March 3, 2004

Document of the World Bank

Report No. 28064-KE

KenyaStrengthening the Foundation ofEducation and Training in Kenya

Human Development ICountry Department: AFC05Africa Region

This document has a restricted distribution and may be used by recipientsonly in the performance of their official duties. Its contents may not otherwisebe disclosed without World Bank authorization.

Report N

o. 28064- KE

Kenya Strengthening the Foundation of Education and Training in Kenya

FOR OFFICIAL USE ONLY

Opportunities and Challenges in Primary and General Secondary Education

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GOVERNMENT FISCAL YEAR

July 1 -June 30

CURRENCY EQUIVALENTS

ASAL CBE CBS CHE DEO EMIS ERAP FPE GDP GER GoK HELB HIViAIDS

KCPE KCSE KIE KNEC

Currency Unit: Kenya Shillings (KSh) Official Rate: US$ 1.00 = 75 KSh. (July 29,2003)

ABBREVIATIONS AND ACRONYMS

Arid and Semi-Arid Lands Curriculum-Based Establishment Central Bureau of Statistics Commission for Higher Education District Education Officer Education Management Information System Economic Recovery Action Plan Free Primary Education Gross Domestic Product Gross Enrollment Ratio Government of Kenya Higher Education Loans Board Human Immunodeficiency Virus/Acquired Immunodeficiency Syndrome

Kenya Certificate of Primary Education Kenya Certificate of Secondary Education Kenya Institute of Education Kenya National Examination Council

Ksh MDGs MoEST MTEF NFE NGO OC PDE PE PER PRSP PTA PTR SACMEQ

TAC TIMSS TVEC TSC

Kenyan Shilling Millennium Development Goals Ministry of Education, Science, and Technology Medium-Tern Expenditure Framework Nonfonnal Education Nongovernmental Organizations Other Charges Provincial Director of Education Personal Emolument Public Expenditure Review Poverty Reduction Strategy Paper Parent Teacher Association Pupil-Teacher Ratio Southem Africa Consortium for Monitoring Education Quality Teacher Advisory Center Trends in International Mathematics and Science Study Technical and Vocational Education and Training Teachers Service Commission

This report was prepared by a team comprising Dandan Chen (Economist, AFTHI, Task Team Leader), Donald Hamilton (Senior Education Planner, AFTHl), and James Kamunge (Education Specialist, Consultant). The team worked closely with the Technical Working Group (TWG) of Ministry of Education, Science, and Technology (MoEST), and participated the TWG’s retreats for the technical discussions during 2002. The report benefited from comments by its peer reviewers Manny Jimenez (Sector Director, EASHD), Peter Moock (Consultant, AFTHl), and Harry Patrinos (Senior Education Economist, LCSHE), and all the participants of the review meeting. All the education colleagues at AFTHl have also provided comments on an early draft. Technical guidance from Birger Fredriksen (Senior Education Advisor, AFTHD) is much appreciated. Makhtar Diop (Country Director), Dzingai Mutumbuka (Sector Manager), and Paud Murphy (Lead Education Specialist, AFTHI) provided overall guidance. Financial assistance from Norwegian Education Trust Fund is gratefully acknowledged.

FOR OFFICIAL USE ONLY

Table of Contents Executive Summary ..................................................................................................................................... i

Introduction ............................................................................................................................................................... i Main Sector Issues and Critical Challenges ............................................................................................................. ii Policy Recommendations ...................................................................................................................................... vi11 Sector Planning: Projections o f Costs and Financing ............................................................................................. x i i

Macroeconomic Context and Demographic Trends ........................................................... 1 Evolution o f Gross Domestic Products ..................................................................................................................... 1 Fiscal Resources and Performance ........................................................................................................................... 2 Population and Labor Force ..................................................................................................................................... 4

...

Chapter 1

Evolution of the Population ...... Labor force and employment

Impact ofHIV/AIDS ................. Economic Development Perspectives ....................................................................................................................... 6

Macroeconomic Prospects ................................................................................................................................... 7 Education Sector Development ............................................................................................................................ 7

Conclusions .............................................................................................................................................................. 8 Education Coverage and Attainment .................................................................................. 9

Historical Overview .................................................................................................................................................. 9 Preprimary Education ............................................................................................................................................. 10 Primary Education .................................................................................................................................................. 11 General Secondary Education ................................................................................................................................ 13 Determinants for Low Enrollment at Primary and Secondary Level ...................................................................... 15 Postsecondary Education and Training .................................................................................................................. 16

....................................... 17 ..................... 17

Chapter 2

University ................................................................. ................................................ 16 Tertiary-Level Technical Education . Teacher Education and Training

Other Education and Training ............. Technical and Vocational Education and Training (TVET) Nonformal Education (NFE) Adult Education ......................... 19

............................ 20

Conclusions ........ ................................ Chapter 3 Internal Efficiency and Student Flows .............................................................................. 24

Late School Entry ................................................................................................................................................... 24 Dropout Rate at Primary Level ............................................................................................................................... 25 Grade Repetition at Primary Level ......................................................................................................................... 26

............................................. .................................... 27 Dropout at Secondary Level ................................................................................................................................... 28 Repetition Rate at Secondary Level ....................................................................................................................... 28 Completion Rate and Cohort Flow at Secondary Level ......................................................................................... 29 Primary to Secondary Transition Rates .......................................................................................... : ....................... 30

...................................................................................................................................................... 31 Education Quality ................................................................................................................ 32

Educational Inputs .................................................................................................................................................. 32 Curriculum ......................................................................................................................................................... 32 Teachers ........................................................... .............................................................................. 33

ing materials .............. .............................................................. 41 ........................... ........................ 43 rmance ............................................................................... ..................... 44

Cohort Flows and Completion at Primary Level ......

Chapter 4

lThis document has a restricted distribution and may be used by recipients only in lthe performance of their official duties . I t s contents may not be otherwise disclosed 1 lwithout W o r l d Bank authorization . I

Kenya Certificate of Primary Education (KCPE) ............................ Kenya Certijicate of Secondary Education (KCSE) ..................................... 45

Conclusions ................................................................. Chapter 5 Education Cost and Finance ............................................................................................... 48

Overall Public Finance ........................................................................................................................................... 48 Recurrent Government Expenditure on Education ................................................................................................ -49

Development Expenditure and Donor Finance .................... Efficiency o f Public Spending ................................................................................................................................ 59 Equity o f Public Spending: Benefit Incidence ........................................................................................................ 61 Household Expenditure on Education .................................................................................................................... 61 Conclusions ............................................................................................................................................................ 64

Institutional Arrangement and Management o f Education Service Delivery ................ 65 Overall Institutional Arrangement for Service Delivery ........................................................................................ 65 Management and Capacity o f MoEST ................................................................................................................... 69

Allocation across subsectors ................................................................ Allocation across functions and Unit Cost Composition

Chapter 6

Funds Flow .... ...................................................................... 74

Decentralization of Educational Management ......................... Provincial Level Management ..................... District Level Management

Management o f Inspection o f Services ................................................................................................................... 80 Conclusions ............................................................................................................................................................ 81

Chapter 7 Policy Directions and Sector Development Projections ................................................... 82 Critical Challenges ................................................................................................................................................. 82

Equitable Expansion of Enrollment

Quality of Education .......................................................... 83

........................................................................................ 82 Internal efjciency .............................................................................................................................................. 83

Costs and Financing .................... 84 Sector Strategies ..................................................................................................................................................... 84

Expand Enrollment ..................................................................................................................................... 84 Improve Quality .......................................... Enhance Eflciency of Resource A Strengthen Institutional Arrange ............................. 91

Secondary Level ............................. Issues of Special Attention for Further Sector Planning .................................................................................. 107

Additional Tables ............................................................................................................... 110 Kenya at A Glance ............................................................................................................. 124

Sector Development Projections ..... Primary Level ............................

