PARIS, October 21, 2011 – A new report released today, Breaking Even or Breaking Through: Reaching Financial Sustainability While Providing High Quality Standards in Higher Education in the Middle East and North Africa, highlights the need to increase funding to meet the demands for more and better education opportunities in the Middle East and North Africa (MENA) region.
The global economic crisis and the Arab Spring have raised additional challenges for most countries in the region. Young people in MENA are demanding more social and economic inclusion. Higher enrollment rates have not translated into sufficient economic gains, as unemployment rates among university graduates remains stubbornly high. For a variety of reasons, economic growth has not been enough to absorb the growing educated labor force: excessive GDP volatility; labor demand heavily dominated by the public sector; economies over-dependent on oil revenues and highly dependent on low value-added products; and weak integration into the global economy. This macro scenario, coupled with mismatches between labor supply and demand, very slow school-to-work transition, and low quality and relevance of post-basic education and training systems, provides a challenging environment. Furthermore, enrollment rates over the next ten years are expected to grow as fast as during the last ten. In all but a few of the oil-rich countries, the need for expansion will be difficult, if not impossible, to satisfy with government revenues.
Within this framework, the World Bank and the French Development Agency (AFD), in partnership with the Marseille Center for Mediterranean Integration (CMI), have prepared the report, Breaking Even or Breaking Through: Reaching Financial Sustainability While Providing High Quality Standards in Higher Education in the Middle East and North Africa, to study the dynamics of financing Higher Education (HE) systems in the MENA region, to provide models for funding the needed expansion, while preserving quality and ensuring equity of access.
The report stresses the need to diversify sources of funding and improve the efficiency in the use of current funds. “Tertiary education institutions need to be ready to produce graduates with the skills required by today’s world. This implies developing cognitive, behavioral, social and technical skills aligned with the rapid changes of globalization” says Adriana Jaramillo, Senior Education Specialist at the World Bank and Co-Editor of the report. “To meet these goals, more financial resources are needed, but more importantly, using existing resources in more effective ways is critical”.
Additionally, the report assesses that in order to meet the surging revenue needs of universities and other institutions of HE in MENA, non-governmental revenue from tuition and other fees, university entrepreneurial activities, external grants and contracts, the private sector and philanthropy are needed. “Since education is generally assumed to have both private and social returns, an education system fully paid by students might prove both inequitable and inefficient, but cost-sharing, with varying proportions of public and private funding according to the context, has economic justifications.” says Thomas Melonio, Economist at the Economic and Social Research Department at the AFD and Co-Editor of the report.
The report notes that in countries where the tax base is too limited or when the government is concerned with equity issues and with limited fiscal revenues, having the students and their families share in the cost of HE makes sense. Student loans and grants targeted towards students from low socio-economic backgrounds are essential to broaden access either when the share of students in private universities is high or when public universities charge significant fees. Governments could also spend resources in a more cost-efficient way by linking funding to performance. This can be done through performance-based contracts, competitive funds, or any form of results-based funding.
The report also examines a new way for the region to find additional resources by reaching out for philanthropic contributions. The endowment model used successfully by both private and public universities in the US, merits strong consideration as a mechanism for alternate funding for MENA HE. “Philanthropy has the advantages of not requiring new taxes, not diverting faculty from core teaching and research activities, and not having to confront political opposition to tuition fees” says Mourad Ezzine, Education Sector Manager at the World Bank. “Although not yet well developed in the MENA region, building on this innovative source of funds seems attractive, especially to political leaders.”