COST SHARING IN EDUCATION AND HEALTH IN KENYA

BY

WASUNNA OWINO AND OKWACH ABAGI Institute of Policy Analysis and Research

(IPAR) __________________________________________________________

Report of a Desk Study Commissioned by the Department for International Development (DFID)—EASTERN AFRICA

DRAFT—NOT FOR CIRCULATION

SEPTEMBER, 2000

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TABLE OF CONTENTS

Abbreviations, Acronyms and Symbols ................................................................... iv List of Tables ........................................................................................................... vi List of Charts............................................................................................................vii Acknowledgement ..................................................................................................viii Executive Summary.................................................................................................. ix

CHAPTER ONE

1.0 INTRODUCTION

1.1 Context of the Study ...............................................................................1 1.2 Methodology ...........................................................................................1

CHAPTER TWO 2.0 EVOLUTION OF COST-SHARING IN KENYA WITH

SPECIFIC REFERENCE TO EDUCATION AND HEALTH

2.1 Introduction.............................................................................................3 2.2 Operation of cost-sharing in education...................................................3 2.3 Safety nets in education ........................................................................16 2.4 Cost Sharing Policy in Health and Challenges .....................................19 2.5 Safety nets in health..............................................................................26

CHAPTER THREE

3.0 IMPACT OF COST-SHARING ON ACCESS TO EDUCATION AND HEALTH

3.1 Introduction............................................................................................29 3.2 Impact of cost-sharing in health.............................................................29 3.3 Impact of cost-sharing in education.......................................................32

CHAPTER FOUR 4.0 INFORMATION AND RESEARCH GAPS

4.1 Education ..............................................................................................38 4.2 Health ...................................................................................................39

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CHAPTER FIVE

5.0 THE WAY FORWARD AND CONCLUSION

5.1 Education ...................................................................................................................................40 5.2 Health .........................................................................................................................................42

REFERENCES .......................................................................................................45 Appendix One: Terms of Reference.......................................................................56 Appendix Two: Multilateral and Bilateral Agencies in Education and Areas of

Coverage, as at March, 1998 .......................................................58

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ABBREVIATIONS, ACRONYMS AND SYMBOLS ACECE Appropriate Cost Effective Centres of Education AHS African Health Services AIDS Acquired Immune Deficiency Syndrome AIEs Authority to Incur Expenses AMREF African Medical Research Foundation ASALs Arid and Semi-Arid Lands BoGs Board of Governors CBS Central Bureau of Statistics DANIDA Danish International Development Agency DFID Department for International Development DFMS Decentralisation of Financial Management Systems DHMBs District Health Management Boards DHMTs District Health Management Teams DHs District Hospitals ECCD Early Childhood Care and Development EDSAC Education Sector Adjustment Credit FAO Food Agricultural Organisation FIF Facility Improvement Fund FY Financial Year GDP Gross Domestic Product GER Gross Enrolment Rate GNP Gross National Product GoK Government of Kenya HCFD Health Care Financing Division HCFS Health Care Financing Secretariat HELB Higher Education Loans Board HIS Health Information System HIV Human Immuno-Deficiency Virus IMF International Monetary Fund IPAR Institute of Policy Analysis and Research IRACC Information Research and Communication Centre IRACC Information Research And communication Centre JICA Japan International Development Agency KNH Kenyatta National Hospital KSES Kenya Schools Equipment Schemes Kshs Kenya shillings KU Kenyatta University LDCs Less Developed Countries MOE&HRD Ministry of Education and Human Resources Development MoEST Ministry of Education, Science and Technology MoH Ministry of Health MPET Master Plan on Education and Training MSH Management Sciences for Health MSW Medical Social Worker NEFT National Education Finance Trust NFE Non-Formal Education NGOs Non-Governmental Organisations NHIF National Hospital Insurance Fund NSFCK National School Feeding Council of Kenya ODA Overseas Development Agencies OPD Outpatient Department PGHs Provincial General Hospitals PMO Provincial Medical Officer PRA Participatory Rural Assessment PRSP Poverty Reduction Strategy Paper PTA Parents Teachers Association SAPs Structural Adjustment Programmes SDD Social Dimensions of Development

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SDHs Sub-District Hospitals SIDA Swedish International Development Agency SPRED Strengthening Primary Education SSA Sub-Saharan Africa STD Sexually Transmitted Diseases TACs Teachers Advisory Centres TB Tuberculosis UN United Nations UNECA United Nations Economic Commission for Africa UNESCO United Nations Educational Scientific and Cultural Organisation UNFPA United Nations Population Fund UNICEF United Nations Children’s Fund UPE Universal Primary Education USAID United States Agency for International Development W&E Waivers and Exemptions WB World Bank WFP World Food Program WHO World Health Organisation

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LIST OF TABLES

Table 1: Recommended fees for public secondary schools by the MoE 1996................................................................................................8 Table 2: Public school costs borne by government and household, 1995/97 (% GDP) ................................................................................................10 Table 3: Sources of revenue for selected secondary schools ............................................................10 Table 4: Average annual household expenditure by school/category ........................................... 11 Table 5: Summary of primary school costs borne by stakeholders ....................12 Table 6: Mean annual expenditures on education of HH with enrolled children by province.................................................................................................................12 Table 7: Household per pupil expenditure in education, 1994 ...........................13 Table 8: Cost sharing revenues generated by type of health facility ..................22 Table 9: MoH recurrent expenditures recovered through user fees....................22 Table 10: Cost-sharing revenue as a percentage of MoH recurrent expenditure...........................................................................................23 Table 11: Banking as a percentage of cost-sharing collections in Health.............23 Table 12: Categories of patients and illnesses exempted in public health services..................................................................................................26 Table 13: Eligibility criteria for waivers in selected public health facilities .......27

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LIST OF CHARTS Chart 1: Kenya primary education: sources of finance, 1996 ........................................................... 9 Chart 2: Socio-economic background of pupils admitted into Private schools in two districts............................................................................................... 14 Chart 3: Overall annual fees charged in selected private primary schools .................................... 14 Chart 4: Collections as a percentage of targeted revenue................................................................ 21 Chart 5: Utilisation of user fees in Health ........................................................................................... 21 Chart 6: NHIF collections as a percentage of cost-sharing revenue in health............................... 24 Chart 7: Primary and secondary completion rates and primary to

secondary transition ................................................................................................................. 33

Chart 8: Education expenditure as a percentage of GDP.................................... 34

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Acknowledgement

The execution of this study and the preparation of this report would not have been possible without the support and the invaluable contributions of a number of individuals and institutions. First, we appreciate the initiative and support of the team from DFID led by Dr. Richard Hogg, Senior Social Development Adviser, Dr. Alan Penny, Senior Education Adviser, and Dr. Jason Lane, Health Adviser. We also thank those officials in the ministries of Health, and Education who assisted in one way or another during the study. Special thanks also go to Mr. Timothy Oketch and Mr. Wycliffe Otieno for their contributions as Research Assistants. Their input in data collection and analysis is highly appreciated.

The study also benefited greatly from various opinion leaders, donor organisations, and managers of the social sectors, as well as others who spent many hours processing and analysing the literature. Their insights and professional contributions are highly appreciated. Lastly, we thank Margaret Anaminyi of IPAR and Dr. Lewis Odhiambo of the University of Nairobi, for editing the report. The finding, interpretations, views and conclusions are those of the authors.

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EXECUTIVE SUMMARY

On attainment of independence in 1963, the government of Kenya (GoK) committed itself to providing free education and health services for citizens as part of its development strategies to improve the welfare and productivity of the nation (GoK, 1965). At the onset of socio-economic crises of the early 1980s, however, user fees were introduced in the social sector as part of the wider structural adjustment programme. The aim was to encourage increased cost recovery as a way of mobilising additional resources. Like in most countries in sub-Saharan Africa, cost-sharing has been criticised for its adverse impact on the income poor and vulnerable groups. It is against this background that the Department for International Development (DFID) commissioned this study to examine the operation of cost-sharing in the education and health sectors in Kenya with a view to establishing the extent of its impact on the poor and other vulnerable groups. The study also identifies key research/ information gaps and provides suggestions on how they can be filled. Emerging Issues and in the Education Sector v Appalling situation of education: There is evidence that the education sub-sector is at a crossroads,

characterised as it is by low enrolment, poor retention, low completion, and low transition rates as well as poor quality education. Worse, the sector has experienced an increase in the cost of education and training and a widening gender gap in access and enrolment. Educational financing remains problematic as parental and community contribution is constrained by poor macroeconomic performance. There is also inefficiency and ineffectiveness in the utilisation of the limited resources available.

v High expenditure in education: Kenya has one of the highest ratios of public expenditure in

education and training in relation to GNP in sub-Saharan Africa. Primary education consumes 60 per cent of this expenditure followed by secondary (20%) and university (16%). Over 95 per cent of recurrent spending goes to personal emoluments—salaries and allowances—at the primary and secondary levels leaving only meagre resources for instructional materials and operations and maintenance.

v Absence of actual unit cost of education: Lack of policy guidelines from the Ministry of Education

(MoE) headquarters1 on the implementation of cost-sharing have led to, among others, wide divergence in costs applied by the schools across and within the region. The operators, owing to a lack of an appropriate framework, often flout fee guidelines. Even where efforts have been made in computing unit costs, there has been no consensus, and most of the findings lie in shelves. The result has been uncoordinated fee structures most of which reflect arbitrary increases that are often unjustified. At the moment, direct fees for secondary education are estimated to vary between Kshs. 15,000-50,000 per annum while the indirect costs range from Kshs. 2,000-15,000. In the absence of baseline unit costs of education, many schools have increased their charges arbitrarily and without justification thus placing a heavy burden on parents.

v Ineffective and Inefficient operation of safety nets: The safety nets put in place to mitigate adverse

impacts of cost-sharing remain ineffective as evidenced by, among others, lack of transparency and accountability, leakage of benefits, limited coverage and poor co-ordination. Worse, the most innovative and effective programmes tend to be donor dependent/driven, thereby posing sustainability problems.

Research Gaps in the Education Sector v Limited studies on cost sharing: There are few systematic policy-oriented studies on the

willingness and ability to pay for education by parents and communities in the cost-sharing programme. Apart from Deolalikar (1998), studies on costs and financing in education have tended

1 The Ministry of Education has since then changed its name twice, initially Ministry of Education, Science and Technology (MoEST) and lately, Ministry of Education and Human Resources Development (MoEHRD)

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to be too general, giving cost-sharing inadequate attention (e.g., SPRED2 I and II, CESA3 Report (1994), World Bank sponsored Cost and Financing Studies in 1995). This situation calls for an impact assessment of user fees based on the geographic distribution of existing educational institutions at the provincial, district and community levels. While it is correct to say that income potential determines the ability to equip schools and, by implication, the quality of the teaching/learning process, in most studies, cost-sharing is only mentioned in so far as it explains the inability of parents and communities to afford education for their children. Nevertheless, some of these studies indicate that cost-sharing has increased households’ burden and adversely affected children from vulnerable groups. Even though the magnitude of government contribution to the cost of primary and secondary education are yet to be established, the figures are believed to be in the range of 31-60 per cent.

v Dearth of Micro based studies: Much of the existing literature rarely focus on the household and

school levels and instead tend to present only generalised information on user fees, ignoring critical issues such as assessing gender of household heads, their asset portfolio, and competing expenditures, etc. In fact even sector-wide studies, such as the Comprehensive Education Sector Analysis (CESA) are not exhaustive enough in establishing the impacts of cost-sharing in education.

v Efficacy and Impact of the Safety nets: Systematic studies are required on the efficacy and impact

of the safety nets, particularly on the children from poor and vulnerable groups. Such research will capture such aspects as who the real beneficiaries are; how they are benefiting, and the nature and extent of benefits by income groups and region. Similarly, studies are needed on the potential of alternative educational financing mechanisms such as insurance, voucher system, ‘harambee’, specially targeted programmes, etc.

Emerging Issues in the Health Sector

In the advent of the socio-macroeconomic crisis of the 1980s, the government’s ambitious ‘free medical services’ policy became unsustainable, leading to the introduction of cost-sharing which has led to some positive contributions to the health sector. Over time, the contribution of the cost-sharing programme has risen from Ksh. 28.5 million in 1990/91 FY to about Ksh. 585 million including Kenyatta National Hospital (KNH) in 1998/99 FY, and accounted for about 14.5 per cent of non-wage recurrent expenditures in 1996/97. Through such contributions, the programme has kept many public hospitals running at a time when the government lacks money. The National Hospital Insurance Fund that became part of the cost-sharing programme in 1993 has also, until recently, been a major source of income for many hospitals and contributing about 4 per cent of the total MoH’s gross recurrent expenditures. Owing to such significant contributions, it is likely that the programme will remain part of the ministry’s key strategies in financing health in the medium term. In spite of the programme’s positive impact on the health sector, it still faces various challenges. For instance, on equity considerations, the policy has not promoted access to modern health care, as the targeting approach remains ineffective. Moreover, there has been no corresponding improvement in the quality of health care with the generation of additional funds. Also, the financial management systems are still characterised by collection problems and inefficiencies due to structural and institutional weaknesses. Finally, the NHIF is constrained by low coverage, poor investment portfolio, weak administrative systems, non-accountability, and unresponsiveness to the needs of the members. Research Gaps in the Health Sector

v Assessing progress towards the attainment of alternative goals of cost-sharing in

health: There are other potential benefits of the cost-sharing program to the public health system that are yet to be established. These include improving efficiency in the functioning of the referral system, attaining the equity objective in targeting

2 Strengthening Primary Education 3 Comprehensive Education Sector Analysis

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the poor, diverting demand to providers, and particular freeing up funds for primary health care in areas such as immunisation, malaria control, and provision of safe drinking water. These benefits need to be explored further.

v Exploiting the potential of feasible alternative financing mechanisms: In spite of the existence of

feasible alternative financing mechanisms in health, their viability has not been exploited. These include private insurance, Bamako Initiative, employer-sponsored medical schemes, community-based prepaid insurance schemes, household out-of-pocket payments, and paying-in-kind mechanisms.

v Strengthening the operations of the NHIF and making it more responsive to

members’ needs: In spite the increasing contributions of the poorer groups to NHIF, it is still not clear whether or not the contributions match the respective withdrawals from the Fund. In addition, though consideration has been given to both widening treatment coverage to outpatient care and extending membership to non-wage earning groups, no analysis has been done so far on how the NHIF functions. To this end, a few pertinent questions remain unanswered. These are: Do the poorer contribute more relative to both the contributions of the rich, and in relation to their withdrawals from the fund? What is the burden sharing between employees and employers? Should the fund be converted into a health insurance pool mainly financed by a “pay-as-you-go” system?

v Efficiency and effectiveness in the operations of the safety nets: Most of the

existing studies on safety nets have had less focus on the effectiveness of waivers and exemptions in ensuring access to health care among the income poor and other vulnerable groups. The few studies that exist on the issue are less detailed and based on MoH supervision and monitoring reports that only examine public health facility records and exit surveys with patients on a piecemeal basis. The full effects of the safety nets incorporated as part of the cost-sharing policy are yet to be ascertained. There is, therefore, need to carry out a more comprehensive study, covering a relatively longer period and a wider range of services. This should be complemented by a carefully controlled time series analysis of utilisation data to determine the causes and effects of the observed changes in the utilisation of both the public and non-public health sectors.

v More robust methodology in assessing impacts of User Fees in Health: Most of

the existing studies on cost-sharing in health are based on rapid assessment of public health facilities and, thus, do not provide the much required information on important factors that influence health-seeking decisions at the household level, e.g., income, household structure, facility-specific variables and other competing needs for scarce household resources. There is inadequate information on non-users of public health facilities. It is, therefore, not clear, what happens to individuals who cease to consume public health services—whether or not, they shift to private facilities, mission facilities, traditional practitioners, or go without care. Facility-based surveys have not shown whether or not the observed drops in utilisation are for minor problems or for more life-threatening cases. At the household level, we are yet to establish the extent to which families are being impoverished by selling assets and/or borrowing to obtain health care. The effects of cost-sharing on the lives of individuals and livelihoods of households have, therefore, not been clearly discerned. Further, no study exists on household health expenditure patterns by income.