Conclusions .......................................................................................................................................................... 108 Annex I Annex I1 Bibliography ............................................................................................................................................ 126

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List of Tables Table 1.1: Real GDP Growth 1980-2001 ..................................................................................................................... 1 Table 1.2: Current GDP Per Capita and Population ...................................................................................................... 1 Table 1.3: Government Revenue and Expenditure As Percentage o f GDP, 199711998 - 200212003 ............................ 2 Table 1.4: Expenditure Category and As Percentage o f GDP, 199711998 - 2002l2003 ............................................... 2 Table 1.5: Share of Public Expenditures By Sector ...................................................................................................... 3 Table 1.6: Population by Gender and Age Structure in 1999 (in 1000s) ....................................................................... 4

Table 1.8: Total Employment And Shares by Sector 1997 - 2001 (in 1000s) ............................................................... 5

Table 2.2: Primary School Gross Enrollment Rates by Sex 1989 - 2000 ................................................................... 12

Table 2.4: Enrollment Increase by Region between 2000 and 2003 ........................................................................... 13 Table 2.5: Secondary School Gross Enrollment Rates by Sex 1989-2000 ................................................................. 14 Table 2.6: Secondary School Gross Enrollment by Sex and Province, 2000 ............................................................ 14 Table 2.7: Reasons for Non-School Attendance (by percentage) ................................................................................ 15 Table 2.8: Enrollment in Universities 1995-2001 ....................................................................................................... 16 Table 2.9: Enrollment in Technical Education 2000-2001 .......................................................................................... 17 Table 2.10: Enrollment in Public Primary Teacher Training Colleges 1991-2001 ..................................................... 18 Table 2.1 1: Enrollment in Adult Literacy Programs ................................................................................................... 19 Table 2.12: Enrollment in Special Education at Primary Leve l by Sex 1986-99 ........................................................ 20

Table 1.7: School Age Population Estimates ................................................................................................................ 5

Table 2.1 : Evolution o f Gross Enrollment Ratio o f Preprimary Education (in Percentage) ........................................ 11

Table 2.3: Primary Schools Gross Enrollment Rate by Province and Sex, 2000 ........................................................ 12

Table 2.13: Enrolment in Special Schools at Secondary Level by Sex 1990-99 ......................................................... 20 Table 3.1: Primary School Dropout Rates by Province and Gender in 1999 ............................................................. 25 Table 3.2: Primary School Drop-out Rates by Sex and Grade .................................................................................... 25 Table 3.3: Primary School Repetition Rates by Province and Sex, 1999 .................................................................... 26

Table 3.6: Cohort Flow at Primary Level .................................................................................................................... 27 Table 3.7: Secondary School Dropout Rates by Province and Gender in 1999 ......................................................... 28 Table 3.8: Secondary School Dropout Rates by Sex and Grade ................................................................................. 28

Table 3.4: Primary School Repetition Rate by Sex and Grade, 1999 ............ - ........................................................... 26 Table 3.5: Primary School Enrollment Size by Sex in Grade 1 and Grade 8 during Eight Year Cycle, 1989 - 200027

Table 3.9: Secondary School Repetition Rates by Province and Sex, 1999 ............................................................... 29 Table 3.10: Secondary Repetition Rates by Grade and Sex ....................................................................................... 29 Table 3.11: Secondary School Enrollment Size by Sex in Form I and Form IV during Four Year Cycle, 1989 - 2000

............................................................................................................................................................................ 29

Table 3.13: Primary to Secondary School Transition Rates by Sex, 1991-2000 ......................................................... 30

Table 4.1: 2001 KCPE Candidates by Subject ........................................................................................................... 32 Table 4.2: Numbers o f Primary Teachers by Qualification 1997-2003 ....................................................................... 34

Table 3.12: Secondary School Cohort Flow ................................................................................................................ 30

Table 3.14: Public Primary School Transition Rates by Sex and Province, 2000 ...................................................... 31

Table 4.3: Pupil-Teacher Ratio by District and Province 2003 ................................................................................... 35 Table 4.4: Number o f Secondary Teachers by Qualification 1997-2001 ......................... : ......................................... 38

Table 4.6: Reasons for Teachers Leaving Service (%) ............................................................................................... 40 Table 4.7: Availability o f Textbooks ........................................................................................................................... 41 Table 4.8: Availability o f Classroom and School Libraries ........................................................................................ 42 Table 4.9: Availability o f Other Learning Materials ................................................................................................... 42 Table 4.10: Availability o f Classroom Furniture ......................................................................................................... 43 Table 4.1 1: Indicators o f Other School Facility Status ................................................................................................ 43

Table 4.13: Performance by Gender, 2001 .................................................................................................................. 45

Table 4.5: Distribution o f Secondary School Teachers across Provinces and Districts, 2000 .................................... 38

Table 4.12: Examination Performance in English, Maths, Physics, Biology and Chemistry at KCSE 1992-2001 ..... 45

Table 5.1 : Share o f Government Revenue and Expenditure as Percentage o f GDP .................................................... 48 Table 5.2: Government Expenditure on Social Services and Education (by percentage) ............................................ 49 Table 5.3: MoEST Recurrent Expenditure by level, 1996197-2002 in Ksh Mil l ions .................................................. 50 Table 5.4: Proportion o f Subsector Public Recurrent Expenditure .............................................................................. 50

... 111

Table 5.5: Unit Cost Evolution (Kshs. Per pupil. Per year): 1996197 -2002103 ......................................................... 52 Table 5.6: Number o f Teachers and Pupils at Primary Level 1993-2003 .................................................................... 53 Table 5.7: Numbers o f Primary and Secondary School Teachers by Category ........................................................... 55 Table 5.8: Average Annual Salary o f Teachers by Category (Kshs) ........................................................................... 56 Table 5.9: Average Monthly Earnings in Public Sector by Function .......................................................................... 57 Table 5.10: Development Expenditure Per Subsector, 1997-2002 (million Ksh) ....................................................... 59 Table 5.1 1 : Public spending on education and indicators o f education achievement in selected African countries ... 60 Table 5.12: Benefit Incidence o f Public Expenditure .................................................................................................. 61 Table 5.13: Components o f Household Education Expenditures (Ksh, per child annually) ....................................... 62 Table 5.14: Household Education Expenditure on Primary and Secondary Education ............................................... 63 Table 6.1 : Functional Assignments for Education Services in Kenya ......................................................................... 65 Table 7.1: Primary Level Enrollment Projection ......................................................................................................... 95

Table 7.3: Projection o f Development Costs for Classroom Construction at Primary Level: Lower-Bound .............. 97

Table 7.5: Projection o f Development Costs for Classroom Construction at Primary Level: Upper-Bound .............. 99 Table 7.6: Summary o f Recurrent Costs (USD million) ............................................................................................. 99 Table 7.7: Baseline Case Enrollment Projection at Secondary Level ........................................................................ 102 Table 7.8: Recurrent Costs with Base Case Secondary Enrollment and N o Efficiency Improvement : Baseline

Scenario ............................................................................................................................................................ 103 Table 7.9: Constant Transition Rate with Efficient Utilization o f Teachers: Scenario 1 .......................................... 104 Table 7.10: Enrollment Expansion at Secondary Level ............................................................................................ 105 Table 7.1 1: Recurrent Costs wi th Secondary Enrollment Expansion and Efficiency Improvement : Scenario 2 ..... 106

Table 7.2: Projection o f Recurrent Costs for Teachers Compensation and School Grants at Primary Level: Lower- Bound ................................................................................................................................................................. 96

Table 7.4: Projection o f Recurrent Costs for Teachers Compensation and School Grants at Primary Level: Upper- Bound ................................................................................................................................................................. 98

Table A . 1: Primary GER by District. 2003 .............................................................................................................. 110 Table A . 2: Classroom-Pupil Ratio at Primary Level by District. 2003 .................................................................... 112 Table A . 3: Public Finance: Recurrent Expenditure for MoEST, 2001102-2003/04 ................................................. 114 Table A . 4: Public Finance: Teacher Salaries: 2002103-2003104 .............................................................................. 116 Table A . 5 : Public Finance: Development Expenditure: 2001lO2-2003/04 ............................................................... 117 Table A . 6: Public Finance: Summary 2001/02-2003104 .......................................................................................... 117

