National Education Sector Budget Brief:
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1 Budget Brief Ethiopia UNICEF Ethiopia/216/Tesfaye National Education Sector Budget Brief: Key Messages The sector received 24.2 per cent of on-budget total national expenditure and 4.4 per cent of Gross Domestic Product (GDP) in 215/16, meeting the global benchmark of 2 per cent of the national budget spent on as put forth by the Education for All. This is an impressive achievement which begs the call for maintaining the share of government expenditure being spent on. Per student spending on higher is approximately 35 times greater than what is spent on general in 214/15, mainly fuelled by the construction and expansion of universities. Improvements are required in the composition of spending by reallocating government expenditure within the sector towards general which is more pro-poor and more equitable. The Government of Ethiopia has achieved remarkable progress in sustaining nominal increases in spending though this is quite modest when accounting for inflation. In 215/16, the aggregate expenditure in the sector was Ethiopian Birr (ETB) 67.9 billion in nominal value but when taking into account the rise in consumer prices since 26/7 this amount only equates to ETB 16.8 billion. In light of the pressure of providing quality to a growing child population (approximately 47 million below 18 years of age in 217) greater effort is required to ensure sustained increases in inflation adjusted expenditure. This budget brief is one of four and analyses budget and expenditure that are recorded on-budget for the Federal Ministry of Education (MoE) and its affiliated sub-national level Bureaus of Education (BoE) and district level Woreda Education Offices. Audited financial accounts are presented for the years up to 213/214 while preliminary financial accounts have been made available for the 214/215 and 215/216 fiscal years. The main objective is to synthesize complex budget information so that it is easily understood by stakeholders, and to put forth key messages to inform policy and financial decision-making processes.
2 Key Messages Continued National expenditure is predominantly recurrent expenditure amounting to 62.6 per cent of total spending on average over the past decade, out of which teachers salaries account for the greatest proportion leaving insufficient financing for investments in the other inputs essential for children and young people s academic success, such as the maintenance of infrastructure, the provision of curriculum materials, teacher development, etc. Improvement in budget allocation needs to be made within the sector so as to not forsake these essential elements that if unattended to will compromise gains in outcomes. Early Childhood Education (ECE) is currently heavily under resourced. Investments in holistic ECE should increase as ECE is a cost-effective way to enhance long term al outcomes and to reduce al inequities. ECE is currently missing as a separate line item in public finance data making it difficult to measure and track how much is being spent on ECE. A separate budget line for ECE should be introduced in the state budget. Significant financing of the sector is directed through off-budget channels making it challenging to track and record how much is being spent on. There is a need to shift offbudget financing of the sector to on-budget records in order to better track, plan, execute, monitor and direct funding towards sustainable financing of the sector. Further evidence generation is required to better understand and document financing, for example by conducting Public Expenditure Tracking Surveys to assess leakages and wastages in the sector, which can contribute to additional efficiency gains. UNICEF Ethiopia/213/Ose UNICEF Ethiopia/213/Ose 2
3 1. Overview of the Education Sector Education has remained at the forefront of Ethiopia s development agenda. The government has continuously prioritized investments in this sector, which has contributed to a rapid expansion of access to all levels along with a sharp increase in the number of teachers and schools. As a result, the system has expanded from million students in 25/6 to 25 million students in 214/15 (Figure 1). Figure 1: Enrolment trends by levels of (in million) /11 211/12 212/13 213/14 214/15 Pre-primary Primary Secondary TVET Undergraduate Graduate Total Source: Data from Ethiopia Federal Ministry of Education (FMoE), Education Statistics Abstracts for 214/15 & 215/16. Ethiopia achieved universal primary ahead of the 215 MDG mark, however, national achievements at the primary school level are still not matched at the pre-primary and secondary levels. Most preschools and secondary schools are located in urban areas, and access is limited to children whose parents can afford to pay school fees. Inequities are also reflected in school attendance ratios in that both primary and secondary benefit the most students in the richest quintiles. 1 Apart from pre-primary enrolment, enrolment rates significantly decline the higher the grade level (Table 1). Net Enrolment Ratios (NER) greater than per cent 2 bring to light the issues in data quality and challenges faced in obtaining dependable administrative data which is a vital requirement for measuring progress in the sector. A recent study that looked into this concern reports that schools have a tendency to inflate and over-report on their enrolment rates due to enrolment rates being tied to the amount of school grants that schools receive for quality improvement purposes. 