Master of Arts Degree In Sustainable International Development

The Programs in Sustainable International Development The Heller School for Social Policy and Management Brandeis University The Impact of Capitation Grants on Access to Primary Education in Ghana Submitted by MOHAMMED AMIN DAWUDA A paper submitted in partial fulfillment of the requirements for the Master of Arts Degree In Sustainable International Development Academic Advisor Date Director, Programs in Sustainable International Development Date In signing this form, I hereby authorize the Graduate Programs in SID to make this paper available to the public, in both hard copy and electronically over the internet. Student Signature Date

TABLE OF CONTENTS CONTENTS PAGE TABLE OF CONTENT... i ABSTRACT... iii EXECUTIVE SUMMARY... iv ACKNOWLEDGEMENTS... vi ABBREVIATIONS... vii SECTION ONE... 1 INTRODUCTION... 1 Introduction to the Development Question...1 The Case Study...2 Contribution to the Development Field...3 Limitations of the Study...4 SECTION TWO... 5 BACKGROUND AND DEVELOPMENT PROBLEM... 5 SECTION THREE... 8 METHODS... 8 Introduction...8 Context of the Study...8 Data Sources/Analysis...9 Definition of Key Indicators... 10 Section Summary... 12 SECTION FOUR... 13 LITERATURE REVIEW... 13 Introduction... 13 i

Education Policy Reforms in Ghana... 13 Abolition of School Fees in Basic Schools... 16 The Capitation Grant Policy... 18 Gender Gap in Education... 22 Equity Allocation of Education Resources... 24 Section Summary and Conclusions... 25 SECTION FIVE... 26 FINDINGS AND SUBSTANTIVE DISCUSSION... 26 Introduction... 26 Effects of Capitation Grants on access to Primary Education in Ghana... 26 Gross Admission Rate (GAR)... 26 Net Admission Rate (NAR)... 27 Out-of-Primary School Children in Ghana... 29 The Effect of Capitation Grants on Participation in Primary Education... 30 Gross Enrollment Rate (GER)... 30 Net Enrollment Rate (NER)... 33 Gender Parity Index... 34 Primary Completion Rate... 36 Analysis of Equity Issues in Capitation Grants Allocation to Primary Schools in Ghana... 37 Section Summary... 39 SECTION SIX... 40 CONCLUSIONS AND IMPLICATIONS... 40 Conclusions... 40 Implications for Development... 41 REFERENCES... 44 ii

ABSTRACT The capitation grants policy is one of the key strategies adopted by the Ghana Government to motivate Ghana s drive to achieve universal primary education. This paper examines the impact of this policy on access to and participation in primary education in Ghana. The key policy questions addressed in this paper is that: to what extent has the capitation grants policy contributed to increase access to and participation in primary education adequate enough to enable Ghana achieve its educationrelated MDGs? And what lessons can be learnt from Ghana s experience of the capitation grants policy? Data for the study was obtained from the World Development Indicators, UIS, and Ghana Education Management Information System (EMIS). The key indicators observed in the study are GAR, NAR, out-of-primary-school children, GER, NER, GPI and primary completion rate. In addition, the study looked at the extent to which capitation grants were equitably allocated. The above indicators were observed five years before implementation of capitation grants and five years afterwards. The results obtained from the indicators of the two regimes were compared to assess the extent to which capitation grants affected enrollment outcomes. The results of the study were mixed. While the study showed that Ghana will miss the MDGs, the evidence presented showed significant improvement in enrollment following implementation of the capitation grant policy. The results also showed that the allocation of capitation grants was less equitable and might encourage inequality in schools. The study therefore suggests modification in the capitation grants allocation formula to include three components: threshold grants, variable grants and bursary to children with special needs. iii

EXECUTIVE SUMMARY The general consensus across the globe is that poverty and inequality can be effectively addressed through human development and the principles of human development are built on sound education. The importance of education to development is clearly articulated in the UN Millennium Development Goals and the Education for All goals. In recognition of the central role of education to development, the government of Ghana subscribed to the principles of the MDGs and EFA. As part of strategies to achieve universal primary education, the government of Ghana launched the capitation grants policy in 2005 where every public basic schools including kindergarten, primary and junior high schools were paid GH 3.00 Ghana cedis ($2.10) for every child enrolled in school. This figure was reviewed upwards to GH 4.50 Ghana cedis ($3.14) in 2009 to account for inflationary effects. The grants were meant to replace school fees and to provide schools with the resources needed to carry out school quality improvement activities such as enrollment drive in basic schools. This paper looks at the impact of the capitation grants policy on access to and participation in primary education in Ghana. In particular, it examines outcomes related to Ghana s performance on the education-related MDGs. It also examines equity issues of the grants. The key policy questions addressed in this paper is that; to what extent has the capitation grant policy contributed to education access and participation in Ghana to encourage the attainment of the education-related MDGs and what lessons can be learnt from Ghana s experience in implementing capitation grants? To address this policy question, this study looked at trends in enrollments five years prior to implementation of the capitation grants policy and compared them to trends in enrollments five years after capitation grants were introduced. The data for the study were obtained from three sources: the World Bank World Development Indicators, UNESCO Institute of statistics, and the Ghana Education Management Information System. The analyses were carried out by observing indicators related to education access including GAR, NAR, and out-of-primary school children; and by indicators related to participation include GER, NER, GPI, and primary completion rate. In addition, the study examined the extent to which capitation grants are equitably allocated using the vertical equity allocation framework. The results of the study showed that capitation grants have to some extent contributed to greater access to primary education in Ghana albeit, not enough to enable Ghana to achieve the educationrelated MDGs by the target date. All the indicators measuring access and participation in education increased significantly following the implementation of the capitation grants policy. For instance, prior to implementation of capitation grants, primary net enrollment rate depreciated by about 5 percent in iv

three years but soon after implementation of capitation grants, primary net enrollment rate increased by 6 percent in just one year and thereafter, increased by 11 percent in three years. The improvements in enrollments were generally in favor of girls. While capitation grants have contributed to increased access to primary education in Ghana, these increases were inadequate to enable Ghana to achieve the education-related MDGs. If Ghana was to achieve the MDG on education, all children of the official entry age for primary school should have been attending school by 2009. However, this did not happen. The indicator for measuring net intake in grade one (NAR) as of 2009 was 72 percent indicating that 28 percent of children of the official entry age were not enrolled in grade one in 2009. What was more alarming was that the net intake rate of grade one (72%) was lower than the NER (76%) showing deterioration in primary enrollment in Ghana. But in terms of gross admission, the results showed that many more children were enrolled in school than before. But gross admission rate is not a good measure of universal education because it considers enrollment of over-age and under-age children. In addition, the number of out-of-school children declined significantly which is an indication of positive impacts of the capitation grant policy. In regard to participation in primary education, the results were mixed. While the study showed that Ghana will miss its MDG target on education, the key indicators observed comprising gross enrollment rate (GER), net enrollment rate (NER), and primary completion rate improved significantly. Indeed, before implementation of capitation grants, enrollment rates were declining at about 6 percent but this situation was arrested soon after implementation of capitation grants and enrollment figures began to rise again. Finally, the results of analysis of allocation of capitation grants to schools in Ghana showed that the allocation was inefficient and less equitable. The allocation method whereby every school is given per capita capitation grant was proven to be less equitable and will likely perpetuate inequality in schools. Inequality can seriously undermine the objective of the capitation grant. In order to improve the capitation grants to eliminate inequality in schools, I propose that the allocation formula should be modified to incorporate three key components. A threshold grant to every school to cover administrative expenses, variable grants base on enrollment and bursary for disadvantaged children. One of the key lessons learnt from Ghana s experience of implementing capitation grants was that a fairly simple method of financing primary education could potentially contribute greatly to higher educational outcomes. Despite the weaknesses of the grants, it has encouraged more children to be enrolled in school. v

ACKNOWLEDGEMENTS I wish to express my heartfelt thanks to Professor Susan Holcombe, my academic advisor and a professor of practice at the Heller School for Social Policy and Management, for her sustained inspiration, objective criticism and guidance throughout this project. I am also beholden to Professor Stephen Fournier and Professor Ricardo Godoy for their advice on data management. Additionally, I sincerely appreciate the moral support of my wife Grace Ananginbire, my mother Rahinatu Dawuda and all the Dawuda family. Lastly, I thank all my colleagues in the Advanced Study class who provided criticisms during the MA seminar period where I presented several aspects of this paper. vi

ABBREVIATIONS AACN BECE CDD DDE DEO DFID EAMI EFA EMIS fcube FPE GAR GER GES GH GPI GPRS JHS MDG MOE MoESS NAR NEED NER NPP PTA SHS SMC SPIP American Association of Colleges of Nursing Basic School Certificate Examination Center for Democratic Development District Director of Education District Education Office Department of International Development Education for All Monitoring Indicators Education for All Education Management Information System Free Compulsory Universal Basic Education Free Primary Education Gross Admission Rate Gross Enrollment Rate Ghana Education Service Ghana Cedi Gender Parity Index Growth and Poverty Reduction Strategy Junior High School Millennium Development Goals Ministry of Education, Ghana Ministry of Education Science and Sports Net Admission Rate Nursing Education Expansion and Development Net Enrollment Rate New Patriotic Party Parent Teacher Association Senior High School School Management Committee School Performance Improvement Plan vii

UN UIS UNESCO UNICEF USAID WDI United Nations UNESCO Institute for Statistics United Nation Educational, Scientific and Cultural Organization United Nations Children s Fund United States Agency for International Development World Development Indicators viii

SECTION ONE INTRODUCTION Introduction to the Development Question There is general consensus across the globe that one of the most important means by which poverty and inequality can be effectively addressed is through human development and the principles of human development are built on sound education. Among the key international initiatives designed to address educational issues is the Education for All Initiative (EFA) and the UN Millennium Development Goals (MDGs). Education is a top priority of the UN Millennium Development Goals in that attaining universal primary education is its second goal. These goals require that every child, girl or boy alike, enroll and complete the full cycle of primary education. These two key international policies underscore the importance of education to sustainable development. In recognition of the central role of education to development, the Government of Ghana subscribed to the principles of EFA and the MDGs to attain universal primary education by 2015. This is reflected in the key policy initiatives undertaken over the past decade to promote basic education. The government s initiatives among others include the Free Compulsory Universal Education (fcube) policy launched in 1996, and most recently the Capitation Grant Policy. Capitation grants are school operating grants. Under the policy, the central government makes cash transfers to all public basic schools based on the number of pupils enrolled. In other words, it is per capita allocation of funds to school to support school performance improvement efforts. In Ghana, like other parts of the world, basic schooling is comprised of 2 years kindergarten, 6 years primary school and 3 years junior high school. Since 2005, the Ghana Government abolished school fees in basic schools and replaced it with capitation grants. This represents one of the key policy intervention design to enhance the achievement of the MDGs. Currently each public basic school in Ghana receives a sum of four Ghana cedis, fifty pesewas (GH 4.50 or $3.15) per pupil enrolled per academic year. The overarching goals of the grant policy are: a) to remove the financial barriers that prevent households from enrolling their children in schools and b) to enable schools to use financial resources to embark on school performance improvement to increase access and participation in education. After implementing this policy for nearly five years, very few studies have been conducted to assess its impact. One of the very few studies that have been carried out is Osei et al 2009. This study concluded that capitation grants had minimal influence on enrollment in basic schools but this study was flawed by methodological and attribution issues. This paper therefore examines the impact of this major education policy on access to and participation in education in Ghana particularly outcomes related to Ghana s attainment of the 1