Table A . 8: Public Primary School Transition Rates by Sex and District, 2000 ....................................................... 120 Table A . 9: Composition o f Standard Instructional Materials ................................................................................... 122 Table A . 10: Estimation o f Unit Cost o f Instructional Materials ............................................................................... 123

........................................................................ Table A . 7: Secondary School Enrollment by Sex and District, 2000 118

List of Figures Figure 1.1 : Fiscal Deficit as Percent o f GDP ................................................................................................................ 3 Figure 2.1: Structure o f Education and Training in Kenya .......................................................................................... 10 Figure 2.2: Grade Attainment Profile by RuralNrban ................................................................................................ 21

Figure 2.4: Grade Attainment Profile by Gender ........................................................................................................ 22 Figure 2.5: Grade Attainment Profile by Household Wealth ...................................................................................... 23 Figure 3.1: Girl’s Age Composition in Standard 1 ...................................................................................................... 24 Figure 3.2: Boy’s Age Composition in Standard 1 ...................................................................................................... 24

Figure 4.2: Comparison o f Candidates Mean Performance in the Year 2001 and 2000 KCPE Examinations ........... 44 Figure 4.3: SACMEQ Reading Scores, 2000 .............................................................................................................. 46 Figure 4.4: SACMEQ Maths Scores, 2000 ................................................................................................................. 46

Figure 5.2: Primary School KCPE Ranking and PTR ................................................................................................. 55

Figure 5.4: Public Sector Monthly Eamings by Industry: 1996-2000 ........................................................................ 58

Figure 2.3: Grade Attainment Profile by Province ...................................................................................................... 21

Figure 2.6: Grade Attainment Profile by Household Wealth (Age 10-14 cohort) ....................................................... 23

Figure 4.1 : School Level Teacher Distribution In Relation to Number o f Pupils at Primary Level ............................ 37

Figure 5.1 : Growth of Pupils and Teachers at Primary Level, 1993-2003 .................................................................. 54

Figure 5.3: Civ i l Servant’s Salary Increase ................................................................................................................. 57

i v

Figure 5.5: Public Sector Average Salary Growth Rate. 1996-2000 (1996=100) ....................................................... 58 Figure 5.6: Education Spending as Percentage o f GDP vs . GDP Per Capita .............................................................. 60 Figure 5.7: Household Expenditure on Primary and Secondary Education ................................................................ 62 Figure 5.8: Primary and Secondary Education Expenditure as Percentage o f Household Total and Non-Food

Expenditure ......................................................................................................................................................... 63 Figure 5.9: Public vs . Household (Private) Spending Per Pupil .................................................................................. 64 Figure 6.1 : Institutional Arrangement o f Education Service Delivery ........................................................................ 66 Figure 6.2: Organization Chart o f Ministry o f Education, Science, and Technology ................................................. 70 Figure 7.1: Upper- and Lower-Bound o f Recurrent Costs at Primary Level ............................................................. 100 Figure 7.2: Upper- and Lower-Bound o f Classroom Construction Costs at Primary Level ...................................... 100 Figure 7.3: Recurrent Cost Projections at Secondary Level ...................................................................................... 107

V

Executive Summary

Introduction 1. Kenya i s currently going through an important political and economic transition period. On December 27, 2002, Kenyan voters elected their f irst new president in 24 years, ending the political domination o f the party that has ruled Kenya since independence. Facing the tremendous challenge o f revitalizing economic performance, the new Govemment i s quickly moving forward to strengthen its poverty reduction efforts, and to address the governance and economic management issues. The Govemment has put the highest priority on education, recognizing the close links between poverty alleviation, economic growth, and human development.

2. The new Govemment has instituted immediate policy changes in the education sector to jump- start the system. Under the “Free Primary Education (FPE)” policy started this year, school fees and levies are abolished at primary level, thereby greatly relieving the household burden o f financing primary education. Households immediately responded. Including both public and non-public schools, the primary education gross enrollment rate jumped to over 100 percent, with close to 1 mil l ion enrollment increase from the previous year. Enrollment in primary schools has reached 7.2 mil l ion this year from 6.3 mil l ion in 2002. Quality improvement measures have also taken place at this level, with nationwide provision o f funding directly to primary schools through a capitation grant o f 1,020 Kenyan Shillings per pupil to finance the purchase o f textbooks and other teaching and leaming materials, as well as to support other school operation activities.

3. The expansion of school enrollment and the improvement o f education quality at primary level will continue during the subsequent years. The development at this level has increased pressure on as well as provided opportunities to the other subsectors. A wider sector reform agenda needs to be put in place immediately. The Kenya National Education Conference held in November 2003 provided an opportunity for the discussions o f a sector strategic plan with al l the stakeholders. A sector-wide program with wider coverage will be developed based on the sector strategic plan.

4. The World Bank i s providing a great deal o f support to the education and training sector in Kenya. The “Free Primary Education Support Project” became effective in July, 2003, providing US$50 mil l ion grant to finance the provision of instructional materials to the primary schools nationwide, together with essential capacity building activities in the sector for better service delivery. This sector review has also been a result o f the close collaboration between the technical working group in the Ministry o f Education, Science, and Technology (MoEST), and the Bank education team. The review provides an analytical base with identified sector issues, and focused sector development directions, which will form a solid foundation for the sector strategic planning and preparation o f the sector reform program. The Bank i s also envisaged to play an important role in supporting the sector-wide program.

5. This sector review has emphasized the primary and secondary subsectors, although the postsecondary levels are covered in the discussions o f the system coverage, management, and resource allocation. This i s mainly owing to the fact that a labor market study i s planned to be conducted jointly by the Bank and the Govemment. The information from that study will be crucial to the analysis o f the extemal efficiency o f the sector, particularly with close linkages with postsecondary level education and training.

i

Main Sector Issues and Critical Challenges Enrollment 6. Kenya has made great strides in expanding the total number o f students enrolled in primary and secondary education. Since Independence in 1963, the total enrollment at primary level has grown from a mere 891,533 to over 7 mill ion in 2003, and from 30,000 to over 800,000 at the secondary level currently. However, during the 90s the enrollment increase slowed down significantly and did not keep pace with the school-age population growth. After peaking at 105 and 30 percent respectively, both the primary and secondary gross enrollment ratios have declined through the 1990s. At the beginning o f 2000, including both public and registered private schools, the GER at both the primary and secondary level has fallen to 88 and 22 percent respectively (Fig. 1 and Fig. 2).

7. In 2003, following the implementation o f “Free Primary Education” policy, a massive increase in primary enrollment took place. Including both public and non-public primary schools, the enrollment at the primary level has exceeded 7 million, representing a GER of nearly 104 percent, which i s much higher than the average o f 79 percent among al l Sub- Sahara African (SSA) countries (African Development Indicators, 2003).

8. At the secondary level, about 660,000 students were enrolled in 2000. Current enrollment i s estimated at 700,000. Given an 8-year primary cycle, the secondary education in Kenya i s largely equivalent to upper secondary level in other SSA countries. Although the gross enrollment ratio at this level i s comparable with the regional average, its lag behind the primary GER i s more distinctive now (Fig. 2).

9. Regional disparities in enrollment s t i l l exist at both primary and secondary level. The magnitude o f the responses to the FPE policy also varies across the regions. Currently, the

Fig. 1: Primary and Secondary Enrollment

0 8 6,000 8 4,000 E

v - - - g 2,000 W

0

7 1 Source Ministry of Educunon, Sciency and Technology (MoEST)

Fig. 2: Primary and Secondary GER

30

10 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2002 2003

+primary -secondary

Source: MoEST.

Fig. 3: Regional Disparities in Primary and Secondary GER (%)

1 Ourimarv Msecondarv 1

Source: MoEST 2000. 2003.

_ . Northeastern Province has the lowest primary and secondary gross enrollment’ratios (at 23.2 and 4.5 percent respectively), with Nairobi the next lowest (Fig. 3).

11

Internal Efficiency 10. The education system in Kenya has also been characterized by l o w internal efficiency, as indicated by the high grade repetition and dropout rate.