3 This calls for introducing check and balance measures (for example third party data verification) to ensure that data quality and dependability are maintained, which are issues planned for greater attention over the remaining period of the national Education Sector Development Plan V (215/16-219/2). Challenges in student retention, such as a high Grade 1 dropout rate of 17.9 per cent in 215/16 and low school completion rates (Table 1) that result in the inability to achieve higher levels of, reinforce the need for greater investment in holistic Early Childhood Education (ECE). ECE addresses inequities and improves attendance in pre-primary and primary school, while contributing to efforts in improving the quality of and learning outcomes. Such results have been demonstrated by the Government of Ethiopia s (GoE) O-class initiative and UNICEF s Accelerated School Readiness (ASR) and Child-to- Child School Readiness Programmes which target children that do not have access to O-class. 4, 5 Affirmative action measures have improved gender parity, though female enrolment in higher is still very low. For instance, the percentage of female students in undergraduate and postgraduate programmes were 35 per cent and 23.8 per cent respectively in 214/15. 6 Progress is also underway in making accessible to the pastoralist community through al programmes that meet the unique needs of the mobile pastoralist lifestyle, such as the Alternative Basic Education (ABE) programme, mobile schools, Koranic schools, distance and open learning, functional and integrated adult, and pastoralist field schools, as outlined in the recently updated National Pastoralist Education Strategy. The Education Sector Development Plan V also addresses the links with social protection services such as school feeding programmes in food insecure areas, scholarship support, as well as the opening and expansion of boarding and para-boarding schools in pastoral and semi-pastoral areas. 1 Central Statistics Agency; 216 Demographic Health Survey, p The MoE enrollment rate calculation makes use of pupil headcounts (measured by the MoE managed Education Management Information System (EMIS)) which are divided by the Central Statistics Agency s school age population estimates. 3 Findings and preliminary outline, Education Management Information System (EMIS) Action Plan, October 216, draft report prepared by FHI36 under the direction of British Council Ethiopia with the support of UKAID for the Federal Democratic Republic of Ethiopia, Ministry of Education. 3 4 American Institutes for Research Evaluation of the Accelerated School Readiness Intervention in Ethiopia: Cohort 1 School Readiness Assessment. 5 University of Toronto, Ontario Institute for Studies in Education, 214, An Evaluation of the Child-to-Child School Readiness Programme in Ethiopia. Report prepared for the Government of Ethiopia and UNICEF. 6 Ethiopia Federal Ministry of Education, Education Statistics Abstract, 214/15. pp. 151 and 157.
4 Table 1: Selected outcome indicators Key indicators 29/ 215/16 (NER) (pre-primary), % NER (Grade (G) 1-4), % NER (G5-8), % NER (G9-), % NER (G11-12), % Dropout rate (G1), % Completion rate (G5), % Completion rate (G8), % Student-Teacher Ratio (G1-8) Student-Section Ratio (G1-8) Gender Parity Index (GPI), % Primary (G1-8) Lower Secondary (G9- Upper Secondary (G11-12) Source: Ethiopia Federal Ministry of Education; Education Statistics Abstracts for 214/15 & 215/16. Despite noted achievements in access to, challenges in the quality of remain. A 2 study on early grade reading assessment provides findings that there were a significant percentage of illiterate children among children who had attended school for two or three years, and reading comprehension scores were also very low with more than 5 per cent of children in most of the regions under study unable to answer a simple comprehension question. 7 Other results from a recent national learning and assessment study show that the national average score for Grade 4 students in four subjects (namely English, reading, mathematics and environmental science) was 44.7 per cent, while the national average score for Grade 8 students in five subjects (namely English, mathematics, physics, chemistry and biology) was 41.1 per cent, both levels scoring less than the minimum expected score of 5 per cent. 8 The MoE is addressing quality issues in the sector through its Second Quality Improvement Programme (GEQIP II), though a long road ahead awaits. This will require huge effort and substantial financial investments to effectively address concerns in the quality of. Box 1: Policy and strategy documents for Growth and Transformation Plan, GTP-II, (215/16-219/2) which builds on former national development plans such as GTP-I (2/11-214/15). National Education and Training Policy, Education Sector Development Plan V (215/16-219/2), which builds on four former Education Sector Development Plans (ESDPs) implemented between 1997/98 and 214/15. National Pastoralist Education Strategy, 28 and updated and validated in 216. National Quality Minimum Service Standards for Primary Schools. National Girls Education and Gender Equality Strategy, 213. Code of Conduct on School-Related Gender Based Violence (SRGBV), 213. Education Sector Knowledge Management Strategy, 215. Communications for Development (C4D) in Education Strategy, 215. National Social Protection Strategy, 216 ( ). National Social Protection Action Plan, 217, ( ), Regional Social Protection Action Plans for Amhara, Oromia, SNNP and Tigray regions. 2. National Education Spending This budget brief is focused on analysing the budget and expenditures that are recorded on-budget and reported by MoFEC. The sector accounts for the largest proportion of the GoE s spending at 24.2 per cent of total expenditure in 215/16 reflecting the strong commitment of the GoE to al development (Figure 2). However, it should be noted that due to linkages across sectors, spending in sectors such as health and road construction (especially rural roads) has spillover effects that positively affect outcomes. For instance, healthier children are more likely to have higher school attendance rates, while rural roads facilitate access to services. 7 USAID. 2. Ethiopia Early Grade Reading Assessment. Data Analysis Report: Language and Early Learning. 8 National Educational Assessment and Examinations Agency. November 216. Ethiopian Fifth National Learning Assessment of Grades Four and Eight Students. First Draft. 4
