Interviewees Put Emphasis On Policies

Published Date: 02 Nov 2017

The findings of the study also clearly established that the current policy of financing public universities has not made the public universities effective and sustainable. The current policy does not provide a comprehensive approach that combines different tools that can provide immediate as well as mid- and long-term solutions to ensure financial vibrancy, sound infrastructure, and smooth operation and thus preserve the quality of public university education systems. A number of measures are also not in place to achieve effectiveness and sustainability such as introducing a true cost sharing, enabling environment for true entrepreneurship and more cost-efficient modes of delivery, managing student flows, streamlining social expenditure, improving governance and management practices, and providing incentives for private sector development.

All respondents’ (lecturers and students) clearly indicated that both the current cost sharing and revenue diversification policies have not made public universities effective, viable and sustainable. It had more weaknesses than strengths. This finding is consistent with other studies conducted in developing countries (Kotecha, 2008; McNernery, 2009; UNESCO, 2009; Gillies, 2010; World Bank, 2010) which show that most financing policies for financing higher education in developing countries are less effective. The policies have had only a modest impact. The result in this study show that though the majority of respondents about 70% indicated that the cost sharing policy was a good policy option in university finance, it was not operating smoothly in Zambia’s public universities. The result also shows that the policy was not well implemented (with 63% indicating so). Concerning the student loan policy, most of the students and lecturers strongly supported the introduction of the student loan aid scheme as a cost effective and sustainable way of stabilizing public universities. This policy as already alluded has never seen the light of implementation 16 years after its formation. They further showed great hope and confidence that the new loan scheme would provide cushion to needy students (84%). 73% of respondents indicated that if loan policy is well implemented, it can help in sustaining public universities.

Interviewed participants of the study were less optimistic about the viability and sustainability of both the policy and current universities operational models. All respondents felt sustainability, effectiveness and viability can only be attained by examining certain indicators. First universities are projected to carry out and satisfy both local and worldwide expectation and standards. This implies, there must be satisfactory infrastructure, happy teaching staff because of excellent working conditions, staffs should also largely enjoy the academic freedom in dispensing of their duties and hence universities should operate like public corporations (Ilon, 2003). Universities are expected to be financially viable. Currently all public universities in Zambia (except Mulungushi) have many-sided challenges such as poor faculty, overcrowding, derisory infrastructure, scarce resources and autonomy, student and lecturer’s strikes, and rapid increasing enrollment among others (SARUA, 2012; Masaiti, 2012). Most of the participants’ want to see policies which will make these public universities sustainable, effective and viable in line with Zambia’s 2030 vision of having prosperous economy and vibrant universities.

The current policy cannot be sustainable because it has more weaknesses than strengths. The research question of assessing the strengths and weaknesses of the current policy of financing public universities in Zambia was explored based on cost sharing, revenue diversification and student loan. In line and consistent with other studies, if well formulated and implemented, the policy based on the three dimensions can make institutions self sustaining and more stable (Carnoy, 2007). The most pronounced weakness from the study is premised on the failure and inability to fully implement especially the student loan scheme. Currently public universities are heavily indebted and operate huge budget deficits which show the inability of policy to respond to this austerity. These findings are similar to what other researchers obtained pertaining to the prevailing situation in most of the developing world (Mhamed, 2006; Atuahene, 2006; McNerney, 2009)

Most respondents’ lecturers and students positively perceived the policy of cost sharing as a good policy option for Zambia’s public universities. The biggest weakness of the current cost sharing policy according to them is that it lacks clear guidelines and detail of ‘the how’ and ‘which form’ it should take. A good policy ought to clearly stipulate the role and percentage of government, universities and students contribution to higher education. On the other hand, majority of the respondents positively perceives private sources of revenue are crucial for universities as a clear strength. Lecturers and students think the emphasis of attracting the private sector to partner with universities is more desirable. There was also emphasis that the current policy also gives lee way for institutions to raise revenue through research and consultancy. A sizable number of respondents felt that the weakness of the current policy can also be seen in the fact that government has not really allowed this institutions to operate like corporations, so that they have more lee way to operate relatively independent. This research clearly shows that unlike earlier thoughts that the Zambian students and lecturers were opposed to student loan policy, in fact, majority (above 70%) support the introduction of student loan scheme. This is really a strength especially in an environment were free government support to students in public university is still a reality. Majority respondents also strongly felt that the student loan scheme is an appropriate and ideal way of supporting needy and vulnerable students from poor background (above 83%). The greatest weakness of the Zambia student loan policy is that it has never seen the light of implementation. It is clear that most blockages to financing policies are found in the implementation. In policy research of financing public universities in Afghanistan McNerney found similar policy blockages (McNerney, 2009).

From those interviewed, the results were similar to the quantitative views. Interviewees indicated that the biggest weakness in the current arrangement was that despite good policies crafted in the policy document, there had been no effective plan to implement the said policies. Government was still giving grants to student and cost sharing was just a lip service and loan scheme had never been affected. The only strength was that since the introduction of the free market economy and democracy in 1991, Zambian populous was ready to pay for services as evidenced in the mushrooming of private universities where Zambian parents pay economic fees. The government should truly implement a truly cost sharing model.