Millennium Development Goals. The key policy questions addressed in this paper is that to what extent has the capitation grant policy contributed to increase in access and participation in primary education in Ghana to spur Ghana s attainment of the MDG 2? And what lessons can be learnt from Ghana s experience of implementing the capitation grants? The specific questions addressed within this larger development question are fourfold. First, has capitation grants expanded access to primary education adequately enough to motivate Ghana s quest to achieve the MDGs? Second, what is the effect of capitation grants on participation in Primary Education? Third, does abolition of school fees bridge the gender gap in education? And finally, how equitable is the capitation grants allocated to schools? These questions have been posed against the backdrop that various international development organizations, including the World Bank, UNICEF and DFID, have been advocates of school fees abolition and have supported school fees abolition initiative with the notion that school fees represent one of the key barriers to basic education in many developing countries. But in this paper, I argue that the abolition of school fees alone is not a sufficient condition to propel higher enrollment in schools. There are other competing issues such as private cost of schooling to households, school infrastructure, availability of teachers and adequate teaching and learning resources that encourage access and participation in basic education. The Case Study The capitation grant policy is a new social policy currently being implemented by the Ghana Government to motivate achievement of universal basic education. Ghana is one of the sub-saharan African countries that are striving to achieve the MDGs. As of 2009, about 24 percent of Ghana s four million primary school-aged children were not attending school (Ministry of Education, 2009). Though basic education in Ghana comprises kindergarten, primary and junior high school; this study focuses on primary education. Primary education was chosen against the backdrop that the capitation grant policy came into force in 2005. Therefore, the cohorts of the policy are yet to complete primary school. It would therefore be less meaningful to look at the effects of the grants at the junior high school level because the cohorts of the program are yet to enter junior high school. Similarly, kindergarten education was rolled into the formal education system in 2007 so there is no sufficient data to facilitate meaningful analysis at the kindergarten education level. More importantly, looking at impacts of the policy at the primary education level is consistent with the MDGs and the EFA. 2

Key stakeholders of the capitation grant policy are categorized in terms of policy and implementation levels. At the policy level, the key stakeholders of capitation grants are the Ministry of Education, the Ministry of Finance and Economic Planning, and The Ministry of Local Government and Rural development. While the Ministry of Education is the lead ministry responsible for education policies in Ghana, the other ministries play significant role as well. For instance, the Ministry of Local Government and Rural Development provides school infrastructure through the District Assemblies. Likewise, the Ministry of Finance and Economic Planning harmonizes budgets of all ministries and departments into a national budget. Given this strategic positions, both ministries are key players of education delivery in Ghana. At the policy implementation level, the key stakeholders are the Ghana Education Service, School Management Committees, Parent Teacher Associations, Ghana National Association of Teachers, Old Students Associations, traditional rulers, community-based organizations, and non-governmental organizations. The Ghana Education Service is the lead agency in-charge of implementing pre-tertiary education in Ghana whereas the SMCs are the governing bodies who make key decisions on school performance improvement. In other words, the SMCs are the custodians of basic schools at the community level. Contribution to the Development Field This study is relevant to development in many ways. Foremost, it provides useful feedback on the effects of the capitation grant policy. Capitation grant is a public good in that its resources are drawn from the consolidated funds. The consolidated funds are revenues generated from taxes and other government revenue sources. Therefore, effective and efficient utilization of these resources have wider implications for Ghana s socio-economic development. For instance in 2009, government projected to spend about 24 million Ghana cedis (16 million US Dollar) on payment of capitation grants to basic schools. This amount is equivalent to the cost of constructing about 365 three-unit classroom blocks with adequate sanitary facilities. While it is important for government to make education affordable to all, there are other competing needs such as provision of adequate school infrastructure for the large number of children who enroll in school each year. One key issue yet to be resolved is inadequate classrooms. Currently there are a number of public primary schools running a shift system in Ghana. The shift system is a system where the schooling period is divided into two segments and used by two schools in the same school building. One school uses the school building for the first half of the day and the other continues in the second half of the day. This system has serious limitations especially on contact hours and on school attendance. Children attending such schools spend less time in school 3

compared to their counterparts in schools that do not run shift. Hence, the shift system has widespread implications on both participation and quality of education. In addition to the above, the report of this study serves as an important source of information for researchers interested in studying more about the capitation grants. Therefore findings of the study will add to the stock of existing knowledge. Furthermore, recommendations from this study could contribute significantly to shaping public policy on education in Ghana and other parts of the world. For example, effective use of the capitation grants could enhance access to basic education and provide more opportunities for children to effectively participate in education and training. Finally, the study will provide information on the extent to which Ghana is meeting its obligation in providing universal primary education. Ghana s constitution under article 25 clause 1(a) guarantees free basic education for all children, but realization of universal basic education depends on a number of factors including efficient use of scarce education resources. In addition to the above, primary education is a fundamental human right guaranteed under international law. Ghana as a party to the International Covenant on Economic, Social and Cultural rights as well as the International Convention on the Rights of the Child, has an obligation to provide quality education to every school-aged child in Ghana. It is against this backdrop that this study is important to development. Limitations of the Study In every human activity limitations are bound to occur. This study is not an exception. The study has three main limitations. Foremost, there was no sufficient data to carry out rigorous statistical analysis that would have shown causality. The Ministry of Education had no effective database for managing information on education indicators. For example, I could not obtain information on payment of capitation grants to basic schools since its implementation. The website of the Ministry of Education has been broken down since I began this research in June 2010. Second, the micro enrollment data I obtained from the Ministry of Education in Ghana were in PDF format making it extremely difficult to be transmitted into excel or STATA or any useful statistical software to facilitate meaningful statistical analysis. Lastly, it would have been useful to develop a questionnaire to collect data from the program implementers and beneficiaries in the field. However, the Program in Sustainable International Development does not encourage students to carry out independent study on topics they are researching. This limited the amount of information that would have otherwise led to a much sophisticated analysis and yielded stronger results. 4

SECTION TWO BACKGROUND AND DEVELOPMENT PROBLEM The importance of education to development is clearly articulated in the UN Millennium Development Goals (goal 2 and 3) and serves as reference point for many governments and international development organizations around the world. Ghana s vision of becoming a middle income country by 2015 is envisaged in its Medium Term Development Plan known as the Growth and Poverty Reduction Strategy (GPRS) II and basic education is one of the key strategies outlined for the achievement of the objectives of the GPRS. It was observed that despite government s earlier educational interventions such as the Free Compulsory Universal Education (fcube) policy launched in 1999, basic schools were charging school fees and this was a barrier to enrollment of children in schools especially to many poor households who could not afford these fees and levies. To address this issue, the government through the Ministry of Education in 2005 abolished school fees at the basic school level and instituted school capitation grants in the 2005/2006 academic year. The nation-wide implementation of the policy was informed by the positive results of a pilot project implemented in the then 40 most deprived districts in Ghana. The implementation of the pilot project in these districts resulted in a 14% increase in enrolments in schools in just one year. Despite the implementation of the capitation grants policy for nearly five years from now, many children of school-aged are still out of school. As of 2009 primary net enrolment rate was 75.9% indicating that about 24% of children of the official school going age were not attending school. What is more alarming was that the number of school-aged children enrolling in grade one was lower than the number of school-age children attending the full cycle of primary school, that is grade one to six (MOE, 2009). What this means is that nearly 28% of children aged six where not enrolled in grade one. This trend has far-reaching implications for the human resource development agenda of Ghana as well as Ghana s drive to achieve the UN Millennium Development Goals. This means that Ghana is likely to miss its target of the education-related MDGs. This therefore raises the question as to whether capitation grants alone are adequate to encourage higher enrollment in primary schools. While efficient use of the capitation grants is necessary to achieve its desired goals, as a Budget Officer responsible for implementing the capitation grants at the district level, I found that a large portion of the funds for capitation grants is mismanaged at the school level due to inadequate capacity of many head teachers to effectively use the grants to embark on good school performance improvement activities. Indeed, many 5

head teachers have issues with preparation of effective school performance improvement plans 1. A study conducted by the Ghana Centre for Democratic Development in 2010 showed that one out of six district directors indicated that their schools have no school performance improvement plans (SPIP) which is a prerequisite for utilization of the grants. Furthermore, only 17 percent out of the districts who prepared SPIPs submitted them in time for approval. Other issues relating to the management of capitation grants reported in the CDD-Ghana study were weak monitoring and supervision, lack of transparency in utilization of funds and general consensus that the grants are inadequate in meeting the needs of the schools (CDD-Ghana, 2010). These issues are critical because the accountability systems outlined in the policy document appear to be ineffective. Another issue affecting the capitation grants policy is the emergence of informal examination fees in basic schools. Whilst abolition of school fees is still in force, it is a common knowledge that basic schools still charge examination fees and other forms of levies. Head teachers believe that the current rate of the capitation grants of 4.5 Ghana cedis or $3.1 is inadequate in meeting the resource demand of their schools. These issues were apparent in the CDD study. Although the Ghana Education Service is aware that schools charge fees, they are unable to prevent or stop those illegal fees. Indeed, charging children examination levies is likely to undermine the well-intentioned capitation grant policy in general. UNICEF and World Bank maintain that school fees and other direct and indirect costs of schooling represent a significant obstacle to enrollment, especially for the poorest and most vulnerable children. They therefore believe that abolishing school fees will make it easier and less costly for these poor households to enroll their children in school (UNICEF, 2005; World Bank, 2004). This thesis was made against the backdrop that many African countries that implemented the school fees abolition initiative witnessed dramatic surge in enrollments in basic schools. Equal opportunity for girls and boys is of utmost importance to education development. Although, evidence from the development literature showed that abolition of school fees is likely to increase enrollment in schools it was not clear whether these increases will automatically lead to bridging gender gap in education attainment. Gender quality in education is equally important in addressing issues of poverty. Based on my experience working in rural communities in Ghana, girls are 1 School performance improvement plan (SPIP) is an operational plan of a school that describes the key activities to be implemented within one year in order to expand access and improve quality of education in the school. It is often designed to cover one academic year but broken down into three school terms. A typical SPIP is designed to cover the following areas: components/targets, action to be taken, responsible officer for an activity, resources needed, time frame, and who monitors implementation of the activities. 6

less likely to be enrolled in school compared to boys due to socio-cultural and economic reasons. Some households in certain parts of Ghana contend that girls are likely to get married and so investing in them will not yield any benefits to the family, rather all the benefits of schooling will go to the husband s family. This and many other social stereotypes impede the enrolment of girls in school. Similarly, in poor households where families face the opportunity cost of enrolling only one of their children in school, it is less likely that the girl-child will be chosen. This is because Ghana is a patriarchal society where men generally have dominance over women in society. Besides, it is culturally believed that girls will eventually get married and the benefits of their education will likely to be shared with her husband s family. Although a number of interventions have been put in place to bridge gender gap in education, more boys are in school than girls. If capitation grant will likely increase enrollment in schools then it was equally relevant to examine how capitation grants contribute to bridging gender gap. Various studies that have been conducted to examine the impact of school fees abolition in Ghana including Osei et al (2009) have failed to address issues of gender differences in educational access and participation. Last but not least, payment of capitation grants is made on per capita basis. This means that schools with higher enrollment receive more funds than schools with smaller enrollments. In other words, larger schools are likely to benefit more from capitation grants than smaller schools. Though equal amount of funds are allocated to each school based on the school s enrollment, schools with smaller enrollment especially those in remote and rural areas are likely to receive insignificant amounts. However, the administrative cost of managing a school in a remote area is often higher than that in urban and peri-urban areas due to overheads costs. My experience in managing capitation grants at the district level showed that many small and remote schools fail to utilize their capitation grants because the administrative costs involved in even getting SPIPs approved was far above the money allocated to the school. Therefore, instead of utilizing the grants each school term, many smaller schools with low enrollment rather prefer to accumulate the grants for one year or more before accessing them. This situation undermines the purpose for which the grants were established. To this end, these discussions underscore the fact that all is not well with the capitation grants in Ghana in spite of its good intent. Further investigation into these issues would be essential to elicit the weaknesses of the model and make it more meaningful to educational development. In spite of the above problems, the capitation grants policy has the potential to make significant contributions to primary education in Ghana. 7

