EdInvest News 

March 2004
 
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Facilitating Investment in the Global Education Market

In this Issue:  

This month's newsletter will focus on Kenya. We draw on the presentation by Dr. Freida Brown, Vice-Chancellor of the United States International University in Nairobi at the IFC International Forum on Investment in Private Higher Education held January 21-23, 2004.

Visit the Forum website at: http://ifcln1.ifc.org/ifcext/che.nsf/Content/EducationConference

Background

Kenya has made significant gains in both primary and secondary in recent years and literacy levels have risen considerably, increasing from 10 percent in 1960  to 60 percent in 1998 for women and from 30 percent to 82 percent for men during the same period.  At the tertiary level, a rapid increase in enrollment has taken place in the past two decades, however universities are plagued with financial and quality problems.
These conditions have attributed to a tremendous growth in the provision of private education.

Access

The Kenyan education system consists of eight years of primary education, four years of secondary education and four years of college.  However, places in the secondary system are available to only half of the roughly 500,000 students who graduate from primary each year.  The Kenyan Certificate of Primary Education (KCPE) is the standardized test taken by all students to gain entry into secondary education.  The 2,000 students with the best scores on the KCPE are offered positions at eight prestigious "national" schools. After those places have been awarded, students are placed in provincial secondary schools and, finally, in the least prestigious district schools.  This leaves 250,000 students with no place at all in the public system (Buaer, Brust and Hubbert, 2002).  

Growth in enrollments at all levels surged through the 1960s and 1970s and by 2000, the gross enrollment ratio stood at 94.0 percent at the primary level and 30.6 percent at the secondary level (EdStats, 2000). Girls' enrollment share at the primary level was 49.5 in 2000, up from 47.5 in 1980; and at the secondary level it stood  at 47.6 in 2000, a significant increase from 40.7 in 1980.

Tertiary education has expanded rapidly since independence in 1963. Public universities have grown from only one constituent college with an enrollment of 572 students in 1963 to six with enrollment at over 50,000 in 2002.  Entry into higher education institutions is based on performance on the Kenya Certificate of Secondary Education (KCSE)  for which an average of 150,000 students sit annually.  Public universities admit roughly 10,000 students and those denied often opt for private universities or continue their studies abroad.

Kenya currently has more than 250 middle-level colleges, with an enrollment of over 60,000.  These colleges offer courses in many fields including teaching, agriculture and medicine and are operated by both the government and the private sector.  Another option offered by public universities are parallel degree programs which admit self-financing students who meet the minimum admission criteria (an average grade of C+ or better). This program has proven popular because of its flexible entry requirements, the option of condensed programs as well as evening and weekend classes.  Public universities have also begun to create private institutions.  Dr. Brown provides the example of  the University of Nairobi which has created a for-profit entity called University of Nairobi Enterprises and Services Ltd (UNES), a limited company registered in 1996 and owned by the University of Nairobi offering  the consulting services of university academics.  Both the parallel degree programs and consulting services are an important source of revenue for cash-strapped public universities.  

Quality

Public secondary schools are ranked in quality by "national" schools, provincial secondary schools and the least prestigious district schools.  Students are assigned to a category according to their KCPE results.  By 2001 there were 700 primary and 300 secondary private schools and both offer varying degrees of quality, which vary greatly in quality despite government efforts to license and inspect them.  In recent years, the best private primary schools have led the nation in scores on the KCPE.  The best private secondary schools lie somewhere above the provincial schools but are not yet considered equal to the elite "national" public schools in prestige and quality.  

At the tertiary level, enrollment skyrocketed in the early 1990s when universities were forced by Government to admit more qualified school leavers.  In the 1990-91 academic year alone, more than 20,000 students were admitted.  This was on increase of 184 percent over the previous year (Daily Nation, 2003). This had far-reaching implications on the quality of education because Government has failed to raise corresponding resources, resulting in grossly overburdened facilities and infrastructure.  For example, Egerton University, with an enrollment of 8,000 students has nearly the same facilities that were designed for only 1,600 students. University libraries cannot afford to subscribe to current journals and science and computer labs have outdated equipment. Research has declined due to a lack of funding and outdated equipment. All new research proposals  must be approved by the office of the president. Special presidential clearance is also required by lecturers to attend  seminars or workshop overseas, possibly denying them exposure to the most recent developments in their fields.  With conditions such as these, it is no surprise that Kenya is losing its educated citizens. According to a 1998 study by Carrington and Detragiache, 6,912 Kenyans with tertiary level education emigrated to the United States in 1990 9C. Ngome, 2003).  Those who remain can expect to earn around US$1,098 per month as an associate professor and about $US1,200 a month as a full professor.  As Dr. Brown observed, many of Kenya's 3,500 faculty members change institutions frequently in pursuit of increased salary.  Low remuneration makes the recruitment of external faculty extremely difficult.

Quality and Distance Education

Distance education can improve the quality and relevance of education.  In Namibia, South Africa and Tanzania for example, distance education is being used to provide remedial or bridging programs to secondary school graduates who lack the necessary qualifications for tertiary admission. Teachers can benefit from using the internet to access current information and teaching aids.  However, for these programs and tools to be effective, high quality must be maintained.  

The importance of quality control is an issue of global concern as international markets for tertiary distance education develop and become more competitive.  Mauritius is addressing this by having the Tertiary Education Commission review distance education course offerings from external providers.  Another option is to have certification of students on the basis of internationally accepted performance criteria.  For example, the new Western Governors' University in the United States offers students the option of obtaining a degree based entirely on self-study, awarding degrees once the student has passed a series of competency-based examinations (W. Saint, 2003).  