Both respondents and interviewees indicated that the current policy needed to be reviewed. It is worth noting that the current policy of financing public universities has more challenges than strengths. This is slight different from institutions in the developed world where institutions are relatively supported by comprehensive system and policies, and to a large extent are financially sound and enjoy some level of academic freedom (Jonstone, 2009).

6.1.4 Support for the Transformation of Bursary to Student Loan Scheme

The study presents concrete findings on the urgent need to implement the student loan scheme that has been in existence for 16 years now as a way of stabilizing and sharing costs in public universities. The current Bursaries Scheme should be phased out because it is not cost effective and sustainable. The study has clearly shown that the greatest weakness of the Zambia student loan policy is that it has never seen the light of implementation and most blockages to the implementation have had to do with government inertia. This research has gone further in presenting evidence that unlike earlier thoughts that the Zambian students and lecturers were opposed to student loan policy, in fact, majority (above 70%) support the introduction of student loan scheme.

Respondents showed highest support to student loan policy is a cost effective way of assisting students from the vulnerable background (M=4.39, SD=1.05), followed by there is need for creation of a special Bank to manage the student loan policy (M=3.95, SD=1.32), Student loan policy is a good way of financing and sustaining public universities (M=3.94, SD=1.29), the criteria for deserving students should have been complicated (Means testing is very difficult in Zambia—who qualifies for the loan?) (M=3.51, SD=1.45) and government and public universities are slow to respond/adjust to student loan system (M=3.53, SD=1.31). Most of the students strongly supported the introduction of the student loan aid scheme as a cost effective and sustainable way of stabilizing public universities. This policy as already alluded has never seen the light of implementation 16 years after its formulation. Clearly the findings show students supported the introduction of the policy unlike previous assumptions that the student populace was opposed to the introduction of student loan scheme (70% support loans). Most students were very concerned about the issue of access once the loans scheme takes off or get introduced. They want to see a loan scheme which is inclusive and also shields the poor and vulnerable students. Students advocated for an all inclusive loan scheme for all students in higher education unlike the current bursaries scheme where only two universities had access. They further showed great hope and confidence that the new loan scheme would provide cushion to needy students (84%). 73% of student indicated that if loan policy is well implemented, it can help in sustaining public universities. Most students’ respondents (62%) indicated that government inertia was responsible for the failure of implementing the current student loan policy.

Majority of respondents argued that there was an urgent need to phase away the bursary scheme and introduce the student loan scheme. Both respondents and interviewees indicated that the scheme should be administered by a special commission for the sake of viability and cost effectiveness. The need for strengthening the data base was given emphasis as a way of easily tracing all beneficiaries of the loan scheme. No free loans at whatever cost because the system will be compromised and eventually crumble. The government is being encouraged to undertake a study to see how the loan system operates in other countries and how it can be applied to the Zambian context. The respondents and interviewees made an appeal to have a well defined funding model especially based on different market segmentations.

Clearly, positive perception to the implementation of student loan scheme is a major finding for this study. Before this study, there was a strong perception that key stakeholders like students were against its introduction but the study has proved otherwise.

6.1.5 Lessons for Zambia from China

The study has also shown that there are many lessons Zambia can learn from China in higher education finance. Despite a huge population, china has been increasing access, allocations, infrastructure, and quality and staffing in especially public universities. In People’s Republic of China, the financing structure for higher education is dominated by government subsidies, but additional funding comes from civil society and tuition fees. For now, it appears all public institutions receive the per-capita grants. The identified top research-oriented universities receive significant amount of resources from the "985" and "211" projects and often generate significant levels of additional revenue. While others more instructionally-oriented universities and colleges relies almost entirely on tuition to supplement their per-capita allocations. Increasingly both the top research universities and less elite institution are engaging in a variety of entrepreneurial activities to complement their government and student sources of income. As for the private Chinese universities, they are financed from a combination of tuition and entrepreneurial earnings (OECD, 2003). Chinese universities are still exploring alternative source of revenues especially from the beneficiaries, thus both graduate in employment and employers should pay their fair share.

The financing of higher education in China in premised on cost sharing, revenue diversification and student loan scheme. Suffice though to mention that the government is still a big player especially when it comes to project ‘985’ and ‘211’ project universities. Hays (2012, p.1) elucidates, "In the 1990s, the republic of China began giving huge financial support into Chinese universities in a big effort to lift them up to world class category and create as much as necessary openings for a boom in university age students enrolments. These days land is still being cleared and schools are being merged to make way for new school facilities and also to improve management". China now close to 2000 institutions of higher learning, nearly double the number in from the year 2000. Close to or slightly above 19 million students are enrolled, a six fold exponential growth in just one decade. The number of faculty has also grown following the same trend (Hays, 2012).

All in all, Zambia can learn a lot from financing policy of higher education in China. Despite, its population of close to 1.4 billion people, it has a system of higher education which is relatively effective. The enrollments keep swelling, the funding from government is ever increasing to meet the demand, and infrastructure is constantly being constructed and upgraded. China has also a number scheme of assisting needy student or those who cannot afford (Check 2.2.2). There is now a deliberate effort focusing on children of immigrant workers and farmers so that they are given opportunity to access higher education. The growth of Chinese economy especially in the last three decades has had a direct trickledown effect of improved finance to the higher education sector.