SECTION THREE METHODS Introduction Capitation grants is one of the emerging methodologies used to finance universal primary education in many developing countries. Unlike other forms of grants, which are donor driven, in Ghana this particular grant is purely financed from the government s own consolidated fund making it reliable and more sustainable for educational development. In view of the scarcity of resources for development, it is important to regularly assess the effects of this program to find out whether it is achieving the desired results; which is the essence of this study. This section discusses the broad context of the study and then discusses the sources of data as well as how they were analyzed. Context of the Study This study was primarily a desk research that utilizes the case study methodology to elicit information on the effects of the capitation grants policy on access to primary education in Ghana. The case study methodology was deemed appropriate for this study for two reasons. Foremost, it is the standard methodology approved by the Heller School for the Master s Paper project in partial fulfillment of the requirements of the Master of Arts degree in Sustainable International Development. Second, Soy (2006) observed that the case study methodology is appropriate for contextual analysis and for examination of contemporary real-life situations. Additionally, it provides basis for the application of ideas and modification of methodologies. The Master s Paper is a professional research paper which falls under this domain and enables me to draw on my own professional experiences as a manager of the capitation grants, complemented by my learning experiences from the second year coursework to make meaningful contextual analysis of the impact of the grants. Most recently, I worked with the Ghana Education Service as a Budget Officer where I was responsible for managing the School Capitation Grants at the District level. In this capacity, I supported head teachers to develop school performance improvement plans which were used as work plans to implement the school capitation grants. The capitation grant is one of the key strategies outlined in the Ghana Poverty Reduction Strategy (GPRS) II to motivate free compulsory universal basic education in Ghana. Hence these experiences are relevant to this study. 8

Data Sources/Analysis This study used data comprising primary and secondary data. The key primary data sources used in the study are data from the Ghana Educational Management Information System (EMIS) prepared annually by the Ministry of Education, Ghana. Each year EMIS conducts a school census in all pretertiary education institutions in Ghana (both public and private schools). In addition to the EMIS data, the study utilized data from the World Development Indicators, a World Bank database comprising various development indicators including those for education. A third type of dataset used for this study was the UNESCO Institute of Statistics database. This database is a UNESCO statistical resource that reports various education outcome indicators. These datasets were mainly time series data. The datasets covered primary enrollment figures of Ghana spanning the period 2000 to 2009. The data were screened, edited and coded to facilitate meaningful analysis. In addition to these primary data sources, the study used secondary data from both published articles and unpublished papers. Some of these papers included journal articles, Ghana education performance reports, and reports of international development organizations including UNESCO, UNICEF, USAID, and the World Bank. These organizations have over the years been supporting implementation of various education programs geared towards encouraging universal primary education across the globe. Analysis of the data was done mainly qualitatively, complemented by some quantitative analysis, to provide the basis for examination of the impact of the school capitation grant policy on access to primary education in Ghana. Ideally, an impact study requires either a comparison of a program s participants before they enter the program with their situation afterwards or compares the program with equivalent groups who did not benefit from the program. This type of comparison was not possible because the program was implemented nationwide. Another option was to compare educational indicators of Ghana and with those in neighboring countries with similar educational and socioeconomic context but who have not yet implemented the capitation grant policy to examine the differences in annual growth rates in enrollment (Weiss, 1998). Unfortunately, Ghana s neighboring countries are francophone countries whose educational systems are different from that of Ghana; making it less meaningful for comparison. However, UNESCO developed standard indicators for measuring educational outcomes which are adopted in this paper. The UNESCO educational outcome indicators are of two broad categories. Those related to access and participation and those related to quality of education. Due to inadequate data, the indicators observed in this study were limited to access and participation in education. 9

Definition of Key Indicators Gross Admission Rate (GAR) GAR as used in this paper refers to gross intake rate in grade one. It refers to the total number of new entrants in the first grade of primary education, regardless of age, expressed as a percentage of the population of primary school-aged children. GAR is used to show the general level of access to grade one regardless of age. A high GAR shows greater level of primary education access. The ratio obtained can exceed 100 percent as a result of under-aged and over-aged children enrolled in grade one (UIS, 2009). Net Admission Rate (NAR) NAR as used in this paper refers to the net intake rate in grade one. NAR refers to the share of schoolaged children actually enrolled in grade one relative to the population of the same age group. NAR measures primary education access by eligible population of primary school-entrance age in grade one. It is computed by dividing the number of school-aged children who actually enter grade one of primary education for the first time by the population of the same age, and multiply the result by 100. A higher NAR shows greater level of primary education access to school-aged children. A 100 percent NAR is a necessary condition for the policy goal of universal primary education (UIS, 2009). Out-of- Primary School Children (OOS) Out-of-primary school children refers to the number of primary school-aged children who are not enrolled in primary school. It shows the size of the population of school-aged children who should be targeted for policies and efforts in achieving universal primary education. It is computed by subtracting the number of primary school-aged children enrolled in primary school from the total population of school-aged children. A higher OOS raises concerns about universal primary education. When disaggregated by geographical location, this indicator can identify areas needing the greatest efforts. Policies can also focus efforts on priority population groups or a particular gender (UIS, 2009). Gross Enrollment Rate (GER) Gross Enrollment Rate refers to the ratio of total enrollment of primary education, regardless of age, to the population of school-aged children in a given year. GER can exceed 100 percent due to enrollment of under-aged and over-aged children. GER shows the general level of participation in primary education (UIS, 2009). 10

Net Enrollment Rate (NER) Net Enrollment Rate refers to the ratio of primary school-aged children actually attending school to the population of primary school-aged children. It shows the level of participation of age-specific children in primary education. NER cannot exceed 100 percent. NER higher than 100 percent shows inconsistency in either enrollment or population data. It shows the level of participation of school-aged children in school. NER is a complement of NAR in determining universal primary education (UIS, 2009). Gender Parity Index (GPI) Gender Parity Index is the ratio of female to male values of a given indicator. It is computed by dividing the female value indicator (either GER or NER etc) by that of the male. A GPI equal to 1 indicates parity between females and males. In general, GPI less than 1 shows disparity in favor of boys and a value greater than 1 indicates disparity in favor of girls. GPI measures progress towards gender parity in education participation and/or learning opportunities available for female in relation to those available to males (UIS, 2009). Primary Completion Rate The primary completion rate is the ratio of the total number of students successfully completing (or graduating from) the last year of primary school in a given year to the total number of children of official graduation age in the population. This indicator is one of the indicators used to measure the policy goal of the UN Millennium Development Goal two which states that by 2015, children everywhere, boys and girls alike, complete the full course of primary schooling (UN, 2010). Completion rate is measured by dividing the number of primary school graduates by the number of children of primary school graduation age. Access to primary education is a policy goal of the UN Millennium Development Goal on education. Universal primary education implies that all school-aged children should have the opportunity to enroll in school. But beyond primary education access, it is equally important to examine the extent to which children participate in education, in other words, the extent to which children enroll and complete primary education. This is why both access and participation are important for examining the policy goal of universal primary education. 11

In terms of access to education, three key variables are observed in this study. These include gross admission rate (GAR), net admission rate (NAR) and out-of-primary school children. These indicators are the most common indicators used by the United Nations in measuring access to education especially the education related MDGs. NAR, in particular, provides information on the actual proportion of school-aged children who are enrolling into grade one. In regard to participation in education, the study observed four key indicators. The gross enrollment rate (GER), net enrollment rate (NER), gender parity index (GPI) and primary completion rate. GER provides information on the level of participation in general including both overage and underage children. NER is used to measure participation of school-aged children in primary education. It is the key indicator used to measure universal primary education. NER is the proportion of school-aged children actually attending school compared to the population of all children within the official primary school-age level. The above indicators have been widely used by the World Bank, UN and other similar international development organizations to report educational participation around the globe. The GPI in particular was used to assess whether capitation grants have bridged gender gap in education. In each case, the study observed the marginal change of the indicators five years before the implementation of capitation grants and five years after implementation of the capitation grants. Analysis of the results was done using descriptive statistics such as frequency distribution tables and graphs to obtain quick visual impression of the various performance indicators mentioned. The last type of analysis was done using the equity resource allocation framework to examine the extent to which capitation grants is equitably allocated to basic schools in Ghana. Section Summary In conclusion, the case study methodology was used for this study. This methodology is consistent with the MA Master s Paper requirements and has been proven to be more appropriate for examining the effectiveness of on-going programs particularly where the researcher needs to draw on his personal experiences to make pertinent conclusions and recommendations. Both primary and secondary data were used in this study complemented by the researcher s personal experiences. The primary data was from EMIS, World Development Indicators, and Education for All Monitoring Indicators. Key indicators observed in the study are GAR, NAR, GER, NER, and primary completion rate. Additionally, the study examined the extent to which capitation grants are equitable utilizing the equity analysis framework. Analysis of the study was done both qualitatively and quantitatively by looking at the marginal change in various indicators. 12

