Clases utilizadas en el Analizador de flujos

and targeted

redistribution

have proved

helpful in

redressing

education

inequalities

R A I S I N G Q U A L I T Y A N D S T R E N G T H E N I N G E Q U I T Y : W H Y G O V E R N A N C E M AT T E R S

F i n a n c i n g e d u c a t i o n f o r e q u i t y

Box 3.4: Fiscal decentralization in Nigeria — reinforcing regional disparities Improved governance and the return of democracy to Nigeria

have done little to narrow inequalities in education. One reason is that insufficient attention has been paid to the development of a more equitable financing system.

Primary net attendance rates (NARs) in Nigeria range from 85% in Anambra and Ondo states to less than 30% in Jigawa and Zamfara states (Map 3.1). These disparities are linked to substantial differences in poverty rates. In 2004 the poverty headcount ratio in Anambra was 20%, compared with 95% in Jigawa.

Under an equitable financing system more resources would be allocated to states with low levels of participation and high rates of poverty. In Nigeria the equity principle is turned upside down: the wealthiest states and regions with the highest education participation secure the lion’s share of federal resources. For example, Lagos receives around five times as much as Jigawa, which has attendance rates less than half of those in the commercial capital.

Fiscal decentralization has reinforced regional disparities in education. Since the return to multiparty democracy in 1999, an increasing share of federal revenue (predominantly from oil and gas) has been allocated to state and local governments. Since 2002 about half the federal budget has been allocated to states and local government areas (LGAs). Of this share, a third is reserved for the four oil-producing states in the Niger delta and the remainder is distributed under a complex formula that produces a simple result: large financing inequalities. In 2005, Kano, a poor state with a low primary NAR and limited revenue-generating capacity, received 20% less in federation account revenue than Enugu state, with similar revenue raising capacity, lower poverty rates and a higher primary NAR. Unlike most states that depend on federal allocations, Lagos generates two-thirds of its revenue from local sources — an arrangement that reinforces regional financing gaps.

Not all the problems in Nigeria’s education financing can be traced to unequal fiscal decentralization. National planning is also weak. No statutory accountability mechanisms exist to ensure that state and LGA plans, where they exist, are aligned with national goals in education. As a result, the priority that LGAs give to primary education varies enormously, even within states. In Kano, 28% of the Dala local government budget was allocated to primary education, compared with 12% in Bichi. Recognizing the need for additional financing in education, the federal government created the Universal Basic Education Commission (UBEC) intervention fund, which channels federal resources directly to basic education. Between 2005 and early 2008 about US$750 million was made available to states through the fund. Unfortunately, this has done little to enhance equity or efficiency:

Equal allocations lead to unequal effect.Some 70% of available resources are allocated equally across states without regard for differences in need. Only 9% of resources are directed to the most disadvantaged states and to activities promoting education for physically and mentally challenged children.

Disbursements have been much lower than expected.Only 60% of allocated funds had been disbursed by mid-2007. Problems range from inadequate policy coordination to complex bureaucratic procedures and weak capacity in state education bodies.

Use of funds is inflexible.The UBEC has strict guidelines on the proportion of funds that can be spent on pre-primary, primary and junior secondary education, as well as the type of expenditure. For example, 70% of funds must be spent on construction, regardless of need. This makes it more difficult to use resources effectively to support state plans for the development of basic education.

Sources: Adediran et al. (2008); Bennell et al. (2007); Kano State Ministry of Education (2008); Nigeria National Bureau of Statistics (2006a, 2006b); World Bank (2007b, 2008f). Niger Borno Yobe Taraba Bauchi Oyo Kogi Kebbi Kaduna Kwara Edo Benue Sokoto Zamfara Kano Adamawa Plateau Jigawa Delta Katsina Ogun Ondo Gombe Nassarawa Rivers Osun Imo Ekiti Bayelsa Ebonyi Cross River Enugu Abia FCT, Abuja Akwa Ibom Lagos Anambra 21 28 65 28 28 26 34 63 132 Less than 50% 50% - 79% 80% and above Primary net attendance rate

Public spending per primary school-age child (constant 2006 US$)

Map 3.1: Net attendance rates and education spending per primary school-age child, Nigeria, most recent year

Sources: Calculations based on Kano State Ministry of Education (2008); Nigeria National Bureau of Statistics (2006a).

The boundaries and names shown and the designations used on this map do not imply official endorsement or acceptance by UNESCO. Based on United Nations map.

0

0

2

Education for All Global Monitoring Report

C H A P T E R 3

Decentralization has been described as a process rather than a destination (Bird and Smart, 2001). The way the process unfolds is heavily influenced by public policy choices, institutional capacity and government commitment to deal with poverty issues. In the case of education, much depends on how governments use financing arrangements to equalize opportunity and improve service provision in poor areas. From an equity perspective, the important question would seem to be not

whether to decentralize, but how and what to decentralize. Four broad rules would appear to be of particular importance for progress towards EFA. First, revenue-raising powersfor local government should be clearly defined. Subnational authorities should not be permitted to mobilize budget resources through user charges in basic education, which have regressive and damaging effects on the poor.