11. At the primary level, although the dropout rate in each grade averages 5 percent, the cumulative effect i s quite large. By the end o f the gth year, only an average o f 63 percent o f the entrants are s t i l l in the system. In the meantime, the grade repetition rate i s alarmingly high, and averages about 14 percent annually between Standards 1 and 7. I t i s estimated that among the 63 percent.who are s t i l l in the system by the 8" year, only about a third o f them are in grade eight. The rest are s t i l l in the lower grades owing to grade repetition at some point. Out o f an average o f 52 percent o f the entrants who eventually complete the 8" grade, only 40 percent exit the primary cycle o n time (Fig. 4).

100 -

80 --

60 --

40 --

20 --

0

12. The survival at the secondary level i s relatively better. By the end o f the 4th year, an average o f 84 percent o f the entry cohort i s st i l l in the system. On average, 81 percent o f the entry cohort complete the secondary cycle eventually, with over 90 percent o f the graduates graduating o n time (Fig. 5).

--

Quality 13. The national examinations to obtain the Kenya Certificate o f Primary Education (KCPE) at the end o f primary cycle and the Kenya Certificate o f Secondary Education (KCSE) at the end o f secondary cycle are designed to evaluate the extent to which the primary and secondary graduates master the curriculum content. The results f rom the KCPE examinations in 2001 show that the overall score i s low. English, Kiswahil i, and mathematics subjects are among those with the lowest scores. Test scores from the KCSE examination results are even worse, with the scores below 40 percent in a l l the subjects tested in 2001. In addition, the trend does not seem to have improved over the years. In the K C S E examination, girls do better than boys

Fig. 4: Cohort Survival During Primary Cycle

Source: MoES7: 2000

standard 8

"standard 7

standard 6 .----I

-standard 5

-standard 4

'standard3

-standard 2

-standard I -

Fig. 5: Cohort Survival During Secondary Cycle

i -Form I V

L_I Form 111

-Form I1

-Form I

1st 2nd 3rd 4th 5th 6th

year

Source: MoEST, 2000.

Fig. 6: 2001 KCPE Examination Results (%)

Source: Kenyu Nurionul Exuminution Council. (KNEC), 2001.

in English, Swahili, and chemistry, but boys-are far better in mathematics and other science subjects (Fig 6. and Fig. 7).

... 111

14. Although the KCPE and KCSE examination outcomes are not satisfactory, Kenyan students seem to do well in standard competency tests. For example, the SACMEQ results show that Kenyan 6th-graders performed well on reading and mathematics tests, with both scores ranking second after Seychelles and Mauritius for reading and mathematics, respectively (Fig. 8).

15. The differentials o f the results o f the public examinations such as KCPE and KCSE, and the standard learning assessment such as SACMEQ are arguably due to the bias o f public examinations in measuring learning outcome as they also serve the purpose o f selecting students for the next cycle o f education. The selection requires certain degree o f difficulty o f the testing items so as to differentiate the top students. In the meantime, to emphasize the accountability o f schools and teachers in the quality o f education service delivery, the public examinations also bear the objective o f differentiating schools wi th various performance. This also requires certain level o f difficulty o f the examinations.

16. Although Kenyan students are doing relatively better than other SACMEQ countries, there i s general concerns among education officers, teachers and parents that the education quality i s not satisfactory by international standards. For example, although Kenya has not participated in the

Fig. 7: 2001 K C S E Examination Results

English Maths Physics Biology Chemistry

Source: KNEC, 2001

Fig. 8: SACMEQ Scores, 2001 I I

Source Southern Africu Consortiumfor Monitoring Educution Quulity (SACMEQJ, 2001 I

“Trends in International Mathematics and Science Study (TIMSS)”, the participating South Africa could provide a useful benchmark. The low performance o f South African students i s particularly alarming as South Africa i s generally considered the highest performer in Sub-Sahara Africa.

17. Due to the introduction o f the diversified and costly curriculum in the 80s, public resources could basically only finance teachers’ salaries, leaving other teaching and learning inputs to be financed by parents, who were also under tight financial constraint during the same period o f time due to declining economy and increased poverty. I t i s arguable that shortage and inappropriateness o f educational inputs has shown negative impacts on the learning outcomes. The most important inputs include teachers, curriculum, instructional materials, and learning environment.

18. Overall teacher availability i s adequate at the primary level. However, there are huge variations in the pupil-teacher ratio across individual schools, zones, and districts. The nationwide pupil-teacher ratio i s estimated at 39: 1 at this level, with variations from 21: 1 (Baringo District in Rift Valley Province) to 57:l (Mandera District in North Eastern Province). The overall pupil-teacher ratio at the secondary level i s 16:1, which i s quite low by regional standards. As teachers teach by subject at this level, the demand for teachers i s mainly determined by the curriculum. Therefore many factors, such as the number

iv

o f subjects offered and the school size all affect the level o f pupil-teacher ratio at secondary level. However, the current low secondary pupil-teacher ratio i s a good indicator showing the low efficiency levels o f teacher utilization in secondary schools.

19. The diversified curriculum was introduced together with the 8-4-4 system (8 years o f primary education, 4 years o f secondary education, and at least 4 years o f university education) which started in the mid-1 980s. This diversified curriculum includes 13 teaching subjects and seven examinable subjects for KCPE at primary level, and 32 teaching subjects and eight examinable subjects for KCSE at secondary level. Although many o f the elective courses are taken by very few students, supporting the system requires a large amount o f resources to provide specialized teachers, school facilities, and equipment, and extra teaching and learning materials. In the meantime, whether such a curriculum i s relevant with regard to the objectives o f general education i s arguable. After detailed evaluation by MoEST and other agencies in Kenya, the curriculum reform has already started with the reduction o f the number o f subjects examined in KCPE from seven to five, and KCSE from eight to seven. Broad guidelines have also been developed to encourage the adaptation o f the curricula to the local environment, with strengthened support for effective teaching-learning to ensure that learners gain relevant knowledge and skills. The reformed curriculum i s being implemented in phases: Standard 1 and 5 at primary level, Form I at secondary level in 2003; Standard 2 and 6, and Form I1 in 2004; Standard 3 and 7, and Form I11 in 2005, and Standard 4 and 8, and Form IV in 2006.

20. Lack o f teaching and learning materials has also been identified as an issue negatively affecting education quality. In 2001, more than three quarters o f the students surveyed by SACMEQ study reported lack o f textbooks. The study also found that the availability o f exercise books and notebooks was only 25 and 18 percent o f what i s required. The Government i s fully aware o f the importance o f the instructional materials in education quality. Following the implementation o f the FPE policy in 2003, primary schools have received capitation grants from MoEST for teaching and learning materials including textbooks, teaching guides, supplementary reading materials, as well as exercise books and stationary packages. The textbook-pupil ratio i s expected to reach 1:3 at lower primary, and 1:2 at upper primary level. The impact on learning outcome o f the great improvement in the availability o f textbooks and other instructional materials at primary level will be seen in the coming years.

21. The learning environment including classrooms and other school facilities also has an impact on learning outcomes. Based on the school level information collected in 2003, the total number o f classrooms nationwide i s quite adequate at primary level, with an average pupil-classroom ratio o f 36: 1. However, the classroom distribution i s quite uneven in relation to the enrollments in the districts, with pupil-classroom ratio ranging from 7 1: 1 (Kisumu Municipality), to as low as 22: 1 (Turkana District in Rift Valley Province). The findings o f the SACMEQ 2001 survey shows that school sitting and writing places are adequate. However, much o f the school furniture i s not in good condition. Schools also tend to be overcrowded with regard to small average classroom space per pupil and extremely crowded sanitary facilities shared by too many pupils.

22. Although educational inputs are closely linked to learning outcome, the other crucial factor i s the process that mobilizes inputs to produce the results. It explains why schools wi th comparable inputs produce different results. The process factors include effective school management, leadership, and culture; classroom time and successful students’ grouping with special attention to some individual students; effective utilization o f teaching resources including innovations in teaching methodology, collaborative lesson planning, peer support on pedagogy; and close monitoring student achievement and sharing with parents and staff for further development. These are all the areas that need further investigation.