SECTION FOUR LITERATURE REVIEW Introduction Education is the cornerstone of development in that it provides individuals with the necessary skills needed to actively participate in the social and economic life of a society. When children receive good quality education they are more likely to be active participants in the economic and social development process and this is likely to translate into sustained poverty reduction (UNICEF, 2000). Many developing countries that have subscribed to the Education for All (EFA) policy and the MDGs have demonstrated their commitment to making basic education accessible to all. However, the critical issue facing many governments in developing countries today is how to mobilize the necessary financial resources to finance universal basic education (Inoue and Oketch, 2008). Recently, the capitation grant policy emerged as one of the simplest and most promising methods of financing universal basic education. Ghana among other African countries, has taken a bold step to implement the capitation grant policy as part of its strategy to achieve the goals of the Millennium Development Goals. To set this study in context, the following pages begin with a background of education policy reforms in Ghana. The literature is then reviewed under four themes based on the specific objectives of the study. The first theme examines the abolition of school fees in basic schools and its implications for basic education access. The second theme looks at the capitation grant policy as an emerging model for education finance around the world. The third theme examines gender gaps in education by looking at the barriers to girls education in Ghana. The fourth theme discusses the theoretical concepts of equity in allocation of educational resources to serve as a basis for determining whether the capitation grant policy in Ghana is equitably distributed. Finally, the literature review concludes with a brief summary of the issues discussed in the section. Education Policy Reforms in Ghana Since the 1950s, Ghana s education system has gone through many reforms with the ultimate goal to improve access and quality. The concept of making basic education free for all children in Ghana dates back to 1951with the introduction of the Accelerated Development Plan. This plan introduced a six year free and compulsory basic education, which resulted in massive increases in primary enrollment (Create, 2008). After independence in 1957, the new government, led by Dr. Kwame Nkrumah, introduced the 1961 Education Act, which extended free and compulsory basic education through an additional four-year middle school program. While the policy helped to expand access to basic 13

education, it did not yield the desired sustained growth in enrollment and completion rate. In 1970, education participation suffered a major setback, leading to decline in enrollments, due to an economic downturn. In order to address this setback, a new education reform was launched in 1986 to improve access, quality, and management efficiency. This reform led to increases in public education expenditure to ensure that adequate resources were available to increase the momentum of universal basic education. While this reform led to substantial increases in enrollment, the increases could not produce the desired results. After nearly six years of implementation, many school-aged children were still out of school (Create, 2008). To further address issues emanating from the reform and compel successive governments to pursue policies aimed at expanding basic education access, the 1992 Constitution of the Republic of Ghana, under Article 25 (1) guaranteed the rights of all persons to equal educational opportunities and facilities by ensuring free, compulsory and universal basic education. Furthermore, the objectives of basic education were clearly spelt out in Article 38 (1-2) of the same Constitution. The constitution mandated the Government of Ghana to draw up a program for the implementation of free compulsory basic education within ten years after the constitution came into force (Ministry of Justice, 1992). Pursuant to these constitutional requirements, the Government of Ghana launched the Free Compulsory Universal Basic Education (fcube) Policy in 1995 to provide basic education access to all Ghanaian children (MOE, 2003). The policy was also meant to improve access, quality and management efficiency in schools. Though this policy brought tremendous improvement in education delivery in Ghana, it was not without shortcomings. The key shortcoming of the program related to the component of cost sharing which limited poor parents from enrolling their children in school (The World Bank and UNICEF, 2009). Under the fcube policy, the government was solely responsible for setting up structures to sustain the program. These included school infrastructure, tuition, equipment, tools, and teaching and learning resources. Meanwhile, parents were responsible for stationery, meals, transportation, and levies; such as sports and cultural fees and other charges imposed by the Parent Teacher Association. In addition, parents were responsible for partial payment of textbook user fees. The payment of levies was soon identified as one of the key barriers preventing poor households from enrolling their children in school. In order to address these issues, the government introduced the capitation grant concept in 2005 to give true meaning to the fcube policy (Ghana Education Service, 2005, Inoue and Oketch, 2008, Akyeampong, 2009). One of the key government policies that emphasized access to quality and affordable basic education was the 2003 Growth and Poverty Reduction Strategy (GPRS) II. The GPRS recognized 14

education as one of the key priority areas of development necessary to produce the middle-level manpower necessary to accelerate Ghana s progress towards achieving broad middle income status (National Development Planning Commission, 2005). Therefore education was considered the topmost priority of development in the GPRS II. In furtherance of the GPRS II, the Ministry of Education developed the Ghana Education Strategic Plan (ESP) in 2003. The ESP operated within the framework of a sector-wide approach (SWAp) in which all ministries, departments, agencies, and donors harmonized resources to support the education sector (Ministry of Education, 2003). In other words, the ESP provided the roadmap for achieving the education-related MDGs and the EFA goals based on ten policy goals covering access and participation; quality of teaching and learning; health and environmental sanitation; and gender parity, among others. The implementation of the ESP increased the government s commitment to the development of the educational sector. Prior to the ESP, an education reform review committee known as the Anamuah-Mensah Committee made a couple of recommendations for the improvement of the pre-tertiary education in Ghana, particularly improvements related to access. The Anamuah-Mensah Committee s recommendations directly informed further education reforms in 2007 (Osei, Owusu, Asem, Afutu-Kotely, 2009). In that year, the Government of Ghana issued a White Paper on Education Reforms which outlined key policy interventions aimed at improving access and quality of education as well as accelerating Ghana s progress towards achievement of the MDGs and EFA goals. The Education Reforms had two key objectives. First, it builds on the commitments of the ESP as well as ensuring that high quality education was provided to children at the basic school level. Secondly, it aimed at ensuring that all second cycle education was made more meaningful and appropriate to the needs of young people and the demands of Ghana s economy (Ministry of Education, 2011). Under the new reform, basic education was expanded to include two years of kindergarten education, six years of primary education, three years of junior high school education and four years of senior high school (SHS) (Ministry of Education, 2011). Due to the lack of consensus on some aspects of the 2007 education reform, the new government of the National Democratic Congress reversed the four-year SHS to three years. The entire basic education will continue to be free and compulsory and will receive the highest priority of all sub-sectors. The overarching goal was to reach 100 percent completion rates for both males and females at all basic levels by 2015 and to achieve a 100 percent net enrolment ratio. To this end, capitation grants, among other policies are key policies driving this ambitious objective. 15

Despite decades of international efforts to accelerate access to primary education across the globe, many school-aged children around the world, especially in sub-saharan Africa, are still out of school. The 2010 global reports on the MDGs indicated that the world was likely to miss the target of the MDG goal on education because the education-related indicators were far below the targeted values. Though primary enrollment continues to rise across the globe, the increases are insufficient to achieve the education related MDGs by the target date of 2015. The UN has stated that to achieve the education related MDGs by the target date, all children within the official entry age of primary school would have had to be enrolled in school by 2009 (UN, 2010 p.17). Against this backdrop, many developing countries have missed their targeted date. As of 2008, one out of four primary school-aged children was out of school in sub-saharan Africa. This is indicative of the fact that the primary net enrollment ratio of sub-saharan Africa in 2009 was 76 percent, the lowest in the world (UN, 2010). The net enrollment ratio of Ghana shows some mixed results. For instance, while the net enrollment ratio as of 2009 (88.5%) was higher than the benchmark of sub-saharan Africa (76%), the net admission ratio (72%) of over the same period was lower than the average for sub-saharan Africa (Ministry of Education, 2009, UN, 2010). This trend shows retrogression in Ghana s drive to achieve the MDGs. This raises the question of whether the factors militating against enrollments are merely school fees. Abolition of School Fees in Basic Schools Many countries that subscribed to the UN Millennium Development Goals have abolished school fees at the basic education level as a strategy to motivate the achievement of universal primary education. As indicated earlier, fees charged in public schools have been identified as one of the key barriers to education access, especially among less privileged households within many communities (USAID, 2007, World Bank, 2004). A survey conducted by the World Bank in 2001 categorized the type of fees charged in the African region, including community contributions and PTA dues were the most common type (81% of countries surveyed). Other fees are less common but nonetheless significant: tuition, textbooks, uniforms, and other activity fees (World Bank, 2004). The literature on school fees abolition presents two main conceptual arguments. One school of thought argues that abolishing school fees will lead to massive increases in enrollment, whereas the other maintains that abolishing school fees is not a panacea to unlocking barriers to enrollment of children for school-aged. The main argument advanced by proponents of school fees abolition (World Bank and UNICEF) is that, school fees and other direct education related costs to households represent a significant obstacle to enrollment, especially among poor and vulnerable households (World Bank, 2009). School fees abolition will therefore make it easier and less costly for children with these 16

challenging backgrounds to enroll in schools and eventually help in achieving some of the education related MDG goals in a country. Malawi, Uganda, Cameroon, and Tanzania were among the first countries to adopt the policy of school fees abolition. Other countries in Africa that have also abolished school fees in the 2000s include Lesotho, Kenya, Zambia and Ghana (World Bank, 2009). When Malawi abolished school fees in 1994, enrolment rates increased greatly at both the primary and the secondary levels (USAID, 2007; World Bank, 2009). Similarly, abolition of the school fees in Uganda led to nearly a doubling of enrolment figures in 1997. Again, when Cameroon abolished school fees in 1999, the primary gross enrollment ratio rose from 88 percent to 105 percent. Tanzania saw an even greater response; when it abolished fees in 2001 the net primary enrollment ratio increased rapidly from 57 percent to 85 percent within one year. Further, when Kenya eliminated fees the following year, 1.2 million additional students entered primary school. Similar decisions were made in Ghana in 2005 leading to a 14% increase in enrollment in basic schools that year. The most significant part of these increases was mostly among the poor and under-resourced communities where educational opportunities are limited. Enrollment of disadvantaged children, including girls and orphans, also increased thereby bridging the access gap in basic education (USAID, 2007). While these increases in enrollment are significant to development, the 2010 global reports on the MDGs showed that more than 30 million children of official school-going age are out of school. On the basis of the arguments of the proponents of school fees abolition, one would expect that countries that abolished school fees in the early 2000s would have been more on their way to achieving universal primary education, but this is not the case. On the contrary, opponents of school fees abolition argue that merely abolishing school fees will not reduce the private cost of schooling to zero. The counter-argument presented against school fees abolition is that even when school fees are eliminated, children from poor and vulnerable households are likely to still face serious barriers to participation in education due to other direct and indirect costs of schooling. Beyond school fees, households still need to cope with other private costs of schooling such as the cost of meals, transportation, parent teacher association contributions, exercise books, and other support services rendered by teachers (Fentiman, Hall & Bundy, 1999; USAID, 2007). Apart from these costs, some households face the opportunity cost of enrolling their children in school. For instance, in many agrarian communities, children are considered as an additional source of labour to supplement family incomes. Households in such situations face the tough choice of either enrolling their children in school or having them supplement labor on farms (USAID, 2007). Therefore, opponents of school fees abolition initiatives, including USAID, maintain that they are not totally against school fees abolition but that school fees abolition initiatives should be holistic to address all barriers to education access. In other 17

words, any intervention aimed at encouraging enrollment in basic schools should critically take into consideration the totality of other education-related costs borne by households and not only school fees (USAID, 2007). USAID further observed that abolishing school fees, although likely to have positive effects on enrollment, might have a negative effect on the quality of education. They argue that increases in enrollment figures following school fees abolition are likely to overwhelm the available supply of schools, teachers, and educational materials available within schools. In Malawi, for instance, after the abolition of school fees, the ratio of pupils to classroom increased to 119:1. Similarly, the ratio of pupils to teachers increased to 62:1 and the ratio of pupils to text books increased to 24:1(USAID, 2007). Based on the trend observed in Malawi, there is no doubt that quality of education often suffers when fees are abolished. Furthermore, communities are likely to shirk their responsibilities to the school community. In Malawi, for instance, the elimination of school fees has reduced the willingness of communities to provide voluntary support for local schools as local leaders interpret abolition of school fees as central government s assumption of full financial responsibility. This is a problem because voluntary community support is a very important contribution to schools especially in the rural and deprived communities (Al-Samarrai and Zaman, 2007; Ahmed and Sayed, 2009). The above arguments show that barriers to education are much more complex than one can imagine. Educational policies geared towards encouraging enrollment in schools should adopt a multi-faceted approach to address all possible barriers to education access and participation. The Capitation Grant Policy Capitation grant is one of the simple models of educational finance used in some countries to allocate financial resources to schools. The grant is allocated to schools based on the number of students enrolled. In other words, it is a per capita allocation of financial resources to schools. In the United States, there is growing evidence that capitation grants could contribute to expanding nursing school capacity. A study conducted by the American Association of Colleges of Nursing (AACN) in 2009 showed that capitation grants have had a stabilizing effect on past nursing shortage. The study noted that between 2002 and 2008, Congress provided capitation grants, in the amount of $400 for each full-time baccalaureate student enrolled and $275 for each associate degree or diploma student enrolled in schools of nursing to support nursing education. The effect of this policy was that enrollment of baccalaureate and graduate nursing programs in the United States rose from 153,785 in 2002 to 278,453 in 2008 representing 81% increase in enrollment in nursing programs over 6 years. The AACN concluded that 18

