MALAWI. 2016/17 Education Budget Brief. March 2017 KEY MESSAGES

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1 March 2017 MALAWI 2016/17 Education Budget Brief KEY MESSAGES Although the Ministry of Education, Science and Technology (MoEST) budget increased from MK109.7 Billion in to MK146.5 billion in , and received the second highest share of the total budget after the Ministry of Agriculture, Irrigation and Water, the education sector share of the budget fell down from 18% in to in Taking into consideration practical challenges on the ground such as a high pupil teacher ratio, inadequate infrastructure and limited learning materials additional resources are required to ensure all children have access to quality education. In the short term, given fiscal constraints faced by the Government of Malawi (GoM), challenges such as the high pupil classroom and high pupil teacher ratios may best be addressed through reforming rural teachers incentives and enhancing equity in the distribution of available resources, including teachers. Budget allocation to secondary education increased by 84% from the budget. An estimated 40% of the MK 20 billion increase from the previous year came from a World Bank grant for improving secondary schools. The situation on the ground however remains dire, calling for increased allocations to pre-primary, primary and secondary education. Recognizing budget pressures there is a need to ensure no real reduction in basic and secondary education expenditure in the budget. Government s capital spending, ( Expenditure II) makes up only 1.75% of the MoEST s budget. The budget for other recurrent transactions (ORT) declined from 22% of MoEST s budget in to 11% in As a result, many schools, especially in most marginalized areas, have insufficient classrooms and learning materials. As budget conditions normalise the Government should increase the capital and operations budget in order to improve outcomes for children, especially in the most disadvantaged schools. The GoM should ensure appropriate balance between personnel emoluments (PE), recurrent and development expenditures. Over the past few years, the number of classrooms has been increasing, albeit at a slower rate than enrolment, up until The pupil classroom ratio declined marginally from 1:116 in 2009 to 1:111 in The Government committed to reducing that ratio to 60:1 by To meet this commitment, 42,350 new classrooms are needed. While primary enrolment increased by 45 percent between 2004 and 2013, the number of primary classrooms rose by only 12 percent. With improvements in fiscal space, the Government of Malawi should prioritize construction of classrooms, especially in hard-to-reach areas. In the short term, it is important to at least maintain existing infrastructure in order for it to remain in usable condition. 1

2 The rural teachers allowance, which aims to attract and reward teachers working in remote and hard-to-reach areas, has not significantly improved the distribution of teachers. Reducing the allowance to 80% of eligible teachers to MK 8,000 (10% of wage) would generate enough savings to increase the allowance of teachers working in the 20% most disadvantaged schools to MK 18,000 or 23% of a new teacher s wage and provide a real incentive to draw teachers to schools with the worst education outcomes. The GoM is encouraged to reform policies on teacher incentives to ensure they achieve intended objectives and also carry out a comprehensive evaluation of the double shifting policy to measure its impact on class size and pupil teacher ratio. While significant progress has been made in training and hiring teachers, the Pupil -Trained Teacher Ratio remains significantly high at 1:78 (EMIS 2014). Ironically, Teacher Training Colleges are graduating teachers much faster than the Government s ability to hire. The GoM should plan and budget for teacher hiring, from enrolment in teacher training through to the hiring of graduates rather than responding to in-year pressures. At the same time, it should assess the need for constructing new teacher training colleges against enrolment rates, planned hiring and other infrastructure needs. 1. Introduction Education remains one of the top priorities of the Government of Malawi (GoM). The Malawi Growth and Strategy (MGDS II ) recognizes education as a major catalyst for socio-economic development and a necessity for sustainable development. The National Education Sector Plan (NESP), has three thematic areas of interventions: i. Expand equitable access to education to enable all to benefit. ii. Improve quality and relevance of education to reduce drop-out and repetition rate and promote effective learning. iii. Improve governance and management of the system to enable more effective and efficient delivery of services. The NESP outlines policies and priorities for Early Childhood (ECD), Primary Education, Secondary Education, Teacher Education, Technical and Vocational Education and Higher Education. It also provides guidelines on improving learning in lowerprimary school and in expanding access to secondary education. Primary Education runs from Standard 1 to Standard 8. The official age of entry is 6, although there are wide variations in age with some children beginning their schooling earlier, due to a lack of access to ECD services and others remaining in school for much longer than the school-going age due to the high repetition rate. Secondary education runs from form 1 to form 4 with national exams at the end of form 2 and form 4. Box 1: Key Statistics Total Population Malawi 16.7millon Pupil Trained Teacher Ratio 1:78 Primary Net attendance rate 94% Pupil Classroom Ratio 1:111 in 2016 Population of Children Under 18 yrs 8.5millon Special Needs Students 2.5% as a % of total primary school enrolment Primary School Completion Rate 45.7% Population Growth Rate 3.1% Proportion of children of school going age out of school 8% (8.4% boys; 7.6% girls) Literacy Rate among Young People 75% (77.8% boys; 72.4% girls) Population of school-going age 5.3millon (Primary & Secondary) Primary Net attendence rate 93.6% Transition Rate to Secondary School 57.8% Sources: MDG Endline Survey, 2014 & NSO 2014; Source: EMIS (2014) 2

