Thursday, June 3, 2010


The paper is analyzing and comparing on how higher education is financed in Tanzania and Canada, it attempts to draw a general picture of how higher education is run and explores the major means for financing.
This paper is divided into sub-sections; first section is an introduction which gives a picture of the whole discussion herein. The second section of this paper discusses ways of financing higher education which include; Loans and grants from government and higher education students’ loans board, private sources- individual contributions (cost-sharing), sponsors/donors, revenues and tax collection, education levy, contracted research and consultancy in both countries.

The other sections take a glance at the policies for financing higher education which are practiced and what are the consequences that Tanzania may face in the near future using such means of funding and policies.

The paper examines also some key issues of financing education in Canada, the author decided to use Canada since the education system in Canada is well developed and therefore it is a good model for others to learn from. It focuses only on sources of revenues for higher education in Canada and its equity implication towards its people and what Tanzania can learn from them.

Therefore, this paper explores a variety of financing systems of higher education in the country, its availability and accessibility.

Meaning of higher education
Higher education is of paramount importance for economic and social development. Their responsibility is to equip individuals with advanced knowledge and skills required for positions of responsibilities in government, business and the professions.
According to Higher Education, (1994), Higher educations are those institutions characterized by the fact that they offer post-secondary education and or lead to the award of professional qualifications that range from diplomas to degree. It includes Universities, technical/professional institutions, colleges and technological institutions.

Introduction and Background

Funding for higher education in Tanzania has brought chaos and misunderstandings between the students, government, institutions and in fact with the studying schedule too. This is caused by the lack of clear higher education funding policies in the country. It was until 1992 after the creation of the new ministry of Science, Technology and Higher Education (MSTHE) that the need for the policy for financing higher education became necessary. (MSTHE, 1999)

Ishengoma (2008, p.2) puts it this way… The Tanzania government-despite of the existence of cost sharing in higher education policy for the past 15 years and its limited financial ability to finance public higher education because of many competing needs- still shoulders the burden of financing both public and private higher education through disbursing interest free loans and grants through the Higher Education Students’ Loans Board (HESLB) and the Tanzania Education Authority (TEA). The current system of financing public higher education is in dire need of being revisited to avoid further looming crises in the higher education sector.

The means for financing higher education in the country which works under the cost-sharing policy include these; Loans and grants from government through higher education students’ loans board, private sources- individual contributions (cost-sharing), sponsors/donors, revenues and tax collection, education levy, contracted research and consultancy.

Current policies for funding higher education
There have been several policies formulated since the creation of the Ministry of Science, Technology and Higher Education in 1990s, other policies and utterances from political leaders have also been given out, the major aim was to improve the process of financing higher education.

The 1999 policy as narrated in the number 2.2.5 articulates that; the big imbalance in students’ enrollment between the sciences and humanities shall be addressed. Currently, the policy was used as a determinant of who should get the loan for the on going academic year 2009-10.

The policy as narrated in 2.2.6 states that, deliberate action shall be taken towards increased financing of higher education in general and of higher education institutions in particular in order to facilitate pursuit of the missions of which they each are established. Increased funding towards the critical minimum of 1 to 1.5 percent of GNP shall be the goal.

This policy has done nothing to its claims as Another policy is found in 3.2.1 of the MSTHE document of 1999 demanding that, curricular emphasis on higher education shall be placed on programs that are geared towards responding to the changing world of sciences and technology and the corresponding ever –changing needs of the people… as agriculture will continue to be the back-borne of the economy, agricultural related disciplines and technologies shall be given priority. My doubt is what is the meaning of having good policies with poor teaching technology and manpower. The execution of this policy may remain in the writings than in practical.

3.2.3 Policy states that, the education sector shall be given priority in allocation of resources by the government. Training and research objectives shall target the development and promotion of a strong indigenous base of science and technology to enable Tanzanians solves their development problems.
If Tanzania truly wants to produce strong indigenous base of science and technology, some of the policies needs or should be removed and that, there must be one source of information to avoid current “conflict of interest”. For example, while the Loan board claims that, there is no enough fund to fund all students, the head of the state stands out and declare that, no one student shall miss the university or chased out because of lacking loan.

