/SELM2_wk3_Program_EN

Higher Education in the Mediterranean and beyond: how to reach financial sustainability while providing high quality standards?

AFD/WORLD BANK/CMI PROGRAM

The Agence Francaise pour le Development (AFD) and The World Bank are proposing to assist Mediterranean and Middle East and North African countries, interested in seeking financial sustainability to enhance their Tertiary Education Systems. Building on previous work conducted by AFD, notably the studies done in Lebanon, Egypt and Tunisia on Financing of Higher Education, and on sector work conducted by the Bank in Egypt, Jordan, Morocco, Palestine and U. A. E., this program aims to analyze the current financing constraints- in particular given the increased enrollments- that countries in the Region are facing, and building on lessons learned from the Region and elsewhere, propose a menu of policy options.

This program has emerged as a result of multiagency cooperation efforts at CMI- Marseille Center for Mediterranean Integration. It is part of the CMI Cluster on Skills, Employment and Labor Mobility (SELM). The main objective of the SELM cluster is to promote cooperation between European and MENA countries to stimulate job creation and economic growth to absorb the rapidly growing and more educated labor force in MENA countries. To effectively address such a complex issue, a multi-sectoral approach is needed, involving policies encompassing the education system, labor market institutions, as well as the social insurance system. From the Education Sector, one of the key programs is to Build a Regional Approach to Improve Quality and Governance in Tertiary Education. The proposed activity on Defining Financial Sustainability Strategies for Higher Education Systems in the Region is an activity within this Program.

To meet the above objectives AFD and WORLD BANK are proposing to hold a two day seminar in Marseille on January 24-25 2011 to explore and discuss with representatives from Ministries of Finance, Higher Education, Public and Private University leaders, International Finance Corporation and experts on Financing of Higher Education, alternative financing mechanisms that would enable countries in MENA to achieve financial sustainability in the short and medium term, while at the same time increasing coverage and the quality of their graduates.

Why a Seminar on Financial Sustainability of Tertiary Education in MENA? MENA countries are already spending an important amount of financial resources on higher education, however the education systems are not obtaining the economic nor social benefits expected due to the high unemployment rate of University graduates. In addition to this, the allocation of resources within the sector is not taking into account expenditures on science and technology development, which are critical to offer good quality tertiary education. On average 75% of expenditures are allocated to salaries, with a ratio of 32 students per teacher, and a ratio of academic to non-academic staff of 1:0.7.

This indicates that there are little resources left for investments critical for higher education such as 1

libraries, laboratories, and qualified staff. Although most countries are already spending between 4-8 percent of GDP, which in some cases is higher than the average for OECD countries which is 6 percent, when per student costs are analyzed it becomes evident that the systems are underfunded. This underfunding is virtually inevitable given the increase in enrollment rates observed in all countries in the last decade and the constraints on the public sector budget, with limited capacity of substantial additional tax revenues to finance public higher education. Indeed, the rapid increase in the number of students leads to an equally rapid decline in the expenditure per student in real terms, even if national authorities are making significant efforts.

In terms of outcomes of the higher education system, some key indicators used internationally are related to number of researchers per million people. The MENA average is 4 times less than the OECD average, signaling that higher education systems in the Region have a long way to be able to produce the kind of results needed to be competitive in a knowledge based economy.

Another important element to understand what are the benefits of higher education, and who is benefiting from it is the interaction of educational attainment and employment opportunities.

Although the expansion of the higher education system has given access to much more students throughout the MENA region, University graduates are not necessarily better placed to find jobs than secondary or TVET graduates. In some countries, the unemployment rate of University graduates has increased in recent years, and is much higher than for TVET graduates.

These poor outcomes in terms of labor market insertion can not only be explained by failures in the education system. To fully understand the limitations to job creation it is important to analyze constraints emerged from labor regulation. Mathur, 2010, and King et al, 2010, have studied the effect of higher employment protection on investments in tertiary education. The mechanism driving this link is the effect of employment protection on worker flows. Overregulation of labor leads to fewer vacancies available per unemployed worker (also referred to as market tightness). This reduces the probability of finding a job and therefore lowers the expected returns to education.

It is quite important to devote attention to what are the most common used mechanisms for allocation of resources and their respective accountability measures. There are geographical disparities in the way supply of higher education is presented in some countries. This indicates somehow that the allocation of public resources is not necessarily being equitable. On the other hand, there are also indications that there are internal and external efficiency problems related to the management of higher education.

Searching for equitable and efficient use of financial resources to support higher education is a critical priority for most countries in MENA. What are the lessons to be learned in terms of Resource mobilization, resource allocation and resource utilization?

Looking at lessons from European countries, the US, Canada and Australia, as well as from countries where higher education systems have moved from being ‘elite’ systems towards ‘massification’ of higher education, the main question has been and still is, to what extent higher education should be publicly funded, and derived from it, who should benefit from public funds, and how should public funds 2

be allocated. Although different countries have set up different funding schemes, they do not necessarily respond to economic concerns, they usually are a product of political and cultural contexts and constraints. Changes observed in the past two decades have been basically related to the use of student fees and other charges, and student aid programs to compensate for equity concerns related to lack of access due to lack of financial resources. Regarding resource allocation, there are a couple of experiences in the MENA region on the use of competitive mechanisms to support quality and innovation. The most notable ones are Palestine, Egypt, Jordan and Tunisia. Important lessons on these experiences and how they can be a tool to target use of public funds to meet specific national goals are worth examination.

There are also recent experiences aligned with European trends to promote University Autonomy, and countries like Tunisia and Morocco are introducing for the first time contract-based funding to support Universities. Although this is a very recent development, important lessons on the first experiences, as well as lessons learned from elsewhere can be relevant in the quest for efficient use of public resources and contribute overall to defining sustainable financing strategies.

