Is Kenya’s Higher Education Funding Model Locking Out Some Learners?
Category: Education
By: Oscar Ochieng, Winnie Ogejo,
The financing of higher education in Kenya plays a crucial role in equipping the fast-growing labour force with advanced skills needed to transform the country to a middle-income economy as envisaged in the Vision 2030. Economists regard education as both a consumer and capital good, because it offers utility (satisfaction) to citizens and also serves as an input into the development of the human resources necessary for the country’s economic and social transformation. It is also considered to play a substantial role in a country’s achievement in increasing its labour productivity.
Leroy Almedarez, argues in his article “Human Capital Theory: Implication for Education Development” that in as much as the Human Capital Theory and educational systems work well in the development of individuals and nations, there is still a need to ensure significant allocation of resources towards the expansion of the education systems. The focus on education as a capital good is related to the concept that skills and knowledge are, collectively, a form of production input, i,e. capital which is embedded in people – hence its name, human capital. Human capital is an important factor of production and has been shown in many countries to be more important than physical capital (machinery or infrastructure), both in initiating and sustaining national development.
A government that prioritizes the education offered to its citizens is one that is very deliberate in taking ownership of ensuring improved economic stability and steady enhancement of the human capital for all of its citizens. With population growth and rising cost of education coupled with higher demand for education (as illustrated in Table 1 below) and within a context of decreasing financial allocations to the education sector, the Government of Kenya introduced cost-sharing at all education levels in the 1980s. This policy was implemented in a bid to cushion the poor (using the cost sharing revenue) against adverse financial difficulties of the time, and to ensure that no eligible students dropped out of university due to inability to finance their education.
The Role of Higher Education Loans Board (HELB)
To concretize its policy of promoting university education, the government established the Higher Education Loans Board (HELB) in 1995 that would benefit all university students especially from low-income families who were considered needy but could not fully finance their education. Through HELB, consideration is made for undergraduate students who are considered extremely needy and are in programs sponsored by the Government of Kenya (GOK) or for self-sponsored students who upon application meet the criteria for the award of the HELB loan.
Since its inception, the Higher Education Loans Board has financed more than 1,126,308 students for a cumulative nominal cost of Ksh.117.8 billion pursuing higher education in both public and private universities, in technical training institutes and at polytechnics.
As in many other countries, the higher education system in Kenya is the factory where advanced human capital is produced. However, university education is out of reach for many low-income students with a notion that tertiary education is unaffordable and unattainable even when they have been admitted to join university through the government sponsored students’ programme. The World Bank’s Kenya Economic Update ‘Rising Above the Waves’ – (June 2021:35), Edition No. 23 indicates that the proportion of students from the top socioeconomic quintile is 49 times larger than the proportion from the bottom socioeconomic quintile. The higher education sector faces serious equity, and financing challenges that have been exacerbated by Covid-19 pandemic.
As the world marked the International Education Day on 24 January, it’s a good time to take stock of Kenya’s performance in ensuring quality Higher Education. The available statistics on education reveals that University enrolment in Kenya in the academic year 2020/21 increased to 546,699 from 509,468 in 2019/20 representing a 7.3% annual growth. These figures clearly show that there is a growing demand for higher education amongst Kenyans. Article 43.1.f, of Kenya’s constitution recognizes that “every person has the right to education”. Education is the bedrock of Kenya’s development, with human capital critical to economic and social development.
Parents from low-income strata that have children aspiring to join institutions of higher learning, have major concerns with the financial implications that come with pursuing higher education. Although many parents may know very little about the details of higher education financing, they know that the tuition fees and other academic charges threaten accessibility of education by children from low socioeconomic status.
Challenges in obtaining the HELB Loans?
There has been significant increase in the number of students who join institutions of higher learning and also those seeking for HELB funds (see table 1 below).
The Higher Education Loans Board has faced challenges, particularly in receiving adequate funding from the exchequer in order to meet the demand for financing tertiary education through loans. It has also had challenges associated with loan recoveries. As shown in the table 2 below, in the last six years, HELB has set targets for the amounts to be recovered and failed to reach them. This shows that there are challenges with the tracing of loan beneficiaries, insufficient commitment to loan repayment on the part of the beneficiaries and a lack of employment for the past beneficiaries to enable them have resources for the loan repayment.