Major ways for funding higher education in Tanzania
i)Loans from government through higher education students’ loans board
It is an effective way of funding higher education which can be accessed by majority and increase equity in education from the low income families to the high income families. However, this effectiveness depend on the effectiveness on “means testing” and reduced misconduct by the board personnel.
ii)Private sources and individual contributions (cost-sharing)
It includes the self financed students and those financed by government by percents, it is also another effective way which if used properly could increase students' accessibility to higher education but very unfortunately, this has been denied and therefore, everyone need to be included in the grants and loan scheme. Such claims were difficult to find out any written document to support this argument.
In the year 2004-2005 after the effective take-off of the loan board, all students were supposed to be under the board, it was at this point when the role of the Sponsors and donors lost its meaning. Sponsors and donors in this sense refers to, religious foundations and organization, community based organizations and individuals who were sponsoring students at different level. Donors and sponsors (those who were helping individuals) withdrew from financing higher education at the level of individuals and their role was turned to finance direct to the government.

iv)Revenues and Tax collection plus Education levy
This method of financing higher education could have been a solution to the current problem only if the government could have played its role in the collection of revenues and tax and proper allocation of the fund in the higher education.

Ishengoma (1998) clarifies that the while domestic revenue has increased by 55% from 2000/01-2005/06, and during the same period Government finance registered consistent deficits between revenue and expenditure implying the Government’s inability to adequately finance critical sectors including higher education and also inability to control its expenditure.

v)Contribution by Owners
Other source of finance which is not in money value is from these owners of the higher institutions; their contribution is mainly on provision of infrastructures, buildings and other resources. If well organized and utilized through involvement in the development of higher education institutions, Owners can play a great role of financing higher education.

Major ways for funding higher education in Canada
Higher education in Canada, is the responsibility of the individual provinces and territories. Provinces provide the majority of funding to their public higher education institutions, with the remainder of funding coming from tuition fees, the federal government, and research grants. Compared to other countries in the past, Canada has had the highest tertiary school enrollment as a percentage of their graduating population. The following are some of the most notable sources of revenues for higher education in Canada.
In Canada, grants and loans are used as the first and major means of financing education in the country, students have guaranteed access to loans, these grants and loans a given under several categories as follows;
Principles of grants-in aid where these steps are opted in granting, one, the stimulation principle, two, tax-relief principle and the equalization principle. The purpose of these grants is not only to help majority access education but also to compensates boards in economically underprivileged areas for their relative inability to raise sufficient revenue from the locally collected taxes. ( Rubinoff, 972)

Equalization principle refers to the concept of the foundation program grant combining the ideas of provincial standards of school service and an equalization grant to provide the difference between the cost of a given level of service and the amount that can be raised by a uniform rate of taxation on real property.
This is practiced under three basis; as flat grants ( certain amount allocated to the boards on the basis of total population), variable percentage grants( sought to equalize the fiscal capacity of each district), and foundation grants programs.

Taxes in Canada is another source of revenues used as the major means of transferring money from people to government, the federal government makes sure that there is a good estimates between income and expenditures, the people are well informed in their role to pay taxes and therefore, part of the tax is allocated for financing education.
Borrowing is the other means used to finance education in Canada, this is only used when there is a need t establish very large, one-shot expenditures, such as construction of universities/ colleges or projects within the schools.

Money creation; although the federal government has the right to create money to finance public sectors, In Canada, this is merely done but it is in their constitution. This gives them an opportunity to fund education if the need be for their coming professionals. Potential Graduate Employees donate to the higher institutions students and professorial chairs sponsorship.

In Canada, Alumni play also a role in financing higher education, These are graduate students who did their studies in that particular institutions, they organize themselves in associations and collect funds. The funds collected are always given to their former education institutions, therefore, the institution earns from them.

How the Process of financing higher education divide the community in Tanzania

These policies do not allow elasticity- that is do not consider other cross-cutting issues that individual may face, example, the claim that, all science students shall be given priority in disbursement of loan and admission in the higher education does not consider students who come from low socio-economic status and villages where there have never been a laboratory and science materials are rare, therefore, it is vivid that, majority can not enjoy the loans from the loan board.