Cost as well as quality is an important consideration.  Dr. Brown described the situation at USIU, which is now offering survey courses for its MBA online.  They found that the students' employers were not allowing them to use the company computers because of the time required to download the materials and downloading from their home computers (which few students can afford) cost the students about $475 per term in telephone costs.  USIU then made its computer lab to the students and was overwhelmed by demand.  She does offer some examples of cooperation which have led to cost reduction: the national  telephone company has recently agreed  to cut tariffs by 50% for educational institutions and USIU has convinced Government to allow them  to aggregate their bandwidth, reducing the cost of one megabyte from $7,000 a month to $2,500 a month.

Administration

The president of Kenya is automatically the chancellor but can appoint someone else to the position.  The chancellor appoints vice-chancellors, chairpersons of university councils, their deputies, honorary treasurers and ten other members of the council who serve to represent the government.  The university senate, presided over by vice-chancellors, is responsible to the council for academic affairs and for the financial and administrative management of the university. Recently, management boards have been created to assist in the running of public universities.  

Financing

Primary and secondary schooling had been provided free of charge until in 1986, when the addition of  new courses to the required curriculum increased demands on schools' limited resources, requiring public schools to begin charging fees ranging from US$38 to as much as US$380 per year in 2001, based on household income.  When  President Mwai Kibaki won the Dec. 27  2002 election he eliminated  primary school fees, creating a funding shortfall of $65 million.  Now that parents pay only for school uniforms, many who could not afford to send their children to class under the old policy are enrolling their children, resulting in severe overcrowding (New York Times, 2003).

University education was free until the mid-1970s, when loans were introduced at the undergraduate level to finance student tuition, accommodation, subsistence and books.  The recovery procedures for these loans were poor and in the 1991-92 academic year the government introduced a new cost-sharing scheme.  This scheme required students to pay direct fees of US$80 and offered a student loan of about US$280 per year.  A bursary system was established to assist needy students who were unable to pay the direct fee.  This system was revised in 1995.  The direct charges were increased from US$80 to US$107 annually and total charges were raised to US$667.  Student loans were consequently increased to US$560 and became means-tested.  

Until 1993 the Government used a negotiated budget system which required universities to submit their budgetary requirements to the Treasury for funding.  This method has been replaced by a unit cost approach (the cost of one student per year per degree program) (Daily Nation, 2003). The current unit cost of US$1,600 is comprised of tuition of US$1,147 and catering, accommodation and other costs that amount to US$453.  The government's capitation per university is computed by multiplying the total number of students in the university by US$933 which is the government's annual grant per student.  This method does not take into account differential costs of the various degree programs nor the unit cost of postgraduate students. Since the cost of educating a student is between US$2,427 and US$6,207, all public universities are seriously underfunded.  

Private Sector Provision

Demand for private provision is increasing at all levels.  At the primary level, this can be attributed to population growth, the fiscal constraints faced by the public sector and by the high individual test scores on school examinations.  Enrollment has increased from 975 female students in 1980 to 5,615 in 1996 and for male students from 527 in 1980 to 919 in 1996. At the secondary level, 32 percent of households reported sending their children to private schools in 1994 compared to ten percent in 1990 (World Bank, 1999).
 
The growth of private university sector in Kenya has been fueled by several factors, including the limited opportunities available in public universities; the constant closures of state-funded universities and the need to complement government-managed tertiary education. Kenya now has seventeen private universities with an enrollment of about 10,000 students.  

On average, tuition at private universities is US$1,800.  Most also rely on donors for infrastructure construction, teaching materials and scholarships. Female students make up only 30 percent of total enrollment in the public universities, while gender parity is evident at all accredited universities where women comprise 54.5 percent of the 1999-2000 total student enrollment.  Most women enroll in private universities because they fail to secure admission into public universities, owing to poor performance on the Kenya Certificate of Secondary Education (C. Ngome, 2003).

Private Sector Regulation

The CHE (Commission for Higher Education) was established in 1985 and is responsible for licensing private universities.  In granting accreditation, the CHE evaluates physical, human and financial resources to ensure that they comply with the guidelines set forth in the Universities Rules, 1989.  For example, one of the rules requires a private university to have at least fifty acres of land before it can be accredited.  This requirement is certainly not encouraging to investors.  However, the recently established  Private Universities Vice Chancellor Committee is looking at how to pass more favorable legislation to private universities.

The accreditation process is rigorous and may take several years to complete.  Universities which are on the right path towards being granted a charter are given a Letters of Interim Authority (Daily Nation, 2003) . Private universities established prior to 1985 are given Certificates of Registration.   There are currently five private universities with Letters of Interim Authority, six accredited universities and six are registered.

Labor Market/Relevance

After independence, there was a massive expansion of education and a subsequent surge in the number of university graduates.  Unfortunately, employment opportunities have not kept pace with this increase and total unemployment is running at 58%. This situation is made worse by overenrollment in arts programs.  Between 1985 and 1993, more than 69 percent of graduates studied only four degree courses: Bachelor of Education, Bachelor of Arts, Bachelor of Science and Bachelor of Commerce.  AT USIU, the majority of students are in MBA courses at the graduate level.  Dr. Brown confirms that this degree is growing in popularity and in a nation where unemployment is running at 58%, it is important for students to pursue a degree which they feel will lead to employment.