Revenue Generation Strategies in Sub Saharan African Universities

Fisseha Mamo Gebreyes

(PhD Candidate)

University of Twente School of Management and Governance Center for Higher Education Policy Studies
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Outline of the presentation

Background Research questions Theoretical framework Case Selection and Methodology Major findings

Background
Sub Saharan African universities are facing changes in their environment:
Rapid expansion in students (from 2.7 million in 1991 to 9.3 million in 2006). If current trends continue, 20 million students by 2015. Public expenditure per student: from US$6800 in 1980 to US$ 2,800 in 1991 to US$ 2,000 in 2006 to just US$ 981 in 2010(World Bank, 2010) Rate of annual public expenditure per student to GDP per capita is 3 (but 0.3 in OECD) Governments allocate close to 0.78% of GDP to HE (20% of education budget) (1.2% in OECD).

Revenue generation in SSA (accounts for approximately 28% of the total recurrent budget) (World Bank, 2010).

Background
Scholars on revenue generation: (e.g. Clark, 1998 & 2004; Mamdani, 2007; Saint, 1992; Johnstone, 1998; Ouma, 2007; Massy, 2009; Slaughter, et al., 1997; Musisi, N.B. & Muwanga, N.K. (2003), etc). Ongoing debates concerning RGA (how and why to go for it, and benefits and risks).

Research Questions
How can SSA universities improve their financial sustainability by diversifying their resources and at the same time continue to accommodate the growth in student enrolment?
1. 2. Identifying theory (including research model and expectations) Identifying enablers for and barriers to revenue generation from the case study universities in Ethiopia, Kenya and South Africa

To study the findings in a comparative perspective for universities operating in different (i.e. regulatory/financial/institutional)settings.

Theoretical Framework
Resource Dependence Theory (Pfeffer and Salancik, 1978; Aldrich and Pfeffer, 1976; Davis and Cobb,2009): Organisations depend on environment for survival (vital resources both monetary and non-monetary) Environment: stakeholders (as resource providers), resources, regulations, opportunities, competitors, threats Environment holds many different stakeholders (identify key stakeholders; manage stakeholder relationships to ensure survival) Organizations also try to actively influence their environment

Operationalisation I
University: mission; internal governance, leadership, academic core, financial resources/capital Environment: External stakeholders (e.g., governments, students, firms, community, donors),and competitors (private and public HEIs) Regulation: law, autonomy, incentives, accountability Finance/ legitimacy
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Operationalisation II
Strategies (two): 1.Adapt to environment: e.g., differentiation in educational and research services; introducing financial and non-financial incentives, de-regulation, setting up dedicated functions, structures and units 2.Attempt to alter environment (e.g. lobbing, alliances/consortia, selecting external board members, etc) Revenue Generation Activities Education (dual track) and research services (research projects) Contract work: consultancy and/or short-term training Sale of goods and services
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Cases and Data Collection

1. Cases Ethiopia: Adama Science and Technology University & Haramaya University, Kenya (Jomo Kenyatta University of Agriculture and Technology), South Africa (Nelson Mandela Metropolitan University)]. 2. Data collection: interviews, observations, desk research (institutional documents, research literature, etc.) 3. Interviewees include university administrators & academics (university presidents, deans, registrars, heads of Continuing Education, Heads of Technology Transfer Offices, Heads of university companies, Heads of External Relation Offices).
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Major Findings
Universities widened their resource base (student fees, contract research, campus services, project funds from donors, and regional and local authorities.
Source ASTU 2007/08 Government Nongovernmental 86 14 2010/11 93 7 HU 2007/08 78 22 2010/11 83 17 JKUAT 2007/08 44.5 54.5 NMMU 2010/11 2007/08 2010/11 38.2 61.8 53 47 50 50

New academic units (new research centers or institutes, continuing education) Support units (TTO , KTI, Project coordination offices, Marketing units, fund raising, Strategic planning unit, etc. recruiting experts/professionals from abroad as academic staff members; internatl partnerships; outsiders in uni boards; HR policy: rewards and incentive structures for academic staff (all case study universities) and subunits (NMMU & JKUAT)