6.2 Implications for Theory and Mixed Method

Under this section, I attempt to show how the study implicates theory. I try to position the study in a larger theoretical debate around the human capital, neo-liberal and quasi public good. I end the section by looking at the implication of this study on mixed methods.

Financing universities or simply higher education with tax funds has gained a serious debate in economic discourse. A variety of theories have emerged from such debates, but three applicable theories that informs this study is the Human Capital philosophy debate with its twin pillars of private and public rates of returns argument, the Neo-Liberal Ideologies and Quasi public good. Proponents of the Human Capital theory have challenged public investment in higher education. Different studies have come out to explain the intricacies of these debates over the years. Particularly, those who support investment in basic education than higher education make arguments based on the social and private rate of returns. Some argue that university education has higher private and lesser social rate of returns than basic or secondary education, hence the support of the latter.

There are several studies that have been conducted worldwide to calculate the rates of return of investment in education and also examining the nature policies of financing different sectors-primary, secondary and tertiary. Psacharoupoulos and Patrinos (2004) give a good summary of the results of studies done in 98 countries over the period 1960-1999 that have been conducted on a comparable basis. Clearly, the private rate of return is higher than the social rate of return for all areas and all levels of education. On average for the world the private rate of return for primary education is 7.7 percentage points higher than the social rate of return and the corresponding figure for secondary schooling is 3.9 percentage points. On average the private rate of return for higher education is no less than 8.2 percentage points higher than the social rate of return (Ibid, 2004). The rates of return in developing countries are normally higher for all levels of education than the rates in developed countries. When one looks at the sub-Saharan Africa region (which Zambia forms part of) it is clear that these rates of return are the highest of all regions in the world for all levels of education. Especially the private rate of return on higher education is very high which stands at 27.8% while social at 11.3%. This is a clear motivation to continuously invest in education for both governments and individuals.

A similar study by Tafah-Edokat (1998) on Cameroon finds that returns to higher education is positive than returns to other sectors of the economy. The study concluded that primary education has the highest rate of social returns followed by secondary education and then tertiary education respectively. While some of these studies propose for greater investment in basic education than higher education, recent studies have given impetus to tertiary education. This is traced to the initials ideas developed by the progenitors of the human capital theory. Human Capital theory as initially propounded by Nobel Laureate Theodore Schultz and further elucidated by Nobel Laureate Gary Becker is based on the concept where individuals’ acquisition of knowledge and education increases their skills and quality at the place of work (Schultz, 1961 & Becker, 1975). This implies that in an organization where many employees have relatively higher levels of education, it is believed and expected that their income will increase alongside their inputs and quality. This debate is further extended to private and public rates of returns to education at all levels, and has become the basis of government investment in higher education.

While Psacharopoulos’ rate of returns argument and others advocated for higher investment in primary and secondary education, recent data in developing countries like Zambia from World Bank (2004) show that higher levels of education is associated with higher incomes and earnings and economic growth. At the same time education above the basic and secondary level leads to higher income earnings, this can reduce income poverty. Additionally, investigation by Canagarajah and Pörtner, (2003) revealed that there appears to be low returns to having a primary education. In the same vein a recent report of the World Bank (2004; 2010) also finds that significant positive returns are only found for senior secondary and tertiary graduates.

Baum and Payea (2004) used available government statistics to study the benefits of higher education to different groups of people in the United States. In a similar article appearing in NEA higher education research, the author used 1975 U.S. census data to investigate the benefits of higher education also showed positive correlation. He indicated that fulltime workers who have bachelor’s degree earned 1.5 times the salary of a person with high school degree. The author further observed that between 1975 and 1999 the value of having some college certification increased by less than 10% while the value of having a Bachelor’s degree increased by about 20%. And further, in the same period the value of an advanced degree increased by over 40 %. Though it is difficult to support this with quantifiable data, in Zambia having a higher education certification especially degree makes one marketable with a relatively well paying job. In fact, Zambia’s education system especially tertiary education was premised on developing the much needed human resource (Lungwangwa, 2001).

Neo-Liberal ideology has increasingly become an important hegemony in education provision. This theory is united by three broad beliefs: the benevolence of the free market, minimal state intervention and regulation of the economy, and the individual as a rational economic actor (Harvey, 2005; Turner, 2008). Saunders (2009) opines, privatization and commercialization of previously publicly funded institutions extended to higher education, and as a result, these institutions became increasingly reliant on private funds especially in the case of the US (Slaughter & Rhoades, 2004). There was now a greater emphasis on generating revenues, economic efficiency became high priorities for universities and colleges (Alexander, 2001; Aronowitz, 2000; Levin, 2006).

To some extent university education was increasingly seen as a private good to be purchased by a student, who was redefined as a customer (Chaffee, 1998; Swagler, 1978; Wellen, 2005). The result for this was that individuals and institutions started using neoliberal policies and as an economic rationality to make educational decisions, including attempts to treat and govern the university just like any traditional business, its faculty as traditional workers, and its students as customers (Saunders, 2009). With the liberalization of Zambian’s economy in 1991, in the third republic, market forces were introduced in different sectors of the economy including education. Private players including institutions were encouraged to supplement government effort in the provision (MOE, 1992; 1996). Private universities in Zambia started growing with minimum state intervention and operating mostly on the market model.