capitation grant is a successful strategy for addressing nursing shortage in the United States. In 2009, the Nurse Education, Expansion, and Development Act (NEED) Act S.497 was introduced in congress to increase funding of nursing education in the United States through capitation grants (AACN, 2009). Apart from the United States, Ireland is among the first countries to implement capitation grants in primary schools. In Ireland, each year, the Department of Education and Skills pays capitation grants to primary schools to finance the day-to-day running of administration of schools. The grant is used for heating, cleaning, lighting, maintenance of school premises, and provision of teaching and learning resources among others. The grant is paid to schools in two installments. The first installment (70%) is paid at the beginning of the financial year and the second installment (30%) is paid by June each year. The allocation of the capitation grants is based on the disadvantaged criteria developed by the Department of Education and Skills to cater for different needs and circumstances of various schools. For instance, small schools with 60 people received a fixed sum of 11,400 per annum whereas large schools with management boards received 190 per student per annum. Similarly, national schools maintained by the Office of Public Works received 76 per student enrolled per year. Specific provisions have also been made for students attending special classes in mainstream schools such as visual impairment, hearing impairment, profound death, and other similar cases that require additional budget support (Irish National Teachers Organisation, 2011). The Irish model of capitation grant policy is specifically relevant to this study because it is similar to the one currently implemented in Ghana but it is more comprehensive in terms of its scope and breadth than the Ghanaian model. In Africa, some countries have adopted the capitation grant policy following abolition of school fees. These countries include Uganda, Kenya, Malawi and Ghana. In Uganda, the Ministry of Education and Sports pays capitation grants to basic schools and senior high schools based on fixed and variable grants. A fixed amount is paid to schools per a child enrolled and variable grants are paid based on the government s own disadvantage criteria (MoES, 2010; Grogan, 2008). The capitation grant model of Uganda is similar to that of Kenya. Each year the Ministry of Education of Kenya pays capitation grants of 1,020 Kenyan Shillings ($15) per child enrolled in primary schools. This is part of the Kenyan government s Free Primary Education (FPE) Policy (Sawanura & Safuna, 2008). Likewise, the Government of Ghana with the support from the World Bank under the Pilot Programmatic Scheme Project introduced the capitation grants concept in 2004 on pilot basis in the then 40 most deprived districts in the country where enrollments were low. This grant was meant to remove the financial barriers that prevented households from enrolling their children in schools and also facilitate fiscal decentralization. During the pilot phase of the policy, beneficiary schools received an 19

amount of GH 2.50 2 per every male-child enrolled and GH 3.50 for every female-child enrolled. This was meant to compensate the affected schools for revenue losses due to abolition of fees and levies. The implementation of this policy led to a 14.6% increase in enrollment in primary schools the following year in the pilot districts. Additionally, gross enrolment rate of the pilot districts increased by nearly 5% compared to an average increase of 0.2% in the non pilot districts. The overwhelming increase in enrollment figures in 2004 following the implementation of the capitation grant policy in the pilot districts led to the nationwide implementation of the policy in 2005 (World Bank and UNICEF, 2009, MOE, 2005). Unlike the pilot project, there was no difference between the proportion of the grants to males and females. Per capita share of the grant for both males and females was 3.0 Ghana cedis. In 2009, the capitation grants were reviewed upward from 3.0 Ghana cedis to 4.50 Ghana cedis. Therefore, public basic schools in Ghana now receive capitation grants of 4.50 Ghana cedis ($3.15) per every child enrolled per year. The grants are used principally for the day-to-day running of public basic school. Specifically, the grants are used for procuring teaching and learning materials and resources, payment of sports and cultural dues, payment of cost of school and cluster-based in-service training and transportation cost involving official duties. Each year, head teachers of schools prepare School Performance Improvement Plans (SPIP) which are approved by the District Director of Education (DDE) before capitation grants funds can be used. The key players in managing the grants are the DDE, deputy director supervision, circuit supervisor, district accountant, school management committee, head teacher and assistant head teacher. SPIPs are prepared by the head teacher and staff with approval of the SMC. It usually covers a period of one academic year but broken down into three school terms. To ensure ownership and community involvement, the SMC has oversight responsibility of implementing the SPIP while the DDE ensures that the activities of the SPIP contribute to the larger goal of the ESP. Funds are transferred from the Ministry of Finance and Economic Planning from the consolidated fund to the schools through the Ghana Education Service. Special Bank accounts have been opened for all public basic schools where the funds are lodged. The grants are usually paid to basic schools in three tranches. The first tranche is paid at the beginning of the academic year based on the enrollment estimates of schools at the end of the previous academic year. Similarly, the second and third tranches are paid at the beginning of each school term. The schools are expected to keep financial records such as 2 One dollar as of September 1, 2010 was one Ghana cedis, forty-three pesewas ($1 = GH 1.43) therefore, each school was paid $1.75 dollar per male-child enrolled each year and $2.10 per female-child enrolled each year. The disparity between male and female was meant to encourage enrollment of more girls in school. 20

cash books to facilitate accountability, monitoring and financial control (Ghana Education Service, 2005). While the capitation grant policy has been running for nearly five academic years now, very few studies have been carried out to assess its impact. A recent study conducted by Osei, Owusu, Asem and Afutu-Kotey (2009) found no significant effect of capitation grants on enrollment in basic schools. While appreciating the scientific nature of the study, it is significant to note that the study has some limitations. First, the study focused on junior high schools rather than primary schools. Since the capitation grant policy was implemented nationwide in 2005, the cohort of the program are yet to enter junior high school and therefore it would have been more meaningful to focus the study on primary schools. Second, emphasis of the study was on quality of education but the overarching goal of the grant is to increase access to education. Therefore, looking at the outcomes of the policy in terms of quality does not reflect the underlying objective of the program. The Osei study looked at outcomes of the grant from the perspective of basic school certificate examination results which are associated with products of junior high schools. Though junior high schools are benefiting from the capitation grant, in Ghana, children complete six years of primary education before enrolling into junior high schools. Technically, it is impossible to experience increase in enrollment at the junior high school without following through the cohort of children moving from primary school to the junior high school. In this regard, more meaningful results would have been obtained if the study had focused on observing impacts of the grants at the primary schools level. Anecdotal evidence in Ghana shows that the capitation grants are being misapplied. Consequently, the Northern Regional Director of Education in a workshop to train head teachers and circuit supervisors noted that some head teachers were using the capitation grants for personal development, in particular, for paying their fees for distance education programs in Ghana. The Director observed that mismanagement of the grant is undermining the efficiency of the capitation grant in bringing about the desire educational outcomes (Ghana News Agency, 2010). The Regional Director was disappointed that in spite of the huge resource expended to the basic education sub-sector through capitation grants performance of girls, in particular, has been appalling. In 2007, out of 4000 girls who sat for the Basic Education Certificate Examination (BECE), 68 percent failed. This underscores the fact that the inefficiencies noted can seriously undermine the objectives of the capitation grant policy. Similarly, in a study to track capitation grant utilization in public primary schools, the Center for Democratic Development (CDD-Ghana) noted that there are many leakages in the capitation grants disbursement due to lack of transparency. The CDD observed that leakages are observed along the 21

transfer chain, from Ghana Education Service (GES), through the District Education Offices (DEO) down to the beneficiary schools. The CDD therefore suggested that the Ministry of Finance and Economic Planning and the GES should publish records of capitation grants released and disbursed to the districts in the media and on their respective websites for each district to know how much had been released to it by the Ministry (CDD, 2010). The above revelations indicate that all is not well with the capitation grant management processes. While the capitation grants remain a simple and promising model of education finance, it would only be effective if efficient control mechanisms are put in place to ensure that the funds are used for what they are intended. The above discussion shows that capitation grants are gradually becoming a popular model of education finance across the globe. They have been successful in increasing enrollment in nursing schools in the United States, used as a major financing model in Ireland and now in many African countries to bridge the financing gap created as a result of implementation of the school fees abolition initiative. While the results of capitation grants in some countries are robust, the situation in Ghana seems different due to inefficiency. This might be one of the reasons why the Osei study could not establish any evidence of the effects of capitation grants on educational outcomes in Ghana. Gender Gap in Education Tanye,(2008), Dolphyne, (1998) and Atakapa, (1996) noted that poor educational background of parents, the school environment, sexual harassment, and poor teaching and learning methods are among the key factors that militate against girls enrollment in Ghana. Likewise, the girls education unit of the Ghana Education Service identified three categories of barriers to girls education. These barriers are access barriers, retention barriers and achievement barriers. Access barriers include the opportunity cost of sending girls to school, distance to school, lack of gender friendly sanitation facilities, and private cost of schooling to households. For instance, some girls in rural communities in Ghana stop going to school when they are in their menstrual period. Those schools do not have the necessary sanitary facilities to enable such girls manage their menstruation. Retention related barriers comprise inadequate role-models, teenage pregnancy, and early marriages. Finally achievement related barriers are low selfesteem, gender biases in classroom practices and inadequate guidance and counseling services (GES- GEU, 2003). In addition to these barriers, various studies have shown that a proportion of girls who enroll in schools in some parts of Ghana dropout of school or do not transition from primary to junior high school as a result of migration decisions and culturally specific reasons such as kinship obligations 22

including fosterage 3 (Fentiman, Hall and Bundy, 1999). In parts of Northern Ghana, fosterage is a common reason for low enrollment and higher dropout of girls in schools. A majority of girls in fosterage homes migrate to the cities in search of nonexistent greener pastures. Such girls engage in head porter work popularly known as kayaye (Dawuda, 2003). Other factors that militate against girls education are socio-cultural factors such as societal norms, laws, rules, beliefs, and practices (Tanye, 2008). Some people in Ghana, especially those living in the rural areas, believe that the best place for the woman is the kitchen and that women should concentrate on making babies and taking care of household chores. Such people are in denial of the important role women can play in socio-economic development of a nation (Gyekye-Nimako, 1983 in Tanye, 2008). Traditional and religious practices have been another important factor that relegates women and girls to the background. In Ghana, the traditional belief is that men are responsible for providing resources for the upkeep of the households. This kind of thinking has created an endogenous power relationship between men and women. An evaluation study conducted by UNICEF Ghana in 2002 showed that not much progress has been made to address the gender gap in education. The report particularly noted that the fragmentation of the work of the various divisions of the Ghana Education Service regarding girls education is affecting the realization of the girls education policy in Ghana. For instance, the Science Education Unit of the Ghana Education Service has been organizing annual science, technology and mathematics education clinics each year to encourage girls to take keen interest in science related disciplines. This kind of program should have either been coordinated by the Girls Education Unit. Additionally, lack of logistics and budget lines for Girls Education Unit are other key factors that affect the girls education policy (UNICEF-Ghana, 2002). In the 2010 UN world report on women, it was noted that while the world had made progress toward bridging the gender gap in education over the years, gender parity is far from being achieved. This underscores the relevance of incorporating gender dimensions in educational planning to ensure that gender issues are well catered for. The above discussions suggests that gender gap in education is a multi-dimensional issue that requires a multi-facet approach in order to address it. It is not clear whether capitation grants alone can bridge gender gap in basic education though school fees could be a major obstacle to bridging the gap between girls and boys in school. 3 Fosterage is a term used to describe the act of caring or bringing up a child who is not a biological child. In some parts of Ghana there is a cultural practice where the first born of a man is given to his sister to bring forth. In most cases, such children do not receive equal treatment as the biological child of the sister. Many foster children do not attend school. They are often encouraged to work for the foster parents whilst the foster parents children attend school. 23