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Major findings.(2)
Barriers to RGA: inadequate professionally trained staff at PhD level (Ethiopian universities), legislation (not clear for JKUAT); resource allocation mechanisms (national & institutional) for Ethiopia; inadequate budget for research (less than 1% in the case of Ethiopia, and up to 3% in case of Kenya), centralisation/bureaucracy; Enablers to RGA: committed senior university leadership; strengthened administrative capability; legislation (Ethiopia); autonomy (introducing prorgammes in education, setting research priorities, determining prices for products and services); competitive funding; incentives (sometimes within a scarce-resource situation). E.g., about 13% of total resource for SA Positive impacts of RGA: increased revenues, enhanced autonomy, quality of facilities, staff rewards (reduced turnover), increased quality/volume of research 11 Negative impacts of RGA: crowding out, moonlighting, nondisclosure of earned income, inferior services, etc.

Summary findings.(3) ASTU

Level Enabler Environment/ HE Law, national ESDP National Seed money for RG High demand for education Dual track system Autonomy in education and research Setting pay scale for heads of support staff Autonomy in setting internal governance Capacity building trainings (decentralization of power in Ethiopia) Barrier Resource allocation mechanism (line item budgeting ) One-year funding cycle (flow backs) Unable to borrow money from capital market Unable to set pay for academic staff Conditionality related to donors funding Long procurement process and bureaucratic financial transfer system Centralized system (finance, HR, Procurement) Lack of incentives at departments and schools (parallel programs) RG is not a promotion criteria

University

Operational

Broad mission Committed leadership (managerial approach) Social contacts (networking) Able professional support staff (heads) Availability of earned revenue as seed money Keep surplus Motivating individual academic staff

Lack of motivation for support staff Inadequate research facilities

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Summary findings.(4) HU
Level Enabler Environment/ HE Law, national ESDP National Seed money for RG High demand for education Dual track system Autonomy in education and research Autonomy in setting internal governance Capacity building trainings (decentralization of power in Ethiopia Barrier Resource allocation mechanism (line item budgeting ) One-year funding cycle (flow backs) Unable to borrow money from capital market Unable to set pay Conditionality related to donors funding Long procurement process and bureaucratic financial transfer system Centralized system (finance, HR, Procurement) No comprehensive policy for RG Inadequate professional support staff (finance, procurement)

University

Operational

Committed leadership (committee approach) Established academic units Expanded physical structure Marketing (mass-media, brochures) Support structures (starts from VP-IDCE) Alliances/consortia Diversified modes of delivery Flexible timing (education) Motivating individual academic staff Senior staff in agriculture disciplines Adequate laboratories

No promotion linked to success in RG

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Summary findings.(5)JKUAT
Level Environment/ National Enabler High demand for education (new secondary schools following vision 2030) Lump-sum budgeting (unit cost per student, more fexible) Loan system for students Parallel program (dual track) IUCEA (networking) Autonomy in education and research Free to set fees (parallel students) Free to establish new units (not college) Mission Revenue generation policy Committed leadership (collegial central steerage committee approach) Business plan (seed money) Administrative units (directors: linkages, production, Extension and technology transfer ) Iso 9001:2008 certified Qualified academic staff (about 37% PhD) Working with local entrepreneurs to build hostels (or dormitories) 8-9 satellite campuses in Kenya and one in Tanzania Franchise(co-ventures with non-degree awarding middle level) Marketing (exhibition, open day show, internet, etc) Alumni JKUATES Bridging courses Motivated academic staff Adequate facilities Qualified academic staff Barrier 1994 Act-no reference to RG Not borrow funds from capital market without approval of the gov inability to decide pay scale Have presence of government as council members Competition (national and international providers)

University

Centralized system (finance, procurement, HR) RG is not used as a criterion of promotion

Operational level

Over stretched academic staff Lack of workload policy

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Thank you

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