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v Cost-sharing in a decentralised framework: A few pertinent issues about cost-

sharing in a decentralised environment remain unclear. These are (i) enforcing the policy guidelines from the centre and provincial tiers to the lower- level; (ii) the extent to which cost-sharing is following the Ministry of Health's planning and budgetary structures; (iii) efficiency in the collection and use of revenue generated; (iv) how the component of donor contributions fit within the government financial system; and (v) how the people on the ground can be empowered to participate more effectively in the programme.

v Effects of uncoordinated fee structure and a lack of policy guidelines: There is

need to establish: (a) the impact of the emerging uncoordinated fee structures on the referral system and, (b) the ideal unit cost of illnesses and how this could provide a basis for a pricing policy.

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Policy Directions

Education ü As the validity and efficacy of cost sharing in education appears to be questionable, the

MoE&HRD headquarters need to review and re-evaluate the philosophy (principles and objectives) of the programme once again. More effort needs to be directed toward enhancing efficiency and effectiveness in the use of the available limited resources, including effective monitoring and evaluation mechanisms. Appropriate mechanisms for cost recovery should also be put in place.

ü A systematic study is required to establish the actual unit costs of primary, secondary and higher

education and training. This would provide appropriate policies and guidance on the cost and financing of education and training including ideal fees structure for each region, locality or schools.

ü To make education more affordable and accessible, there is need for an urgent review of the

curricula, and adoption of appropriate strategies to reduce unnecessary direct and indirect costs. Capacities also need to be strengthened on the supervisory and monitoring roles of MoE&HRD in implementing directives on cost and financing of education and reviewing policy and legislation frameworks which have tended to curtail the participation of the poor and other indigent groups in education.

ü In revitalising the education system, the MoE&HRD needs to be cognisant of the Koech Report4

that provides some direction on appropriate cost-recovery strategies, equity considerations, legal frameworks, among others. Ideally, the ministry needs to use this report and related documents to develop a national strategic plan for education with the objectives for short, medium, and long term plan.

ü Any policy on cost and financing of education should take into account the existing distribution of

educational opportunities and the effect of adding further costs to parents. ü In rationalising public expenditure in education vis -à-vis the outputs of such an investment, there is

need for the provision of additional resources to cater for non-wage items, in particular, teaching learning materials, and monitoring and evaluation activities.

ü Programmes that make education more costly to individuals and households should be curtailed.

Areas for consideration in this area include reductions in unnecessary levies and having cost-effective school milk and school feeding programmes.

ü In the envisaged Poverty Reduction Strategic Paper (PRSP), it is advisable to put education at the

core of poverty eradication and development. There is, therefore, need to support the intra- and inter-ministries approach, including budgeting that boosts investment in, and efficiency and effectiveness of, education. For example, feeding programmes costs could be shared between the Office of the President and the Ministry of Agriculture. Active partnerships should also be encouraged between the MoE&HRD and related ministries, e.g., Health, Labour, Local Government, Trade, etc., in improving education and recognising that it is an important vehicle for poverty reduction.

ü Without good governance and efficient management of schools in general, and financial

management in particular, investment in education from any source would not be fruitful. The communities, parents and school heads will have to be fully involved in education policies touching on cost and financing. They will have also to be actively involved in managing their schools, including hiring and disciplining teachers and deciding or, at least, approving fees charged by the respective schools.

4 This is a short form of the "Commission of Inquiry into the Education System of Kenya: Realities, Challenges and Prospects".

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Health ü There is need to review the operations of the NHIF with a view to expediting payment of claims,

broadening its functions and coverage, thus promoting competition, and providing an enabling environment for its operation and expansion. The income poor and other vulnerable groups would need to be enrolled by the government in some flexible risk-sharing schemes. Other forms of social financing and mandatory employer health-based insurance schemes also need to be explored and developed. As a matter of urgency, the NHIF should settle the claims owed to public hospitals instead of holding such funds. Similarly, the funds need to be ploughed back in health for the maintenance and rehabilitation of medical equipment, providing start-up capital for clinics in rural areas, and provision of loans to buy ambulances.

ü Based on the operations of waivers and exemptions, it is necessary to: encourage partial waivers

and offer credit facilities; create awareness of the system to potential users, especially those in rural areas, through public barazas; make eligibility criteria transparent to ensure that genuine cases benefit; properly manage cost-sharing operations so as to improve the quality of services and subsidise the poor; and properly identify the poor.

ü Communities should be sensitised through manuals, barazas on the benefits of the cost sharing and

the roles expected of them, so as to ensure increased acceptance and sustainability of the programme.

ü Part of the cost-sharing funds should be used to rehabilitate health facilities so that they may offer

quality services and meet extra demand. The development of quality standards for medical equipment and strengthening of the capacities of public health institutions to carry out preventive maintenance should accompany the effort to rehabilitate health facilities.

ü The potential for enhancing alternative financing mechanisms such as social insurance, employer-

sponsored medical schemes, community-based prepaid insurance schemes, household out-of-pocket payments, and payments-in-kind should be exploited. Notwithstanding the general perception that the Bamako Initiative is not viable in Kenya, a recent study has revealed that the units are able to recover their costs, provided that appropriate structures are put in place during its implementation.

ü The need for a clear pricing policy by the Health Care Financing Division (HCFD) to provide

guidelines and improve the planning and co-ordination of fee adjustments countrywide is clear. Also, a clear definition of the roles of different tiers in fee adjustment is necessary. Meanwhile, the present system of cost-sharing could be maintained, but a differential pricing system based on adopted income, i.e., a sliding scale of fees with low charges or even none for the very poor needs to be established.

ü Strict accountability and transparency in the use of cost sharing funds is vital to eradicate misuse

and shifting/diversion of such funds to other uses. ü There is an urgent need to strengthen the existing financing mechanisms and, in addition, mobilise

additional financial resources to bridge the existing financial gap. In the longer term, emphasis should not only be placed on revenues generated through the cost-sharing programme but, rather, approaches for overcoming weaknesses in the implementation of the programme. Specific issues that need to be resolved are: (i) low efficiency in collecting revenue; (ii) balancing the revenue generation objective against accessibility to services by designing appropriate safety nets for the vulnerable; (iii) matching revenues collected with exp enditures in a way that ensures availability and improvement in quality of services.

ü A more extensive systematic survey is required to assess welfare impacts, particularly among the

vulnerable, in both public and non-public sectors.

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CHAPTER 1

1.0 INTRODUCTION 1.1 Context of the Study At independence in 1963, the government of Kenya (GoK) committed itself to providing free education and health services for all citizens as part of its development strategy to improve their welfare and productivity. At this time there was a fairly general consensus as to the kind of education and quality health care towards which the country should achieve. It was envisaged that a full range of heavily subsidised health and education services would be available to all citizens within a walking distance and that the quality of the health and education personnel would be upgraded through training by the central government.

However, the onset of socio-economic crises in the late 1980s proved to be a major blow to such ambitious programmes. As the schemes that were largely funded and centrally managed started to experience severe difficulties, services rendered became ineffective. Moreover, the education and health sectors had become too large for their respective ministries to manage properly, and it soon became evident that the available government resources were insufficient to fully finance a basic package of cost-effective education and health services. Against this background, the cost-sharing programme in the social sector, including education and health, was mooted in the 1984/88 Development Plan. It was further reiterated in various policy documents before finally being implemented in December 1989. Its main objective was to encourage increased cost recovery as a way of mobilising additional resources. Today, while the potential benefits of the cost-sharing programme seem obvious to many, there is widespread concern that increased user fees may not be affordable to some segments of the population thereby denying the poor and other vulnerable groups access to basic social services including education and health. This study sought to provide pointers on the impact of cost-sharing in health and education with a particular focus on the poor and other vulnerable groups. Based on the findings, the study proposes strategies for addressing poverty concerns. The terms of references for the study are as outlined in Annex 1.

1.2 Methodology This analysis involved documenting what already exists on the impact of cost sharing in the education and health sectors. It used both primary and secondary sources of information. To start with, informal consultations were held with key stakeholders in the government, especially Ministry of Education and

2

Human Resources Development (MoE&HRD) and Ministry of Health (MoH). Key donors and non-governmental organisations (NGOs) were also contacted in order to track available literature/ reports on the subject and elicit views on the major issues. Secondary data was gathered largely from (i) official documents from MoE&HRD, Central Bureau of Statistics (CBS) and other relevant government documents5, (ii) Ministry of Health (Health Care Financing Division and Health Sector Reform Secretariat), (iii) related studies commissioned by donor organisations such as Department for International Development (DFID), United States Agency for International Development (USAID), Japan international Development Agency (JICA), Danish International Development Agency (DANIDA), World Bank, Swedish International Development Agency (SIDA), (iv) non-governmental organisations involved in policy analysis and research and, implementation of projects, viz. Institute of Policy Analysis and research (IPAR), African Medical Research Foundation (AMREF), ACTIONAID, African Health Services (AHS), Management Sciences for Health (MSH), among others. Several approaches were used to achieve the assignment’s objectives. These included: (1) A review of the literature during which official and research papers were scrutinised to provide basic data. In particular, the following methodologies were used for extracting data: a. Survey: This involved a search for existing information on cost-sharing in the various documents

in health and education and highlighting their use. This involved visiting the offices of the ministries of Education and Health, Central Bureau of Statistics, NGOs and international agencies and key libraries within Nairobi.

b. Text (content) Analysis: Based on the scope of work identified above, meta analysis was conducted.

c. Drawing the balance sheet: Identifying research gaps based on (a) and (b) and guided by the critical issues.

d. Policy reviews: This entailed an analysis of policy pronouncements as contained in various policy documents with a view to determin ing continuity or discontinuity in policy.

(2) A workshop was organised toward the end of the consultancy for the consultants to share their findings in the form of a first draft with Ministry of Health officials and DFID advisers as well as other interested stakeholders, including government officials, donor agencies, and NGOs. On the basis of the views and comments raised at this meeting, the consultants produced this final report.

5 Some of the Government documents used included Master Plan, 1999 ; National Poverty Eradication Plan, 1999-2015; Kenya Human Development Report, 1999; Economic Survey (various issues); and Various Policy Legal Documents such as the Education Act, “Health Policy Framework Paper”; and “National Health Sector Strategic Plan” etc.

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CHAPTER 2

2.0 EVOLUTION OF COST-SHARING IN KENYA WITH SPECIFIC REFERENCE TO EDUCATION AND HEALTH

2.1 Introduction The World Bank publication “Education in Sub-Saharan Africa, Policies for Adjustment, Revitalisation and Expansions” (1988) marks one of the earlier studies aimed at promoting user fees in the region including Kenya. In part, the publication prevailed upon African governments to move toward initiating greater liberalisation of education and entrenchment of Structural Adjustment Programs (SAPs). The launching of the document coincided with the inauguration of two related documents in Kenya, i.e., Kamunge Report (Republic of Kenya, 1988), followed by Sessional Paper No. 6 on Education and Training for the Next Decade and Beyond. These documents provided the framework for the implementation of cost-sharing, in which the government was to meet salaries of teachers and education administration as well as fund some limited school facilities while parents were to provide for tuition, textbooks, activity and examinations fees. The communities on the other hand were to be responsible for putting up physical structures, and ensuring their maintenance. 2.2 Operation of Cost-Sharing in Education 2.2.1 Implementation of cost Sharing and Consequent Reactions The implementation of cost-sharing in education was characterised by several weaknesses, notably: lack of clarity in the policy itself; mode of implementation; the role of the key actors; and future direction. This contrasts sharply with the situation in the health sector where policy implementation was entrusted to a dedicated unit6 in the Ministry of Health that provided fee guidelines to be administered at the various levels of the health delivery system. It is therefore not surprising that, without the guidelines from MoE&HRD, schools started to impose levies on a broad array of items including school development fund, activity fees, watchmen’s fees, Parents Teachers Association (PTA) fund, etc. Some of the levies were hiked without due consideration on households’ ability to pay. There emerged also wide divergence of fees charged by the various schools, even within similar localities. In a desperate move to control the otherwise confusing situation, the MoE&HRD headquarters stepped in to provide fee guidelines from 1990. Since then the ministry has been publishing recommended fee levels through circulars to schools. A factor yet to be established, however, is whether or not the fee guidelines set by the ministry reflect the real unit cost of education at the various levels. For long, the ministry has been criticised for the lack of clarity on criteria upon which the guidelines are derived. Table 1 presents the MoE&HRD fee guidelines for the years 1996 and 2000.

6 This is Health Care Financing Division, previously the Health Care Financing Secretariat

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Table 1: Recommended Fees for Public Secondary Schools by Ministry of Education, 1996 (Kshs.)

Vote head*

School Category

1996 2000 Boarding

(Ksh.) Day

(Ksh.) National

(Ksh.) Boarding

(Ksh.) Day

(Ksh.) Tuition fees 2,700 2,700 3,500 3,500 3,500 Boarding Equipment & Stores

6,000

-

9,000

7,000

- Repair, Maintenance and Improvement

500 200 1,200 600 300

Electricity, Water & Conservancy

600

300

1,200

800

400

Local Transport and Travel 600 200 900 800 250 Contingencies 450 200 700 600 275 Activity 500 300 1,000 700 500 Medical 150 100 500 250 125 Personal Emoluments 2,000 1,000 4,500 3,000 1,500

Total 13.500 5,000 22,500 17,250 6,850 Source: Ministry of Education, 1996 and 2000 Note: The figures omit caution money of about Kshs 500 charged for new students, and development levy of Kshs. 2,000 on approval of District Education Board (DEB) projects. The fee structure differs by category of school: (i) whether day or boarding or (ii) whether or not national. In spite of the regular reviews by MoE&HRD, discussions with the various stakeholders reveal that MoEST guidelines have not kept pace with inflation and the general rise in education costs such as food equipment and learning materials. 2.2.2 Reactions to the Imposition of cost Sharing In Education At the time of reviewing the fees in the year 2000, schools charged double the recommended fees. The ministry’s figures were accordingly declared to be unrealistic, arbitrary and unresponsive to needs and conditions of individual schools. For this reason, schools continue to flout the MoE&HRD guidelines, charging fees ranging between Kshs. 30,000 and Kshs. 50,000 per student per year for provincial boarding and national schools (Daily Nation, May 15, 2000: 21). The emerging fee adjustments by individual schools had the negative social effects of locking out the poor from public schools and, more so, bright children seeking entry into elite schools. In the stand off between the MoE&HRD headquarters and the heads of secondary schools, poor parents and their children have been the losers. While the latter welcomed the move to moderate fees, the fee guidelines remain unimplemented. Instead, the schools have hiked fees and, in a surprise move, became harsh to those parents who are “unwilling” or unable to comply with the changes. In turn, children continue to be chased away from school for lack of payment for one thing or another (Republic of Kenya, 1997). The MoE&HRD has remained silent.