3 2. What constitute the education sector budget? Although the allocation to the education sector increased by approximately 21% in nominal terms from MK162 Billion in to about MK196 Billion in , the sector share of the total budget decreased from 18% in to in as shown in Figure 1. Repayment of debt and interest as well as reduced budget support by donors possibly account for this decline. Interest on debt grew by 403% in the same period. Education however remains one of the top priorities of the GoM. In , the MoEST received the second highest share of the total budget after the Ministry of Agriculture, Irrigation and Water. Figure 1 Composition of total government budget ( to ) 100% Other share Budget Share % 80% 60% 40% 20% 3 7% 6% 1 35% 11% 1 36% 8% 14% 15% 18% 35% 10% 12% Transport Interest on debt Agriculture share Education share Health budget 0% 12% 2013/ / /17 Source: Consolidated Financial Statements , Ministry of Finance (MGDS data for Agriculture and Transport sectors) The GoM has demonstrated a strong commitment to education. However total resources available are far from what is required to meet national goals articulated in the NESP. Table 1 Malawi Education Spending International Comparisons Country Expenditure on education as % of total government expenditure (%) Government Expenditure per student (PPP) Congo, Dem. Rep Malawi (12th highest in the world in 2013 but decreased to in 2016) (2nd lowest in the world) Mauritius Mozambique South Africa Ethiopia Source: World Bank Indicators (2013) 3

4 Figure 2 below shows how much the GoM spends on education per student in relation to other countries. Based on this measurement, Malawi is one of the least spenders on education in sub-saharan Africa together with a few countries such as Ethiopia and the Democratic Republic of Congo. Malawi s per pupil spending was estimated at just US$ in The low per capita spend reflects the low gross domestic product of the country compared to other countries such as Mauritius and South Africa. Figure 2 Government spending on education (PPP) Government spending per student (PPP) Mauritius South Africa 500 Mozambique DRC Malawi Ethiopia % of Government spending on Education (2013) Source: World Bank Indicators (2013) The education sector share of the budget is increasing at a rate which is lower than overall government expenditure. Whilst the overall budget grew by 20 in nominal terms between and , the education sector budget only grew by 154% during the same period. In light of the current budget pressures it is crucial that the GoM ensures no real reduction in basic and secondary education expenditure. At the very least it should maintain current levels of percapita spending, after adjusting allocations for inflation. At the same time, there is need to enhance equity in the distribution of educational resources including teachers. Training and Public Universities received significantly lower budgets. These institutions attract an estimated 21% of the education sector budget. Allocations to universities and other subventions decreased from 27% in financial year to 21% in The Ministry of Gender, Children, Disability & Social Welfare (MoGCDSW) received a small allocation (MK400 million or 0.2% of the total education sector budget) which is directed towards early childhood development (ECD) and adult education. Funding for the construction of ECD centers is provided through Local Council Grants. Figure 3 shows composition of education sector funding from to How are education sector resources spent? The Ministry of Education, Science & Technology (MoEST), which received 74% of education funds in financial year , is the dominant player in the education sector. Other institutions such as the National Examination Board, Technical Vocational Education 4