Good policies especially in financing higher education needs to be compatible in commensurate with economic theory (Barr, 2008). There three central propositions that underpins reform in both advanced and developing countries, include among others: competition is beneficial, graduates should contribute to the cost of their degree and lastly Well-designed student loans have core characteristics (Barr, 2008). Clearly in most countries, higher education is mostly through centralized systems as the case is for Zambia, this ideology is though not favored by the economics of information. Barr argues that competitive environments create ideal incentive for universities to be more or at least respond to demands of student and employers. Though, there is need for an effective system for quality control to avoid recklessness.

This study was also guided by the theory of Quasi-public good. A public good, as defined by fiscal theory, is a good that, on an occasion of being produced, can be used or consumed by a supplementary consumer at no added cost (Holcombe, 1997). Higher education can neither be a public good or commercial good but has sufficient positive externalities or benefits. It is therefore argued that through theory that education is quasi public good. It is in the middle of two extremes.

These forgoing studies clearly show how different theoretical underpinnings impact education and higher education especially and others reveal the importance of investing in all levels of education. First, public investment at the basic level through secondary to the tertiary education level is a manifestation of the public involvement in human capital accumulation. Neo-Liberal and Quasi public good also puts emphasis on the benefits associated with higher education. Regardless of the impact of returns to education, investment in it could trigger economic growth. Any attempt by policy makers, institutions and individuals to invest into pre-tertiary and higher education in Zambia would yield positive results in the country. Investing in higher level of education by government should be considered as a public and social policy priority because it can improve individuals’ lifestyles and also reduce the level of income poverty; enhance much needed economic growth through the acquisition of higher levels of knowledge, skills and investment in research. This can reduce the number of people in the society that are dependent on social welfare; and above all could reduce the level of social vices like crime, poor healthy among others in the country.

Through the provision of financial support to higher education, the Ministry of education officials, university administrators and other respondents acknowledged the important role of higher education and research to the development of the social, economic, political and scientific development Zambia. Providing scholarships, loan schemes and other sorts of financial support is a recognition that higher levels of education yields both public and private benefits and therefore, making beneficiaries responsible for some proportion of the cost of their education. In conclusion, it is true that investment in education at all levels has both social and private impacts. While recipients of this education enjoy high levels of earnings, better social life, and better health conditions in the case of women and the aged, the impact of investment in higher levels of education especially university level, on the national economy cannot be oversimplified based on mere justification of private rate of returns. Higher level of education benefits society through technological advancement, higher level of skills and thinking, high level of research into global problems, the training of high level scientists, medical doctors and the improvement of information technology, and much desired innovation.

Even though the majority of the respondents and interviewees were less optimistic about the success of the current policy of financing higher education in terms of cost sharing, revenue diversification and student loan policy, this policy remain critical in attaining the much needed success in higher education. As already observed, what is needed is to review and re-engineer so that it becomes efficient, effective and sustainable. Government involvement is still critical especially in the management and funding of the student loan scheme and for capital projects in different institutions. As a student who has passed through the University of Zambia and who was a beneficiary of free government bursaries, I need to pay back so that the system remains vibrant. Because of lack of such schemes and lack of investments, the public universities currently have multifaceted challenges.

Just like earlier assumptions and addition to the mix method studies, the study on financing policy of public university in Zambia adds to literature and also clarifies the value added when using the mixed approach in methodological considerations of research. The use of mixed methods in research has been gaining prominence for almost five decades now. Clearly it began in the 1950s and was still being formed and developed until the 1980s as noted by Gelo et al., (2008). Campbell and Fiske are believed to be the brains behind its development in the late 1950s when they decided to use multiple quantitative data collection techniques that lead to researchers combining quantitative and qualitative research in the 1970s. Others followed suit Cook & Reichardt, (1979), Jick, (1979); and Sieber, (1973).

Campbell and Cronbach in the mid and towards the end of 1970s encouraged researchers start including qualitative data in their quantitative studies. A couple of years later Patton provided researchers with a few ideas on how to effectively conduct mixed research study (Creswell & Plano Clark, 2011). Since then researchers have been expanding on details of combination of qualitative and quantitative research by providing clear design types (Creswell & Plano Clark, 2011; Tashakkori & Teddlie, 1998). In theoretical consideration, Lincoln (1988) stated that quantitative and qualitative research were based on different assumptions and therefore questioned if integrating the two methodologies was appropriate in achieving reliable results. This debate is ongoing though researchers are now awakening to the strengths of the combination. The debate of the challenges associated with integrating the two research approaches has intesfied the quantitative-qualitative debate (Gage, 1989; Newman & Benz, 1998; Tashakkori & Teddlie, 1998).