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The failure of the ministry to control the fee-setting process in schools is mainly due to lack of an established real unit cost of education with the result that schools have taken advantage to impose charges, some of which have no direct bearing on teaching/learning process. At the 2000 annual Kenya Secondary Schools Heads Association (KSSHA) meeting, participants maintained that the MoE&HRD fee guidelines were unrealistic and unworkable owing to differences in the financial situation and needs of individual schools. This accusation prompted the ministry to withdraw its latest fee guidelines and, in a turnaround, directed that the charges be determined by individual schools with the assistance of local education officers with involvement of stakeholders at the district level (The East African Standard, June 24, 2000, page 1). The surprise move by the ministry drew heavy criticism from key stakeholders including the Kenya National Parents Association which maintains that the provision of fee guidelines should be the responsibility of MoE&HRD headquarters. In the absence of a clear policy, the association argues that parents have been left at the mercy of school authorities that are often selfish and unrealistic in setting the fee levels beyond the means of most parents. In fact, if left unchecked, school fees could become inhibitive to many households, particularly those in rural areas. 2.2.3 Sharing the Burden of Educational Costs: Households, Schools, Community and

Government. In a survey of spending patterns by rural households (National Council of NGOs, 1997), it was found that the annual average income of Kshs. 22,500 was just sufficient to provide for food and education which, respectively, require estimated expenditure of Kshs. 10,000 and Kshs. 12,500. That is, the average yearly spending on food and education alone consume the entire average incomes of rural households. Consequently, because households provide the main source of financing for primary education, (Chart 1), any increase in costs, whether or not attributed to cost sharing would adversely affect this group. Source: The National Council of NGOs, 1997 An assessment of the division of educational spending by government and households at various levels provides conflicting results. Abagi and Olweya (1998) reveal that on the average, urban and rural households educational spending range from 30-40 per cent and 60 per cent, respectively. Evidence from other sources give conflicting results (Mitha et al, 1995; Republic of Kenya, 1998; Abagi, 1997). Table 2 shows that direct household expenditures remain relatively high for pre-primary education, followed by secondary and technical education. Perhaps the high spending attributed to the government at the university level results from the

Chart 1: Primary Education: Sources of Finance, 1996 ( Kshs.)

GoK27%

Household72%

other 1%

6

operation of a loan scheme under Higher Education Loans Board (HELB), which also has a bursary component. It is also doubtful whether or not all the direct and indirect costs are captured. Table 2: Public School Costs Borne by Government and Households, 1995/97

Level of education Government direct (%)

Household direct (%)

Pre-primary 0 100 Primary 69 31 Secondary 40 60 Technical 40 60 University 92 8

Source: MoE&HRD, Public Expenditure Review, 1998. Other studies (e.g. Mwiria and Ogbu 1999) reveal that at the secondary school level, fees typically contribute between 91 per cent and 100 per cent of the financial sources available to the institutions. Government subsidy, on the other hand, hardly ever exceeds 8 per cent of the schools’ total budgets. Even with these contributions by households and the operation of a cost-sharing policy, a number of schools fail to meet the operations of some of their financial obligations, such as salaries for non-teaching staff, provision of teaching and learning materials and adequate maintenance and construction (ibid). The contribution of parents would thus be still significant in all categories of secondary schools even when salary costs which are normally met by the government are taken account of (Table 3). Table 3: Sources of Revenue for Selected Secondary Schools, 1994 (Kshs.)

Type of School

Revenue (In Kshs)

GoK

Households

Other

Total

Percentage of costs borne by

Households Day 5,359 4,646 51 10,056 46.2 Boarding 6,621 12,161 279 19,061 63.8

Day and boarding

6,851

9,317

297

13,465

56.6

Source: Karani, et. al 1995 (Tables 8 and 9). At the primary school level, the actual costs of education borne by the different stakeholders also vary according to the studies reviewed. Whereas Abagi (1997) found that parents meet almost 90 per cent7 of non-wage recurrent expenditures, but other surveys however give different figures8. Table 4 presents estimated educational spending for a household with one child enrolled in various categories of schools. Evidently private schools are about 18 times more expensive than the rural schools and almost twice as expensive as urban public schools. The major differences in costs appear to be in the direct fee charges levied by the private schools and transport and meals components excluded in the case of rural public schools. As observed earlier, households provide most of the costs at the secondary school level. As part of the cost-sharing programme, this group caters for a whole

7 This figure excludes schools in the arid and semi-arid areas, which get subsidies from the government and donors. 8 The figures given by other studies are, for instance, 44 per cent (Action Aid Kenya, 1993); and 31 per cent (Mitha and others, 1995).

7

range of items that include meals, books, equipment, lab chemicals, sports kits, chalk, buildings, electricity, telephone and water bills, as well as salaries for Board of Governance (BoG) staff that include cooks, watchmen, clerks, messengers and laboratory assistants, among others. Table 4: Average Annual Household Expenditure (in Ksh.) by School Category,

1997

School Direct fees

Books

Transport

Meals

Tuition

Indirect costs

Uniform

Total

Urban public

0 3,500 7,200 5,500 4,050 1,500 2,500 34,950

Rural public

0 1,400 0 0 900 820 1,500 4,620

Private 45,000 4,500 13,500 7,500 4,500 3,500 2,500 81,000

Source: Adapted from Abagi, 1997, Table 7, p.22 The items presented in the table do not reflect the full range of educational costs that parents pay for. Literature shows that there are significant contributions from parents and communities that are often more ignored in the determination of education costs by researchers. These include the financing of physical facilities such as classrooms, offices, workshops, teachers’ houses and latrines and support to school activities such as games, physical education and athletics. Currently, parents and communities finance virtually the entire development expenditure through voluntary contributions (harambee) or specific levies imposed on learners which go by such names as ‘development fund’, ‘school fund’ or ‘activity fund’ etc. These are in addition to providing for watchmen’s salaries and other levies mostly to meet the costs of maintaining Teachers’ Advisory Centre (TACs), transport costs and lunches for education officers and inspectors visiting the schools. An analysis by Deolalikar (1998) of the per capita primary and secondary education expenditure by income quintiles (Table 5) reveals a heavy burden on the poor. As is evident, the poorest group spends about 13.6 per cent of their per capita consumption expenditure per pupil against a meagre 4.7 per cent for the richest group. Table 5: Average Annual Household Expenditures (In Kshs.) On Schooling Per Pupil, By

Expenditure Category, Schooling Level, and Per Capita Expenditure Quintile, Kenya, 1994

Expenditure Category

Per Capita Expenditure Quintile All Quintiles

Poorest 2nd 3rd 4th 5th Primary

Tuition fees 52 46 77 194 605 169

Uniforms 166 191 233 259 401 240 Books 121 152 185 253 375 206

Transport 3 4 4 20 106 22

Boarding 19 8 9 42 117 34

Tutoring, exams 25 29 40 53 122 50

Harambee 71 104 122 146 187 122

Total 456 533 669 966 1,912 843

Secondary

8

Tuition fees 4,760 5,883 6,137 6,507 7,671 6,534

Uniforms 506 547 781 869 1,023 816

Books 436 513 598 669 1,019 714

Transport 158 112 281 342 470 316

Boarding 756 403 510 898 1,130 800

Tutoring, exams 162 167 238 245 182 206

Harambee 341 229 359 416 343 348

Total 7,200 7,855 8,903 9,947 11,838 9,744

Annual household per capita expenditure per capita

Per cap. cons. exp.

3,346

7,036

10,634

16,396

41,117

14,897

Source: Deolalikar, (1998) calculated from the 1994 Welfare Monitoring Survey II A further analysis by Deolalikar (1998) of the representation of the various economic groups at the various levels of education depicts a relatively lower representation of the poor, particularly at the higher levels of education (secondary and university) (Table 6).

9

Table 6: Distribution of Primary, Secondary and University Students Across Per Capita Expenditure Quintiles

Quintile

Representation (%) at the Various Levels of Education

Primary (%)

Secondary (%)

University (%)

Poorest 21.62 8.72 7.54 Second 21.97 15.20 4.46 Third 21.68 20.26 20.96 Fourth 19.24 26.29 22.25 Richest 15.48 29.53 44.78

It is evident from Table 6, that the poorest group comprise less than 9 per cent and 8 per cent of the student population at the secondary and university levels, respectively. The richest quintile, on the other hand, comprises close to one third (30%) of the student population in secondary schools and 45 per cent at the universities. By implication, therefore, the government’s expenditure and/or subsidies at the secondary and tertiary institutions benefit disproportionately the more affluent groups in the society.

Generally, studies on cost and financing of education in Kenya show variations but provide no clear consistency in policy. Table 7, for instance, illustrates the differences in findings among researchers on the costs borne by the various stakeholders in the cost-sharing programme. Table 7: Summary of Primary School Costs Borne by Stakeholders

Study Year Household Government Other Abagi* 1997 95% - - ActionAid Kenya 1993 44% - - Mitha et al.** 1995 31% 69% - Deolalikar 1994 27% 73% GoK** 1998 31% 69% - NGO Council*** 1997 72% 27% 1%

Notes: *Calculated direct school expenditure. **The GoK document relies on Mitha et al., and, hence, the similarities. ***Calculated from general sources of finance for primary education. Plausible explanations for the differences could include variations in methodologies, sample sizes and study sites, time coverage, and scope of educational costs covered. Depending on interest, some of the studies have tended to focus on costs covered by specific providers. Even then, the wide differences present additional problems to policy makers. Apart from not providing accurate figures for planning and policy guidance, the studies do not build from each other, making it difficult to make generalisations from them. They also provide no comparisons with the pre-user fee period and neither do they pay much attention to financial contributions from other stakeholders such as the communities, religious organisations, NGOs, the private sector, individual investors, and international agencies to the education sector. An analysis of national mean expenditure per household by province (Table 8) points to Nairobi as being the most costly province, followed by Western, Rift Valley, Central, North Eastern, Nyanza and, lastly, Eastern provinces. In structure, such costs as tuition fees and harambee contributions, which are illegal, represent large proportions of the costs. This finding highlights MoE&HRD’s weaknesses in enforcing its own regulations. Table 8: Mean Annual Expenditure (Kshs.) on Education of Households with

Enrolled Children by Province Province/ District

Fees Uniform Books Travel Costs

Boarding Charges

Tuition Fees

Harambee Donations

Total Cost per HH

Nairobi 8,967.2 1,282.4 1,196.0 740.9 1,141.6 393.0 309.8 14,031.0 Central 1,611.4 745.1 634.1 71.1 115.3 121.9 473.4 3,772.3

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Eastern 1,280.2 891.0 496.8 47.8 157.7 114.6 308.2 3,296.3 North Eastern

1,452.0 985.9 500.1 112.1 146.6 118.6 287.2 3,602.6

Nyanza 1,772.1 529.8 589.3 77.9 106.7 123.4 251.3 3,450.4 Rift Valley

2,098.7 766.8 704.5 140.9 245.6 196.0 406.7 4,555.9

Western 2,450.3 729.9 708.9 155.2 562.3 195.3 612.3 5,414.1 Rural 1,656.6 685.2 579.2 84.4 209.5 138.5 375.9 3,728.3 Urban 6,136.9 1,187.1 1,117.8 519.3 732.2 324.4 397.1 10,414.8 TOTAL 2,327.9 760.4 659.9 149.5 287.8 166.4 379.1 4,730.1 Source: Republic of Kenya, 1996 (WMS II) Other evidence (Wanjala and Akwanalo, 1998; Akwanalo, 1998; Wang’ombe, 1998) show that the average parent with five children in school spends Kshs. 70 per day on incidental school expenses. Considering that this figure is above individuals’ average earnings per day in some rural areas, such costs have prompted the dropout of about half of the pupil proportion in such areas. Further, data (Table 9) show that there are variations in household expenditures on education per pupil by province and level of education. This signifies differences in the relative cost burdens of education9. Table 9: Household Expenditure (Ksh) per Pupil on Education, 1994

Province Pre-primary Primary Secondary Post-School Vocational

University Informal

Nairobi 2,510 3,854 14,584 10,831 36,150 - Central 788 947 10,625 7,903 16,751 - Coast 1,050 804 8,124 6,007 29,786 3,006 Eastern 401 718 8,278 5,143 5,804 2,076 North Eastern

582

1,011

8,821

890

15,700

510

Nyanza 221 534 7,877 8,317 36,955 2,152 Rift Valley 391 815 10,576 6,817 13,537 2,147 Western 243 598 10,498 7,170 11,625 2,140 Rural 332 652 9,368 6,875 20,340 1,486 Urban 1,895 2,506 12,117 9,786 29,003 2,584 National Average

599

856

10,095

7,661

22,565

1,639

Source: Republic of Kenya, 1998 (Table 10g, p.161). The figures presented Table 9 should be read with caution, as they may not show the real picture in terms of costs incurred by parents. This is because most households enrol more than one child in school, and others have children in more than one level of education. An analysis of unit costs of primary education overtime (Deolalikar, 1998) reveals an increase from less that 5 Kenya pounds (in 1982 prices) in 1964-65 to about 25 Kenya pounds in 1980/81 and 35 Kenya pounds in 1994/95. On the other hand, the unit cost of secondary education has declined from 133 Kenya pounds in 1964/65 (in 1982 prices) to a low 50 Kenya pounds in 1983/84, after which it started to rise reaching about 90 Kenya pounds in 1994/95 (for more details refer to Deolalikar, 1998). At the university level, there have been proposals concerning what would be the ideal unit costs of the various courses offered. The current unit cost of Ksh.120,000 is however arbitrary and does not take into consideration the real costs of the various programmes, some of which are very capital intensive; it also ignores inflationary trends in the economy. 9 The National Poverty Eradication Plan estimates the public expenditure per pupil at the primary level at Ksh. 2,745, which approximates the estimate of Ksh. 2,774 by Abagi (1997).

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The operating unit cost of Ksh. 120,000 was calculated as comprising: (i) tuition fees amounting to Ksh. 86,000 shared as follows: a government contribution of Ksh. 70,000, a direct student contribution of Ksh. 16,000, both totalling Ksh. 86,000; (ii) student welfare costs distributed as follows: a catering fee of Ksh. 18,000, accommodation charges amounting to Ksh. 7,000, a book allowance of Ksh. 9,000, for a sub-total of Ksh. 34,000. A proposal has been made that that the unit costs be revised every three years or as and when the need arises, but the government has not openly stated its position on the matter. Part of the reason may be government’s apprehension that if implemented, the new unit cost structure may exclude many students admitted into the public universities. In fact the current fees level already denies some students from poor families university education. Secondly, adoption of the proposals might compel the government to increase its funding for HELB, a development that it might not be able to honour. At its inception, HELB was capitalised to the tune of Ksh. 800 million but this has been reduced to Ksh 6OO million due to the economic constrains the government is facing currently.

2.2.4 Non-Formal Education During the last ten years, Kenya has witnessed an unprecedented increase in the number of children who are out of school. This prompted the government to encourage the establishment of non-formal educational (NFE) centres to offer alternative education to such children. Various NGOs and communities embarked on the provision of alternative education for the children aged mainly below 17 years of age who are unable to access education for various reasons, but who need to be catered for. The emergence of NFE has, therefore, been associated with high drop out rates from formal schooling (Republic of Kenya, 1998). A report of a non-formal education workshop (Nzomo et al., 2000), reports that NFE is preferred by many because of its low cost and flexibility. Sifuna (1999) for instance indicates that popularity on NFE is due to its potential for efficient use of scarce resources, expansion of educational services, promotion of equity in educational opportunities, and the enhancement of the relevance of education to the needs of the socio-economic development. Generally, NFE includes programmes or organisations such as youth clubs with educational objectives, agricultural extension activities, community education projects, family planning education programmes, functional literacy activities for adults, as well as health and nutrition education programmes. The NFE centres which are more often not registered as schools, are overcrowded and lack basic facilities, and are mostly run on self-help basis. Their exact number is not known because many centres spring up regularly and are not registered, and neither is data available regularly on such schools and centres. Table 10 shows the distribution of some known formal schools in Nairobi, the major municipalities of Mombasa and Kisumu and Samburu district. Table 10: Non-Formal Education Centres in Major Towns and in Samburu

District, 1993 Area Centres/

Schools (In No.)