Much depends on

how governments

use financing

arrangements to

improve service

in poor areas

Box 3.5: Financial decentralization with equity in Ethiopia Since the late 1990s Ethiopia has witnessed rapid

improvement in education outcomes. The country has also been implementing far-reaching education reform, including radical decentralization, in the context of wider governance reform. Equity is a central concern.

Ethiopia’s decentralization has involved a radical overhaul of government structures. In the first phase, a four-tier governance structure was created: the centre, the regions (nine ethnic-based states plus the cities of Addis Ababa and Dire Dawa), the zones and the woredas(districts). In the second phase, legal, fiscal and administrative reforms devolved responsibility for management of social services to the woredas.

Education is now financed through a two-step process. The first involves fiscal transfers from the federal government to the regions and the second from regional governments to woredas, which now manage about 45% of regional public expenditure. Most transfers operate through large federal block grants which regional and woredagovernments may allocate freely. A ‘three parameter’ formula for grant allocation to the regions takes into account population size, poverty and development levels, along with an index of revenue effort and sector performance.

While funding formulas have an equity component, they have tended to produce strong biases in favour of regions with smaller populations, even though they are not necessarily the poorest.

Most regional governments use the three-parameter formula to allocate their grants to woredas, but there is sufficient flexibility for them to experiment with other approaches. The Southern Nations, Nationalities and Peoples Region, one of the country’s poorest, has taken advantage of that flexibility to develop innovative new approaches. Between 2003/2004 and 2006/2007, authorities have experimented with a unit cost approach that distinguishes between recurrent and capital expenditure. Reduced to its essentials, it allocates higher per capita funding for recurrent

expenditure to the woredaswith the more developed social services, so those services can be adequately staffed and function effectively. Meanwhile, higher per capita funding for capital expenditure is allocated to

woredashaving less developed social services so they

can expand infrastructure and reduce the gap with the other woredas.

Data on education expenditure suggest that the unit cost approach had equalizing effects between

woredas. For instance, mean per-student recurrent

expenditure on primary education increased by 18% between 2001 and 2004, per-student funding became more equal among woredas, the mean woreda-level primary GER increased from 63% to 73% and enrolment gaps between woredasnarrowed. Decentralization in the region seems to have

disproportionately favoured remote, food-insecure and pastoral woredas(Table 3.7). Despite these outcomes, the unit cost approach has led to some woredas receiving lower funding, prompting demands for further reform. 266 361 36 516 530 3 431 528 22 288 320 11 126 221 75 389 453 16

Remote (more than 50 km from a zone head city) Non-remote Food insecure Food secure Pastoral Non-pastoral

Table 3.7: Ethiopia’s Southern Nations, Nationalities

and Peoples Region: woreda-level spending on education

before and after decentralization

2001 Type of woreda

(district)

Total education

Source: Calculations based on World Bank (2007b, Table 4.3, p. 43). 2004

Change between 2001 and 2004 Constant 2006 US$ (%)

R A I S I N G Q U A L I T Y A N D S T R E N G T H E N I N G E Q U I T Y : W H Y G O V E R N A N C E M AT T E R S

Second, central government should retain redistributive capacity. Intergovernment transfers are needed to prevent the growth of regional financing inequalities and the widening gaps in opportunity that can result.

Third, equity goalsshould be built into intergovernment financing formulas. Transfers should be weighted to provide larger per-capita transfers to regions marked by high levels of poverty and marginalization, with education indicators as a central part of the formula. In addition, national rules need to provide a framework for ensuring that lower levels of government prioritize equity in delivery of financing. Finally, central governments should carefully assess the implications of decentralization for the achievement of national goals in education. Ensuring that local governments have the resources and capacity to manage progress towards inclusive education is critical.

Conclusion

Approaches to education finance will continue to exercise a critical influence over prospects for achieving the goals set out in the Dakar Framework for Action. Increased financing is not a sufficient condition for delivering on the commitment to education for all – but in many countries it is a necessary condition. In some cases, national governments are not demonstrating sufficient levels of commitment either to resource

mobilization or to equity. Much of South and West Asia falls into this category. In other cases, stronger national commitment will need to be accompanied by scaled-up donor support.

Financial governance challenges vary enormously across regions and countries. Improving efficiency and facing up to corruption are two immediate priorities for many governments. It is also important for governments to take stock of the experience of decentralization. While the case for avoiding overly centralized decision-making and for devolving political authority under appropriate conditions remains strong, decentralization is not a panacea. In the area of financing, there is an urgent need to place equity at the centre of the decentralization agenda. That means central government retaining a strongly redistributive role consistent with commitments to inclusive education and equal opportunity for education.

Central