Bryman (2006) expanded on Greene et al. (1989) work which had reviewed 232 articles by examining the methods and design of the articles to get the insight and rationale for using the article. Bryman found that most researchers use mixed methods research is to enhance the study, complete the study, and triangulate the findings, for sampling reasons and for a diversity of views. The study on re-engineering policy to make public universities effective and sustainable used the mix method design as a way of giving a complete picture of the study. Some issues were easily explored using quantitative design but the why questions were best suited for qualitative design.

The re-engineering of policy of financing public universities in terms of cost sharing, revenue diversification and student loan scheme is dependent on funding sources or possibilities which are: government, donors, entrepreneurship, parents and students. Johnstone (1986) calls this as Mix model funding possibilities. What lessons have been learnt about the funding possibility sources in the context of Zambia?

State Funding: According to the interviewees and respondents, the current system of funding does not meet the requisite needs of Zambia higher education. Major reliance on the state for most resources is not acceptable to some senior officials at the universities and MOE, not only because the funding is insufficient but also because the government retains complete control over the public university and highly compromise ‘university autonomy’. Since tax funding is ever decreasing, public universities quality is gradually deteriorating with hidden costs. The costs are manifested in some of these trends: class size continues to increase, the overall quality of the faculty is decreasing as the Percentage of advanced degree holders, university facilities continue to deteriorate due to the lack of maintenance and upkeep, and all these factors contribute to degradation of quality in university education.

Though public universities operate with relative freedom, they are still seeking more autonomy especially as a way to look for other sources of income in return this will put less pressure on the government to provide all the funding. This is really a delicate argument by the institutions; they want complete autonomy but they also want more government funding. If they argue too much for autonomy, the government may grant them what they wish but also stipulate lower rates of government funding in the future which might make universities more unsustainable especially in an environment where entrepreneurship and donor support is not guaranteed. Currently, government will remain the big financier for a foreseeable future as other funding possibilities are still in their infancy.

Donors: Though the number and amount of donor support has reduced greatly in recent years, there are still a number of donors that assist higher education and education sector in general. In Zambia, international donors including bilateral and multi-lateral organizations have provided support through partnership arrangement. In future the universities will most likely have to further strengthen the private sources of philanthropy from internal sources such as wealthy businessmen since the international donors keep dwindling. Developing private philanthropy is a very challenging task for most developing countries though it is attractive for institutions. One of the main reasons why donor gifts are so attractive to higher education institutions is that they do not involve a tuition increase or an increase in state funding, two politically very difficult tasks Johnstone (2005) observes. There are ways of cultivating the increase of donor contribution such as: appropriately cultivating wealthy individuals, institutions should create development offices with marketing presence, government should have favorable legal tax rate for donors and in general a culture of philanthropy has to exist to develop private donors notes British Task Force (2004). Surprisingly, even in a place such as Zambia the pool of wealthy donors may be larger than expected if they are asked and if treated properly.

Entrepreneurship: As noted in Chapter two, entrepreneurial activities include many types of non-traditional relationships between university faculty, students and the institution itself with outside private and public interests among others. For example, in the Zambian context might include industry related research and development undertaken by the faculty but funded by the private sector, consultancy opportunities for faculty members, technology transfer through patenting and licensing fees. These might also include educational activities outside of the traditional undergraduate classroom, such as continuing education and lifelong learning in various forms, and the commercialization of physical campus assets including agricultural land, halls of residence, cafeterias or even the limited sports facilities as the case is for UNZA and CBU. Some of these activities outlined above are ongoing on a small scale. In Zambia, almost all public universities are running on dual track model as a way of supplementing meager government revenues. This is a special kind of entrepreneurship.

Revenue diversification in terms of private donations and entrepreneurial activities has similar legal and technical blockages. Both require new regulations and well-conceived operational guidelines with real incentive structures in place.

Parents and Students (Tuition and Fees): Parents and student relationship in higher education finance could be termed symbiotic. These are two crucial sources of finance in higher education, but it is important to note that the responsibility for paying various costs of higher education depends on the nature of the costs and the culture, even for households that can afford fees. For example, in affluent Scandinavia countries like Norway, higher education costs (tuition and fees) are paid by the state (Marcucci & Johnstone, 2007). In Zambia, all students in higher education are supposed to pay tuition and fees. But for public universities, government sponsors about 80 percent and therefore objects increase in tuition by the institutions as a way of avoiding the huge student costs. Tuition charged in public universities does not reflect the economic reality. This has triggered the dual track system. The dual track system developed out of necessity because the governments could not keep pace with the rising costs of providing higher education, and leaders could not undertake the political expense of attempting to implement the student loan scheme instead of grants. In this compromised approach institutions offer additional seats to fee-paying students. In Zambia, the fee paying is called parallel students and usually takes their sessions in the evenings. The percentage of fee-paying students is still relatively small compared to the merit-based scholarship students.