V

23. Total education spending as a

for many years in Kenya. However, Kenya percentage of GDP has reached Over 6 percent

does not get the value o f these allocated public resources as compared to other Sub-Sahara African countries (Fig. 9). With similar levels o f overall Education Index (a composite index reflecting both a country’s adult literacy and i t s primary and secondary school enrollments), some other SSA countries spend far less on the education sector as percent o f their GDP.

Fig. 9: Public Education Spending vS. Education Index

I 0.9

0 8

8 0.7 c .- 0.6

0.5

0.4

0 3

x

A I Y

achievement factors, the widely recognized unsatisfactory students’ academic

......................................... ..*.... 4

1 I

Source: Humon Development Report, UNDP, m i .

............................. .. *........‘rt ....................

............... ~ ........ L . ?...*..@ ...............

....... ............................................ *- - - - - - - - - 0 2 4 6 8

Education Spending as % of GDP Although the Education- Index does not take into account the aualitv or leamina

24. This inefficiency o f public spending on education i s mainly owing to the inappropriate resource allocation and utilization within the sector. A large proportion o f spending i s on personal emoluments, leaving l i t t le resources to support educational inputs, such as teaching and learning materials, school equipment, and other operational activities at school level. Before 2002, teacher salaries had constituted as much as 99 percent o f recurrent expenditure at the primary level, and over 95 percent at the secondary level. The allocation between personal emoluments and other operational costs reached a reasonable level at the primary level following the implementation o f the “Free Primary Education” policy in 2003. The current personal emolument (PE)/other charges (OC) ratio at primary level i s 81:19 in 2003. However, to make this level o f allocation sustainable at primary level, and further adjust the PE/OC allocation at secondary level, there are two areas in which policy changes could make a difference.

25. The f i rs t area i s teacher’s salary level. The average annual eamings o f primary and secondary school teachers are reasonable compared with Kenya’s GDP per capita, with the average primary school teacher’s salary about 3.5 times, and secondary school teacher’s salary 5.5 times the per capita GDP. Teachers’ eamings are also comparable with the civil servants in other sectors. Although the levels o f teacher’s salaries are adequate, the total cost o f employing teachers i s quite high since benefits constitute a large proportion o f teacher’s overall compensation package. Including all the benefits, the average teacher’s compensation would be six to nine times the GDP per capita at the primary and secondary levels, respectively. In addition, in some cases, teacher’s qualifications do not match their positions. Teachers are paid according to their qualifications, but do not necessarily reflect the jobs they are actually doing. For example, although usually only P1 teachers are needed at the primary level, there are s t i l l graduate teachers teaching at this level, with a graduate teacher’s salary. The utilization o f “over- qualified” teachers also pushed the average PE cost higher.

26. The second area concems the overall teacher supply. Before the enrollment increase in 2003, Kenya had one o f the lowest pupil-teacher ratios in Africa at the primary level. Further, this ratio declined steadily over time - from 39 in 1963 to 33 in 2000. Following the primary enrollment jump in 2003, the current PTR has come back to an adequate level o f 39:l. At the secondary level, the PTR dropped from 26 in 1983 to a mere 16 now. The decline in the pupil-teacher ratio in recent years has been a result o f declining enrollment together with the supply-driven teacher employment. Although the

vi

practice o f supply-driven teacher employment has been replaced by a demand-driven approach in recent years, the deployment o f teachers over the years under the supply-driven approach has resulted in wide variations in the pupil-teacher ratio across schools and communities. Curriculum-related overstaffing has also been a distinctive phenomenon at the secondary level. Owing to the broad curriculum and low student registration for many selective courses, many teachers do not have a sufficient teaching load.

Equity

27. Most o f the public spending on education that benefits the poor i s delivered through primary education; however, this pro-poor effect i s marl other hand, i s pro-rich. The poorest 20 percent o f the households received only 10 percent o f the government subsidies that went to secondary schools. In contrast, the richest 20 percent received 24 percent (Fig.10). The degree o f inequality i s even more severe if one looks at the distribution o f public spending across al l school-age children instead o f across households, due to the fact that poor households have more out-of-school children o f the relevant age range. In addition, even some o f the children from poor households do go to school, these schools in poor communities tend to receive less public resources such as teachers from the government.

28. The ineff icient and inequitable public spending on education has put much o f the financing burden on poor households.

la1 in Kenva. SDending on secondarv education. on the

Fig. 10: Equity of Public Spending: Concentration Curve

0 20 40 60 80 100

--t primary --E#-- secondary

Household expenditures include tuition, school uniform, textbooks, transportation, meals and boarding, and “Harambee” contribution. At primary level, before the FPE policy was implemented, it cost a household 1,210 Kshs (US $16) annually on average to send a child to the primary school. Household expenditure on secondary education i s much higher than at primary level. The average annual expenditure i s close to 10,000 Kshs (US $130 equivalent) annually per secondary school pupil. Given the fact that public expenditure on education i s already high in the country, this indicates that the overall unit cost i s alarmingly high at the primary and secondary levels in Kenya.

Institutional Arrangement and Capacity for Service Delivery 29. Adequate institutional arrangements and capacity are necessary conditions for effective service delivery. A t the central level, weaknesses are found in the areas o f sector analysis, policy and planning, and overall system monitoring. Coordination i s also lacking between the MoEST and other central technical agencies, including Teachers Service Commission, Kenya Examination Council, and Kenya Institute o f Education, which i s reflected by irregular information flows and communication across and within the agencies. The management o f human resources, including both education officers and teachers, and the management o f financial resources are also weak at central level.

30. Kenya’s education system i s highly centralized. Decentralization i s justifiable given the vast coverage o f the education sector in terms o f the number o f students, institutions, teachers, and other service providers. Weak district-level and school-level capacity, however, i s a barrier to the effective decentralization o f education service delivery. These weak areas include limited local authorities’

vii

involvement, district- and school-level planning and reporting, school inspection, and teacher support as well as financial management and other day-to-day functions for service delivery.

Policy Recommendations 3 1. Further development o f the education system in Kenya requires a major investment in all the critical areas including school access, retention and completion, and education quality. Furthermore, the shift o f some o f the household burden o f education costs to the public sector will also put much pressure on the public resource allocation to the sector. The implementation o f the “Free Primary Education” policy has pushed the education recurrent expenditure up to 39 percent o f the total government discretionary spending in 2002-2003. Given the extremely high public spending on the education sector, improvement o f efficiency will be the key for the overall sector strategy. The efficiency improvement would benefit all the areas o f sector development including expanding enrollment, improving quality, and lowering the unit cost as well as strengthening the management o f the system. The efficiency improvement in the allocation and utilization o f resources i s particularly vital to the sustainability o f the overall sector development.

32. The other crucial factor for sustained sector development i s the balance between the sub-sectors. The enrollment bulge at primary level, together with quality improvement at this level will ripple through the system and lead to the increased pressure on the expansion o f general secondary, technical and vocational education and training, as well as tertiary education. Overall planning i s needed well ahead to prepare for the most effective sector-wide development strategies with close relation to Kenya’s poverty reduction and economic recovery efforts.