5 Figure 3 Composition of Education Sector Budget Allocations ( to ) MK 000, ,000 University and Subventions Local 21% Fund 150, ,000 50,000 23% 7% 65% 5% 26% 6% 64% 2% 28% 5% 67% 5% 74% Local Councils MoEST Source: Approved Appropriation Bill. Years , Ministry of Finance. In , 56% of the education budget was directed to primary education, 25% to secondary and 1 to tertiary. Primary education attracts slightly less funding than the Education Sector Implementation Plan (ESIP II) target of 60%. The Government s contribution to development expenditure makes up only 1.75% of the Ministry s budget, while salaries consume 74%. Many schools, especially in remote areas, have insufficient classrooms and learning materials. An estimated 10% of the wage bill is dedicated to the recruitment of new teachers. 1 The composition of the budget, which is skewed in favour of PE, at the expense of development and other recurrent transactions (ORT), seems to be impacting negatively on the Ministry s ability to deliver quality education to all children. It is encouraging to see efforts by MoEST to rebalance the budget by decreasing the share of PE to 74% of the budget in from a high of 82% in as shown in figure 3. The long term average for PE for financial years to was 60%. Demands on PE have been driven by high inflation ever since 2012, which saw the real value of teachers salaries erode. In 2016, inflation ranged between 20 and 25%. 2 Figure 4 below shows that increases in PE were not corresponding to other recurrent transactions (ORT) and development expenditures. In , the Government s contribution to ORT was well below the to average of 23%. Some of the ORT expenditures are being covered by donors through off-budget support. The ORT budget contributes to essential items such as textbooks and teaching materials as well as monitoring and training expenses, all of which have been critically underfunded. Figure 4 Education Spending by Economic Classification MK 000, ,000 (Government) 74% 100,000 80,000 82% (Donor) Other Reccurent Transactions Personnel Emmoluments 60,000 40,000 61% 71% 20, % 11% 7% % 7% 4% % 3% % 14% % Source: Ministry of Finance, Appropriation Bills Ministry of Finance, Medium Term Expenditure Framework as Appropriated. 2 Ministry of Finance 5

6 Part II Budget reached a low of MK2.56 billion, dropping from 7% of the education budget in to less than 2% in the approved budget. The increase in the Part I budget in was driven primarily by a large grant from the Global Partnership for Education, facilitated by the World Bank. This saw the Part I development budget increase by 203% from the previous year. The grant is four times greater than the government s own spending on education infrastructure. Much of the grant is dedicated to supporting government secondary schools which currently service 358,033 students. 3 Table Composition of Education Budget by Economic Classification Figure Budget Estimates- Budget by Schooling Level 1 56% 25% Higher Education Secondary Education Basic Education Source: Budget Estimates Personal Emoluments Other Recurrent Transactions Part I Part II Approved Revised Revised Year End End Year Difference Per cent change from Approved 90,180 90,623 91,574 1,394 2% 14,453 12,927 11,345 (3,108) -22% 6,520 7,667 7,667 1,147 18% 3,600 3,065 2,162 (1,438) -40% Total 114, , ,748 (2,005) -2% Source: MTEF Ceilings as Appropriated. September 2016, Ministry of Finance. spending is needed to address infrastructural gaps in the education sector, especially in primary and secondary education in order to address the problem of high pupil to classroom ratio which stands at 1: The primary school enrolment rate has been increasing at 5%, while classroom construction has been lagging significantly. This follows the prioritisation of PE spending over development, leading to classes without classrooms. To reach the targeted primary school pupil to classroom ratio of 60 an additional 42,350 classrooms would need to be constructed. The current stock of classrooms is 37, What is the level of Government Investment on teachers? The average teacher-pupil ratio, which stood at 1:67 in 2014, continues to impact heavily on quality of education. It is however important to note that these national averages tend to mask realities in individual districts. Some districts are in worse situations than others. Take for instance, the relatively urban Zomba district which averages 57 pupils per teacher and the more remote Mangochi district with a teacher-pupil ratio of 1:152. A survey conducted by the World Bank from a sample of 13 schools in rural Blantyre showed that the pupil-teacher ratio varies from 43 to Nationally, however, based on averaged pupil- teacher ratio the GoM has made good progress toward the targeted ratio of 60 by Population growth is however likely to see the overall pupil-teacher ratio increase in To ensure that there are teachers in remote areas, the GoM introduced the rural teachers allowance, which now seems to be used as an income supplement for teachers, as 85% of the teaching force receive the rural teachers allowance. There is therefore need to review the rural teachers allowance taking into consideration the need to achieve desired equity objectives, cost effectiveness and political sensitivities. In , the rural teacher s allowance was pegged at MK 10,000 per month. The rural teachers allowance is approximately 13% of a newly recruited primary school teacher s wage. Reducing the allowance to 80% of eligible teachers to MK 8,000 (10% of wage) would generate enough savings to increase the allowance of teachers working in the 20% most disadvantaged schools to MK 18,000 or 23% of a new teacher s wage and likely increase demand and motivation for those teaching in those areas. 6 3 Malawi Education Management Information System Malawi Education Management Information System The GoM also introduced another policy to improve availability of teachers in hardest to reach areas, which requires new teacher graduates to first serve at least two years in rural schools, especially the remotest. This policy has however not been fully implemented to achieve desired results. This policy was to be accompanied by a program to construct houses for teachers in those areas. Unfortunately, the program recently became defunct due to the Education Management Information System