A primary lesson from international experience in recent decades with resource mobilization and financing of higher education is the importance of not having policies relying on a single source of funding – government (Albatch, 2007; 2008; Barr, 2005; 2009; Johnstone, 1988; 2003; 2006; 2009). The growing diversity of funding sources has been an important and effective response by many governments and institutions to the mismatch between demand and resources (World Bank, 2006; 2010). It seems clear that most countries should rely on a mix of funding models to achieve the objectives they seek for their higher education systems (Shen, 2003). Student loans and cost sharing often are the best mechanism to help promote better access and equity, but they should not be entirely relied on for achieving this important objective (Shen and Zinderman, 2008). A good policy also needs to be compatible with economic theory (Barr, 2005; 2009). Graduates should contribute to the cost of their degree (Barr, 2009)

The alternative to the status quo financial system is the mixed model policy of funding that seeks other sources. As indicated in conceptual framework, the success of the mixed funding model depends on resolving particularly the issue of institutional autonomy. Currently every effort is being put in place to move in this direction though a lot discussion need to take place, especially to what extent government can divorce itself from these public institutions.

7.1.2 Implication of the Study for Other African Countries

In this study, there has been an extensive use of different literature on the finance of higher education in a worldwide system, which is applicable to both western and other countries. At the same time, the challenges facing higher education in Zambia are not in any way different from those facing other developing countries, particularly countries in sub-Saharan Africa. Both private and public university in the advanced countries also face similar challenges. What makes the problems different from country to country is though the magnitude of the difficulty faced by universities in developing nations is higher than those faced by the more advanced countries. What is also true is that the history of higher education in Africa is common with similar elements. For instance, Teffera & Altbach (2004) show that higher education has similar challenges in the purpose, the limitedness in access, academic freedom, language of instruction and the nature of the curriculum as designed by the colonizers are not different in the various African countries. Clearly the legacy of colonialism is a big factor in African higher education. African countries have in general strong ties to their former colonizers as can be evidenced in the language of instruction

This situation indicates that most African universities have common challenges in terms of access, funding difficulties, governance, among others. The study on re-engineering policy of financing Zambian public universities is a timely call to other African countries that are experiencing similar policy challenges. For instance, the World Bank team observed that financing for higher education in Africa needed urgent need to modify policies. Difficulties in financing higher education are universal, but their magnitude and consequences in Africa are gravy: (a) growth in demand is extremely high, (b) the fiscal base is very weak, (c) public spending per student is declining, (d) primary education is not yet universal and remains a priority, and (e) families’ contributions are relatively larger in primary education than in higher education (World Bank, 2010).

If the 2010 observed trends continue, the total number of students for the entire African continent could reach between 18 million and 20 million by 2015 (World Bank, 2010).The implies that the level of expenditure could be 75 percent higher than the volume of public resources that may be mobilized. The number of teachers required would need to double, from a total of approximately 456,000 in 2006 to 908,000 by 2015 (Ibid, 2010). It will be even more difficult for these countries to retain a sufficient number of senior faculty members, who are necessary for the conduct of research, the improvement in the scientific and pedagogical quality of instruction, and the preparation of future generations of teachers and researchers. Indeed, the level of effort devoted to research has been inadequate to train a sufficient number of doctoral students. To address all these challenges there is serious need to reform and re-engineer financing policies of higher education to reflect the new reality.

1. There is need to avoid political meddling in policy of financing public universities by government especially after policies are formulated. These public institutions need to be made independent in daily operations. Independence here does not mean the administration and management of the universities should be privatized. What it means is that the government should avoid unbridle interferences in terms of the determination of cost sharing, releasing grants, determining tuition fees and engineering the election of university administration and council. It is therefore highly recommended that decision-making be decentralized and universities be allowed to charge economic fees, among other actions. Government could consider granting university-level institutions autonomy to charge cost recovery fees, while ensuring measures to allow access to university education for needy and deserving students.

2. Zambia public universities need to adopt more innovative budgetary practices and begin to move away from historically based budgets. Formula funding could be appropriate based on cost per student. These have become common, such as in Kenya and Rwanda among others. Then, other countries, such as Nigeria and Ghana, use normative unit costs derived from prescribed student-teacher ratios by discipline and the recommended cost of goods and services for a teaching unit by discipline , this is another way of becoming efficient. Zambia could adopt one of the two.

3. The current debt in public universities should be liquidated to allow the institutions to implement new reforms so that they relatively remain stable and effective. The government should take deliberate steps to liquidate the debt and give more autonomy to these institutions. Zambia's government through the ministry of education should substantially increase allocations to the higher education sector.

4. One of the problems facing universities in Zambia is over employment of non-academic staff. In some universities they even out number faculty. While these are essential part of the smooth university operation, the number should be reduced and certain services can be provided by students enrolled. History and research has taught us that these expenditures have contributed to the high budget of institutions and has drained the budget of universities over the years. As a result, the universities and government should focus on developing institutions’ academic infrastructure, direct manpower development with little less expenditure on non teaching staff. This is one way of boosting internal revenues and making institutions relatively sustainable.

7.2.2 Recommendation for Cost Sharing, Student Loan and Revenue Diversification

For cost sharing;

1. It is recommended that a true cost-sharing model be implemented in an effort toward making public universities more effective and sustainable. Currently, the model has never been fully implemented for more than 15 years. All stakeholders, especially the government, need to review the current policy and formula for financing public universities. This study on re-engineering the financing policy together with national and international literature shows that if the policy is right and implemented well, the great potential of higher education finances can be unlocked.