33. The recommended policy directions are summarized in the table below. Further operationalizing these policy directions with sequencing and the design o f investment mechanisms would require wide discussions among stakeholders under the development o f a comprehensive sector strategic plan.

viii

Table 1: Summary of Policy Directions

Targeting disadvantaged areas and population groups through both supply-side and demand-side financing

Other imoortant measures: Efficient utilization o f classrooms and other school facilities

view the staffing norm and redeployment o f teachers to ensure adequate availability teachers in each school

Other imoortant measures: Continuation and supervision o f the curriculum reform Strengthening in-service teacher training and other teacher professional support Continuation and supervision o f the provision o f teaching and learning materials at primary level, targeted provision o f teaching and learning materials at secondary level

Studies on school and classroom effectiveness including students’ time on task, pedagogy, and assessment

efficienc ;of public performance-based teacher incentive schemes resource allocation and utilization

Rationalize teacher compensation package, in relation to the establishment o f

Evaluate and adjust teacher resource requirement under the streamlined curriculum, together with alternative teaching methods such as multi-grade teaching in small schools Establish a planning mechanism for adequate resource allocation between primary, general secondary and other sub-sectors

institutional arrangements monitoring and capacity for service delivery

Strengthening central function o f sector analysis, policy and planning, and system

Strengthening management capacity at the school level, including the capacity o f School Management Committee at primary level and that o f Board o f Governors at the secondary level

Other important measures: Strengthening district-level capacity o f local system management, including school inspection, teacher development, monitoring and reporting Decentralization and greater involvement o f local authorities in education service

Equitable Expansion o f Enrollment

Targeting

34. Spending additional public resources on poor and underserved districts and fewer resources on better-off and well-served districts would not only be more equitable but also increase the effectiveness o f public spending on education. Demand-side financing targeting the lowest-income households will also achieve greater education participation. Although every primary school-age child has benefited from the

ix

“Free Primary Education” policy, there i s a need to put in place clear and transparent mechanisms for exempting the poorest students from user fees in secondary schools and make available to them bursaries and scholarships that help their families pay for the other costs o f schooling.

Efficient utilization of classrooms and other school facilities

35. Expansion o f the system also calls for increased classroom capacity. Although double-shifting use o f classrooms i s not common in Kenya, after the primary enrollment increase this year, many schools have successfully practiced double-shifting, particularly for lower grades with shorter learning hours. This practice has the potential to save substantial resources that would have otherwise gone into new building.

Public-private partnership in education provision

36. Greater private sector participation in the education sector i s inevitable for the future expansion o f education, particularly at the secondary level, since a very large proportion o f public resources has already been allocated to the education sector. Furthermore, gains from efficiency improvement and lowered unit cost will not be sufficient for further expansion o f coverage given the currently extremely low secondary education enrollment. Greater private sector participation will also introduce competition into the sector, which i s a crucial internal mechanism for efficiency enhancement. This would require review and necessary revisions o f the regulatory framework with regard to private school registration as well as quality assurance and supervision. The policy focus should also be on relieving the constraints o f private participation in education, for example, in areas o f school financing and credit market access, and land acquisition together with tax exemption and other incentives to make private education more attractive to investors.

Quality and Internal Efficiency Impro vement

Efficient deployment of teachers to ensure adequate teacher supply in schools

37. Pupil-teacher ratio at primary level has increased to 39:l from 33:l after the implementation o f FPE in 2003. However, teacher resources need to be more evenly distributed across schools based on school enrollment. The staffing norm o f 1.025 teachers for one class need be reviewed and better articulated so as to link the number o f pupils directly to staffing needs. Deployment o f teachers according to need wil l be crucial to improve efficiency and education quality. Furthermore, there are large PTR differences among zones within districts, and among districts within provinces. Therefore, redeployment o f teachers i s not infeasible given that within-district and within-province redeployments are relatively low-cost and put less stress on redeployed teachers.

38. At the secondary level, although the overall teacher supply i s high related to the secondary enrollment, attention should be given to certain core subjects such as maths and science where teacher deficiency s t i l l exists. Long-term teacher needs should also be evaluated for the expansion at this level, particularly with regard to the “rippling effect” from the great expansion o f primary education following FPE.

Implementation and supervision of curriculum reform

39. The curriculum reform currently underway at each level i s aimed at re-aligning the curriculum design and learning objectives at each level. The examined subjects at the primary level have been reduced from seven to five at secondary level from eight to seven. The curriculum content has been revised to focus on teaching and learning essential core ski l ls. Further monitoring and supervision will be needed to examine the effects o f curriculum reform on core course learning achievement as well as on lowering the overall cost.

X

In-sewice teacher training and other teacher professional support

40. The ongoing curriculum reform also requires a great deal o f in-service training o f teachers and extensive teacher professional support to let the teachers adapt to the new curriculum. This i s particularly crucial at the secondary level as many teachers may have to be re-trained to teach core courses within a streamlined curriculum with fewer subjects. The roles o f Teacher Advisory Centres will have be reevaluated and strengthened to provide needed professional support to teachers.

Provision of teaching and learning materials

41. Until 2002, teacher salaries accounted for over 95 percent o f the recurrent expenditure at the primary and secondary levels. As a result, there were almost no public resources remaining for other school inputs, such as learning materials and textbooks. In 2003, the spending on school materials has increased to close to 20 percent o f the total primary-level recurrent expenditure, mainly through the implementation o f the primary school grants for textbooks and other teaching and leaming materials. At the secondary level, to raise the effectiveness o f public spending on education, the government will have to continue increasing the total resources on instructional materials or reallocate resources from teacher salaries to other recurrent inputs. To make the most o f limited resources, the provision o f textbooks and other leaming materials may have to be targeted to poor students at the secondary level. Better-off students and communities who are able to pay for textbooks and learning materials may have to continue to finance these inputs themselves.

Improvement of school facilities

42. Improving the condition o f school facilities will include new constructions and also emphasis on the maintenance o f school facilities, which i s in general more cost-effective, particularly under double- shifting use o f classrooms. Furthermore, since the distribution o f classrooms relative to enrollment i s uneven across districts, targeted provision o f development funds for classroom construction and maintenance should be considered. In the meantime, more populated areas also face the constraint o f the availability o f land. Efficient utilization o f classrooms i s particularly crucial to ensure education quality in these areas.

Improvement of classroom effectiveness

43. There has not been much information so far in Kenya regarding the process that educational inputs produce learning outcome. The research findings in other developing countries have shown that it i s one the most important determinants o f effective learning and teaching. Further monitoring and analysis i s needed in the areas o f classroom learning such as time on task, students’ grouping, attention to individual students; and effective teaching including innovations in teaching methodology, collaborative lesson planning, and peer support on pedagogy.

Efficiency Enhancement o f Resource Allocation and Utilization Rationalization of teacher compensation with linkages to performance-based incentive schemes

44. There i s need to further review and rationalize teachers’ overall compensation package, particularly with regard to the pending teachers salary award granted in 1997198, i t s sustainability and fiscal impact. More importantly, an incentive scheme, in replace o f the uniform benefit package, should be considered to link certain award directly to teacher’s performance.

Evaluate and adjust teacher resource requirement

45. New staff norms need to be established based on the enrollment at school level, so as to optimize teacher utilization with enough teaching loads for each teaching position. Alternative teaching modes, such as multi-grade teaching, should also be experimented to increase the cost-effectiveness o f teaching

x i

and learning. This i s particularly relevant to schools o f small sizes and located in sparsely-populated areas.

46. Curriculum-related overstaffing has been a distinctive phenomenon at the secondary level. This situation should improve with the ongoing implementation o f curriculum reform. However, this may also require re-training o f many teachers because the training they received to teach certain subjects may not be useful for teaching core courses.

Resource allocation between sub-sectors

47. The effect o f nearly one mill ion increase o f primary enrollment in 2003 on the demand for secondary education and other levels o f education and training will be seen in a few years. There i s immediate need to plan ahead.for the expected expansion. Given an improved economic perspective, i t i s envisaged that there will be increased resource demand at secondary and higher levels. However, decisions on how much publicly-financed upper general secondary education a country such as Kenya should provide at i t s present stage o f economic development i s not an easy one. Labor market considerations should play an important role in determining the priorities for public financing. H o w to efficiently allocate public resources among sub-sectors will be a major challenge ahead for a balance growth o f the education sector to meet the needs o f poverty reduction and economic recovery.

Strengthen Institutional Arrangements and Capacity for Service Delivery 48. The f i rst area i s the management and planning functions at the central level. The second area i s the implementation capacity at the school and district levels. At the central level, there i s need for (1) better coordination o f central agencies including KIE, TSC, and KNEC for overall sector policy and standards with (2) clear accountabilities and communication mechanisms across various agencies. There i s also need for (3) enhanced capacity o f monitoring and evaluation function at the central level, which would firther require (4) an improved EMIS and (5) better Research and Development (R&D) functions at this level.