Enrolment (In No.)

No. of Teachers

Girls Boys Total Trained Untrained Total Nairobi 77 3647 3579 7226 59 127 186 Mombasa 14 - - 2519* - - 57 Kisumu Municipality

5

-

108

108

-

-

-

Samburu District

2

-

150

150

-

-

-

Total 98 3647 3867 10003 59 127 243 Source: CESA Report, 1994

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The MoE&HRD and other partners have put in place a number of innovations to enhance education for nomadic and pastoralist out-of-school children and youth in Wajir, Laikipia and Samburu Districts. The most notable innovation in this regard is the establishment of mobile schools where teaching is done in Manyattas (Kraals) in which children are gathered. Subsequently both teachers and children migrate with community/family as and when climatic conditions change.

In Laikipia, shepherd schools (Osiligi) have been established to promote basic education. In these schools, pupils and their teachers operate in shifts (morning and afternoon), and learners attend classes whenever they are free from looking after animals. The curriculum is localised and covers animal husbandry, cultural and traditional issues, and basic literacy.

In Samburu district there is a non-formal education programme targeting herders (lechekuti) who have been unable to access the formal schooling system. The youth, aged between 6 and 16 years attend classes from 3.00 p.m. when animals are brought back near homes from pasture. The NFE programme is carried out in nearby primary schools.

ActionAid Kenya has initiated two related projects: (I) Appropriate Cost Effective Centres of Education (ACECE) and (2) REFLECT (Regenerated Freirean Literacy through Empowering Community Techniques). The ACECE programme is being implemented in three districts: Malindi, Mwingi and Samburu and involves: linking primary schools in areas of low participation to flexible outreach centres which provide access to socially and economically disadvantaged children, particularly girls, and act as feeder centres into formal school system; using the outreach centres to provide practical child-centred and participatory methodologies which influence local primary schools to which they are linked; and maximising peoples’ participation in children’s basic education and creating an enabling environment for wider community education.

Table 11: Enrolment (in number) in Mukuru Promotion Centre, 1990-1999 Year Boys Girls Total % Girls

1990 220 209 429 48.7 1991 537 455 992 45.9 1992 636 578 1,214 47.6 1993 651 607 1,258 48.3 1994 1,391 1,331 2,722 48.9 1995 1,933 1,842 3,775 48.8 1996 2,316 2,344 4,660 50.3 1997 2,253 2,252 4,505 50.0 1998 2,314 2,368 4,682 50.6 1999 2,405 2,446 4,851 50.4

Source: MoE&HRD, 2000 Other non-governmental organisations have also set up NFE centres in various parts of the country. Among the most innovative centres is the Mukuru Promotion Centre, sponsored by the Catholic Church. This centre has five schools in different locations within Nairobi and combines a series of teaching methodologies including multigrade teaching and offers both formal and non-formal education with academic and vocational curricula. Enrolment in the five primary schools of Mukuru Promotion Centre has increased significantly in recent years. For instance, enrollment increased more than eleven-fold to 4,851 in 1999 from 429 in 1990 (Table 11). The proportion of girls enrolled in the centre has improved steadily from 45.9 per cent in 1991 to 50.6 per cent in 1998 though it dropped slightly (to 50.4%) in 1999. The success of the Mukuru Centre derives from the fact that pupils are allowed to come to school without uniform, as most parents would not be able to afford them. Finally, because

13

of lack of a clear government policy on NFE, the sustainability of such centres is not assured when the donors pull out. 2.2.5 Private Education It should be noted that, in private schools, parents meet the entire cost of education. Private schools constitute about 2 per cent of all primary schools in the country. Studies show that there are varying fee levels charged in these schools depending on their category. Some serve high- income families while others serve medium and low-income groups. Charts 2 and 3 show the socio-economic backgrounds of pupils in these schools, and fee levels charged in a sample of private schools in Meru North and Nairobi. Source: KimKam Development Consultants, 2000. As shown in the charts, the private schools target the rich with restricted entry for the poor, principally due to inhibitive costs. Invariably, the poor enrol only in private schools managed by charitable organisations. Apart from the figures in Chart 3 that

34,100

63,580

18,000

410

33,000

50,040

17,150

2,250

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

Aga

Kha

n

Str

athm

ore

St.

John

's

Sac

red

Hea

rt

Rua

raka

Lore

to

MC

KN

yam

bene

Mak

ina

Sel

f H

elp

Chart 3: Overall annual fees* charged in selected private primary schools (Kshs.).

Chart 2: Socio-economic background of pupils admitted into private schools in two districts (Meru North and Nairobi (%)

medium income group17%

low income group17%

medium and high income group

41%

low and medium income group

17%

all income groups8%

14

reflect normal fees, pupils in private schools have to pay additional fees for such services such as computers and games like taekwondo, tennis, swimming, and special fees for clubs. Apparently, the figures from Sacred Heart, Korogocho, may be low because they probably reflect only direct charges to the parents and exclude donor donations. 2.2.6 Issues of Transparency and Accountability in Financial Management The implementation and increased emphasis on cost-sharing in the late 1980s was not accompanied by a comprehensive framework for overseeing the administration of funds collected by education institutions. Consequently, funds collected by schools have not been well accounted for in a number of cases. Press reports give accounts of head teachers being accused by parents of either imposing unnecessary levies on pupils or failing to account for money collected for specific projects. Things have not been made easier by district education offices which are supposed to send auditors to schools for inspection purposes. In some cases, head teachers have colluded with the auditors to misrepresent audit reports in order to hide the malpractices. In some areas, the auditors lack vehicles to move to the schools resulting in schools remaining unaudited for as long as three to four years. In many cases, therefore, it is not known how much is collected by schools for specific activities. In rural areas in particular, where tend accept whatever explanations they are given by head teacher and school committee chairmen. These latter tend also to be important opinion leaders who are trusted in their communities. At the secondary school level, head teachers often embark on ambitious programmes that require large financial outlays such as purchasing a school bus. This practice is not limited to public schools only but has also been reported in private schools. When a decision to undertake such a project is taken by school authorities, every parent or student is expected to pay a fixed amount of money. But this system is often abused as schools can charge as much as Ksh.. 3,000 per student per year for even up to six years. In a school with an average enrolment of 600 pupils, collecting such amounts of money for six years adds up to Ksh. 6 million. In the end some school authorities have opted for used vehicles costing less than Ksh. 1 million even when the money was sufficient to purchase new ones. Given that MoE&HRD is not centrally in control of the cost-sharing at the school level, some local education officers have been known to impose charges on schools such that in a particular education zone, each school is expected to contribute a specific amount of money to the education office for maintenance, office stationery, transport and other expenses. Schools even pay for trips made by teachers and other education officers. In the most recent example, secondary school head teachers visited South Africa and spent millions of shillings in allowances and other expenses. This money was apparently obtained from school accounts. Questions have been raised on the usefulness of the trip educationally and the source of authority to spend such colossal amounts of money by head teachers. It is reported that each head teacher drew up to Ksh.100,000 in the form of allowances. The government has characteristically remained silent on issues raised and has not taken any disciplinary action against the teachers or responded to public outcry on the issue.

15

Again at the secondary school level, since schools fix fee levels, parents are literally at their mercy. There are ins tances, however, where rich parents contribute to the suffering of the poor ones in that, when proposal are made to increase fees during PTA meetings for, instance, rich parents simply endorse such proposals without considering the ability of poor ones to pay. There have also been cases where head teachers have collected examination fees but failed to register students for national examinations. Some of such head teachers have merely disappeared from their work stations after committing such offences. It is not clear that they are ever finally arrested and punished. What the foregoing discussion indicates is that there are several avenues for the misuse of funds by school authorities and education officers. On the whole, there has been widespread abuse of office by school heads as there is no transparency in the use of school finances. In this scenario, it is not difficult to understand why it is the parent who suffers and why some children do not complete their education due to lack of school fees. 2.3 Safety Nets in Education Safety nets in education were introduced by government as part, and within the auspices of the Social Dimension of Development programme. This is meant to cushion the poor and other vulnerable groups from adverse effects of the cost-sharing. In education, the safety-nets were estimated to cost about Kshs. 35,346.9 million per annum. Their components included bursary schemes, the national school- feeding programme, and the school textbook project described below. 2.3.1 The Bursary Scheme The MoE&HRD operates a bursary scheme at the secondary school level targeting poor households and was anticipated to benefit about 400,000 students yearly. The bursaries are given to schools which, in turn, give them to deserving students based on need. The decision as to who receives funds, and how much they receive is reached at the school’s BoG's meeting by a team comprising the head teacher, local district officer and representatives of the Ministry of Education. In 1994, an equivalent of 10 per cent of MoEHRD’s recurrent spending (of Kshs. 300 million) was set-aside for bursaries for distribution to all the districts (World Bank, 1995b). Out of this amount, only about Kshs. 150 million was eventually disbursed. The Interim Poverty Reduction Strategy Paper (Republic of Kenya, 2000) advocates for a 50 per cent increase in the funds for the bursary scheme. Similarly, the MoE&HRD plans to increase the budget to Kshs. 500 million in the current financial year (Daily Nation, June 22, 2000: 5). There is evidence that that the bursary scheme is characterised by inefficiency and ineffectiveness, coupled with lack of transparency and accountability. Firstly, there is limited awareness among parents on the existence of bursaries due to limited publication of the programme. Secondly, the criteria for award of bursaries remain unclear to the general public as a result of which only those who are informed apply. Thirdly, there is evidence that the scheme has been abused and has not benefited many deserving children (UNICEF/ODA/AMREF, 1994:95). In the 2000 annual KSSHA annual conference, head teachers complained that they have often been coerced by MoE&HRD officials into giving bursaries to undeserving students (Daily Nation, June 22, 2000, page 6). One of the participants challenged the MoE&HRD to state the ministry’s official position, arguing that the practice would affect the participation children from poor backgrounds in the education system. In a similar development, the second participatory poverty assessment study (Republic of Kenya, 1997: 21) notes that “ few bursary opportunities are available to the poor, and even where they are, corruption is such that children from the rich would easily obtain the bursaries”. It should be noted, however, that the head teachers are also not without blame on the matter because they tend to manage the bursaries

16

almost single handedly, going as far as determining who amongst the students--whether deserving or not should participate in the scheme. Critical as the bursary programme is in cushioning the poor and other vulnerable groups from the adverse effects of cost-sharing, there is a serious dearth of studies on its administration, operation and impact on target group. Except for occasional mention of the fact that the demand for bursaries outstrip supply (Khasiani, 1997) no study has gone further to analyse the composition of its beneficiaries by the socio-economic backgrounds. 2.3.2 The School Textbooks Project The government began providing textbooks in schools immediately after independence as one of the measures to support children from poor families. Consequently, the Kenya School Equipment Scheme (KSES) was established to implement this policy. Under this policy, the government gave Kshs. 20 per child at the primary school level for the provision of learning materials. Increased enrolment in subsequent years, however, constrained the government’s ability to fully meet the needs of schools and pupils. In a turn of events, the cost-sharing programme shifted the entire burden of book provision to the parents, and KSES was abolished in 1989. In view of the fact that the shift in policy adversely affected the children from the poor and indigent groups, the procurement and supply of textbooks to poor schools under the adjustment credit was re- introduced in the 1990/91 financial year. Concomitantly, the government prepared the policy paper, Social Dimensions of Development: An Approach to Human Centred Development and Alleviation of Poverty, in which it sought for donor support for the provision of textbooks, especially to ASALs and poverty stricken areas. By targeting the core subjects—English, Mathematics and the sciences—this policy aimed at providing school textbooks to about 4.2 million primary school children at an annual cost of Kshs. 3,960.6 million. The current provision, however, only meets 3 per cent of the required allocation due to budgetary constraints. The government had anticipated to spend about Kshs. 4.2 billion between FY 1991/92 and FY 1998/99 but, so far, it has spent only Kshs. 723 million. In 1998, GoK, together with the Netherlands government initiated the National Textbook Project, but the project has experienced numerous problems ranging from an oversupply of irrelevant books, delays in accessing the books, and the fact that only a selected number of districts benefit from the scheme. Criteria for inclusion and exclusion of some areas have also been questioned (Abagi and Olweya, 1999). Owing to such constraints and inability to resolve them, the Dutch government has since pulled out of the project. Other factors that led to the termination of the project included failure to explicitly state government’s contribution to the project and inadequate induction of the Ministry of Education personnel onto the implementation process (Sifuna and Nyaga, 2000) as well as irregularities and lack of transparency in tendering procedures, among other complaints. In the meantime, the government, with the support of the British Department for International Development (DFID), initiated a programme under the Strengthening Primary Education Phase Three (SPRED III) project that has a textbook component. Under this project, some 1.6 million pupils in 5,387 schools spread over 28 districts and municipalities are expected to benefit. The British government is to spend approximately Kshs 1.2 billion, with the Kenya government spending a similar amount under a “penny for penny” (matched funding) criterion. In the financial year 2000/1, MoE&HRD has released Kshs. 260 million to schools to buy books. The British government is expected to release a similar amount under the project. The project aims at achieving a pupil textbook ratio of 3:1 and 2:1 at lower and upper primary school levels, respectively. It should be noted,

17

however, that the project aims at providing books in core subjects only (Daily Nation, June19, 2000, p.17). 2.3.3 School Feeding Programme The school feeding programme in Kenya is not new. Soon after independence in 1964, WHO, FAO, and UNICEF conducted a survey on feeding habits and nutritional statuses of primary school children in the country, which showed that as many as 50-70 per cent of the children were suffering from ill health and malnutrition. They walked long distances to school without adequate breakfast or no breakfast at all, and stayed at school throughout the day without lunch. The children only had an evening meal that, in most cases, was inadequate both in quality and quantity and, therefore, did not supply essential nutrients necessary for a child’s physical and mental development. It is as a result of these findings that the decision was taken to establish the National School Feeding Council of Kenya (NSFCK), charged with the responsibility of organising a national school- feeding programme. From its inception, funding of the NSFCK has been based on cost-sharing between parents and the government through the ministries of Education and Culture and Social Services. The programme initially covered 32 districts but has had to be scaled down due to lack of funds. Donor agencies such as CARE International have pulled out of the programme while grants from the Ministries of Education and Culture have diminished. By 1990s, NSCFK could not manage to run feeding programmes and reduced its activities to cover mainly pre-school children attached to primary schools and a few nursery schools. By 1996, however, it had almost ground to a halt. In 1997, NSFCK submitted a proposal to Office of the President for financial assistance under the Socia l Dimensions of Development Programme (SDD) that was never honoured. In 1980, WFP initiated a funding scheme for school feeding programmes mainly in ASAL areas. The scheme is scheduled to end in 2001. Its main purpose was to encourage regular school attendance and targeted principally the disadvantaged pre-primary and primary school children in those areas. Despite the existence of the feeding programmes and their stated goals, enrolment in the ASALs has been declining like in the rest of the country. It is, therefore, necessary to review the impact of these programmes and propose alternatives that can increase and sustain enrolment and participation in education, not only in the ASALs, but also in the rest of the country. In fact the government has admitted that sustainability of the feeding programme is a major challenge (MoE&HRD, 1998). It should be noted that the safety nets so far put in place in education present critical gaps and challenges that would need to be addressed. First, the exact impact of these safety nets has not been well established. Secondly, their operation in terms of efficiency, effectiveness and sustainability has also not been documented.