2. There is need for a comprehensive study involving many stakeholders to critically look at the whole picture of financing higher education in Zambia. Such a study should include both public and private institutions. This study should also focus on reviews and comparative analyses of countries where the cost-sharing model has been implemented successfully.

For Student Loans;

1. Now that the student loan scheme might be implemented in Zambia, having examined international experience, one of the major problems is repayment and loan recovery. Zambia should develop a system that will help the loan scheme commission. Government with all organizations, private and public needs to identify students who would have benefited and owes the scheme. For this to be successful government should consider issuing all students permanent identification numbers, which will enable the responsible bodies trace them irrespective of the organization they would work for after graduation to facilitate deduction of the money at source from their pay checks. Another system should be put in place for those who go abroad or overseas.

2. Since the study has strongly emphasized the implementation of the loan scheme, there will be an envisaged problem of identifying needy students in Zambia (means testing). It is very difficult for the Loan Scheme body to determine who is needy in the Zambian context. The Loan scheme body and government should come out with a strategy of performing an effective and efficient need assessment, which will be mostly based on reliable national data. It will require trace scholarships applicants’ background from their previous high schools to determine their family socio-economic background (though not easy). This would greatly help to forestall the problem of giving monies to the already advantaged and capable in the society.

For Revenue Diversification

1. The study strongly recommends that for revenue diversification to be successful there should be a review of the current education act which is a big hindrance to the current effort of revenue diversification and entrepreneurship. Public universities are constrained with government procedures and guidelines especially when making investment decisions and utilization of funds in university accounts.

2. The study also highly recommends that all the three public universities should come up with specialized units which will specialize in marketing the institutions and also help in the entrepreneurship activities. This unit will complement administration efforts in looking for partners in private public partnerships (PPP) and in raising the much needed private revenue.

The dissertation now attempts to answer the last research question of this study.

Question: What would be the appropriate model and arrangement for financing public universities in Zambia?

7.2.3 New Model: Mixed Amplified Cost Sharing Model’ (MACSM)

Most academics world over in higher education finance argues that in general there are two broad models of financing public Universities, namely: State funding and Cost Sharing (Shen, 2007; Barr, 2009; Levin, 1987; Carnoy, 2000). A primary lesson from international experience in recent decades with resource enlistment and financing of higher education is the importance of not relying on a sole source of funding – government. The growing multiplicity of funding sources has been an important and effective answer by many governments and institutions to the mismatch between demand and resources. It seems clear that the majority countries should rely on a combine funding models to achieve the objectives they seek for their higher education systems. Student loans often are the best mechanism to help promote better access and equity, but they should not be entirely relied on for achieving this important objective (Johnstone, 1986; 2003; 2006; 2009; World Bank 2010).

Many financing reforms, including establishing or increasing tuition fees, replacing grants and scholarships with student loans or authorizing private higher education institutions to operate are controversial measures especially in countries that have been solely reliant on tax funding. While linking financing to improving equity, quality and performance, it should be used as an intervention measure and must depend to a large extent on the balance of policy objectives being sort. Political difficulty should not be used, however to delay implementing important and necessary reforms (Atuahene, 2006; World Bank, 2006 & World Bank, 2010). Reforms in the models of financing higher education should take cognizance of the development and retention of the next generation academics.

Although in the Zambian context it is almost impossible to propose a viable model or framework for financing higher because of intense and deliberate politicization of financing of higher education and because of the entrenched mindset of "free higher education" among the majority of Zambians, unfortunately including the elite and educated. The truth is that if nothing is done the situation not too long from now will be out of control and even lead to total collapse of public higher education especially public universities. The situation has kept on deteriorating from bad to worse all because of lack of adequate funding. Based on the views from students, lecturers, university administrators and ministry of education officials, this thesis proposes a ‘Mixed Amplified Cost Sharing Model’ (MACSM), other similar versions of model seems to have been successful in Kenya, Nigeria, South Africa and Uganda higher education sectors. This has also worked well in some Asian countries which have attained the middle income status. The ‘mixed amplified cost sharing model’ for higher education financing is proposed in the context of two major trends that have characterized the changes in higher education sector in Zambia since the 1990’s when the government liberalized the provision of higher education: these are some limited privatization of public higher education and the emergence of the private higher education sector. The mixed amplified cost sharing model is somewhat similar to market model also advocated by Oketch (2003) and Lamptey (1994) stresses the injection of the market principles and market driven approaches into the financing of higher education to make it completely self-financing. While Oketch views marketing model of financing higher education in terms of financial diversification and partial privatization of public universities; Lamptey advocates for the adoption of the contemporary marketing concepts of product, price, place and promotion in higher education (Ishengoma, 2009). However, the mixed amplified cost sharing model I am proposing takes care of equity concerns especially by providing cost effective student loans to the needy students.

In the context of Zambia the ‘mixed amplified cost sharing model’ is also justified in the larger context of the market economy which has been adopted since early 1990’s in wider context of improving the efficiency, accountability and quality. This proposed model is guided by three principles: shared costs, equity and human resource development. While the market model of financing higher education has been criticized and branded as academic capitalism driving universities into entrepreneurial competition (Ishengoma, 2009); the model if cautiously adapted can turn around the finances of government and donor dependent public higher education institutions. Similar models have worked at Makerere and Nairobi universities and some South African universities; there is no reason why a mixed amplified cost sharing model should not work in Zambia’s public higher education institutions. The components of the proposed model are summarized in the Table 7.1.