In this aspect, the major group bearing the consequence is the female/girls, low income students, disabled and the societies of pastoralist societies, hence, lack of opportunity to access educational resources.
ii)Accessibility of Loans
Majority of Tanzanian students comes from rural areas where there is limited access to information, the loan board demands students to either download Loan forms from the website or collect them from the post offices, two, the particulars needed to qualify for the loan include certificates of birth, residents, property ownership which these parents do not have, therefore, failure to attach the required information result in missing the loan and miss the access to higher education. Dachi (2000, p.148) copies Woodhall (1989a, 1989b and 1989c:78) that;
… no hard evidence to support the argument that, loans deter low income students, ethnic minorities and other marginalized groups from participation in higher education, the system of mandatory grants is restrictive and it is still the upper income families who are most likely to benefit from higher education despite the system of means tested grants.
iii)Quality of Education provided in Higher Education
Though the policies insist on producing our own scientist to cater our own problems there is great doubt about it, because most of the studying time is spent by students striking for access to loans and good learning facilities.

Two, the increased number of students is inversely proportion to the available facilities starting with accommodation, lecture room, seminar rooms, libraries and the teaching staff. For example, the University of Dar es Salaam has established two learning centers; Center for Continuing Education (CCE) and UDSM-AVU Learning Center in 2001 has changed nothing to the lecturer’s pedagogical skills. Hence, developing fear for a provision of quality education.
Galabawa (2005, p.84) show how technology can be integrated in higher education without segregating others as he says; the first step out of this trap would be to increase enrolment in higher education level in such a manner that, overtime, Tanzania can move into the category of “dynamic leaders” group: with the requisite human-capacity potential to trigger-off technological achievements through new ideas, research and knowledge.

iv)Efficiency of Higher Education
In Tanzania, like other states in Africa, higher education is highly costing than lower and basic schooling, most of the expenditures is being spent on non-teaching and non-research activities. There is also the problem of unequal distribution of enrollment of students in faculties; some of the faculties are laded by students; example, students in social sciences while in the faculties of engineering there are less numbers of enrolled students. Most students relay on theories more than practical. Carnoy (1999, p 42) doubt that, such a situation rises questions about the EFFICIENCY of public universities.

Financing for whose Benefit: Private and Public Returns
When it comes to the question of who benefit from the process of financing higher education, one can conclude that, it is the upper class because the loans scheme especially from the government as the main financier of education is being implanted without taking into consideration other issues like; the level of income of the families, as Dachi (2000) copies Omari (1994) that…the loans schemes in Tanzania is implemented without taking into consideration family income levels, thus failing to institute a different criterion for disbursing loans between relatively, those who are considered as high income students and low income students. It is important to clarify the benefits of higher education by putting them into two categories; private and social/public returns.

Private Returns from Higher Education
Private returns refer to those benefits that an individual have after completing education (higher education in this context). There are several returns including;
a)Earnings- the increase of productivity goes direct with the increasing in earnings. The earnings discussing here refers to the individual earning from cash to material wealth.
b)Quality Employment- with higher education, one is not going to seek for any job but a quality one, one therefore becomes more productive for himself but also for the community. Currently, more jobs are available for increased job-specific human capital among those with higher levels of education
c)Social status – human being likes being appreciated, that they exist, so when it comes to higher education individual would like to acquire it so as to increase their social status in their working society.

Public Returns of Higher Education
This refers to those benefit of an individual through which the public benefit from, these benefits include the following;
a)Economic growth- education has effect on the growth of the economy of any country in that education increases human capital. More highly educated individuals mean more analysts, and inventors, and scientists working to increase more human capital through the development ideas and technologies and proper implementations of those ideas. Hence more and quality goods are produced for the growth of a stable economy.
b)Development of good citizenry- this benefit need to be understood with a close eye, it is believed that, the society with more educated elites the chances of misconducts is lowered, therefore, these people will understand the importance of voting, cleanness and other society related issues.
Therefore, to conclude this section, Galabawa (2005) warns that, unless the urge for entry to higher education compensates for the extra costs incurred at secondary/post secondary levels, there is a danger that enrollment at these level may fall if benefits do not follow schooling. (p.21)
The Findings
a) Lessons from Canada
Canada's aim of all citizen to have access to education has succeeded, from the discussion, the paper does not insist that Tanzania should adopt all the financing techniques from Canada as it has taken Canada centuries to hold the position they have today, but rather insist on practicing some of them including; collection of funds from alumni, proper methods of collecting taxes from citizen and proper allocation of these taxes to be based on countries priorities education being the one, and also encourage repaying of loans from graduates; not through imposing fates on them but laying understandable basis as to why they should repay.
To solve the problem of inequality in accessing loans from the HESLB, the use of equalization principles as used in Canada could play a great part.