Equity Allocation of Education Resources The concept of equity has been used in different fields of philosophy, ethics, economics, and other social sciences. The philosophical concept of equity and the approaches to defining equity have been well discussed and critically appraised by McMahon (1982). Equity concepts relate to a number of political philosophy concepts such as equality or the equalizing of individual net benefits and opportunities for such benefits; providing for distribution of goods or services according to entitlement; providing a decent minimum standard or level of goods and services; utilitarianism, or the maximizing of aggregate gain with resources (Le Grand, 1991); the Marxist theory of distribution on the basis of need rather than ability (Levacic, 2005). Such concerns with equity have laid the ethical basis for the design and implementation of different education reforms. The concept of equity can be viewed from two broad perspectives: Procedural and distributive equity. Procedural equity is concerned with the process by which negotiations and decisions occur. It advocates fairness with respect to processes such as access and financing rather than outcomes. Distributive equity on the other hand, looks at outcomes. It advocates the distribution of education outcomes across individuals and groups within society (Ioue &Oketch, 2008).The issue of equity is usually difficult to determine because of many factors such as geographical area, age, sex, religion, culture among others. Another distinct concept of equity is the horizontal and vertical concept of equity. Monk (1990) noted that horizontal equity entails identical treatment within groups and requires equal treatment of equals. In other words irrespective of different needs groups should be given the same treatment. The second form of equity, vertical equity, on the other hand involves treatment of groups based on need. This suggests that groups should be treated based on their circumstances (Monk, 1990). Much of the education economics literature have taken horizontal equity as a primary matter of service provision which is reflected in the goals of equal service inputs and access or utilization for equal need (Levacic,2005). On the other hand, proponents of the vertical equity theory argue that for equity to be achieved there is the need for unequal treatment of unequal. This concept relate to the idea that underresourced groups should be supported with more resources so that they can grow to be in par with wellresourced groups. This concept is very relevant in education because if educational resources are distributed equally among all groups irrespective of their needs, it is likely that inequality will widen within groups (Inoue & Oketch, 2008). Until recently, the main focus of equity had been on achieving horizontal equity, with the exception of some studies focusing on issues of vertical equity in education finance (Onoue & Oketch, 2009). Increasing concern about the need for preferential or targeted allocation of resources to those with inequitable access to education brings to the fore the need for the 24

vertical equity. In countries where there is growing inequality, allocation of educational resources should give preference to under-resourced schools using the vertical equity model of resource allocation (Monk, 1990). The vertical equity model is of more interest to this study as the achievement of geographical equity in resource allocation and the re-distribution of resources between geographical areas requires preferential allocation based on increased need. The current allocation of capitation grants to Ghanaian schools falls under the horizontal equity theory because funds are deployed to schools equally, irrespective of their need and circumstances. However it is apparent that the vertical equity concept is more efficient for allocating resources, particularly in developing countries where inequalities are very high. It is important in this connection to note that both indirect and direct costs of schooling are often higher in rural areas, where the majority of the poor live, than in the urban areas. Therefore, resource allocation targeted to specific groups will yield better results than those distributed equally. Section Summary and Conclusions In sum, the above discussions showed that policies of universal primary education existed in Ghana long before the EFA and MDGs were promulgated. This is evident in the numerous education policy reforms carried out by Ghana since independence to improve access, and quality of education for all Ghanaian children. Thought these efforts are well acclaimed, Ghana is still far from achieving universal basic education. The school fees abolition initiative is a good concept but the policy needs to be more comprehensive to address issues such as the opportunity cost of schooling to households. While the capitation grant has been used to fill the financing gap created by school fees abolition initiative, its management in Ghana is besieged with ineffective management practices. It is not clear whether capitation grant can bridge the gender gap in primary education because the literature showed that there are many factors responsible for gender gaps which are beyond the scope of school fees. In terms of equity, the literature showed that the vertical concept of allocation of funds is more efficient for allocating financial educational resources to schools in developing countries than the horizontal concept. Hence, the use of the horizontal concept of allocating financial resource to schools is somewhat not efficient. 25

SECTION FIVE FINDINGS AND SUBSTANTIVE DISCUSSION Introduction Primary education is the foundation of human development and can serve as one of the most important means for sustained poverty alleviation and elimination of inequalities in society. In its 2010 reports on the MDGs, the United Nations observed that primary education is a powerful driver for realizing all of the MDGs and for sustainable development more generally (p.1). What this means is that primary education can empower people and provide them with the range of tools needed to access the broad economic, social, political and cultural benefit of society. In Ghana, the capitation grant policy was implemented to provide opportunities for children to have access to and participate in the full cycle of primary education. This section provides an analysis of the effects of capitation grants on primary education access in Ghana by examining the trends of enrollment five years before and five years after implementation of the capitation grant policy. This section is organized under four broad headings comprising access to primary education, participation in primary education, equity analysis of the capitation grants and section summary. Under access to education, the section discusses three key indicators comprising gross admission rate, net admission rate and out-of-primary children. The second part discusses trends of participation in primary education by looking at primary gross enrollment rate, net enrollment rate, gender parity index and primary completion rate. The third part of the section examines how equitably the capitation grants are distributed by using the equity analysis framework. The final part of the section provides succinct summary of the section. Effects of Capitation Grants on access to Primary Education in Ghana Gross Admission Rate (GAR) Figure 1 shows that gross admission rate in primary schools was fairly uniform across the five year period preceding implementation of capitation grants. Between 2000 and 2004, gross admission rate averaged 84 percent. After implementation of capitation grants in 2005, GAR increased above 100 percent (see Figure 1). This may be due to the fact that many under-aged and over-aged children were enrolled in school following implementation of the grants. Comparing the 2009 GAR to corresponding 26

figures of NAR in 2009, it follows that many children either below or above the official school-age enrolled in schools. Though the 2009 enrollment shows downward trend in GAR, it is not clear whether this reflects the true picture. The data for year 2009 was from the Education Management Information System (EMIS) of the Ministry of Education, Ghana. There were some disparities between the dataset of UIS/WDI and those of EMIS. It is likely that the data from EMIS were not properly edited compared to those of UIS/WDI. Nonetheless, the graph in Figure 1 shows that more girls were enrolled in school than boys. The evidence of this study suggests that capitation grants has somewhat led to higher gross admission in grade one than periods before capitation grant implementation. Based on my personal experience working in rural communities in northern Ghana, households enroll a lot of under-age children in school so that their mothers will have some free time to work. Such households do not have genuine interest in education and therefore withdraw their children from school to support them with work, especially when the children grow up. Figure 1: Gross Admission Rate (%), primary grade 1. 140 120 100 80 60 40 20 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Gross intake rate (%) to grade 1, female Gross intake rate (%) to grade 1, male Gross intake rate (%) to grade 1, total Source of Data: World Development Indicators, World Bank 201, 2009 figures from MOE/EMIS, 2009 Net Admission Rate (NAR) The net admission rate measures the actual number of school-aged children who are admitted into grade one. In regard to results of the NAR, the enrollment trends are similar to those observed in NER. However, one striking finding is that soon after implementation of capitation grants, NAR jumped 27

from 26 percent in 2004 to 62 percent in 2005 showing an increase of more than 100 percent in just one year (see Table 1). One of the possible reasons for this sudden increase in admission of school-aged children in grade one was that the capitation grant was implemented in an election year where politicians made a lot of promises of free primary education. Households responded by massively enrolling their children in grade one that particular year. However, this momentum could not be sustained in the ensuing years probably due to the fact that households soon realized that they still have to cater for the private cost of schooling of their children. Between 2005 and 2009, the net intake in grade one increased by only 11 percent indicating an annual average growth of about 4% (see Table 1). Nonetheless, the aggregate increase in NAR after capitation grants was much higher than periods before capitation grants. Despite the progress made in terms of NAR, the data shows some worrying trend in the pattern of net intake in grade one. Looking at the NAR figures for 2009 in Table 1, it is evident that nearly 28 percent of school-aged children are not attending school. What is alarming is that the percentage of children enrolling in grade one (72%) is lower that the percentage of school-aged children attending primary school (76%). This implies that there is a decrease occurring in admission of school-aged children in grade one. Ideally, if Ghana is to achieve the education-related MDGs, then we expect net admission rate to be much higher than the overall primary net enrollment rate. This is however not the case. Ampratwum and Armah-attoh (2010) noted that despite capitation grants, many schools still charge levies such as examination fees. This is a clear indication that the amount allocated as capitation grant is inadequate in meeting the expenditure needs of schools. The implications of this is that children from poor households who are unable to pay these examination levies will be excluded or would not be allowed to take the end of term exams. This might be one of the factors that affect the net intake into grade one. In order for schools to meet their expenditure, Ampratwum and Armah-attoh suggested that government should review the capitation grants upwards from 4.50 Ghana cedis to 7.50 Ghana cedis. Besides school fees, USAID argues that households face other direct or indirect costs of schooling such as provision of meals, transportation, and cost of books, among others. This therefore means that a more holistic approach to capitation grants is needed to ensure that all barriers of education are removed to encourage enrollments in schools. 28

Table 1: Percentage Change in Primary Net Admission Ratio (NAR) of Ghana between 2000 and 2009 NAR 2000 2004 %change 2005 2009 % Change Girls 23.2* 26.5 3.3 62.1 72.7 10.6 Boys 23.9* 26.0 2.1 61.8 71.5 9.7 Total 23.5* 26.2 2.7 62.2 72.1 9.9 EMIS, 2009 and *World Development Indicators, World Bank 2011 Out-of-Primary School Children in Ghana The number of out-of- primary school children in Ghana has been declining since the implementation of the capitation grants. Before implementation of capitation grants, about a third (1.2 million) primary school-aged children in Ghana were not attending school. After the implementation of the capitation grants in 2005, the number of primary school-aged children not attending primary school declined to about a quarter (800,000) of all school-aged children (see Figure 2). In terms of gender, Figure 3 shows that more boys are out of school than girls. This trend is inconsistent with the literature on gender disparity because social and cultural factors keep girls out of school. It is possible that there might be some errors in the data reported by the Ministry of Education to UIS. While generally, there is improvement in the number of children not in school over the periods before capitation grants implementation, the number of children not attending school is still very high. Under international law, primary education is a fundamental right for every child (UN, 2010). Likewise, the 1992 constitution of the Republic of Ghana guarantees the right of every child to primary education. This implies that government has the obligation to ensure that all children receive the full cycle of basic education. From my own experience working in poor communities in rural Ghana, households face the opportunity cost of sending their children to school. Many poor households consider their children as an additional source of labor to supplement family incomes. Many of such households often chose one out of their numerous children to enroll in school. Other factors that work against enrollment of school-aged children are lack of qualified teachers; socio-cultural factors such as foster and single parenthood; and inadequate school infrastructure. For instance, many qualified teachers do not accept postings to rural areas due to lack of social amenities such as good drinking water, electricity and decent housing. Generally, there are no incentives to encourage qualified teachers to accept postings to deprived 29