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2.4 Cost-Sharing Policy in Health and Challenges 2.4.1 Implementation of Cost Sharing Programme in Health The implementation of cost-sharing programme in Kenya’s public health sector was entrusted to the Health Care Financing Secretariat,10 at the Ministry of Health (MoH) headquarters. Since 1997, the Management Science of Health (MSH) through USAID-funded AFS project has been assisting the Ministry of Health to improve collection, programming and accountability of cost-haring revenue and capacities in these areas. At the inception of the policy, patients paid some fees on registration, which differed by facility type. The highest fees were, however, charged at the national referral hospital—Kenyatta National Hospital (KNH)—while the lowest were at health centres. Whereas the referral hospital charged an outpatient treatment fee of Ksh. 40 per visit, the provincial and district hospitals charged Ksh.20 and health centres Ksh. 10. Meanwhile, medical services at dispensaries remained free. Fees for inpatient services ranged from Ksh. 20-100 in district and provincial hospitals. Patients were also required to pay for diagnostic tests, depending on the nature of the test. As a policy, 75 per cent of the fees collected are retained at the facility to facilitate improvements while the remaining 25 per cent is remitted to the district for the preventive and primary health care (P/PHC) activities. During the period, facilities could not use the revenues they retained without obtaining spending authority from the HCFD (Dahlgren, 1990; Quick and Musau, 1994; MoH, 1994). The registration fee structure11 remained in force until August 1990 when the government suspended it in its hospitals and health centres allegedly for various reasons, inter alia because: (i) the fees were denying a large proportion of the population access to medical care; (ii) the anticipated improvements in anticipated quality of care weren’t forthcoming as evidenced by among others, frequent complains of shortage of essential drugs and other medical supplies; (iii) general lack of consensus among the medical staff about the acceptability of user fees; (iv) limited dialogue between the government and other stakeholders in the design of the programme and modalities for its implementation; (v) funds raised during the initial period of the programme were tied up in bureaucratic bottlenecks instead of being used to improve the quality of health services; and (vi) weak management and administrative structures for implementation; (Mwabu et. al., 1992; Collins et. al., 1996; Abdille, et. al., 1999; Mbugua, 1993).

In April 1992, the government reintroduced and implemented new fees in various phases, starting with Kenyatta National Hospital (KNH), followed by the provincial hospitals (in July 1992) and district hospitals (in January 1993). As in the previous phases, no fees were charged in dispensaries. But contrary to the initial structure, patients paid the fees after receiving treatment. The re- introduction of the programme also marked the establishment of District Health Management Boards (DHMBs) in May 1992 to oversee its operations at the district level, ensure effective control of the funds, and enhance effectiveness and efficiency in health care delivery. Meanwhile, through the centralised decision-making process, the HCFD controlled revenue generated nationally from the programme and authorised the expenditures (MoH, 1994). Planning and allocation of resources were developed and implemented centrally. Starting from early 1993, the activities of the HCFD were extended to include the strengthening of the National Health Insurance Fund (NHIF) and the rehabilitation of major equipment in the facilities. With only six technical staff at the HCFD, its secretariat could not effectively train, monitor and supervise the activities of all public health facilities comprising eight provincial hospitals, 94 district hospitals, and 400 health centres (Owino and Munga, 1997). 10 Now Health Care Financing Division (HCFD) 11 The fees were referred to as registration fees because patients paid as their names were registered and before they received any treatment

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As pressure of work piled on the HCFD, public debate focused on the deteriorating conditions at public health facilities, lack of curative patient care items such as drugs and laboratory reagents, poorly maintained medical equipment and buildings, and congestion12, among others. Against patients’ expectations, increased user fees ware not accompanied by efficiency and improvements in the quality of health services rendered. Similarly, cost-sharing revenue was not utilised effectively. To reverse the otherwise deteriorating conditions, the HCFD mooted the idea of decentralising financial management services (DFMS), initially on a pilot basis. The programme of decentralisation was inaugurated in Western Province in June 1994 and then extended to Coast and Eastern Provinces in February and July 1996, respectively. Through the DFMS, several health functions and responsibilities were transferred to the respective provinces. These included13 co-ordination of district health care financing activities including supervision and auditing, approval of expenditure plans and issuance of sub-authority to incur expenses (AIEs), training of boards and teams, and compilation and preparation of routine district and provincial financial reports. The HCFD remained with the responsibilities of: formulating policy—including the setting of fees; monitoring, evaluating and supervising health care; preparing and maintaining national accounts and financial information systems; and liasing with other stakeholders. In the decentralised framework, the District Health Management Board (DHMB) was to be responsible for reviewing, approving and forwarding expenditure plans to the Provincial Medical Officer’s (PMO) office, co-ordinating district health programmes, advocating government health policies among the general public, and making health policy recommendations to the MoH. Though the DFMS in the pilot provinces was envisioned to take five months, it took much longer due to problems at the implementation stage (Owino and Munga, 1997: 5). These included the fact that adequate funds were not available for training, that top MoH officials and DHMBs were not well briefed about the new programme and would not support it, that inadequate infrastructure, computers and equipment and trained personnel constrained the process, and that contrary to the expectations, the PMO’s team did not remain an integral part of the implementation process. 2.4.2 Fee Setting: Theory and Practice As a policy, user fee guidelines are set by the HCFD within the MoH headquarters. There also exist clear guidelines on adjustments. As a requirement, departmental heads at health facilities provide their inputs through the Hospital Management Teams, District Health Management Teams and Boards and, ultimately, the HCFD. At the MoH headquarters, the HCFD convenes a meeting with the division heads (physiotherapy, nursing, etc.) to deliberate on the issue before sending their recommendations to the Health Care Financing Committee, which advises the Permanent Secretary. The latter communicates to the facilities on decisions arrived at through the respective district and provincial administrative systems. In spite the existence of clear guidelines on fee setting and adjustment as documented in Owino (1998), both tasks have shifted away unofficially from the MoH headquarters to individual facilities. This started in 1994 with a few politically well-connected facilities in the Rift Valley Province. These facilities made a bold move to effect increases without reference to the MoH headquarters alleging HCFD’s high bureaucracy in the fee adjustment process. Surprisingly, the latter remained silent as it received notification of the increases through memoranda from the facilities. Soon, the facilities that had made the otherwise difficult and contentious move were rewarded through added financial resources and, for this reason, became the envy of the others. A few facilities thus followed the move through their DHMBs and to date many have unofficially effected adjustments. Currently, most of the decisions on fee adjustments are made and implemented by the District Health Management Teams and Boards (DHMTs/Bs), after which authorisation to effect the changes is communicated to the facilities through circulars. In more than two out of every three cases, the MoH headquarters is hardly ever advised of the changes. The DHMBs contend that they have absolute authority over fee increases because of their much better understanding (than the HCFD) of the unique socio-economic conditions of each facility.

12 See for instance, Daily Nation of June 5th, 6th and 7th, and The East African Standard of June 7th, 1997. 13 For more details refer to the MoH meeting on: “Decentralisation of Cost-Sharing to the Provinces at the Silver Springs Hotel, December 1995.

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2.4.3 Revenue generation against targets In the cost-sharing programme, the HCFD sets targets for the revenue to be generated depending on the workload data and existing fee structure. Further, it is assumed that only 60 per cent of the patients pay (the remaining 40% is assumed to be lost revenue through defaults, waivers and exemptions)14. Chart 4 below shows yearly cost-sharing collections by province as a percentage of the set target. An analysis of the revenue generated in the past three years (against targets) reveals that in all the provinces (except one), the collections have fallen well below half. Clearly, then, potential still exists to tap the lost revenue.

14 Owino and Munga, 1997:8

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Source: MoH Healthcare Financing Division, 2000 Note: For each province, collections are presented for three years

2.4.4 Utilisation of Funds Generated through Cost-Sharing An analysis of the use of cost-sharing revenue for the period 1989-93 by Quick and Musau (1994) reveal that 36 per cent of the funds were used for maintenance of buildings and equipment, 20 per cent for drugs and dressings, 9 per cent for patient P/PHC, 9 per cent for fuel, electricity and water, 11 per cent for transport 5 per cent for cleansing materials, and 9 per cent for patient food, oxygen, and other expenses. The averages, notwithstanding, there are wide disparities in the use of the revenue across the board. Little work has, however, been done in this area.

F i g u r e 5 : U t i l i s a t i o n o f U s e r F e e s b e t w e e n 1 9 8 9 - 1 9 9 3

P / P H C9%

Fuel , Electr . W a t e r

9%

Transpor t1 1 %

Ma in tenance3 7 %

Drugs and dress ings

2 0 %

Cleans ing mater ials

5%

Food, Oxygen ,

others9%

Chart 4: Collection as a Percentage of the Targeted Revenue, FY 1996/97 to 1998/99

0102030405060708090

0 1 2 3 4 5 6 7 8 9

province

per

cen

tag

e

22

In our interviews with the policy makers, concerns were expressed that since 1994, the use of cost sharing funds is being shifted more toward such non-priority areas as transport and food. 2.4.5 Revenue Generated and Banking performance Table 12 shows the contribution of the cost-sharing programme to health spending since 1990, by facility type. Table 12: Cost-Sharing Revenues Generated (in Ksh’000) by Type of Health

Facility Facility Type 1990/91 1992/93 1994/95 1996/97 1997/98 1998/99 Amenity Wards 582 1,600 4,020 629 6,622 8,080 District Hospitals 13,982 24,346 19,656 90,056 79,255 149,064 Sub-District Hospitals 1,912 5,169 6,028 25,739 20,578 38,529 Health Centres 4,462 55 54,011 15,944 8,647 15,612 Provincial General Hospitals

7,578

29,478

153,898

67,137

71,246

113,604

Total Ministry of Health Facilities

28,586

60,648

237,613

205,139

186,347

324,889

Kenyatta National Hospital

20,586

41,165

99,376

185,906

200,000

261,000

Total 49,102 101,813 336,989 385,411 386,347 585,889 Source: MoH, Health Care Financing Division

As shown in the table, contributions have gradually risen from about Kshs. 29 million (excluding Kenyatta National Hospital) in 1990/91 to Kshs.61 million in 1992/93, Kshs. 205 million in 1996/97 and, Ksh. 324 million in 1998/99. With this magnitude of contributions, the programme has undoubtedly had positive impacts on the country’s health care delivery system. It has, for instance, contributed 37 per cent of non-staff recurrent expenditure at provincial hospitals, and 20 per cent at district hospitals and health centres. In all, cost-sharing comprised 13 per cent of non-wage recurrent expenditures for MoH health facilities in 1994/95, rising to 14.5 per cent in 1996/97 (MoH, 1999). Table 13: Cost-Sharing Revenue as a Percentage of MoH’s Recurrent

Expenditure 15 Financial Year

Cost Sharing revenue (Ksh. 000,000)

MoH Recurrent Expenditure (Ksh. 000,000)

Percentage

1990/91 1991/92 1992/93 1993/94 1994/95 1995/96 1996/97 1997/98 1998/99

28 34 61 130 238 200 205 186 325

3,040 3,500 4,580 5,900 7,420 8,280 8,760 9,100 9,620

0.92 0.97 1.33 2.20 3.21 2.42 2.34 2.04 3.38

Source: Central Bank: Monthly Economic Review; Appropriation Accounts, and other Public Accounts of the funds; MoH, Health Care Financing Division.

15 The figures exclude contributions by KNH

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Table 13 shows cost-sharing contributions to MoH recurrent expenditure. It is evident that the contributions as a percentage of MoH recurrent spending, have risen steadily from about 1 per cent in the early 1990s to about 3.4 per cent in 1998/99. The considerable contributions notwithstanding, the country’s performance in this aspect remains below those of other countries in the sub-Saharan region (see Table 14).The literature advocating user fees, however, claims that user fee programme should recover as much as 20 per cent of the recurrent costs (Wang’ombe 1997: 156) Table 14: Recurrent Expenditures Recovered Through User Fees (% of Total):

Various Sub-Saharan Countries Country Share in % Year Cote d’Ivoire 3.2-7.0 1986 Ghana 7.8 1992 Kenya 3.4 1998/99 Senegal 4.4-7.0 1986 Swaziland 4.6 1988/89

Source: Adopted from Wang’ombe 1997, data from HCFD

Banking Performance The public health facilities in the cost-sharing programme are realistically expected to bank 95 per cent of their collections. Table 15, however, depicts lower banking rates as five of the provinces Nairobi, Central, Western, Nyanza and Rift Valley reported declines in banking between 1997/98 and 1998/99 FYs. This poses high risks to the funds retained at the facilities. More specifically, an index lower than 90 per cent would suggest that the revenue generated is being spent without the approval of the DHMBs. Table 15: Banking as a Percentage of Cost Sharing Collections, Selected Years

Province 1996/97 1997/98 1998/99 Nairobi Coast Central Eastern North-Eastern Nyanza Western Rift Valley

87 102 88 93 78 88 89 90

96 89 85 93 84 88 82 84

92 90 77 94 85 76 75 81

Source: MoH, Health Care Financing Division, 2000. Similarly, one the problems in banking the programme has experienced is poor reporting (0-12%) on expenditures among the provinces (Owino and Munga,1997). 2.4.6 NHIF Contributions to the Cost-Sharing Programme Membership to the NHIF remains compulsory for both public and private sector employees earning a monthly salary of Ksh 1,000 and above. Contributions range between Ksh. 30 (Ksh. 1,000-1499) and Ksh. 320 (Ksh. 15,000/= and above). In

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return, the NHIF provides a cover for the contributors, including their families (estimated to be about 7 million) for inpatient care in NHIF-approved hospitals, including private and government facilities. Though reimbursement rates varies from hospital to hospital16 the private sector has better rates. This could perhaps be because the sector often charges higher fees for their operations compared to the public sector. In any event, only 189 of the registered 3,000 public health facilities are accredited by the fund. Until recently, the NHIF provided a major source of income for government, mission, and private hospitals. For government hospitals, it remained the largest financier of health services apart from direct government funding, providing approximately 50 per cent in FY1995/96 of actual revenue generated from the cost-sharing programme. In a turn of events as illustrated in Chart 6, the contributions have been on gradual decline. Source: Calculated from figures obtained from HCFD, MoH, 1999. With respect to different tiers, NHIF revenues as a proportion of cost-sharing collections stands at 6 per cent at SDHs, 9 per cent (DHs), 18 per cent (PGHs). This trend has largely been attributed to poor reimbursement and low claims settlement by the Fund in the case of government hospitals, a situation that is rather surprising as the fund is known to hold huge surpluses e.g. Kenya pounds 55 million (1996/97). In spite its low coverage (33% of the Kenyan population), NHIF faces various limitations adversely affecting its contributions to the cost-sharing programme. These include: (1) non-accountability to its members and less responsiveness to their needs, (2) the payment mechanisms that create incentives for expansion of private bed capacity but not for quality improvement; (3) the claiming process that is tedious, has high transaction costs and is characterised by fraud and abuse; (4) the Fund only offers partial payment of hospitalisation and is managed by individuals with inadequate experience; (5) the Fund is characterised by weak administrative systems,

16 Depending on the bed capacity

Chart 6: NHIF collections as a percentage of cost sharing revenue between FYs 1995/96 and 1998/99

0%

10%

20%

30%

40%

50%

60%

1995/96 1996/97 1997/98 1998/99

Financial Years

Per

cen

tag

e

25

poor investment portfolio, and low claims settlement that induces fraud (Quick and Musau, 1994; GoK, 1994; Kraushaar and Akumu, 1993). 2.5 Safety Nets in Health 2.5.1 Waivers and Exemptions At the inception of cost-sharing in Kenya’s health sector, there was a recognition that some members of the Kenyan society could not afford the charges levied at public health facilities. To this end, a system of waivers and exemptions was introduced as a safety net for the poor and other vulnerable groups17. This was not only important for political acceptability of the cost-sharing programme at that time but also for ensuring the government’s equity principle that all citizens should have access to basic medical services. As documented by Collins, et al., (1996) and MoH (1994) 18 the exemptions were initially provided for: children (0-15 years); specific illnesses; prisoners and those under the police custody; traffic accident victims; civil servants; and destitutes (see also Table 16). On the other hand, intended for the income poor, were to be provided as informally as possible, with assessment criteria largely determined at the community and/or facility level.