Strengthening institutional capacity should focus on two major areas.

49. In accordance with GoK reforms o f the public sector, particularly within the context o f the “Free Primary Education” policy in the education sector, major administrative and resource management functions have been devolved to district and school levels. Therefore, a need exists to strengthen the capacity at this level for the management o f service delivery and financial accountability. The range of management issues at this level not only covers student flow management, but may also include hiring teachers, school-based teacher development, curriculum implementation, school level financial management, and monitoring and reporting.

50. Another important area i s to strengthen the role o f Local Authorities in education service delivery. Local Authorities are mostly held accountable for the development o f local communities. They have the ultimate incentives to support the local primary and secondary schools. Local authorities have also the most direct contact with the local communities to communicate on public policies. They also in general have better knowledge on local conditions, thus have comparative advantage in ensuring the efficiency o f resource allocation on the ground, including the allocation o f teacher resources, as well as targeted demand-side financing resources.

Sector Development Projections 5 1. between primary and secondary levels can be shown using a projection model o f sector planning.

The extent o f the efficiency gains in the sector, and the need for a balanced resource allocation

xii

Enrollment projections 52. The enrollment projection at primary level uses the Millennium Development Goals (MDGs) as the target, with primary cycle completion rate reaching 100 percent by 20 15. This requires that a universal intake rate together with zero dropout should start at the latest in 2007. The projection shows that the "FPE bulge" works i t s way through the system. By 2012, the last cohort o f "FPE bulge" will reach the last grade o f the primary cycle. The system reaches a steady-state in 2013, with 100 percent Ne t Enrollment Ratio (NER), and 103 percent GER. Due to the slow-down o f school age population growth, as projected by the Kenya Central Bureau o f Statistics (CBS), the size o f the enrollment grows slowly over time. Total primary enrollment i s estimated at between 7.5 to 8 mil l ion during most o f the subsequent years. Secondary level enrollment i s determined by the Standard 8 enrollment o f the year before in the primary cycle, together with the transition rate from the primary to secondary cycle. We provide two cases o f enrollment projections (Fig. 11).

53. The f i rs t i s the baseline case, with the transition rate constant at the current level o f 40 percent. I t should be noted that even without increasing the transition rate, the gross enrollment ratio will increase from 23 percent to 38 percent by 2015. This i s mainly due to the expansion o f the primary education, producing more graduates from the primary cycle. The second case has vast expansion o f secondary school enrollment, with a transition rate o f 80 percent starting in 2004, together with a gradual increase in GER from 23 percent in 2003 to 76 percent in 2015.

Cost projections 54. Cost projections focus on the policy options for efficiency gains. A t the primary level, the lower-bound scenario with maximal efficiency gains assumes that the uneven distribution across districts and schools can be solved via complete redeployment o f teachers. Classroom utilization can be intensified though double-shift in areas where there are more than 40 pupils in one classroom on

Fig. 11: Enrollment Projections

8,050,000

7,050,000

6,050,000

1 5'050,000 'e 4,050,000

3,050,000

2,050,000

1,050,000

50,000

1.10

1 0 0

0.90

0.80

0.70 5 0 6 0 0

0.50

0.40

0.30

0.20

'"*""'pnw enrollment ISSSSSsecondaty enmllmt -Secondary enmllmcnf

--+- P n w GER -See GER baseline Sm GER w/expansioi baseline wl expansion

,

Fig. 12: Recurrent Cost and Financing of Primary schooling

...............

...................... ............................

450.0 4 , , ~ , , , , , , , , ,

--C Recurrent cost (lower bound) 4- Recurrent cost (upper bound)

--t domestic recurrent resources

Fig. 13: Development Cost of Primary Education

70.0 ............................................................

.........................................................

.......................................

10.04 , ~ , , , , , , , , ~ ,

-Development cost (lower bound) *Development cost (upper bound)

... Xll l

average. Under this scenario, the national average wil l determine the total cost at this level. In comparison, the upper bound estimation assumes n o efficiency gains with complete rigidity o f teacher redeployment and classroom utilization. I t i s estimated that, between 2003 and 2015, the savings f rom efficiency improvement can reach US$600 mi l l ion in recurrent spending, and U S $ l 5 0 m i l l i on in development spending (Fig. 12 and 13).

55. At secondary level, three scenarios are presented for the comparison o f efficiency gains f rom better teacher utilization. The baseline scenario i s based o n the constant primary to secondary transition rate without

Fig. 14: Recurrent Cost and Financing of Secondary Education

...............................................................

8ooo T - - - - 700.0 4 ...................................................................

efficiency improvement in teacher utilization. The projected domestic resources would not be sufficient to sustain the system. In contrast, Scenario 1 shows that under the same circumstances, but increasing pupil-teacher ratio gradually to 35: 1, this system can largely self-sustained. Scenario 2 further shows that, with more efficient utilization o f teachers, about the same amount o f financial resources required under the baseline scenario can largely finance a much expanded secondary enrollment with 80 transition rate starting in year 2004 (Fig. 14).

Resource projections and allocation across subsectors 56. The FY03104 recurrent budget for MoEST has reached the level o f 39 percent o f GoK's total discretionary budget. This share i s unlikely to increase significantly in the future. The increase o f the domestic resource to the sector will largely rely on the economic and total budget envelope growth. If the resource allocation across subsectors stays constant, and assuming a 3 percent growth rate in the subsequent years, there i s n o financing gap at primary level. Indeed, there i s significant surplus that could be reallocated for further measures o f quality improvement. In the meantime, the efficiency improvement o f teacher utilization i s critical at secondary level to ensure the sustainability o f the development at this level. The sub-sector balance o f public financing would also require to map out the directions o f the development o f general secondary education in relation to technical and vocational education and training, and tertiary education, to meet the needs o f education and skills for economic recovery and growth. In addition, mobil izing resources from the private sector will be necessary to ensure continuous sector expansion.

xiv

Chapter 1 Macroeconomic Context and Demographic Trends

1.1 A country’s macroeconomic and demographic conditions are important determinants o f many features o f the education and training sector in that country. The main indicators o f these conditions that will be discussed in this Chapter include national income and growth potential, population growth and structure, and public sector structure and performance. These factors contribute to the potential o f as well as impose constraints upon the sector development. In the meantime, the performance o f the education and training sector also contributes to the overall economic development by increasing productivity, reducing poverty, and improving human welfare.

1.2 Kenya i s currently going through an important political and economic transition period. On December 27, 2002, Kenyan voters elected their first new president in 24 years, effectively ending the political domination o f the party that has ruled Kenya since independence. Faced with the tremendous challenge o f revitalizing economic performance, the new Government i s quickly moving forward to address govemance and economic management issues, and to strengthen poverty reduction efforts. With i t s close links to economic development, the education and training sector i s given great priority in the overall economic recovery strategy.

Evolution of Gross Domestic Products 1.3 The f i rst decade after independence witnessed a pattem o f high and sustained economic growth followed by a period o f decline, and eventually low cycles o f growth, especially in the 1990s (Table 1.1). Between 1963-1972, the economy recorded the highest growth rates, averaging 6.6 percent per annum. During 1990 to 2001, Kenya’s real GDP grew at only an annual average rate o f 2.2 percent. The growth rate in the 1990s was well below the neighboring countries o f Uganda (6.8 percent) and Tanzania (3.1 percent).

1.4 Kenya’s weak economic performance coupled with a population growth rate averaging 2.7 percent during the 1990s, leading to a contraction in real per capita income by an average o f 0.5 percent per year. The peak o f current GDP per capita reached U S $450 in 1980, compared with U S $365 in 2001 and US$399 in 2002 (Table 1.2).

Table 1.1: Real GDP Growth 1980-2001

80-89 90-93 94-97 98-01 90-01 GDP 4.3 1.3 3.3 1 .o 2.2

Agriculture 3.5 -1.0 3.4 0.5 1 .o Industry 4.0 1.8 2.7 0.5 1.7

Services 5.0 3.3 4.3 1.5 3 .O Real GDP per capita 0.7 -1.5 1.6 1 .o -0.5 Source: Central Bureau of Statistics.