According to studies done by AFD, the demand for private higher education in the Mediterranean is potentially high, stemming from the decrease in standards of public provision, the need to improve skills and qualifications for graduates that can’t find jobs, the need to find more and better opportunities for internships and on the job training, and the need to fill the gap due to regional disparities in public offer.

Lebanon has probably the longest history of a dual system, where 54% of enrollments are in private universities. Other countries in the region such as Jordan and Egypt have begun to increase their offer in private Universities, reaching 15% of enrollments in Egypt and Jordan. This contrasts with Tunisia with only 2.4% and Morocco with 7 %, where private universities were very few ten years ago and are growing very rapidly.

With the exception of Lebanon, private universities are financed through private sources. In Lebanon, public demand side financing for high achieving students is available in both public and private universities. Private demand side financing is available in Tunisia, and Egypt, to finance private universities. In Jordan, the State has introduced state demand side financing for both public and private universities. Given the fiscal constraints that most countries are facing and the likelihood of increased financial constraints, demand side financing is clearly an important option to explore.

Likewise, policy decisions that attempt to supplement limited public revenue with private revenue for example with tuition fees, increasing resource diversification in public universities and institutes, including cost-sharing mechanisms, removing barriers and incentives for further growth of the private sector; and demand side financing as opposed to supply side financing represent important opportunities for improving financial sustainability in MENA countries. All of these options and their potential benefits and down sides will be discussed during the proposed event.

3

DRAFT PROGRAM JANUARY 24-25, 2011 – MARSEILLE, VILLA VALMER January 24, 2011 8:30–9:00

Registration

9:00–9:15

Welcome speech, AWI, World Bank, AFD

9:15–10:30

Overview of financing of higher education challenges and trends

Questions to be addressed during this session: 

Are countries strategies to increase coverage being cost-effective?

 

Are countries investing sufficiently at the tertiary education level?

Are public resources distributed in a manner that encourages innovation and rewards performance?

Are public subsidies distributed equitably across all groups in society?

What are the fiscal constraints to increase financing at the same rate as expansion and increased current and future demands?

 

Panel members: Jamil Salmi, Benoit Millot, World Bank, Samir Helal, Ministry of Higher Education, Egypt Chair and Moderator: Thomas Melonio, AFD 10:30–11:00

Q&A and Plenary Discussion

11:00–11:15

Coffee Break

11:15–12:15

Are the economic, social and labor market outcomes of higher education meeting expectations?

Questions to be addressed by this session: 

Labor Regulation why is it a constraint to employability?



To what extent is labor regulation a constraint for job creation in MENA?

 

Employability of University graduates vs other levels of education Field of Studies, Gender and other considerations to improve employability

Panel members: Diego Angel, World Bank, Hedi Zaiem, Ministry of Higher Education and Scientific Research, Tunisia Chair and Moderator: Abdelhafid Debbarh, Ministry of National Education, Higher Education, Professional Training and Scientific Research, Morocco 4

12:15–1:00

Q&A and Plenary Discussion

1:00–2:30

Lunch

2:30–3:10

Cost sharing and public funding for higher education - How to make it equitable

Questions to be addressed by this session:  

Who should pay for higher education, what is the rational for cost-sharing and what are the available modalities?

Lessons learned on political, social and cultural contexts for cost-sharing to be successful

Panel members: Maureen Woodhall, Institute of Education, University of London, UK; Bruce Johnstone, New York State University, USA Chair and Moderator: Mourad Ezzine, World Bank 3:10–3:40

Q&A and Plenary Discussion

3:40–4:40

Private provision of higher education in MENA

Questions to be addressed by this session : 

What are the incentives driving private provision in MENA?



What are the financing modalities used to fund private provision?



How do compare economic, social and labor market outcomes between public and private provision?

Panel members: Abdelhafid Debbarh, Ministry of National Education, Higher Education, Professional Training and Scientific Research, Morocco, Tahar Ben Lakhdar, Université Esprit, Tunisia; Khalil Karam, Université SaintJoseph, Lebanon; Marc Pena, University Paul Cézanne, France; Paul Ginies, International Institute for Water and Environment Engineering, Burkina Faso Chair and Moderator: Jean-Christophe Maurin, AFD 4:40–5:00

Coffee break

5:00– 5:30

Q&A and Plenary Discussion

5

January 25, 2011

9:00–10:00

Developing financing strategies, what are the tools available?

Questions to be addressed by this session: 

Resource allocation: Financing formulas, perfomarnce based contracts and other financing tools,Targetting investments, the use of competitive funds to promote quality, innovation, and meet national goals-priority sectors



Resource Mobilization: Cost-sharing modalities



Improving Resource utilization: How to reach cost-efficiency

Panel members: Paulo Santiago, OECD; Hisham Kuhail, Alternative Ways Consulting; Lamees Al-Alami, Minister of Education and Higher Education, Palestinian Authority Chair and Moderator: Adriana Jaramillo, World Bank 10:00–10:30

Q&A and Plenary Discussion

10:30–10:45

Coffee Break

10:45–12:00

Private provision and funding for higher education- how to make it equitable



Student aid programs: grants and loans.



Lessons learned globally on capitalization, bearing financial risk, and servicing loans.

Panel members: Marc Gurgand, Paris School of Economics; Bruce Johnstone, New York State University Chair and Moderator: Jamil Salmi, World bank 12:00–12:30

Q& A and Plenary Discussion

12:30–1:45

Lunch

1:45–3:00

Building a sustainable financing strategy: OECD case studies, MENA case studies

3:00–3:30

Next steps

6