7.2.4 Funding Formula

This study also proposes introduction of funding formula in public universities. The funding formula will bring about cost efficiency and will provide an opportunity for institutions to venture into revenue diversification activities. The formula has a component of entrepreneurship in which universities can explore other income generating activities through investment and partnerships. Currently all government public universities are funded based on previous budgets and just minor infusions are made sometimes based on inflationary pressures. In other words, Zambia still uses the traditional budgeting system. I propose a change to performance based budgets based on a formula. This will encourage efficiency and cost effective way of prudently spending the resources and thereby make institutions viable, effective and sustainable. This a common practice in the developed and even in developing countries like Kenya and South Africa. The formula takes into account all teaching activities involving number students from different institutions, disciplines, programs are all factored in the Institutional Budgets (IB).

The budgets for the universities should be constituted by the following elements:

A Basic Grant (B)

A Taximeter Grant for Teaching (T)

A Grant for Capital Expenses (C)

A Research Grant (R)

A Grant for Entrepreneurship (E)

IB=∑ (Basic + Teaching+ Capital + Research+ Entrepreneurship) = (B+T+C+R+E)

Where I=Institution & B=Budget

This formula can be adjusted depending on institutional enrollments: The annual teaching budget might take the form:

The annual teaching budget T for institution i in year t should be calculated by applying the following formula

Ti,t = Ai,1,t*(TT1,t+TO1,t) + Ai,2,t*(TT2,t+TO2,t) + ... + Ai,n,t*(TTn,t+TOn,t) +

PRi,1,t*TP1,t + ... + PRi,k,t*TPk,t + PGEi,t*(TTEt+TOEt) + PGNi,t*(TTNt+TONt)

where: T1,t teaching budget for institution i in year t

Ai,j,t number of active students in institution i enrolled in programs belonging to subject area j (j=1,...,n) in year t

TTj,t teaching cost tariff per active student in programs belonging to subject area j (j=1,...,n) in year t

TOj,t overhead cost tariff per active student in programs belonging to subject area j (j=1,...,n) in year t

PRi,h,t number of active students doing practical training in subjects belonging to area h (h=1,...,k)

TPh,t tariff for practical work necessary for subjects in area h (h=1,...,k) in year t

PGEi,t number of post-graduate students in laboratory-based (experimental) subjects in institution i in year t

PGNi,t number of post-graduate students in non-laboratory-based (non-experimental) subjects in institution i in year t

TTEt teaching tariff for postgraduate students in laboratory-based (mainly experimental) subjects in year t

TOEt overhead tariff for postgraduate students in laboratory-based (experimental) subjects in year t

TTNt teaching tariff for postgraduate students in non-laboratory-based (non-experimental) subjects in year t

TONt overhead tariff for postgraduate students in non-laboratory-based (non-experimental) subjects in year t (Adapted from Maassen, 2000 p. 10)

7.2.5 Special Fund: Zambia Education Trust Fund (ZETF)

In addition to the usual Ministry of education budget allocations support, I propose the introduction of a special fund. Zambia needs a special body called Zambia Education Trust Fund (ZETF) to generate additional income to support the nation’s education system at all levels with special emphasis to higher education. This should be through an act of parliament whose specific functions among others will include providing financial resource to support institutions in terms of infrastructure, grants, staff development, and generate money for loan schemes. The major source of funding for Zambia Education Trust Fund will be derived from 2.5 percent of the Value Added Tax levied on goods and services (products and incomes), parliamentary appropriations to education, accruals from the fund’s investment returns, grants, donations and gift from organizations, and other donors of the fund. The management should by a special 20 member’s board of trustees which would be inclusive and well represented. This special fund should supplement the student loan scheme.

One of the critical components of my proposed model and formula is the establishment of the Higher Education department in the Banks Identified to manage student loans. The current Bursaries committee would be transformed into this department which should have legal backing. This proposed department will also give loans to higher education institutions at an interest rate to be subsidized and determined. Ishengoma (2004) indicates that the idea of an education bank has worked very well in Nigeria. The Nigerian Education Bank (EDUBANK) was established in 1993 after the Nigerian Student Loans Board was dissolved due to its gross failure in recovering student loans amounting to NGN 400 million (US$ 3.34) by the time it was dissolved . The department would play the same role as that of the Nigerian Education Bank. It will play the following roles among others (a) to serve as intermediary in Zambia’s credit market; (b) harness private sector resources for the funding of education; and (c) take over part of the government’s educational funding responsibilities. The special funds will also used for student lending, lending for academic publication, project financing, fund mobilization and provide general advisory services for higher education purposes. The higher education department using this special fund should also provide loans to university faculty for sabbatical leave and attendance at conferences abroad and for book publishing. This could be the way Zambia should go to avoid total collapse of Higher education (public universities) and so that it can maintain a vibrant sector which can respond to modern challenges. A higher education department will be established in an already existing bank, such as ZANACO or Finance Bank and borrowing arrangement for student loan scheme will be constituted.