Cost Sharing in the Ethiopian Higher Education System: The Need, Implications and Future Directions

Abstract

Only about 1.5% of the age cohort is currently participating in higher education in Ethiopia. This is dismal, and is the major factor for of the critical shortage of educated and skilled human resource. The five-year (2005-2010) education sector development program (MOE, 2005) indicates that the higher education system in Ethiopia should be moving away from exclusive enrolments of 1-2% of the age cohort towards increasing participation to over 5%. However, free higher education is not feasible and simply inappropriate for Ethiopia. Covering the full tuition and food and room cost for a small proportion of the age cohort from the taxpayers’ money is inappropriate and inequitable distribution of resources. A significant number of students (about 54% of total enrolment in 2003/04) are enrolled in fee-paying programs in public and private institutions. The increasing need for more public budget to expand access, the requirement to redress inequitable subsidies by taxpayers to a small proportion of the age cohort and the desire to diversify revenue necessitates the introduction of cost sharing. Ethiopia has chosen a modified model of the Australian type Graduate Tax. This model is relatively more attractive, simple and manageable than other systems such as the mortgage type loan. The graduate tax scheme, as implemented in Ethiopia, ensures equitable access to students of any background, as there is no need to stipulate income of parents to arrive at the repayment amounts. It essentially foregoes mandatory parental obligations. By strengthening the tax collection and information system, recovery from graduate tax can represent over 20% of recurrent budget in a decade or so. Some policy and implementation issues need to be given serious consideration. Immediate removal of all subsidies to food and room need to be effected. Appropriate tuition fees and costs should be calculated in each program and institution. There is a need to provide each and every citizen a tax identification number (TIN) and decentralization of tax collection. Management information systems in higher education institutions and the tax collecting authorities have to be updated, harmonized and shared. A credible and transparent mechanism by which extra revenue would be dedicated to higher education for improvements of academic quality need to be put in place. The above improvements enhance the confidence of both public and university community including students towards fulfilling their responsibility and the success of the cost sharing that is implemented to diversify revenue and to address equity and quality in the Ethiopian higher education system.