from basic education to higher levels of schooling. With a rapidly expanding education system,<sup>17</sup> quality has been diminished by the lack of adequately trained teachers, facilities, materials, and management capacity. Only a relatively small proportion of children who complete basic education are likely to have the literacy and numeracy skills expected by that stage, due to an accumulation of learning deficits. This in turn affects the quality of graduates from secondary and post-secondary education. There are also significant imbalances in the kinds of skills being supplied by tertiary institutions relative to what is needed.<sup>18</sup> Only 14 percent of those enrolled in tertiary education are studying science, engineering or technology courses, and there are large shortfalls in the supply of high-skill occupations (managers, professionals, associate professionals and technicians), especially in engineering, manufacturing and construction (EMC) and the sciences.

<mark>The vocational education and training (VET) system in Tanzania is similarly limited and is estimated to supply only about 12 percent of actual national needs (Colleges and Institutes Canada, 2014). On the mainland, this is overseen by the Vocational Education and Training Authority (VETA), an autonomous government agency that operates 28 public training institutes and centers that it owns and more than 600 other for-profit private and NGO training providers that it coordinates. VETA regulates the provision of vocational education and training in the country through the registration and accreditation of TVET institutions, standards setting, assessment, and certification of skills. In Zanzibar, Vocational Training Authority (VTA) is a regulatory body for vocational education and training in Zanzibar, and operates 3 training institutions (UNESCO,</mark> 2013).

<mark>VETA/VTA is financed principally by a Skills Development Levy (SDL), which is the largest source of income for VETA (about 87 percent of total income) (Mwaduma, 2015). Formal sector enterprises with more than four employees contribute a levy of 5 percent of payroll to SDL.</mark><sup>19</sup> <mark>The levy finances public provision of vocational education and training to school leavers by VETA institutions. Not only are the levies high compared to levy rates in other countries, they tend to finance training that is supply-driven and are rarely targeted to the specific skills needed by employers (Dar, Canarajah and Murphy, 2003). This is less likely to be a limitation when levies are used to finance (or reimburse) employer-directed training for its current employees, as in the payroll levy training systems of Malaysia and Singapore. VETA has recently introduced training</mark>

> 17 For instance, enrollments in primary school increased from 4.8 million to 8.4 million over 10 years from 2001 to 2010, while secondary school enrollments almost quadrupled over the 5 years from 2005 to 2010 (Joshi and Gaddis, 2015).

> 18 See the TVETDP of MOEVT (2013) and the Skills Study by the Planning Commission (2015).

> 19 The SDL is collected by the Tanzania Revenue Authority (TRA) which then channels 40 percent of SDL proceeds to the VET Fund and 60 percent for government subventions to the Higher Education Student Loans Board (Dachi, 2015). Some entities are exempted from the levy, including government agencies, diplomatic missions, charitable organization, and farm employers. While the SDL contribution was recently reduced from 6 to 5 percent, it remains high in comparison to other regional and international comparators, where training levy rates of 1 to 2 percent are more common.

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