At its inception, it could be argued that the system of waivers and exemptions was ‘generous’, encompassing a wide range of cases and groups. The inclusion of children (0-15 years) was meant to reinforce the country’s immunisation policy. Again, the package aimed at addressing the negative externalities associated with STD/HIV/AIDS and contagious diseases such as TB and leprosy. In the case of civil servants, the package was meant to boost their morale and productivity—in this case, the government acting as an employer. The policy intentions notwithstanding, the implementation of waivers and exemptions was characterised by certain limitations. In the first instance, there was lack of awareness and poor information on the safety nets. Still, most of the facilities expected to implement the system were characterised by institutional weaknesses. At the national level, poor information on measures set up to protect the vulnerable groups led to a lack of political will. Further, lack of advocacy for policy change and inadequate involvement of all stakeholders in policy formulation led to a poor understanding and appreciation of the objectives of the policy change on the part of facility staff, on the one hand, and, a lack of information by the users on the other.

In a report of HCFS (1991) the facilities visited had no system for accounting for the waivers and exemptions. Furthermore, many of the patients were ill informed about the system partly because some staff felt that, given information, too many patients would seek waivers. Similarly, Quick and Musau (1994) show that, only about 27 per cent of outpatients at the district hospitals and 16 per cent of patients at the provincial hospitals were aware of a system by which some people did not have to pay. Compared with outpatients, a much smaller percentage of inpatients were aware of such a system. In studying the effectiveness of waivers and exemptions in addressing the equity and access objectives Owino and Were (1998) found that most of the facilities are driven by a ‘financial sustainability’ motive, rather than the equity objective of ‘Health for All’. This has, in part, led to a general reluctance by the respective facilities to create awareness about the system. It is argued that those unable to pay ‘will automatically voice their concerns’. In this study, about 70 per cent of the administrative staff interviewed were against publicising the system. Additionally, only one out of every three patients attending public hospitals claimed to be aware of the existence of a system through which one could be treated without paying. By category of patients, awareness is higher among the inpatients (20%) as opposed to the outpatients (14%). By gender, male patients (20%) appeared to be more informed than female patients (15%).

17 Exemptions are automatic and apply to certain categories of patients and cases. They are centrally defined by the headquarters, and staff at the facility level are less involved in their design, though key in its implementation. On the other hand, the waivers are granted on financial and needs criteria 18 MoH circular on “Adjustments of Facility Improvement Funds Fees and Exemptions” to Provincial Medical Officers, District Medical Officers of Health, Medical Superintendents and officers in -charge of health centres.

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Table 16 provides an indication of the category of patients/illnesses that was/is included in the exemption list during a particular year, starting from 1989/90 when cost-sharing was introduced, through the respective periods when adjustments were made. Starting from the 1989/90 general list officially endorsed by the ministry, the ticks (ü ) indicate those groups that are recognised as beneficiaries by operators at the facility level. There is obvious a divergence between official MoH’s policy and the practice at the facilities where treatment is sought. As shown, the exemption list has been narrowed and waivers and exemptions system tightened. Those patients/illnesses receiving exemptions have been reduced from 11 in 19989/90 to about five over time. There are also indications that some of those on the latest list are being charged. Table 16: Categories of Patients and Illnesses exempted: 1989-98 Official Ministry Policy 1992 1994 1998 Children 0 – 15 years 0 - 5

years 0 - 5 years

Prisoners ü ü ü Tuberculosis patients ü ü ü Leprosy patients ü ü ü Patients from charitable / destitute homes ü ü ü Family planning ü ü S.T.D/AIDS ü ü Internal MoH referrals ü ü Unemployed (certified by their District Officer)

ü ü

Antenatal & postnatal clinics ü ü Civil servants and their children under the age of 22 (except for inpatient charges)

ü

Source: tabulated from MoH policy documents and studies and the facilities. The eligibility criteria for waivers and exemptions vary across the board, with each facility indigenising theirs. As shown in table 17, whereas some facilities use a combination of five or more of these factors in determining eligibility, others use three or less. Surprisingly, no facility determines eligibility for exemption on financial considerations, perhaps due to the inherent difficulties in assessment. Still, inasmuch as the investigation process is thorough in some facilities, it is lax in others —at times being undertaken without the authority of the administration (Owino and Were, 1998). Table 17: Eligibility Criteria for Waivers in Selected Facilities

Attributes relating to the patient Facilities Studied 1 2 3 4 5 6 7 8 9

Occupation X X X X X X X X

Mode of dressing/hairstyles X X X X X X X X

Mode of transport to the hospital X X X

Recommendation letter/note from the local administration

X X X X X

Direct observation X X X X X X

Number of dependants/family size X X

Additional information from relatives

X X

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Number and type of visitors X X X X X X

Length of stay after discharge X X X X

Recommendation by social worker

X X X

Note: ‘X’ indicates that the attribute is used by the facility in the eligibility assessment. The codes represent specific facilities whose names are withheld for confidentiality purposes. Based on the survey by Owino and Were (1998), the system of waivers and exemptions was found to be ineffective due to leakages, low transparency and marked by bureaucratic bottlenecks. The reduction of the exemption list and the tightening of the waiver system have adversely affected the vulnerable groups in their attempt to access health care in public health facilities. This has been further compounded by lack of awareness of the policy among the intended beneficiaries. As the system continues to be tightened, the intended objective of promoting the general health of the population by reducing negative externalities associated with diseases such as STD including HIV/AIDS and TB and reinforcing the country’s immunisation policy may be undermined. Most worrying, however, is that the system has been manipulated to benefit undeserving cases with the support of the local administration.

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CHAPTER 3 3.0 THE IMPACT OF COST-SHARING ON ACCESS TO EDUCATION

AND HEALTH BY THE POOR 3.1 Introduction The design and implementation of SAPs in sub-Saharan Africa have come under criticism for not protecting the most vulnerable groups against their adverse impacts. The IMF and World Bank adjustment programmes have, for a long time, ignored such issues on the basis that they should be exclusively the prerogative of domestic policy makers (Tarp, 1993: 124). The World Bank (1989b), for instance, concedes that “the impact of SAPs on macro performance, including GNP growth, will continue to be limited unless the fundamental constraints on growth and development are addressed —health, education, population growth, technological improvement, infrastructure, institutional strengthening, and governance”. Among the agencies that have been emphasising this message for a long time is UNICEF that stresses the need for “adjustment with a human face” by focusing on poverty alleviation programmes and improving the productivity and incomes of the poor as well as strengthening essential services such health (Cornia, Jolly, and Stewart,1987). Considering that governments in sub-Saharan Africa, including Kenya, have the social responsibility to assure the availability to their population of quality and affordable social services including health and education, it is important to examine the impacts of SAPs policy instruments such as cost-sharing. Such an analysis is timely in the light of rising poverty levels in the country. 3.2 Impact of Cost Sharing in Health 3.2.1 User Fees and Utilisation and Efficiency of Health Service Delivery Various studies have been undertaken to assess the impact of user fees on utilisation and efficiency of health services in sub-Saharan Africa but they have yielded conflicting results. First, an increase in demand resulting from quality improvements (Mwabu and Wang'ombe, 1993, REACH, 1994; Maliyamkono and Ogbu, 1999) has been found. Second, some authors have found the tendency of patients to migrate to t private sector facilities (Mwanzia and Mwabu, 1992; Deolalikar, 1997). Third, a reduction in the utilisation of public services seem to have been the result of the introduction of user fees in public health facilities (Mwabu and Wang’ombe, 1995; Mwanzia and Mwabu, 1992), coupled by a drop in outpatient attendance for basic curative services by 5 per cent in such hospitals. The drop has been attributed to lack of essential supplies and equipment and failure to control pilferage drugs, bribery (“no money no care”) being the common saying, hence resort to use of self-medication or traditional healers. Finally, an increase in the number of outpatients receiving preventive services in public hospitals but a decrease in private hospitals (Maliyankono and Ogbu, 1999) has been found. Contrary to the above findings, a study by Obonyo (1990) on the impact of cost-sharing at Kenyatta National Hospital found declines in utilisation, but also marked improvement in the quality of services provided. However, the study does not point out specific areas/departments where services improved. On the other hand, where declines in utilisation were recorded, there was a 27 per cent decrease in average monthly utilisation following the introduction of user fees (Quick and Musau, 1994). There were, however, some variations in health facilities across the country—21 per cent at Coast Provincial General Hospital to 31 per cent at New Nyanza and 34 per cent at Nyeri Provincial General Hospital, with no significant recovery during the nine months in which the fee was in effect. During the period when cost-sharing was suspended, the provincial general hospitals experienced significant increases in utilisation. With respect to the effect of cost-sharing on quality of services, Quick and Musau (1994) found significant improvements in the case of provincial hospitals. The study shows that there were significant increases in the percentage of patients rating services provided at the public facilities as good to excellent (24%). Proportions rating the various services and good to excellent were as follows: staff attitude (17%), cleanliness (34%), building appearance (13%), and availability of drugs (27%). Only one indicator—waiting time—was found to have worsened by 10 per cent of those surveyed with

29

cost-sharing at the facilities studied. A survey of in-patients at district hospitals by the study revealed declines in the availability of drugs (14%), bed linen (17%) and food quality and availability (17%) while waiting time declined by 9%. Owino and Korir (19997), on the other hand, found that there was no corresponding improvement in the quality of health care services following implementation of the programme. This was principally attributed to insufficient health care inputs, and decentralisation of cost-sharing programme that largely focussed on establishing a solid financial base at the expense of promoting access to health services. Owino (1998) found declines in the utilisation in the poverty stricken areas and/or among the public health facilities serving subsistence farmers, nomads, squatters and land clash victims. On realising that the uncoordinated fee adjustment structure has led to relatively higher charges for some services at the lower tiers, the study points out the potential threat to the effectiveness of the “bottom-up” referral policy. In the emerging structure, it is argued patients are being tempted to bypass the primary facilities, in preference for the low cost higher-level facilities. This has posed difficulties in enhancing the capacity of the lower tiers to effectively provide primary and preventive health care services. Owino (1998) concludes that arbitrary fee increases by the DHMBs, unless well co-ordinated, can and do have adverse effects on access to the public health facilities by the vulnerable. As shown by Owino (1998)19, there are wide differences between the “actual” fees being charged by the public health facilities countrywide and Ministry of Health guidelines that were last reviewed in 1994. As a result, vulnerable groups have been adversely affected the in that they face increased difficulties in accessing public health services. Mwabu and Wang’ombe (1993) who conducted a study on user changes in Kenya with a view to evaluating the health service pricing reform in Kenya from June 1989 through 1993 came up with similar findings. Using data from four health facilities—one district hospital and three health centres in Kirinyaga district—these researchers found that the introduction of outpatient fees in Kenya’s public hospitals had reduced demand by a large proportion. Although this study was detailed in its methodology and analytical framework, it suffered from various limitations. For a start, it had a limited scope in that only one district hospital and three health centres were studied. Secondly, data was collected only from facilities and/or patients who visited these facilities. Another study by Narayan and Nyamwaya (1997) found that although health facilities exist in most areas, the poor were have limited access to them due to user fees, long queues in the registration process, and rough treatment by service staff (AMREF/GoK, 1997). In Tanzania, Kizigha et. al., (1994) found that, following introduction of cost-sharing, outpatient attendance for basic curative services declined by 5 per cent in public health facilities due to lack of essential supplies and equipment, and failure to control pilferage especially on drugs. 3.2.2 Formal Versus Informal Payments The official charges by the ministry notwithstanding, patients have had to meet extra charges before registration. For instance, in a poverty assessment survey by the UNICEF and Overseas Development Agency20 (1995/96), it was shown that user fees in Kenya made visits to the government facilities prohibitively costly as the poor were required to make payments to reach the registration table. In yet another study, Owino and Were (1998) found health staff, particularly nurses in charge of wards, granting waivers and/or assisting absconders in exchange for as little as Ksh. 20-100. In certain cases, the patients were asked to provide paper for records purposes after paying registration fees. Gertler and Hammer (1997) have made similar findings and contend that public sector fee increases reduce access more in rural areas where there are fewer private alternatives, as well as Owino and Korir (1997). In spite of the pointers, this area remains least researched. 3.2.3 Willingness to Pay and Affordability As a generalisation, Shaw (1995, p.33) points out that, even with the most optimistic studies on willingness and ability to pay, some members of the public would still require financial assistance to benefit from the public health services. Indeed, a number of studies have shown that the poor are relatively more sensitive to price changes than the rich (Gertler and Van der Gaag,1990; Mbugua, 1994). Mbugua, (1994), for instance, shows that incomes of poor households strongly influence the choice of provider, and conclude that user charges impede access by the poor to better quality care. 19 This study utilised 15 purposively selected public health facilities 20 Has now changed the name to Department for International Development

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Elsewhere, Maliyamkono and Ogbu, (1999) examined the community’s willingness and capacity to pay for health services in Zambia and assessed the impact of the fees on the quality of services using a household questionnaires, focus group discussions, and secondary data analysis on expenditure and utilisation trends. The study found that the user charges were considered generally affordable by 85 per cent of urban respondents. On the other hand, the majority of rural residents found the fees to be unaffordable owing to their merger earnings and precarious means of livelihood. The study found (i) declines in utilisation at the public health services, (ii) low quality care as characterised by unavailability of drugs and other medical supplies, (iii) that limited awareness among vulnerable groups about the existence of safety nets restricted access by this group to the public health services. The researchers suggested that for cost-sharing to be effective, other modes of payment such as in-kind contributions should be encouraged. They further recommended the need to be cognisant of factors such as economic realities of the population, confidence of health staff, and consistency of the supply of drugs to enhance cost sharing A similar survey by Maliyamkono and Ogbu (1994) also found non-affordability of the charges by majority of the respondents. However, the study did not specify the proportion that could not afford the charges. According to the respondents, they were paying high taxes which had by then imposed heavy financial burden on them that could be used to cater for medical services. Similar findings were reported by Kizigha et. al., (1994) in Tanzania. In a participatory poverty assessment study in Kenya on the health seeking behavior, it was revealed that an important factor in public health facilities that discouraged use of the facilities were the lack of drugs. According to the respondents, having no more money meant people could not go to shops to buy medication. A number of widows in Busia district for, instance, observed that they normally prefer to go to hospitals when they have money in case of illness, but when they have no money, they resort to traditional herbs. The survey further revealed that such a coping strategy was well developed in other areas like Kitui and Mwingi districts, especially among female household heads (UNICEF/ODA, 1995). The Ministry of Planning and National Development (1998) report on poverty in Kenya, reveals that, nationally 8.9 per cent of the entire population did not visit a government health facility because it was too costly, while 54.2 percent indicated that they did not visit GoK facilities because of non-availability of drugs. About 76.2 per cent of the population did not visit private health facilities because they were too expensive, while church-affiliated facilities were considered too costly and/or too far. On the whole, the survey found that about 7.7 per cent of the entire population do not seek treatment due to inhibitive costs (GoK, 1998). 3.3 Impact of Cost-Sharing in Education In general, it has to be noted on the outset that there is no specific studies, household or school-based, which have focused on the willingness of the poor to cost-share and their actual ability to cost-share. And, neither are there any studies on the impact of cost-sharing on the development of education or school participation of pupils from poor households. However, there have been general inferences made about the ability of the poor to access and/or complete basic education under cost-sharing policy. Findings of studies on education costs, financing and cost-sharing, though few generally associate increased cost of education to low standards in education, declines in enrolment, rise in of drop out rates, a gradual erosion of parental ability to provide for other essential needs of the family as education takes an increased share of resources available, an overall lowering of the quality of education, as well

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as a low transition rate from primary to secondary education. In an ODA/UNICEF sponsored Participatory Poverty Assessment study for the World Bank, it is observed that,

if anything has failed…then it is education. The case everywhere is that educational standards have declined, as observed in the physical buildings, a large umber of which were incomplete or collapsing, absence of desks, water, toilets and shortage of teachers, and in many cases, indifferent teachers. The situation makes the poor’s betting on education as the only way out of poverty a shaky proposition at best. Some villagers have abandoned their local schools altogether and sent their children to schools in other villages. Many headmasters reported a decline in performance as well. They attributed this to the demands of the 8-4-4 programme, in particular, the cost-sharing requirement” (Narayan and Nyamwaya ,1997: 41).

