For the first time since the New Patriotic Party (NPP) proposed the “free secondary education” policy sometime between 2007 and 2008, Ghanaians now have a very basic financial proposal from the main opposition party regarding how they intend to fund it.
Whilst waiting for the comprehensive set of financial proposals, it makes sense to launch the debate right away to ensure that there is enough time to evaluate this longstanding policy of one of the two major parties in the country. At the very least the debate can focus on settling the financial cost of the proposed policy so that the country can more effectively debate the merits.
Here are the assumptions one can glean from the preliminary NPP announcement:
1. “Basic education” shall in the wake of the policy terminate at the secondary level. The clear goal of the policy is to ensure that all JHS students automatically progress to secondary level (abolishing the BECE in the way that the 1987 reforms abolished the Common Entrance Exams).
2. To succeed with this policy, an additional $150 million would be required to supplement current public expenditures on secondary students in the first year of implementation.
3. The cost of implementation shall peak at $400 million over the 4-year tenure of a prospective NPP government, clearly anticipating massive expansions in enrolment.
Here are some assumptions that we have in turn used:
1. Extrapolating from data provided by the UN Population Division, there are 3.8 million persons of secondary school age in Ghana, of which 1.2 million are enrolled in 415 public secondary schools and 100 privately owned and managed ones.
2. Based on data provided by the UNESCO Institute of Statistics, the per capita public expenditure on secondary education (how much the government spends on each student) is $215, implying a total average annual expenditure of $258 million at secondary school level.
3. According to data from the Ghana Living Standards Survey 4, the average household spends $175 per student at secondary school level.
4. From survey data, the additional amount of wages earned by senior secondary graduates over junior secondary graduates does not translate into enough tax-take to offset additional expenditures on secondary education over a 4-year horizon.
5. The policy can only be said to have been effective if it leads to a considerable expansion in enrolment at the secondary level, one of its primary objectives. We shall use a growth from the current, roughly, 32% of net enrolment to 66% over four years as our benchmark. Our assumption 6 below assumes on principle that 100% of CURRENT enrolees shall from the outset be ENTITLED to benefit from the policy. For practical reasons we shall assume that IN PRACTICE 66% of beneficiaries shall receive support under the policy on commencement.
6. Implementation of such a policy cannot easily be designed to benefit only a segment of the enrolled secondary population because students circulate all over the country making a piecemeal implementation based on geography impractical.
For instance, if a number of districts were selected due to low income levels for the initial phase of the policy, students from that district who are awarded places outside the implementation area through the computerised placement system would have to be discriminated against. This shall be both unlawful and indefensible.
Based on the full complement of these sets of assumptions, one can proceed by elementary arithmetic to establish the initial cost of implementation, based on absorbing private household expenditure on secondary education for 60% of beneficiaries and a 20% administration budget, at $151 million. This aligns with the NPP’s projections for the commencement period.
However, at growing enrolment, the figures begin to diverge significantly from the upper range of estimates provided by the NPP. At a 66% gross enrolment figure (66% of secondary school age students enrolled) the costs balloon to $1.1 billion at a constant rate of recurrent expenditure. Attention has not yet been paid to capital expenditure or the need to invest in quality improving measures to match growing enrolment.
There are caveats that may become evident as the full policy is unveiled. In particular, it would be important for the NPP to explain what percentage of private household expenditure on secondary expenditure it intends to absorb.
The following assumptions were not used in the analysis. It should be noted that their use would have further aggravated the financial challenges facing the NPP policy:
1. The NPP will revert to a 4-year secondary educational system (the financial cost could be upwardly affected by 20% in that event).
2. The average population growth rate over a 4-year horizon of the policy shall be 2.5% per annum, and that the secondary student population growth rate shall follow the same trend (the financial cost could be inflated by 12% under this assumption).
3. Concurrent pressures to expand the number of places at tertiary institutions to maintain the national per capita university enrolment rate, and associated costs.
In summary, we conclude that the NPP’s financial proposals for funding the cost of the party’s proposed free secondary education policy could be conservative by a multiple of nearly three, if by the same policy it also aims to meet the key objectives of the policy: expanded enrolment and the shift of the cost-burden of secondary education from private households to the public purse.