5 Figure 2: Weight of the sector among other priority sectors (per cent of total expenditure) % 9% 8% 7% 6% 5% 4% 3% 2% % % / 211/12 213/14 215/ Water Energy & Electricity Agriculture & Food Security Education Health and Nutrition Road Construction Others Cross country comparisons of al spending are presented in Figure 3 using internationally available data but it should be noted that the international data differs from national data due to probable reasons such as varying definitions, methodologies, reporting periods, etc. Out of the internationally agreed targets set out by the Education for All (EFA) coalition, Ethiopia meets the target on expenditure accounting for 2 per cent of total government expenditure, whereas it is yet to meet the international target for 6 per cent of GDP being allocated to (Figure 3). Figure 3: Education expenditure (% of GDP) across countries Ghana Mozambique Kenya Ethiopia Uganda Global spending benchmark (6% of GDP) Source: Data from the World Bank; World Development Indicators, July 217 edition In 215/16, the aggregate expenditure in the sector was Ethiopian Birr (ETB) 67.9 billion in nominal value and ETB 16.8 billion in real terms, at 26/7 prices (Figure 4) 9. Compared to the spending levels in 27/8, expenditure in nominal and real terms grew at an average rate of 27 per cent and 8.3 per cent respectively (Figure 5). Figure 4: Trends in expenditure Figure 5: Annual change in expenditure Education expenditure (% of GDP) Education expenditure (% of total expenditure) Education expenditure (nominal value in billion ETB) Education expenditure (real value in billion ETB) Education expenditure (nominal change, %) Education expenditure (real change, %) In real terms refers to the adjustment of monetary values by taking into account the rise of consumer prices (i.e. inflation) over time. 5
6 3. Composition of National Education Spending The past two decades have witnessed a major expansion of the public schooling system in Ethiopia, with primary enrolment (Grades 1-8) rising from 5.7 to 2 million, and secondary enrolment (Grades 9-12) increasing from.5 to 2.4 million from the year 1998/99 to 215/16 respectively. As a result, up to the late 2s, the bulk of the spending was directed at financing general, with an imbalance for technical and vocational and training (TVET) and higher. A result of this imbalance owing to the high recurrent budget (mainly due to teacher salaries), is that it leaves insufficient financing available for investments in the other inputs essential for children and young people s academic success, such as the maintenance of infrastructure, the provision of curriculum materials, teacher development, etc. In 29/, 46.8 per cent of the expenditure was allocated towards general, which reduced to 37.1 per cent in 214/15 (Figure 6). On the contrary, low amounts of funding continue to be allocated for the TVET sub-sector, from where middle level competencies to help drive the economy are to emerge. Education spending on TVET has decreased over the period from 8.5 per cent in 29/ to 6.7 per cent in 214/15. Figure 6: Composition of expenditure in 29/ and 214/15 by level of General spending Higher spending Other TVET spending spedning 29/ 214/15 Source: Data from Ethiopia FMoE, Education Statistics Abstracts for 214/15 and General Education Statistical Abstract for 215/16. Higher has been the largest sub-sector in terms of spending since 2 when the construction of the third generation of universities got under way. It accounted for 48.1 per cent of spending in 214/15 (Figure 6). Moreover, the per student spending in higher is approximately times higher than that of general in 214/15 (Figure 7). Improvements are thus required in the composition of spending by reallocating government expenditure within the sector towards general which is more pro-poor and more equitable. Figure 7: Per capita expenditure in 214/15 by level of in ETB. 35, 3, 25, 2, 15,, 5, - Primary Source: Data from Ethiopia FMoE, Education Statistics Abstracts for 214/15 and General Education Statistical Abstract for 215/16. In terms of types of expenditure, spending in the sector remained predominantly recurrent in nature. Over the last decade, nearly 62.6 per cent was on average allocated to finance recurrent expenditure (Figure 8). Salaries and nonsalary recurrent spending, including textbooks and teacher training, account for the bulk of recurrent expenditure. The remaining 37.4 per cent was on average absorbed by capital expenditure. In the presence of competing investment requirements in other sectors such as transport and energy infrastructure, the GoE has remained committed to maintaining its large capital expenditure that has more recently been driven by the construction and expansion of universities. Figure 8: Recurrent and capital expenditure ,517 3 Secondary ,641 TVET 31,668 Higher Recurrent expenditure (% of expenditure) According to the Federal Ministry of Education s General Education Statistics Abstract for 215/16, page 2, general includes preprimary, primary, secondary, Integrated Functional Adult Literacy, Special Needs Education and Teachers in General Education. 11 Per capita spending on general, which amounts to ETB 94, is calculated (due to data limitations) as the sum of expenditures for primary 6 and secondary divided by the sum of students enrolled in primary and secondary using the Federal Ministry of Education, General Education Statistical Abstract for 215/16, p.18.