Hundreds communities. Besides, salaries and wages of teachers in Ghana are based on their qualifications and the circumstances under which they work are often overlooked. This might be one of the reasons why many qualified teachers often feel less motivated to work in deprived communities. Secondly, foster parents often encourage or coerce their foster children to go to the cities to seek greener pastures. Many children in this situation migrate to the major cities of Ghana including Accra, Kumasi and Tamale where they anticipate nonexistent greener pastures (Dawuda, 2003). All these undermine this well-intentioned policy. Government could come out with cogent laws that compel all parents to enroll their children in school. This could significantly contribute to reducing the number of out-of-primary school children to the barest minimum. Figure 2: Out-of-School Children in Ghana s Primary Schools ( 00) from 1999 to 2009 16000 14000 12000 10000 8000 6000 4000 2000 0 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Out-of-school children, primary, girls Out-of-school children, primary, boys Out-of-school children, primary, total Source of Data: World Development Indicators, 2011 The Effect of Capitation Grants on Participation in Primary Education Gross Enrollment Rate (GER) GER is one of the key indicators used for measuring participation in education. However, this is not a good indicator for measuring education access because it does not give information on the actual number of school-aged children attending school. GER is computed with enrollment figures including under-aged and over-aged children (UIS, 2009). It rather gives information on the aggregate number of children in school irrespective of their age. In spite of this weakness, GER is somewhat useful in giving 30

a fair idea of the overall participation level in primary school. Figure 3 presents the trend of gross enrollment rates of primary schools in Ghana between 2000 and 2004, and 2005-2009. This comparison was deemed appropriate in eliciting differences in enrollment before and after implementation of capitation grants. GER was fairly stable prior to the implementation of capitation grants. Soon after the implementation of capitation grants in 2005, GER increased steadily from about 82 percent in 2004 to about 102 percent in 2009 showing an increase of about 20 percent over five years (see Figure 3). Given that GER measures the proportion of all children (regardless of age) in school relative to the population of school-aged children, the results suggest that many children above the official school going-age have taken advantage of capitation grants to enroll in school, which is why GER is above 100 percent. This implies that there might be a significant number of school-aged children who are still not attending school. A more appropriate indicator measuring the actual number of school-aged children in school is the net enrollment rate which will be discussed shortly. Unlike other African countries, such as Uganda and Malawi, that experienced nearly doubling of enrollments soon after abolishing school fees, Ghana s primary schools enrollment increases have been slower. Gross enrollment increases were about an average of 5 percent. Nisimura et al, (2009) observed that when the capitation grant policy was implemented in Kenya in 2002, gross enrollment rate increased by nearly 17 percent in just one year. A more dramatic increase in primary GER was observed in Uganda in 1996 when it implemented capitation grants. Primary GER in Uganda increased sharply by 46 percent from 69 percent in 1996 to 115% in just one year (WDI, 2011). Therefore we expected similar surge in enrollments in Ghana following capitation grants implementation. However, this did not occur. The 102 percent GER obtained contains some hidden over-aged and under-aged children which is why it is difficult to make explicit statements about enrollments rates at this stage of the discussion. In Uganda, with a GER of 115, there are presumably hidden over-age and under-age children, but the greater increase experienced than in Ghana may indicate that the increase in net admission or intake was greater in Uganda. When efficiently and equitably allocated, capitation grants could greatly empower schools to use financial resources to carry out school improvement activities that could eventually impact positively on both education quality and access. For instance, Uganda adopted the vertical equity resource allocation model where capitation grants were allocated based on a fixed and a variable grant. A fixed grant is allocated to all schools irrespective of their size or geographical area. In addition to the fixed grant, a variable grant was allocated to schools based on other factors such as enrollment, geographical location and number of special needs children. This was done to ensure that under-resourced schools and smaller 31

schools get the full benefit of the grants (Nishimura et al, 2009). This might be one of the main reasons why enrollments increased tremendously in Uganda following abolition of school fees. Unlike the Ugandan model, Ghana adopted the horizontal equity allocation model in which capitation grants are allocated to schools based on the number of children enrolled. This allocation model encourages inequality in schools because small schools with fewer children get less funds albeit, their needs might be higher. The above discussion suggests that, a well designed capitation grant policy can significantly contribute to higher educational outcomes in schools. One important observation made about trends in GER in Ghana s primary schools between 2000 and 2004 was that the GER of boys was higher than that of girls. For example the average GER for boys between 2000 and 2004 was 83 percent whilst that of girls was 80percent. Conversely, when capitation grants were implemented, (between 2005 and 2009) the difference between boys and girls became smaller (see Figure 3). GER for boys rose from 83 percent in 2004 to 103 percent in 2009 whilst that for girls rose from 80 percent to 103 percent showing an increase of 23 percent over the period. This suggests that capitation grants have contributed slightly to bridging the gender gap in primary education in Ghana. But a more appropriate indicator for measuring gender gap in education is the gender parity index, which we will discuss later in this section. Whilst the trend of GER suggests that capitation grants contributed somewhat to increased participation in primary education in Ghana, GER does not provide information on the extent to which Ghana is progressing towards achieving universal primary education. The inclusion of over-aged and under-aged children in computing GER makes it less meaningful for examining participation in primary education. A more appropriate indicator for participation in primary education is the net enrollment rate. 32

Figure 3: Trends of Primary Gross Enrollment Ratio (GER) of Ghana from 2000 to 2009 (%) 120 100 80 60 40 20 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Gross enrolment ratio. Primary. Girls Gross enrolment ratio. Primary. Boys Gross enrolment ratio. Primary. Total Source of Data: UNESCO Institute of Statistics, 2011; World Development Indicators, World Bank Net Enrollment Rate (NER) Net enrollment rate examines the actual number of children within the official school going-age that are actually in school. It gives a clearer picture of changes in participation in education which also measures universal education. When a country achieves 100 percent NER, it means that all school-aged children are fully attending school. Table 2 shows the trends of NER between 2000 and 2009. It can be observed that prior to the implementation of capitation grants, NER was declining. For example, between 2000 and 2004 NER declined by about one percent. The decline in NER affected boys more than girls. NER of boys declined by six percent whilst that of girls declined by only one percent indicating that more girls were enrolled in schools than boys. However, five years after the implementation of the capitation grants (between 2005 and 2009), NER increased by nearly 11percent; again with girls benefiting slightly more than boys. The increase in girls NER may be attributed to not only capitation grants, but to the emphasis placed on girls education between 2003 and 2008. Within this period, many international development organizations, including UNICEF, USAID, World Vision International, and World Bank among others, committed enormous resources to advance girls education. This was done after the Girls Education Unit of the Ghana Education Service redefined its mission in order to increase its momentum towards achieving the MDG 3 (Ministry of Education, 2005). Girls education activities were also given priority in the capitation grants policy. For example, when the pilot program was implemented in 2004, in the then 40 most deprived districts in Ghana, girls share of 33

the grants was GHC 3.50 per girl enrolled whereas boys share was GHC 2.50 per each boy enrolled. The pilot study yielded considerable results leading to the nationwide implementation of the capitation grants policy in 2005. In spite of the general gains in NER following implementation of the capitation grants, Ghana will likely miss the target of the UN Millennium Development Goal two. In order to achieve the education-related MDG, all school-aged children in Ghana should have been enrolled in school by 2009. This would have translated into 100 percent primary net enrollment rate. As of 2009, about 24 percent (>800,000) school-aged children in Ghana were not attending school. It is apparent that whilst capitation grants have somewhat contributed to increases in enrollment in Ghana, these increases were not adequate enough to enable Ghana achieve universal primary education by the target date, 2015. Unlike some African countries that experienced extraordinary increases in net enrollment rate following abolition of school fees, these findings of only a small enrolment increase do not support the thesis that school fees are the main barrier to education. If the hypothesis is true, we would have expected higher enrollment than was attained when the school fees barriers were removed in Ghana. The results of this study are therefore inconsistent with the claims of proponent of school fees abolition, such as the World Bank and UNICEF, that removing school fees will automatically help countries to achieve universal primary education. Table 2: Percentage Change in Primary Net Enrollment Ratio (NER) of Ghana between 2000 and 2004 and 2005 to 2009 NER 2000 2004 %change 2005 20089 % Change Girls 62.0 58.6-1.4 64.9 76.2 11.3 Boys 63.8 58.0-5.8 65.3 75.5 10.2 Total 62.9 58.3-4.6 65.1 75.9 10.8 Source: UNESCO Institute of Statistics, 2011 Gender Parity Index Figure 4 shows that Gender Parity Index has improved slightly over the period following the implementation of capitation grants. For instance, gender parity index for gross enrollment rate 34

marginally improved from about 0.94 in 2004 to about 0.97 in 2005 when capitation grants was implemented, it improved further to about 0.99 in 2009. However gender parity for net enrollment rate and adjusted net enrollment rate had already exceeded 1.00 prior to implementation of capitation grant. The period after implementation of capitation grants saw only a marginal increase of 0.01, which can be attributed to natural maturation. As people became aware of the importance of education to development, they are more likely to ensure that their children irrespective of gender receive formal education. Another contributive factor might be the effect of the work of the Girls Education Unit of the Ghana Education Service. The Unit has, since its establishment in 1997, received enormous support from donors such as USAID, UNICEF and DFID, leading to greater awareness of the importance of girls education. Given the resources committed to girls education, it is expected that gender parity will improve overtime. Another observation made from this result is that younger girls, especially those within the official school going-age, are enrolling in schools more than those who have exceeded the official school going-age. This is reflected in the differences observed between GPI of net enrollment rate and GPI of gross enrollment rate (see Figure 4). These results therefore suggest that even without capitation grants, gender parity was achievable probably as a result of the key interventions carried out over the previous years by the Girls Education Unit and other similar organizations working to improve girls education in the country. In this regard, it can be concluded that capitation grants or school fees abolition has not had significant effect on gender gap in primary education. This supports the conclusions arrived in the literature that school fees abolition is not the only barrier to girls education. There are many factors such as socio-cultural factors that hinder girls education (Tanye, 2008; UNICEF-Ghana, 2002 and Gyekye-Nimako, 1983). 35

Figure 4: Gender Parity Index (GPI) of Primary Schools in Ghana Source of Data: World Development Indicators, World Bank 2011 Primary Completion Rate Figure 5 shows the trends of primary completion rate of children in Ghana between the period 2000 and 2009. Before capitation grants (between 2000 and 2004) primary completion rate averaged 70 percent. After the implementation of capitation grants in 2005, primary completion rate rose from an average of 70 percent to about 86 percent, showing an improvement of 16 percent. This improvement was slightly in favor of girls (see Figure 5). For example, the primary completion rate of girls rose from about 64 percent in 2004 to about 82 percent by the end of 2009, showing an increase of 18 percent over the period. In contrast, primary completion rate of boys rose from about 74 percent in 2004 to about 90 percent in 2009 showing an increase of 16 percent. The results suggest that about 14 percent of all children who enroll in primary school do not complete their primary education. But this completion rate figure is higher than the benchmark data for sub-saharan Africa (69 percent) for the same period (WDI, 2010). If the current completion growth rate continues, it is likely that by 2015, Ghana will achieve 100 percent completion rate. Completion rate is one of the key indicators used by the UNESCO to measure participation in education. Indeed, if children enroll in school without completing then a nation will not be able to achieve the level of literacy that is necessary for its socio-economic development. 36