Table 1.2: Current GDP Per Capita and Population

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 Current GDP Percapita 370 340 330 250 240 260 320 379 399 359 346 365 399 (US$)

23.4 24 24.7 25.3 26 26.7 27.4 28.0 28.8 29.5 30.2 30.8 31.5 Population (million) Source:1990-1996 from World Bank; 1997-2002 from Public Expenditure Review (Republic of Kenya, 2003).

1

Fiscal Resources and Performance 1.5 Table 1.3 shows that Government revenue collection peaked at 28.7 percent o f GDP in 1997/98 before falling gradually to 2 1.4 percent o f GDP by the end o f the financial year 2000/0 1, partly due to the slowdown in economic activity and an increase in tax evasion, and paoly to the decline in tax rates. Meanwhile, the share o f extemal grants has fallen steadily from 1.2 percent o f GDP in 1995/96 to 0.5 percent o f GDP in 1999/2000; before improving to 2.8 percent o f GDP in the year ending 2000/0 1.

Table 1.3: Government Revenue and Expenditure As Percentage of GDP, 1997/1998 - 200212003 1997/98 1998/99 1999/2000 2000/01 2001/02 2002/03

Domestic revenue and grants 29.5 27.2 23.5 25.6 22.1 23.9

Domestic revenue 28.7 26.5 22.9 22.7 21.4 22.2 Grants 0.8 0.7 0.5 2.8 0.7 1.6 Expenditure and net lending 31.1 26.6 22.5 27.5 24.5 27.0 GDP at Market prices (Kshs. Million) 623,235 694,029 743,479 796,343 882,725 969,354

Exchange rate: Kshs per US $ 58.0 61.8 70.4 76.3 78.6 75.0

Source: PER 2003.

1.6 Adequate fiscal discipline has characterized the second half o f the 1990s. In 1999/2000, the fiscal deficits tumed into surplus. However, due to the slow expansion &at characterized the economy over the last decade, expenditure has continued to exceed budgeted targets. Although the deficit increased in 2001 due to drought-related expenditures (Figure 1. l), in general the poor expenditure and enforcement controls put much pressure on domestic financing and the accumulation o f domestic arrears. Conversely, where expenditure items as a percentage of total public spending are concemed, recurrent expenditures have grown whereas the fiscal adjustment fell on capital investment. The spending proportions o f both wage and non-wage items have increased during 1995-2000.

Table 1.4: Expenditure Category and As Percentage o f GDP, 1997/1998 - 2002/2003 1997/98 1998/99 1999/00 2000/01 2001/02 2002/03*

KSh million Recurrent 160,279 165,33 1 156,535 198,941 200,807 227,055 Development and net Lending 34,686 32,010 18,584 33,980 24,953 38,795 Total 194,965 197,341 175,119 232,921 225,760 265,850

Recurrent 25.6 22.3 20.1 23.5 21.8 23.1

Total 31.1 26.6 22.5 27.5 24.5 27.0 Source: PER 2003. *provisional.

% o f GDP

Development and net Lending 5.5 4.3 2.4 4.0 2.7 3.9

2

Figure 1.1: Fiscal Deficit as Percent of GDP

..................................................................................... I 1.5 I 1

0.5

0 -0.5

-1

$ -1.5 -2

’ -2.5 -3

.................

.................

................

..........

.........

.........

................. i ........ -3.5 1 .....................................................................................

1.7 In recent years, the government has sought to restructure expenditure allocations across sectors to meet the requirements o f basic functions (Table 1.5). In 2000, the government adopted a medium-term expenditure framework (MTEF), a three-year program aligned with the Govemment’s Poverty Reduction Strategy Paper (PRSP) aimed at making spending more effective and more oriented to expenditure categories with the highest potential to affect growth and improve social sector performance. Human resource development, including education and health, has been identified as one o f the priorities areas for public spending in l ine with overall poverty reduction strategies. Currently, the education sector has the largest share in social spending with an allocation o f a quarter o f the Govemment’s available resources. This represents around 6 percent o f Kenya GDP, compared with an average o f 3.5 percent for Sub-Sahara African countries. Details o f education sector financing will be discussed in Chapter 5.

Table 1.5: Share of Public Expenditures By Sector

Defense & Public Administration 22.3 21.2 31.6 17.8 26.4 28.8 33.3 36.6 General Administration 7.9 9.6 16.1 8.8 13.7 14.3 18.8 18.9 Extemal Affairs 1.3 1.6 1.8 1 .o 1.4 1.7 1.4 2 .o Public Order and Safety 4.9 4.7 6.5 4.3 5.9 7.0 6.9 8.5 Defense 8.2 5.3 7.1 3.7 5.4 5.8 6.1 7.1

Social Services 27.1 24.7 32.5 23.1 31.3 33.5 29.2 33.7 Education 18.5 17.6 22.8 16.9 24.4 26.4 21.4 24.9 Health 5.0 4.8 7.2 4.7 5.3 5.6 6.7 7.2 Housing and Community Welfare 0.5 1.3 2.4 1.2 1.5 1.5 1 .o 1.5 Social Welfare 3.0 0.9 0.0 0.2 0.2 0.0 0.0 0.0 Economic Services 21.9 15.9 18.0 9.4 13.9 15.4 17.0 21.1 General Administration 3.7 1.9 1.9 1.1 1.7 2.8 6.1 6.2

Industry 12 2.4 1.3 1.6 0.8 1.2 1.3 1.3 1.6 Energy 13 2.7 1.7 2.2 1.1 1 .o 0.8 1.1 1.3 Road 3.1 3.2 5.4 2.8 4.1 4.9 4.1 5.2 Other Transport & Communications 0.6 1 .o 1.5 0.3 0.4 0.6 0.3 0.4 Other 2.1 1.4 0.7 0.4 0.6 0.8 0.5 1.9 Other Services 28.8 38.2 17.9 49.7 28.4 22.3 20.6 8.7 Debt Service 12.3 25.2 17.2 48.9 31.5 27.7 23.9 27.5 Total 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 Source: ”Economic Survey” various editions. * Provisional; * * Preliminaly

Agriculture 7.4 5.5 4.7 2.8 4.8 4.3 3.6 4.5

3

Population and Labor Force Evolution o f the Population 1.8 Kenya experienced a fast population growth since independence. During the 1970s and 1980s Kenya had one o f the fastest-growing populations in the world. The 1979 census revealed an astonishing annual growth rate o f 4.1 percent. Ten years later the census estimated that the rate had slowed to a st i l l - rapid 3.3 percent. The results o f the 1999 population census put Kenya's population at 28.7 million, representing an annual average o f 2.5 percent o f the growth rate. The adult HIV/AIDS prevalence rate i s high in Kenya. After peaking at 14 percent in 1998, it i s estimated at 10 percent currently. The increased mortality rate o f adults has also contributed to the slowing growth and increasing dependency ratio o f Kenyan population.

1.9 Some o f the factors that explain the key issues and challenges facing the education sector can be seen in the country's basic demographic indicators. Changes in the demographic profile can dictate the trend o f investments made in the provision o f education. For example, the growth o f the school-age population and the variation in the population density i s critical in determining the cost-effectiveness o f the distribution o f resources for education service provisions. Where the population density i s low, the per capita cost o f service provisions can be relatively high and vice versa. However, efficiency i s not the only concern for public investment, in many cases, social equity i s vital to ensuring the overall sustainability o f economic development. As poor economic conditions are often observed in sparsely- populated areas, the trade-off between efficiency and equity will be faced by many public policies.

1.10 Table 1.6 below illustrates the age composition o f the population according to the 1999 population census. The country's population distribution i s highly skewed towards the youth with the population between 0-19 years accounting for about 57 percent o f the total population. The interpretation suggests a high dependency ratio that will increasingly demand a corresponding r ise in the provision o f social services and employment opportunities.

Table 1.6: Population by Gender and Age Str