7 declining development budget. There were also reports from some stakeholders that the program was poorly targeted. The rate of teacher graduation exceeded the ability of the Government to hire, mainly because of budgetary constraints. In , 10,500 teachers were hired against a backlog of 19,000 graduates. Previously, the government had introduced free teacher training in order to keep up with increased enrolment. Following the withdrawal of budget support, MoEST introduced a fee for student teachers in order to recoup some costs. To avoid such scenarios, the GoM should plan and budget for teacher hiring, from enrolment in teacher training through to the hiring of graduates rather than responding to in-year pressures. The policy of the GoM on double-shifting to address the problem of teacher shortages is yet to achieve desired results because of low uptake as many teachers see the allowance as too small. Double shifting is a practice where teachers work longer hours to provide morning and afternoon classes in the lower grades (standard 1 to 3). Implementing the double shifting policy may help to address both the high pupil to teacher ratio and pupil to classroom ratio. Double shifting has also been seen as a way to group pupils according to their age and provide age appropriate teaching. This is particularly important given that very young and very old pupils are often found in the same class. The rural teachers allowance should be better targeted to attract and retain teachers at schools which face serious disadvantage. Implementation of the policy requiring newly hired teachers to serve at least two years in a rural school is likely to help improve the pupil teacher ratio at some disadvantaged schools. 5. To what extent is education expenditure devolved? In the budget, only 5% of the education sector budget was to be channelled to Local Councils through a combination of grants and allowances. The situation is however likely to change from 2017 with accelerated pace of decentralization. The MoEST is moving to a decentralised human resource system in line with the practice of the Department of Human Resource Management and. The planned decentralisation requires an upgrading of the Integrated Financial Management Information System and the deployment of MoEST staff to regional processing centers. Decentralisation is expected to return dividends in terms of receiving accurate and up to date information such as when a teacher is no longer working at a particular school, has taken leave or has been relocated. 6. Conclusion The GoM should be commended for keeping education as one of its top spending priorities. Unfortunately, reality on the ground in a number of districts, especially those in remote areas point to insufficient and inequitable resource sharing. This makes a strong case for the MoEST to strengthen its surveillance and reporting on education service delivery with a view to keeping track of schools that face extreme disadvantage. The current fiscal constraints have created an imbalance between development and recurrent expenditures which is now affecting quality of education service delivery. Thus, with improvements in fiscal space, the Government should prioritize construction of classrooms, especially in hard-to-reach areas, provision of learning materials and reform of teacher incentives to improve availability and motivation of teachers. Glossary of terms expenditure - is defined by the Public Sector Investment Program as significant (over MK 100 million) project expenditure with a completion date. spending provides returns in lowering operating costs or generating revenue. spending is divided into Part I (project support from external aid) and Part II (project support from domestic resources). 7 Economic Classifications - presentation of the budget according to economic inputs such as wages, operations and capital. The production of goods and services requires a mix of inputs. Nominal Increase in budgets Changes in allocations which are not adjusted for inflation. Other Recurrent Transactions (ORT) - Refers to items such as office supplies, fuel, utilities, routine maintenance, meetings and other program costs as well as acquisition of fixed assets. Personnel Emoluments (PE) - spending on wages and allowances. Real Increases in budgets Changes in allocations which are adjusted for inflation. 7 Ministry of Finance, Budget Manual, Funding channelled through Local Councils is mostly used for operational costs and small scale rehabilitation of schools. All primary schools are able to access grants through school bank accounts. The criteria governing the allocation of these grants and allowances include enrolment, number of teachers, availability of electricity and water, pupil-teacher ratio as well as pupil-classroom ratio. There are also a small number of grants which have been made available based on the performance of schools in implementing national policy. UNICEF Malawi UNICEF House, Airtel Complex PO BOX Lilongwe Malawi. Tel: +265 (0) For more inforation, contact: earchibald@unicef.org or 7

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