The girl child is affected more as she is the one that is likely to drop or be withdrawn from in the face of economic hardships. Indeed the Second Participatory Poverty Assessment Study, for instance, notes that the high cost of education “has led to the situation where some rural parents prefer to educate boys compared to girls, arguing that a girl will eventually get married and therefore need only to be prepared for that role”. This is attributed to the high cost of education. The regressive impact of user charges lead to negative enrolment response, drop-out from school of children particularly from the illiterate and poor segments of society, and a negative income effect which affects the ability of households to meet other basic needs. Abagi and Olweya (1998) conclude that the policy of cost-sharing needs to be re-assessed, if not abolished, as it inhibits the access to basic quality education by vulnerable groups. Evidence shows that there has been a decline in GER from over 95 per cent to just about 76 per cent. The decline in education indices is generally associated with the adverse effects of cost-sharing policy (Republic of Kenya, 1998; Akwanalo, 1998; IRACC, 1998; Khasiani, 1997 and Narayan and Nyamwaya, 1995; Mitha and others, 1995). 3.3.1 Important Efficiency Outcomes Given the objectives of cost-sharing, it would have been expected that there could be gains from freeing the government in financing the non-salary aspects of education. Transfer of costs from the government to parents and communities should have had the positive effect of releasing resources, which could be used to improve other areas and indices of education such as quality, equity, raising internal efficiency of education as well as improving on cost-effectiveness of the entire education system. This however seems not to have been the case in Kenya. An analysis of trends in public expenditure on education and indices such as enrolment shows that there have not been much gains from the implementation of cost-sharing. In acknowledging that the objectives of cost-sharing policy have not being met, the Master Plan on Education and Training (Republic of Kenya, 1998: 162-163) notes that,

First, enrolments have not been rising with population, and historical data show that enrolments are sensitive to the financial demands of parents. Secondly, schools lack essential facilities and materials in spite of the relatively larger levels of household expenditure…. It must be concluded that the policy of cost-sharing has been a contributory factor to falling enrolments as well as failing schools.

The decline in almost all indicators of education dates from 1989 when cost-sharing was introduced. It is not just enrolments that have been declining. Drop out and repetition rates have also been on the increase (Abagi, 1997; Akwanalo, 1998; Abagi and Olweya, 1999; Orodho, 1997). Trends in completion rates at both primary and secondary education are a pointer to this (Chart 7).

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Chart 7: Primary and Secondary Completion Rates and Primary to Secondary Transition (%), 1990-1998

41.3 44.6 46.0

38.4 42.7 44.7 45.2 44.9 44.8

43.2 44.1 46.443.4 43.9 42.6

44.3 46.147.2

86.4

78.2 83.4

68.9

82.1

77.1

95.488.3 84.5

0

20

40

60

80

100

120

1990

1991

1992

1993

1994

1995

1996

1997

1998

year

rate

(%

)

Transition* Primary completion Secondary completion

Source: MoE&HRD, Statistics Section. The trend in primary and secondary completion and transition rates shows that while secondary completion rates have been higher than primary, they are, on the whole, declining. The increases have been erratic and have not been sustained overtime. This is attributed to the high cost of this level of education. It should be noted that the high completion rates at this level relative to the primary level are basically due to the short circle of secondary education, which is half the primary school circle. Had it been longer, the rates would be lower than that at primary level. In addition, completion rates are higher than transition rates in most cases. It means that either those who complete do not attain the necessary competency or qualifying grades, or that those who attain the grades are barred by cost considerations from continuing with their education. There are a few instances, however, where transition rates exceed completion rates. The GER for both primary and secondary levels has also either been declining or remained constant. Where there are increases, the trend has not been sustained. The GER for both levels has declined from highs of 101.8 and 29.4 to lows of 88.8 and 23.2, respectively. It is important to note that the declines have generally been phenomena of the late 1980s and the 1990s. This is the period when cost-sharing was officially introduced and its implementation intensified. The share of education as a percentage of GDP has, on average, been higher than in other sectors (Chart 8). However, for three consecutive years ((1994/95, 1995/96 and 1996/97), education’s share of education. Overall, the proportion of education’s share of the GDP for Kenya is still higher than the sub-Saharan average. The high levels of allocation to education has not been matched by efficiency and effectiveness gains, meaning that investment in this sector is not optimal.

C h a r t 8 : E d u c a t i o n E x p e n d i t u r e a s % o f G D P , 1 9 7 2 / 7 3 - 1 9 9 6 / 9 7

6.82

6.51

7

6.49

6.22

6.33

6.66

6.35

6.58

6.81

6.53

6.445.68

5.676.16

55.33

5.745.216

7

8

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Source: The Kenya National Human Development Report,1997: Statistical Annex 3.3.2 Cost Sharing in the Education Sub-Sector: Emerging Issues As has already been explained, the government in 1988 under the SAPs programme implemented a cost sharing policy in education. Through the policy, the government pays mainly for teachers and meets the main cost of social safety-net programmes. On the other hand, parents contribute by meeting the cost of textbooks and other teaching/learning materials, school maintenance, equipment, and uniforms. The policy was meant to revitalise planning, management, cost and financing of education. The overall assumption was that, with this policy in place, educational opportunities and quality would be enhanced thereby developing the sub-sector. Yet this study has found that the education sub-sector is at a crossroads and faces many problems and challenges. Despite heavy investment in education, with 38 per cent of total government recurrent budget (8.1% of GDP) going into education and training, all major indicators of education—including enrolment, retention, completion, and transition rates as well as and quality—have not been encouraging in the last decade. Besides, the costs of education and training as well as regional and gender disparities have been on the increase. Education costs, however, have been on the increase overtime, making it difficult for poor households to invest in their children’s education. The financing of education has been problematic, especially in the area of sharing the burden. The other major issue facing the financing regime is that of efficient and effective utilisation and management of resources invested. These areas provide major challenges to realising the objective of “education for all.”

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Several issues emerge from this study:

i. While cost-sharing has increased the financial burden of households in financing education, there is little indication of the magnitude of education expenditure by poor households. Varying figures exist, depending on their source, but it is often stated that government contributes 31 per cent and households 60 per cent of primary and secondary school expenses. Other studies by private institutions and NGOs indicate higher figures than the government ones. Thus, the actual impact of cost-sharing on the poor children has not yet been established.

ii. The unit cost for various levels of education, particularly basic education, has

not been established. iii. Despite the cost-sharing policy, there has been a continuous gradual increase in the proportion

of national recurrent budget allocated to education. For example, recurrent expenditure of MoE&HRD’s share of the total government recurrent expenditure rose from 35 per cent to 38 per in 1993/94 to 1998/99, respectively.

iv. There has been no consistency between the high level of public and private expenditure in

education and the low enrolment and participation rates and low quality of and inequity in education.

v. Cost-sharing seems not to have taken into consideration the geographic distribution of existing

educational institutions at provincial, district and community levels. Since different communities have different levels of income, their abilities to equip schools and, therefore, improve the quality of the teaching/learning process have varied greatly. Thus, education standards in various regions and schools also vary based on their economic status.

vi. Lack of specific policy guidelines and proper modalities for cost-sharing in education has

made the cost of education vary by regions and by schools. Most schools have defied government directives on school fees and other indirect costs. So, fees charged vary according to the categories of schools. Apart from direct school fees that vary between Kshs. 15,000 to 50,000 a year for secondary education, schools ask parents to pay for development funds, school transport, insurance, library facility, PTA levy, generator installation, computer project, meter separation, etc. These levies cost from Kshs. 2,000-15,000 depending on the schools and their location.

vii. Although cost-sharing has been in place for a decade now, the governance and

management of education is still centralised. The MoE&HRD headquarters has not been able to share responsibilities with communities and school management bodies like PTAs and BOGs. Such bodies are still politicised and their capacities in governance and financial management has not been enhanced. Many school heads have taken advantage of this situation and have misused money collected from parents and communities in the process. Letting schools decide on who to benefit from the bursaries is a problem. Firstly, it can be abused and the bursaries can end up going to those who would not otherwise qualify for them. Secondly, giving bursaries to those already enrolled in school means that those who qualify for secondary education but are unable to raise fees are automatically excluded. Research should focus on the possibilities of incorporating other stakeholders such as churches, NGOs and CBOs as well as the provincial administration in the management of the scheme. Frontiers for attracting and involving other charitable organisations and foundations to boost the bursary kitty should also be explored. The current Interim Poverty Reduction Strategy Paper (IPRSP)

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(Republic of Kenya, 2000b) indicates that, among the policies to be pursued in the effort to mitigate the adverse effects of cost-sharing is to reduce the cost burden that parents have had to bear by expanding the bursary scheme by 50 per cent. The paper also suggests collaboration with NGOs and other development partners to supplement the efforts of communities to increase the provision of textbooks and science equipment to primary and secondary schools.

viii Cost-sharing policy in education seems to contradict government’s

commitment to achieving the goal of providing quality basic education for all. With the increased level of poverty and the current system of education, cost-sharing seems not to produce positive results or achieve its intended objectives in education.

ix The social safety nets and intervention programmes such as textbook and

school feeding programmes as well as bursary and capacity building projects at school levels are donor driven and dependent. Sustainability of such programmes has been questioned. Furthermore, the management of such programmes at the school level has been problematic because of corruption and lack of transparency.

x Compared to other sub-Saharan countries with Kenya’s level of per capita

income, Kenya has one of the highest ratios of education and training expenditure in the region. The bulk of the expenditure goes to primary education (60%), with secondary and university getting 20 per cent and 16 per cent, respectively. At primary and secondary school levels, over 95 per cent of the allocation goes to personal emoluments.

xi. Compared to the Ministry of Health, the Ministry of Education and Human Resource Development has no specific unit/division of cost-sharing which deals with it policies, implementation and monitoring processes.

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CHAPTER 4 4.0 INFORMATION AND RESEARCH GAPS

Several features and shortcomings emerge from this study. This chapter highlights some of them. 4.1 Education A lack of Cost-sharing specific studies in education: Most of the studies are general on cost of education and only mention cost sharing as a factor, for instance, in explaining the inability of parents and communities to afford education for their children. There are few studies on the impact of cost-sharing in education. Other studies are characterised by generalities such as perceptions of parents on such issues as acceptability of cost-sharing and problems in its implementation. This seems to be the case as some of the regional studies too (see, for instance, Mutakyahwa, 1999; Lungawangwa, 1999; and Mwiria and Ogbu, 1999). Moreover, the literature available tends to concentrate mainly at the primary school level ignoring the other levels. Limited focus of existing studies and a lack of objectivity: From the few studies that are available, it is not possible to draw generalisations because of a limited focus. A number of these studies concentrate on small areas, e.g., locations or districts. Since 1995, when the cost and financing studies that were sponsored by the World Bank, there have not been significant developments in terms of serious studies being undertaken. Even the cost and financing studies were not cost-sharing studies per se but looked at costs and financing of education in more general terms. Further, one does not expect to find much objectivity in these studies because the very people who sponsor SAPs, of which cost-sharing is one component, also sponsored them. Limited studies on the Impacts at the household level: Not many of the studies have rigorously focused on the household level. Not much has been done in terms of gathering relevant data on incomes of households and relating these to expenditure on education. Studies that have attempted to do so have not related their findings to the national averages and have, therefore, left gaps as to the exact extent of cost burdens borne by households. Poor follow up on Recommendations: Some of the recommendations of the studies on education cost are inconsistent not only with the objectives of the studies, but also with efforts to improving the lot of the vulnerable groups. For instance, whereas evidence shows that there has been a drastic decline in GER from over 95 per cent to just about 76 per cent (Republic of Kenya, 1998), Mitha et al. (1995) recommend that cost-sharing needs to be instituted for both the GoK and households as a way of increasing enrolment rates while reducing drop-out rates. Though not the only cause, implementation of cost-sharing has led to negative access and participation indices in education due to the increased burden parents have had to shoulder (Abagi and Olweya, 1999). Ambiguity on the beneficiaries of safety-nets: One of the greatest gaps in our understanding of the operations of cost-sharing in Kenya relates to who has benefited, and to what degree, from the programme. This is one of the areas that has not been addressed at all in most of the literature. Further, the studies have not attempted to provide alternatives to cost-sharing in education. 4.2 Health Ø Safety nets: The existing literature has not sufficiently focussed on the

effectiveness of waivers and exemptions in ensuring access to health care by vulnerable groups. The few studies on the subject are not detailed enough and are based on MoH supervision and monitoring reports that only examine public health facility records and exit surveys of patients on a piecemeal basis. In spite Owino and Were’s (1998) attempts to achieve this, their study was limited in scope and the sample size was too small to be representative or provide divergent attributes. Also, the time period for the study was too short to allow for the derivation of

37

more succinct conclusions. Against this background, the full effects of the safety nets incorporated as part of cost-sharing policy are yet to be ascertained. There is, therefore, need to carry out a more comprehensive study, covering a relatively longer period and a wider range of services. This should be complemented by a carefully controlled time series analysis of utilisation data to determine the causes and effects of the observed changes in the utilisation of both the public and non-public health sector. This would, in part, require a multiple year time series analyses of the utilisation data to determine the price elasticity of demand for various services and exclude the effects of secular and seasonal trends. The impacts of the emerging uncoordinated fee structure on referral system and access; and pricing policy and ideal unit cost of illnesses are yet to be exploited.

Ø Extended studies to households and non-public sector: Most of the existing

studies are based on rapid assessment. Being facility based and conducted immediately after introduction of the policy; such studies do not provide information on such important factors that influence health-seeking decisions such as income, household structure, facility specific variables and other competing needs for scarce household resources. Neither do they provide adequate information on the non-users of public health facilities. It is, accordingly, not clear yet, what happens to individuals who cease to consume public health services—whether or not they shift to private facilities, mission facilities, traditional practitioners or go without care. In cases of facility-based surveys, they do not specify whether the observed drops in utilisation are for minor problems or for the more life-threatening cases, while at the household level we are yet to establish the extent to which families are being impoverished by selling assets and/or borrowing to obtain health care. Thus, the effects of cost-sharing on the lives of individuals and livelihoods of households have not been discerned. Further, no study exists on household health expenditure patterns by income and its significance on health.