Students have however faced several challenges in obtaining education loans due to tedious requirements, like a mandatory recommendation letter from the Chief (a local public administrator) to ascertain that the applicant is a resident of a particular geographical area and is a Kenyan citizen. In addition, the applicant is required to present; a Personal National Identification Card, a Personal identification Number (PIN) provided by the Kenya Revenue Authority, Parent’s Identification card, a Guarantor’s Identification card, the pay slips of the parents, an affidavit from an advocate, and in some instances, a death certificate of a parent. These are burdensome and bureaucratic processes. That constitute a barrier which disproportionately affects poor students and those in marginalised areas.
Conclusion
It appears that the most significant challenge that stands in the way of meeting the demand for higher education in Kenya is funding. Although the government plays a dominant role in financing university education, public funds remain inadequate. The funds availed are not sufficient to support the implementation of universal funding for all Kenyans enrolled in institutions of higher learning. The crucial step in improving education financing is to ensure an increase in budgetary allocation to the sector through parliament to match the growing demand. In addition, HELB must find a strategy that can be implemented to ensure that all the loans that are mature are recovered to enable the fund to finance other students. This must also be supplemented with the prudent management of the funds by the HELB.
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Is Kenya’s Higher Education Funding Model Locking Out Some Learners?
| Post date: Wed, Jan 26, 2022 |
| Category: Education |
| By: Oscar Ochieng, Winnie Ogejo, |
The financing of higher education in Kenya plays a crucial role in equipping the fast-growing labour force with advanced skills needed to transform the country to a middle-income economy as envisaged in the Vision 2030. Economists regard education as both a consumer and capital good, because it offers utility (satisfaction) to citizens and also serves as an input into the development of the human resources necessary for the country’s economic and social transformation. It is also considered to play a substantial role in a country’s achievement in increasing its labour productivity.
Leroy Almedarez, argues in his article “Human Capital Theory: Implication for Education Development” that in as much as the Human Capital Theory and educational systems work well in the development of individuals and nations, there is still a need to ensure significant allocation of resources towards the expansion of the education systems. The focus on education as a capital good is related to the concept that skills and knowledge are, collectively, a form of production input, i,e. capital which is embedded in people – hence its name, human capital. Human capital is an important factor of production and has been shown in many countries to be more important than physical capital (machinery or infrastructure), both in initiating and sustaining national development.
A government that prioritizes the education offered to its citizens is one that is very deliberate in taking ownership of ensuring improved economic stability and steady enhancement of the human capital for all of its citizens. With population growth and rising cost of education coupled with higher demand for education (as illustrated in Table 1 below) and within a context of decreasing financial allocations to the education sector, the Government of Kenya introduced cost-sharing at all education levels in the 1980s. This policy was implemented in a bid to cushion the poor (using the cost sharing revenue) against adverse financial difficulties of the time, and to ensure that no eligible students dropped out of university due to inability to finance their education.
The Role of Higher Education Loans Board (HELB)
To concretize its policy of promoting university education, the government established the Higher Education Loans Board (HELB) in 1995 that would benefit all university students especially from low-income families who were considered needy but could not fully finance their education. Through HELB, consideration is made for undergraduate students who are considered extremely needy and are in programs sponsored by the Government of Kenya (GOK) or for self-sponsored students who upon application meet the criteria for the award of the HELB loan.
Since its inception, the Higher Education Loans Board has financed more than 1,126,308 students for a cumulative nominal cost of Ksh.117.8 billion pursuing higher education in both public and private universities, in technical training institutes and at polytechnics.
As in many other countries, the higher education system in Kenya is the factory where advanced human capital is produced. However, university education is out of reach for many low-income students with a notion that tertiary education is unaffordable and unattainable even when they have been admitted to join university through the government sponsored students’ programme. The World Bank’s Kenya Economic Update ‘Rising Above the Waves’ – (June 2021:35), Edition No. 23 indicates that the proportion of students from the top socioeconomic quintile is 49 times larger than the proportion from the bottom socioeconomic quintile. The higher education sector faces serious equity, and financing challenges that have been exacerbated by Covid-19 pandemic.