b) From the discussion
Several findings have been identified from this paper; the current financing system do not have a specific criteria for deciding who deserves what in the process of disbursing loans, as the result, even the students from well-off families have been included the loan board, two, there is a need of having a guaranteed system of repaying back of loans, scholarships should also be aimed to those in need whose ability to afford the cost of education is almost zero.

Other findings are that, the political statements should be filtered from policy implementation because if this is allowed, the system will always be twisted by those political utterances and statements.

It is also noted that, the connection between education and opportunity has oriented the discourse around those who are most in need of enhanced opportunities. Low income, minority, and disabled students are often the targeted group in this context, and the same general focus has been applied to low-wealth or low-income taxpayers.

What to be done
The financing system in Tanzania has brought the education sector at dilemma, the state is struggling to move forward but there are pitfalls in the financing system that needs to be addressed. There are several options that the state can deploy to enhance the current financing system; the following may be assistance per the finding;
One, finance higher education out of taxation on a small scale, Two, the government inter into contract with banks to provide educational loans to students just the same as “Mabilioni ya Kikwete” which was the loans taken from the bank, or else, create a special bank for generating, disbursing and collecting student loans.
Three, rely on private finance for students who comes from well-off families and, perhaps, a small number on scholarships for Low income, minority, and disabled students and or low-wealth or low-income taxpayers. (Dachi, 2000, Barr, 2004)

Concluding Observation
Having explored the policies for financing higher education, it is strongly recommended to have up-to-date policies which will have clear distinctions criteria of who deserves what and drop the current system of relying on paper information. The government may opt for a system of tracing back the financial capabilities of parents therefore when it comes to means-testing it will be easier to come out with true deserving names.
Tanzania can not ignore the truth that, the supply of resources in our production is so limited and therefore, there are extra power needs to be employed to include both students from low income families too.

We need scientist, teachers and engineers who will take us to somewhere else, therefore, the following must be included in financing higher education as Galabawa (2005) outlines them; (i) the end product ( graduated students) must be allocated among competing uses, assuming that behavior is rational, (ii) resources used in education provision have alternative uses,; thus it is possible to use the same kinds of resources to make different kinds of goods for Tanzanians with the education system itself and outside the education system.

The question comes in, should the state make the higher education scarce so that we may have quality education or allow the influx into higher education and miss the quality? Need more research especially on the rate of return to education, if the higher education has high rate of return both; private and public return regardless of quality let it be, but if not, the state therefore need to rephrase the policies and conduct of financing higher education.

Carnoy, M. (1999). “Globalization and educational reform: What planners need to know. Paris: UNESCO.
Dachi, A.H.(2000). ‘Student loans in higher education finance in Tanzania: a delusion, or a hidden benevolent grant scheme? Vol.16, No.3. Faculty of Education, University of Dar es Salaam.
Galabawa, J.C.J (2005). ‘Enhancing education quality and efficiency: some observation on Kenya, Tanzania and Uganda. University of Dar es Salaam.
Galabawa, J.C.J. (1993). ‘Status and future challenges of the Tanzania primary and secondary education. Economic Research Bureau. UDSM.
Ishengoma,J.M. (2008). Financing Public Higher Education in Tanzania: Towards a New Model
and Implications for Development and Retention of the Next Generation of Academics. Faculty of education, UDSM.
MSTHE, Higher Education Policy (1999), URT
Nicholas Barr, 2004, "Higher Education Funding," Oxford Review of Economic Policy, Vol. 20, No. 2
Rubinoff, Q.S. (1972) “Federal-Provincial Cost Sharing in Education,” Second Alberta Seminar on Education Finance. Edmonton: Alberta Teachers' Association.


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