5
n/a
n/a
country average
Sub-Saharan
1790
0.56
63.2
n/a
n/a
Africa average
Note. From Human Development Indicators 2004, by UNDP.
* -- Human Development Indicators 2001, by UNDP.
Education Index is calculated based on the adult literacy rate and the primary, secondary, and tertiarygross enrolment rates.

Figure 7: Relationship between Educational Index and
Education Expenditure as Percentage of GDP

Public Expenditure on Education

12%
10%
8%
6%
4%
2%
0%
0.00

0.10

0.20

0.30

0.40
0.50
Education Index

0.60

0.70

Note. From Human Development Indicators, by UNDP, 2001 and 2004.

23

0.80

0.90

5. Conclusion
In this paper, I considered the implications of the PRS framework for the education
sector, with a focus on financial aspects. It is too soon to evaluate the overall impact of the
PRS framework, sector programs, and other aid modalities employed under the PRS
framework, on the educational services and poverty reduction. Such evaluation should bebased on a detailed analysis of each country’s context, which is beyond the scope of this study
as it basically relies on secondary data. I showed in this paper that poverty reduction, intended
to be achieved thorough social services, cannot be guaranteed merely by prioritized allocationof resources to the social sectors. It can only be achieved through comprehensive
improvement of educational services both in quality and in quantity, and by careful planningto ensure that the poor receive the due share of the public funds to ensure equity. Also, giventhat an increasing number of development partners emphasize high-level policy dialogue overproject implementation, the role of the government in providing social services is likely toincrease. It is becoming more important for governments to develop professional capacity torespond in flexible and timely manners to the needs of diverse population. One area of suchgovernmental capacity is financial management. The financial management requires thecapacity of: (1) actually appropriating resources as planned in the mid-term financial plans of
the government, such as PRSP and MTEP; (2) executing the appropriated budget without big
gap between the budget and spending; and (3) efficiently distributing the resources to the final
beneficiaries without much leakage in the process. There is a disparity across districts andschools in the actual unit amount of public funds the students can receive. The smaller schools
in the remote areas receive less amount per student than bigger schools in urban areas. In
other words, the flow of funds tends to be less efficient for the former kind of schools than forother schools. Such disparities are often caused by the socio-economic structure of the bigger
society surrounding the schools. This fact indicates that if we want to ensure the equitable
distribution of public funds on education to individual students, we also need to think ofenhancing the equity across schools, districts, and regions.

24

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