Figure 4: Completion Rate 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Primary completion rate, girls (% of relevant age group) Primary completion rate, boys (% of relevant age group) Source of data: World Development Indicators, World Bank 2011 Analysis of Equity Issues in Capitation Grants Allocation to Primary Schools in Ghana As indicated in the literature, equity in resource allocation is crucial for educational development particularly, in developing countries where resources are limited. The literature shows that Ghana s capitation grant allocation method is inefficient because it promotes inequality in schools (Lemon, 2004). The weaknesses of the horizontal equity model of resource allocation, as used in capitation grants disbursement in Ghana, can be grouped into three categories. Foremost, the allocation formula does not account for financial needs of smaller schools. For instance, the horizontal equity allocation model, which is used in allocating capitation grants in Ghana, disburses funds proportionally to schools based on enrollment. This means that smaller schools with fewer students enrolled will get fewer funds compared to bigger schools with higher enrollment. Likewise, schools in rural and remote communities with fewer children will receive the same amount compared to similar schools in urban settings. The horizontal equity allocation model does not consider the location and distance of schools in its allocation. As indicated in the literature, it is more costly to manage a rural school than an urban school with the same enrollment. The costs involved in managing a rural school relate to costs of transportation. More often than not, a head teacher from a rural or remote 37

school would have to incur higher costs of transport to travel long distance to an urban area to procure teaching and learning resources. Likewise, a head teacher from a rural school, especially those from remote areas, incur higher costs of transport to and from the bank, which may be located in an urban area, to withdraw capitation grants funds. Therefore, when the enrollments of such schools are just a few tens, it is likely that the funds allocated to them might not suffice transportation costs, not to mention of implementing the SPIP. Based on my experience as a Budget Officer responsible for managing capitation grants, I observed that many schools in rural or remote communities in the district, in which I worked, do not use their capitation grants because of higher overheads costs relative to the funds allocated to them. Preparation and approval of school performance improvement plans (SPIP) is a prerequisite for utilizing capitation grants in Ghana but the process of preparing and getting a SPIP approved is costly. Some head teachers in remote areas popularly known as overseas in the district in which I worked, argued that the costs of transportation in getting a SPIP approved alone is higher than the amount allocated, in one tranche, to their schools. As a result of this, head teachers in this situation often accumulate their capitation grants for a year before using them. The implications are that such schools would not be able to procure the necessary teaching and learning resources needed to run their schools effectively. Finally, the allocation method of capitation grants does not take into account children with special needs such as orphans, vulnerable children, and disabled children (visual impairment, hearing impairment, deaf, autism etc), among others. These categories of children have varied needs that cannot be met by the limited resources expended to the schools. Many children under these conditions drop out of school because they are unable to meet the basic learning resource they need to function effectively in the school. In Ireland, for instance, capitation grants are allocated based on circumstances of schools. Smaller schools with about 60 pupils receive a flat rate of 4,560 whereas mainstream schools with large enrollment receive 190 per pupil enrolled. Likewise, pupils with visual impairment receive 912 per annum (Irish National Teachers Organisation, 2011). This type of targeted discrimination will allow schools to support children with special needs to enroll and complete the full cycle of primary education without any hindrance. Similarly, in Uganda, capitation grants disbursements are based on fixed and variable grants. The Ministry of Education and Sports in 2007 allocated a threshold of seven million Ugandan Shillings as fixed capitation grants to government assisted secondary schools. In addition to the fixed grants, the ministry allocated an additional variable grant of 29,420 Ugandan Shillings as tuition fees for every student enrolled in Form One at the same level (MoES, 2008). All 38

these countries have applied the vertical equity resource allocation model to ensure that funds deployed to schools are efficient enough to address issues of inequalities and special needs of various schools. The above analyses suggest that capitation grants in Ghana operate less equitably in that it does not provide opportunity to under-resourced schools to flourish. Deprived schools need more resources to enable them compete with well-endowed schools. Additionally, the grant does not cater for children with special needs. In most cases, children with special needs, such as orphans and physically challenged children, require additional resources to enable them succeed in school. Without such support, many children in that situation may drop out of school. A more equitable capitation grant which adopts the vertical equity resource allocation model will enable disadvantaged schools mobilized resources to address the learning needs of children in their schools. This can greatly contribute to reducing inequalities in schools. Ghana can learn from countries such as Ireland and Uganda, among others that have developed stronger capitation grants programs that address varied needs of schools. Section Summary In sum, this study showed mixed results about the capitation grants policy. While Ghana will not meet its MDG targets, there have still been improvements in access and participation in primary education, decrease in number of children not attending school, and increases in gender parity and primary completion rates. Lastly, the study suggests that the capitation grants system is inequitable, and may be increasing inequality among schools. The issue of inequality as reflected in this study may require further investigation. 39

SECTION SIX CONCLUSIONS AND IMPLICATIONS Conclusions As indicated in the introduction, the purpose of this paper was to examine the extent to which the capitation grant policy has contributed to increase in primary education access and participation to enable Ghana attain its education-related MDGs. And what lessons could be learnt from Ghana s experience with capitation grants. In light of these, I have made four pertinent conclusions. First, the evidence of this study suggests that capitation grants have somewhat contributed to increased access to primary education in Ghana although, the increases were inadequate to enable Ghana attain the education-related MDG by the target date. This is against the backdrop that all the three key indicators of access comprising GAR, NAR and out-of-primary school children significantly improved following the implementation of capitation grants. The number of school-aged children attending school increased steadily while the numbers of school-aged children not attending school declined considerably. Generally, girls enrollment in school increased more than that of boys, although these achievements are not entirely credited to the capitation grants policy. The interventions carried out by the Girls Education Unit of the Ghana Education Service at the same period to encourage girls education might have equally contributed to the higher enrollments of girls in primary schools. Second, there were mixed results on participation in primary education. While the study showed that Ghana will miss its MDG target on education, the key indicators observed comprising GER, NER, GPI, and primary completion rate greatly improved during the period in which capitation grants were implemented. More importantly, the declining trends in net enrollment rate prior to the implementation of capitation grants were reversed. This was an indication that many parents were enrolling their children in school than before. Another significant contribution of the capitation grants policy was the improvements in primary completion rate. The steady improvement in primary completion rate showed that children enrolled in primary school are more likely to complete the full cycle of primary education which is consistent with the MDGs and EFA targets. Third, the slower trend of improvement in enrollment following abolition of school fees in Ghana suggest that school fees might not be the only barrier to education. As it was evident in the literature, besides school fees, households incur other private costs of schooling such as cost of meals, school uniforms, exercise books, transportation and other teaching and learning materials that are not provided by the school. For instance, in agrarian communities and in foster homes, households face the opportunity cost of schooling in that they require children to assist in farm work or other income 40

generating activities. This often led to absenteeism and eventual drop-out of children in schools. Some households in this situation may not enroll their children in school at all. Finally, the evidence of the study suggests that capitation grants are less equitably allocated and might perpetuate inequalities in schools. The current allocation method is less beneficial to smaller schools in under-resourced communities where many out-of-primary school children are found. Additionally, the current allocation method of the capitation grants does not account for children with special needs who might not be able to enroll in schools due to their conditions. If the equity issues are not addressed, capitation grants are likely to create greater inequality between schools and this will undermine the very essence of its implementation. In light of this, there is urgent need for the Government of Ghana to revise the allocation method to target less endowed schools as well as children with special needs to avert possible inequality. Inequality in all forms is detrimental to sustainable development. One of the key lessons learnt from Ghana s experience with capitation grants is that a fairly simple method of financing primary education could potentially bring enormous improvement in education outcomes. It is evident from this study that when well designed, capitation grants can contribute greatly to encourage a country to achieve its target of the UN Millennium Development Goals. Another lesson learnt in this study was that equal share of resources does not guarantee equity but rather could perpetuate inequality as reflected in this study. Implications for Development The above conclusions have wider implications for the socio-economic development of Ghana in many ways. Foremost, Ghana s drive to develop the requisite middle-level manpower to accelerate national development will likely be affected. Universal primary education is the foundation of human development, without which, sustained human development could be seriously jeopardized. This is also likely to affect the poverty reduction efforts of Ghana. It is important to note that genuine poverty reduction begins with the child. When children receive the full cycle of quality primary education, they are more likely to escape poverty traps especially if they are able to continue their education thereafter. Education has greater impact on enhancing the quality of life of a people, improve health and economic development. Additionally, capitation grant is a public good in that it is financed with the tax payers money. In the face of scarce resources, it is important to examine efficient ways of using the limited available resources in order to make more resources available to those who need them most. The vertical equity resource allocation framework is very relevant in this direction. Ireland and Uganda are among countries that are successful in implementing the capitation grant policy. Specifically, Ghana can learn a 41

lot from Ireland which has developed a well-structured and efficient capitation grant policy for financing primary education. Ireland employs the vertical equity resource allocation framework to allocate funds to primary schools. This framework allocates funds based on some disadvantaged criteria whereby less endowed schools and smaller schools could get sufficient funds to be functional. In addition, it caters for children with special needs such as physical impaired children, visual impaired children, orphans and the like. To this end, I suggest that Ghana should study the Ireland and the Ugandan capitation grants model in order to improve the one currently being implemented in the country. Furthermore, I suggest that the Ministry of Education should conduct research to determine the minimum amount needed for a school to run its administration. Schools could be categorized into three main groups including large schools, small schools, and rural or remote schools. The share of financial resources allocated to these categories of schools could vary based on their characteristics. This will ensure that smaller and rural schools will receive a reasonable share of resources to cater for their administrative costs. In light of this, I propose that capitation grants should have three components: threshold grants, variable grants and bursary. The first component could be threshold grants based on the minimum administrative costs that a school requires to be functional. A threshold grant could be determined based on the three classification of schools mentioned above to cater for the minimum costs required for administrative work of a school. The second component of the grant could be a variable grants in which funds could be allocated based on the number of children enrolled in a school. This will ensure that bigger schools with higher enrollment and greater resource demand receive a fair share of the resources required to be effective. The third and final component of the allocation should be bursary where funds are allocated to schools to cater for children with special needs such as orphans and physical challenged children among others. These categories of children require additional financial and material support to be able to participate effectively in the school life. Therefore, such bursary could serve as incentives to encourage such children to enroll and complete the full cycle of primary education. The above allocation formula will help make capitation grants more equitable and address issues of inequality in schools. Inequality has the potential to undermine the very essence of a program when not properly handled. Since this study did not look at issues of inequality of schools, but this came up in the discussions, there is the need to conduct further studies to examine the effect of capitation grants on inequality. In addition to the above, there is the need for government to increase the budgetary allocation for capitation grants to ensure that schools have sufficient funds to carry out their mandate without 42

charging households additional levies. The evidence presented in the literature suggests that many schools are charging levies such as examination fees, and other parent teacher association levies due to inadequate funds. One option would be for government to establish regional or district printing centers where basic schools could print their examination questions at subsidized costs. Such an initiative will also provide employment for many people who will be engaged in printing the examination questions. This could contribute greatly to ensuring that the principles of free universal primary education are promoted to ensure sustainable human development. Finally, the discrepancies observed between the data of EMIS, WDI and UIS suggest that there are issues with Ghana s data management system. Indeed, many statistics officers in the Ghana Education Service are appointed with less or no background in statistics. Errors in dataset from the district level will likely not be detected by these personnel, which will eventually, affect the quality of the national dataset. I therefore suggest that the Ghana Education Service should strive to recruit personnel with statistics background to work as district statistics officers to address these problems. 43

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