7 Following fiscal decentralization in Ethiopia, regional and local governments undertake planning and resource mobilization for the sector. As a result, over the last decade, more than half of the national spending was administered by regional and local governments (Figure 9). This demonstrates the government s effort in promoting universal access to primary at the grassroots level, and the implementation of targeted interventions to close the existing regional, gender and urban-rural enrolment differentials to achieve universal primary across the board. Improvements in access to primary schools with innovations such as mobile schools are helping to reach disadvantaged groups and children living in remote rural areas. Figure : Federal recurrent and capital expenditure (% of federal expenditure) % 9% 8% 7% 6% 5% 4% 3% 2% % % Federal recurrent expenditure Federal capital expenditure Figure 9: Federal versus regional expenditure (% of total expenditure) At the regional level however the composition is different. The bulk of regional governments expenditure is allocated to finance recurrent expenditure (Figure 11). Salaries, textbooks and teachers training account for a substantial part of regional recurrent spending, while capital spending at the regional level has stagnated, reflecting the policy to mobilize communities contribution for primary school construction and expansion. Federal expenditure Regional expenditure At the federal level, nearly 64 per cent of the federal expenditure is directed to finance capital expenditure (Figure ). And approximately 19 per cent of the federal capital expenditure is financed from external sources and allocated for the construction and expansion of higher. This is due to the fact that the construction and expansion of universities is the responsibility of the federal Government while regional governments are responsible for the management of lower tier sub-sectors. Figure 11: Regional recurrent and capital expenditure (% of regional spending) % 9% 8% 7% 6% 5% 4% 3% 2% % % Regional capital expenditure Regional recurrent expenditure 7
8 4. Budget Execution Rates In Ethiopia, the sector budget execution rate (measured as actual expenditure as a per cent of adjusted budget) has been rising in recent years, though gaps remain (Table 2). Budget execution rates greater than per cent may signify challenges in the unpredictability of external aid. The gaps in budget execution can be partially explained either by absorptive capacity or allocative efficiency issues, or both, which warrants further investigation. Efficiency gains can be improved by enhancing sector coordination and planning, addressing the quality and capacity of the sector workforce as well as the quality of service delivery to reduce wastage and optimally utilize current expenditures on the sector. Further evidence generation to better understand and document financing, for example by conducting Public Expenditure Tracking Surveys to assess leakages and wastages in the sector, can contribute to additional efficiency gains. Table 2: Federal government expenditure execution rate (per cent) Total spending Recurrent spending Capital spending 26/ 7 28/ 9 2/ / /14 214/ Source: Data from MoFEC (information for sub-national levels of government has not been made available). Note: Percentages greater than per cent may signify challenges in the unpredictability of external aid. financing, domestic resources cover the majority of the federal capital expenditure, while donor contributions (on-budget) to the federal Government capital expenditure have been rising from ETB.5 billion in 26/7 to ETB 3.4 billion in 212/13 and amounting to ETB 1.9 billion in 214/15 (Figure 12). Figure 12: Sources of federal capital expenditure (in billion Birr) External source Domestic source Federal capital expenditure (real value) Sources of Education Sector Financing The national system is financed through domestic funds from the state budget, external funds received from bilateral and multilateral donors, private sector investments and household contributions. A portion of external financing to the sector is directed through off-budget channels, the amounts of which are challenging to track. Hence this budget brief is limited to analysing onbudget finances, and leaves out significant financial resources channelled to the sector through off-budget donor resources, private sector investments and households contributions. Information on the sources of on-budget sector financing has been made available only for federal capital expenditures. Regarding on-budget 8
