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