As the world marked the International Education Day on 24 January, it’s a good time to take stock of Kenya’s performance in ensuring quality Higher Education. The available statistics on education reveals that University enrolment in Kenya in the academic year 2020/21 increased to 546,699 from 509,468 in 2019/20 representing a 7.3% annual growth. These figures clearly show that there is a growing demand for higher education amongst Kenyans. Article 43.1.f, of Kenya’s constitution recognizes that “every person has the right to education”. Education is the bedrock of Kenya’s development, with human capital critical to economic and social development.
Parents from low-income strata that have children aspiring to join institutions of higher learning, have major concerns with the financial implications that come with pursuing higher education. Although many parents may know very little about the details of higher education financing, they know that the tuition fees and other academic charges threaten accessibility of education by children from low socioeconomic status.
Challenges in obtaining the HELB Loans?
There has been significant increase in the number of students who join institutions of higher learning and also those seeking for HELB funds (see table 1 below).
The Higher Education Loans Board has faced challenges, particularly in receiving adequate funding from the exchequer in order to meet the demand for financing tertiary education through loans. It has also had challenges associated with loan recoveries. As shown in the table 2 below, in the last six years, HELB has set targets for the amounts to be recovered and failed to reach them. This shows that there are challenges with the tracing of loan beneficiaries, insufficient commitment to loan repayment on the part of the beneficiaries and a lack of employment for the past beneficiaries to enable them have resources for the loan repayment.
Students have however faced several challenges in obtaining education loans due to tedious requirements, like a mandatory recommendation letter from the Chief (a local public administrator) to ascertain that the applicant is a resident of a particular geographical area and is a Kenyan citizen. In addition, the applicant is required to present; a Personal National Identification Card, a Personal identification Number (PIN) provided by the Kenya Revenue Authority, Parent’s Identification card, a Guarantor’s Identification card, the pay slips of the parents, an affidavit from an advocate, and in some instances, a death certificate of a parent. These are burdensome and bureaucratic processes. That constitute a barrier which disproportionately affects poor students and those in marginalised areas.
Conclusion
It appears that the most significant challenge that stands in the way of meeting the demand for higher education in Kenya is funding. Although the government plays a dominant role in financing university education, public funds remain inadequate. The funds availed are not sufficient to support the implementation of universal funding for all Kenyans enrolled in institutions of higher learning. The crucial step in improving education financing is to ensure an increase in budgetary allocation to the sector through parliament to match the growing demand. In addition, HELB must find a strategy that can be implemented to ensure that all the loans that are mature are recovered to enable the fund to finance other students. This must also be supplemented with the prudent management of the funds by the HELB.
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There is a big global debate on tariffs, their effects, and who pays for them, creating misconceptions. The broader trade strategy premised on Tariffs reflects a worldview rooted in 19th-century mercantilism, emphasizing protectionism and an aggressive use of tariffs.[1] The misconception that tariffs aren’t taxes stems from several factors. Framing plays a significant role. Tariffs […]
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Occupational licensing is widespread in Kenya, particularly in professions such as law and medicine, and it sparks debate in law and economics. In Kenya, occupational licensing is provided for through a set of statutes. This has implications for markets of legal service provision, which we discuss in this blog. Why is occupational licensing now a […]
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It has always been difficult to tie Mr. Trump’s statements to his subsequent policy actions. That fact qualifies any certainty in discerning his implications for Kenya’s macro now. But in three areas, the Kenyan macroeconomic authorities should be on high alert. The Kenya Shilling For much of 2024, the Central Bank of Kenya (CBK)has been […]
Is Kenya’s Tax System Efficient, Optimal, and Equitable?
In my new paper, “On Efficiency, Equity, and Optimal Taxation: Reforming Kenya’s Tax System,” I examine Kenya’s tax system through the lenses of efficiency, equity, and optimality and recommend policy recommendations. I try to look at how efficiently the system generates revenue without distorting economic activity (efficiency), how fairly the tax burden is distributed across […]
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