9 6. Key Policy Issues Improve the quality and dependability of administrative data and address inflated and over-reported al statistics, for instance through third party data verification. Address quality of challenges such as the low school performance and standard examination pass rates for boys and girls at all levels, which will warrant continued national attention. With the significant loss of investment from repetition, every extra year that it takes for the completion of a cycle means the inefficient use of resources. Increase investments in holistic Early Childhood Education (ECE) which is a cost-effective way to enhance long term al outcomes and to reduce al inequities, which alongside investments made by other sectors in Integrated Early Childhood Development (IECD) will result in longer term development and economic outcomes. Introduce a separate budget line for ECE in the state budget as this is currently missing in public finance data making it difficult to measure and track how much is being spent on ECE. Shift off-budget support of to on-budget records: Significant financing of the sector is directed through off- budget channels making it challenging to track and record how much is being spent on, which calls for shifting all financing to on-budget records. Address the significant inequities in outcomes that are primarily driven by wealth disparities, which is highlighted as a critical concern. Also address the lower access to, retention, and completion rates for children with disabilities and children in emerging regions. In addition, school structures continue to neglect the particular needs of girls and disabled children, and many schools are built without adequate water and sanitation facilities, requiring more attention to be paid to institutional linkages to address, for instance, the provision of water and sanitation services for schools, as well as extend institutional linkages for social protection. Provide mechanisms to reduce the number of out-of-school children and ensure children are provided with their rights to an. The GoE estimates that there are approximately 2 million out-ofschool children in the primary school age group. However, when dropouts are also factored in, this estimate increases to over 2.6 million, with girls accounting for approximately 55 per cent of out-of-school children Ministry of Education and UNICEF - Ethiopia Study on Situation of Out of School Children (OOSC) in Ethiopia. 9
10 Annex 1: Ethiopia National Education Sector On-budget Records Gregorian Calendar Ethiopian Fiscal Year 26/7 27/8 28/9 29/ 2/11 211/12 212/13 213/14 214/15 215/16 Julian Calendar Ethiopian Fiscal Year Population (in million) GDP at current market price (in million ETB) General Inflation Rate (CPI growth rate) Exchange Rate (period weighted average) Expenditure (in million ETB) Total National Expenditure Total National Recurrent Expenditure Total National Capital Expenditure Total National Education Expenditure National Recurrent Education Expenditure National Capital Education Expenditure Total Federal Government Education Expenditure Federal Government Recurrent Education spending Federal Government Capital Education spending Total Regional Government Education Spending Regional Government Recurrent Education spending Regional Government Capital Education spending Sources of Finance for Federal Government Capital Education Expenditure (in million ETB) Domestic Source External Loan External Assistance Federal Government Education Original Budget, Adjusted Budget, and Actual Expenditure (in million ETB) Federal Government Recurrent Education: Original Budget Adjusted Budget Actual Expenditure Federal Government Capital Education: Original Budget Adjusted Budget Actual Expenditure Total Federal Government Education: Original Budget Adjusted Budget Actual Expenditure Source: MoFEC.
11 UNICEF Ethiopia/214/Ose This budget brief was written by Zeleka Paulos (Social Policy Specialist, UNICEF Ethiopia) and Ademe Zeyede (Consultant, UNICEF Ethiopia) under the guidance of Remy Pigois (Chief Social Policy and Evidence for Social Inclusion, UNICEF Ethiopia). The content has benefited from information and documentation provided by Shumye Molla (Education Specialist, UNICEF Ethiopia). The provision of MoFEC budget and expenditure data and explanations presented for MoFEC data related questions by Ato Fantahun Belew (Technical Expert, MoFEC) is highly appreciated. This budget brief has been reviewed by Emmanuelle Abrioux (Chief of Education, UNICEF Ethiopia), Jean Dupraz (Social Policy Regional Adviser, Eastern and Southern Africa Regional Office (ESARO)) and Matthew Cummins (Social Policy Specialist, ESARO). United Nations Children s Fund (UNICEF), Ethiopia 217 Permission is required to reproduce any part of this publication. Permission will be freely granted to al or non-profit organizations. To request permission and for any other information on the publication, please contact: UNICEF Ethiopia P.O. Box 1169, Addis Ababa, Ethiopia Telephone: ethcommunication@unicef.org 11
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