Ø Cost-sharing in a decentralised framework: A few pertinent issues about cost-sharing following

decentralisation remain unclear. These include (1) enforcing policy guidelines to the lower-level roles and responsibilities, (2) integrating programme and the Ministry of Health’s planning and budgetary processes and structures, (3) efficiency in collection and use of the fund that raises audit queries, e.g., effectiveness of computerised cash registers, use of workload data to set performance targets by the facilities and board allowances, movement of funds from the exchequer to the facilities, and effects of late disbursements of funds to the facilities and the significance of FIF as a complement to direct government funding, (4) donor contributions to the programme and interventions at the lower levels, and (5) how the people on the ground can be empowered to participate more effectively on the programme.

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Ø National Hospital Insurance Fund: In spite the increasing contributions of the poorer groups to NHIF, it is still not clear whether the contributions match the respective withdrawals from the fund (benefits). In addition, though consideration has been given to both widening treatment coverage to outpatient care and extending membership to non-wage earning groups, no analysis has been done so far on how the NHIF functions. To this end, a few pertinent questions remain unanswered. These are: Do the poor contribute more relative to both the contributions of the rich and in relation to their withdrawals from the fund? What is the burden share of employees and employers? Should the Fund be converted into a health insurance pool mainly financed by a pay-as you go system?

Ø Exploiting the potential of feasible alternative financing mechanisms: Various feasible alternative

financing mechanisms exist in health sector whose potentiality has not been exploited. These include private insurance, Bamako Initiative, employer-sponsored medical schemes, community-based prepaid insurance schemes, household out-of-pocket; and paying-in-kind mechanisms.

Ø Assessing progress towards the attainment of alternative objectives of cost

sharing: There are other potential benefits of the cost-sharing programme to the public health system that are yet to be established. These include improving efficiency in the functioning of the referral system, attaining the equity objective, and diverting demand to providers and freeing up funds for primary health care in areas such as immunisation, malaria control and provision of safe drinking water. These benefits need to be explored further.

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CHAPTER 5

5.0 THE WAY FORWARD AND CONCLUSION

The core concern of this study was to document the impact of cost sharing on the poor and vulnerable groups’ access to education and health services. Costs in both areas are the single most determinant factors of access. This section focuses on the kind of policies needed to redress the adverse impacts of cost-sharing on affordability, quality and management of education and health at both micro (school/facility) and the macro levels. 5.1 Education ü There is need to review and re-evaluate the philosophy of cost sharing in education. The validity

and efficacy of this policy is at the moment questionable in the education sub-sector. More efforts need to be directed towards enhancing efficient and effective use of resources in education.

ü There is need to come up with actual unit costs of primary, secondary and higher education and

training. This will assis t in designing more appropriate policies on cost and financing of education and training.

ü There is need to make education more affordable and accessible by reviewing the curricula, doing

away with unnecessary direct and indirect costs, supervising and monitoring the implementation of MoE&HRD’s directives on cost and financing of education, and reviewing policies and legislation that curtail participation in education. By targeting resources toward sub-sectors and variables that would have greater impact, e.g., allocating more resources to textbooks, the cost of education can be reduced in order to enhance the participation of the poor. A study of the implications of the Koech Report on education costs in Kenya (Abagi et al., 2000), notes that the recommendations could have far reaching effects in cost reductions, savings and expansion of capacity of existing educational institutions. Overall, recommendations of the report have the potential to realise savings of up to 21 per cent (at 2000 prices) on the average cost of education in the next four years.

ü The current education system needs major transformations. The Koech Report should be studied

carefully, particularly those areas that would assist in cost-recovery and making education affordable, with a view to implementation. This should include changing legal frameworks, revising the curricula and making education programmes flexible.

ü Any policy dealing with cost and financing of education should take into account the existing

distribution of educational opportunities and the effect of adding further costs to parents. The economic base of different communities and parents will have to be taken into account. A systematic multi-sectoral study at macro, meso and micro levels should inform such a policy.

ü Rationalisation of public expenditure in education vis -à-vis the outputs of such investments are

critical. With the transformation of education system, the government and other partners in the development of education, including parents, communities, the private sector, and NGOs should invest more resources in teaching and learning materials and in inspectorate and supervision of education programmes.

ü Programmes that make education more costly to the public and households should be done away

with. This would involve doing away with unnecessary levies, abolishing school milk programme and re-evaluating school feeding programme.

ü The prospects of a waivers and exemptions system as operative in the health sector should be

examined and, if feasible, implemented in education. This is crucial given the diminished prospects of further government outlays for the education sector.

ü Education should be put at the core of poverty eradication and development in general. The intra -

and inter-ministerial approach, including budgeting, should boost investment in and efficiency and effectiveness of education. For example, feeding programmes costs should be shared between the

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Office of the President and the Ministry of Agriculture. Other ministries such as that of Health, Labour, Local Government, Trade, etc., should work together with the MoE&HRD in improving education. All ministries should recognise education as an important vehicle for poverty reduction that must be supported by all.

ü If followed, perhaps, the recommendation by Republic of Kenya (1999: 259) that

“the ministry strengthens the monitoring and supervision of the management of funds in the schools through measures such as annual audits and impromptu audit inspection exercises, to ensure efficiency and cost effectiveness in the use of resources” could go a long way in moderating the excesses of schools to charge fees at will.

ü Without good governance and efficient management of schools in general, and

financial management in particular, investment in education from any source would not bear the necessary fruits. Communities and parents will have to be fully involved in education policies touching on cost and financing. They will have to also be actively involved in managing their schools, including hiring and disciplining teachers and deciding or, at least, approving fees charged by the respective schools.

5.2 Health ü Based on the operations of waivers and exemptions, it is necessary to encourage partial waivers

and offer credit facilities, create awareness of the system to potential users, especially those in rural areas through public barazas, make eligibility criteria transparent to ensure genuine cases benefit, properly manage cost-sharing funds to improve the quality of services and subsidise the poor, and properly identify the poor.

ü Communities should be sensitised through leaflets and barazas on the benefits they may expect

and roles expected of them in the cost-sharing scheme so as to ensure that they accept and sustain the programme.

ü The need for a clear pricing policy by HCFD to provide guidelines and improve the planning and

co-ordination of fee adjustments countrywide is inevitable. Also, a clear definition of the roles of different tiers in the fee adjustment is necessary. Meanwhile, the present system of cost-sharing could be maintained, but a differential pricing system based on adopted income, i.e., a sliding scale of fees with low charges or even none for the very poor needs to be established. Future introduction of new fees, or any upward revisions, should be preceded by investments to raise quality of services, and a well worked out system of safety nets for the poor.

ü Strict accountability and transparency in the use of cost-sharing funds is vital to eradicate misuse

and shifting/diversion to other uses. ü In order to improve quality of services in public health facilities, the amount generated through

user fees need to be increased by broadening the base for resource mobilisation. This will entail more involvement of other stakeholders—donors and the community including those not within the non-monetised economy, e.g., nomads who can contribute in kind. However, user charges should continue to be treated as an additional source and not a substitute for government allocations to the health sector.

ü There is an urgent need to strengthen the existing financing mechanisms and, in addition, mobilise

additional financial resources to bridge the existing financial gap. In the longer term, emphasis should not only be placed on revenues generated by the cost-sharing programme but, rather, approaches for overcoming weaknesses in the implementation of the programme should be emphasised. Specific issues that need to be resolved are: (i) low efficiency in collecting the revenue; (ii) balancing the revenue generation objective against accessibility to services by designing appropriate safety-nets for the vulnerable; (iii) matching the revenues collected with the

41

expenditures in a way that ensures availability and improvement in quality of services. In addition, there is need to use the additional revenues to improve the quality of health care by buying more drugs and other medical supplies, maintaining medical equipment and buildings. laboratory reagents.

ü A more extensive survey is required to assess welfare impacts, particularly among the vulnerable

in both public and non-public sectors. Such a study should be more rigorous in methodology and should last for an extended period.

General Conclusion With the recent adverse macroeconomic performance, it would be futile to eliminate cost sharing in toto, as there are already Kenyans willing and able to pay. Evidently, a lot of effort has been put in place to develop the user fee systems, especially in health – albeit still marred by ineffectiveness and inefficiencies. If the situation were to be reversed instantly, it would be impossible to introduce such systems in the future. Worse, this would heighten increased dependency on the government for the entire provision of health and education services - a situation that is not feasible and sustainable given the present socio-economic constraints. What is required urgently are effective and efficient targeting mechanisms and strengthening the operation of the safety nets, to ensure that they catch the "right fish". Considering that it is beyond the scope of the government to fully support education single-handedly, it could negotiate with the donors and other development partners for waivers and/or total exemption of the poor. This could be done in a phased manner, starting with pre-school and lower primary in the first year. Phase two could be implemented in the second year to cover the upper primary level. Alternatively, the school levies could be graduated based on household income levels, with the higher levels meeting a relatively larger part of the education costs, while the absolute poor receiving total exemptions. As a requisite, such an arrangement would require: effective data bank of school-going children at the community level, clear fee structures, and an established community-based bursary scheme. Undoubtedly, these issues could form the basis of negotiations between the government and the donors and other development partners in the envisaged PRSP. In the case of health, the situation is relatively better as there are established structures for cost sharing. This has made remarkable financial contributions and kept many hospitals running at times that the government runs out of money. This notwithstanding, cost sharing has denied a large part of the population access to modern health care. Indeed, the system of waivers and exemptions remains ineffective and inefficient and, needs to be strengthened to encompass the essential health package proposed in the Strategic Plan. This should comprise: Reproductive Health, IMCI, EPI, STI/HIV&AIDS and the control of environmental related diseases, depending on the priorities of each region, in the next six years. The package should be availed to the all Kenyans, particularly to the rural households and the poor in the urban areas. Additionally, there is need for: a clear pricing policy for public health services, a sound data base for community and households’ ability to pay for the respective services, increased transparency and accountability in the use of the funds generated, among others.

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Medicine 29 (1): 35-42 NEWSPAPERS Daily Nation ,. "Blackboard Series", 15th May, 2000 p.2. Daily Nation ,. "Blackboard Series", 22nd June, 2000 p.6 Daily Nation ,. "Blackboard Series", 19th June, 2000 p.17. East African Standard , 24th June 2000 p.1.

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Appendix 1: TERMS OF REFERENCE Background Cost sharing in the education and health sectors was introduced in the late 1980.s as part of Kenya's IMF/WB sponsored structural adjustment programmes. In 1988 the government, through Sessional Paper no.6 withdrew financial support for teaching and learning materials in schools: parents were to meet the cost of maintaining and building classrooms, teaching materials etc. Parental contributions to tile total cost of primary education is estimated at 60% of costs, with the government picking up the balance. In the health sector, user fees were introduced in phases from 1989. Currently user fees represent about 7% of the non-staff recurrent budget of the Ministry (3% of total budget). This is expected to rise to over 30% of non-recurrent costs by year 2000 (12% of budget). The introduction of health and education 'cost sharing' has coincided with a dramatic decline in health and education indicators. Since 1989 primary school enrolment rates have been falling and infant and child mortality rates increasing. Despite the operation of an exemption and waiver system in the health and educational sectors this is unlikely to be coincidental. In the 1994 and 1996 PPAS, 'cost sharing' was perceived by poor people as a major contributor to their declining access to health and education services. Given that over 50% of rura l Kenyans are categorised as poor in the latest (1997) WMS, the ability of the poor to access basic health and educational services under a cost sharing regime must be seriously restricted. Yet we have surprisingly little data on t/7e way 'cost sharing' is implemented at the field level and how it is an obstacle to access to Kenya's poor. Objective To understand and detail how cost sharing impacts on poor peoples ability to access basic health and education services in Kenya based on a review of existing literature (in Kenya mainly but including reference to key studies undertaken elsewhere). Issues The consultant(s) will explore the following issues:

Background to cost sharing:. justification and desired impacts

* Operation): how are fees set, extent of fee retention and use, transparency, management and accountability of monies raised, user consultations, perceptions of users (particularly the poor and women), effectiveness of safety nets such as waivers and exemptions, and extent of informal charges

* Importance of cost sharing: revenue implications, total sector budgets, facility income, additional or substitute income, net of administrative cost,

* Impact: poverty impact-affordability as proportion of household income, importance of cost sharing relative to other barriers to access, utilisation, affect on different groups (old and young, rural versus urban, men and women, income and wealth)

* Efficiency: reducing waste, improving input mix, improved service provider morale * Effectiveness: improved quality of service, impact on cost effectiveness, impact on

coverage * Alternatives: other financing options, other exemption system options for poor and

vulnerable A key expectation of the study will be the identification of major information gaps and the development of a 'research' strategy to plug these gaps in a cost effective and methodologically robust manner.

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Tasks The consultants will prepare a bibliography of important source material, carry out an analytical review of this material based on an appreciation of the key issues set out above, identify key research/ information gaps and how they can be filled, relate their findings to key policy areas in the health and education sectors. While the study will seek to be comprehensive, this should not be at the expense of a clear analysis of the issues supported by documented evidence (wherever available). Informal consultations with key stakeholders in GoK, especially Ministries of Education and Health, donors and non-governmental organisations will be necessary in order to track available grey literature/ reports on the subject and elicit views on the major issues. Use of the lnternet to track comparable publicly available material from other countries will be expected. However, the emphasis of the research will be on Kenya and Kenyan data. A one day workshop will be organised near to the end of the consultancy for the consultants to share their findings in the form of a first draft with DFID advisers and other interested stakeholders, including government officials. On the basis of the views and comments raised at this meeting the consultants will produce a final report within two weeks of the workshop.

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Multilateral & Bilateral Agencies in Education and Areas of Coverage, as at March 1998 Name

Category Activities /Programmes Regions/Districts Covered

WORLD BANK

Multi Lateral

- ECD and Strengthening of primary and secondary education

National Programmes

JAPAN Bilateral Provision of Equipment and Teaching of Science at Secondary school levels

Muranga/Maragwa, Kajiado, Kakamega/Mumias, Butere /Lugari, Kisii (Central & South) and Makueni

DFID Bilateral -Strengthening Primary Education (SPRED); Primary School management (PRISM); In -service Training of Teachers

National Programmes

GTZ Bilateral Strengthening the teaching of practical subjects in Primary Education

Machakos/Embakasi; Busia/Bungoma/Transmara and Kilifi/Malindi

IDA Multi-lateral

Public Universities Investment Project; African Virtual Studies (Kenyatta University)

Public universities through (CHE); Support delivery of degree; programmes via satellite and broadcast education television

JICA/ JAPAN

Bilateral Support to Jomo Kenyatta University Science & Technology

Purchase of science equipment for KSTC & KIE)

Has supported the university since its inception. This support include capacity building as its major component.

NETHER-LANDS

Bilateral Provision of Textbooks as a budget support effort

Mwingi, Kajiado, Laikipia, Keiyo Marakwet, Nandi, Mt. Elgon, Bungoma, Busia, Teso, Kuria, Migori, Rachuonyo and Suba

UNICEF Multi Lateral

Non formal education Girl child education (EFA follow up) Early childhood care and development Aids prevention education in schools

Baringo, Garissa, Kwale, Mombasa Kisumu and Nairobi ___________________________ Nairobi, Kisumu Municipality, Kisumu District, Homa Bay, Migori, Busia, Kwale and Mombasa

WFP Multi Lateral

School feeding Programmes. (Primary & Pre-primary schools)

Assistance to Disadvantaged urban

children

Moyale, Marsabit, Wajir, Garissa, Mandera, Samburu, Turkana, Isiolo, Tana River, Baringo, Koibatek, Kajiado, Narok, Laikipia, Mwingi, Mbeere, Kilifi, Kwale, Lamu and West Pokot. ___________________________ Mukuru and Kariobangi slums

Note: Under the WFP, the first 9 districts are covered 100% while others are covered in pockets.