Who benefits from public education spending in Malawi? Results from the recent education reform

(41 i I MA ~10: *1 , ~ WORLD BANK DISCUSSION PAPER NO. 3 0 (~w)q BJwrlolw WbP3 So Work in progress b 199 for public discussion \Vlho Bcncfits froIm I'tub,Iic Edtication Spcniding(, in Nialawil? R(! i. Y)11 ti //lt Re )(-l, II/ ( ' /ttfioilRto R i'47 I/W '/,,, ,,i, (.,x//b,-1., ,,/  Recent World Bank Discussion Papers No. 281 The Difiusion of Information Technology: Experience of Industrial Countries and Lessonsfor Developing Countries. Nagy Hanna, Ken Guy, and Erik Arnold No. 282 Trade Laws and Institutions: Good Practices and the World Trade Organization. Bernard M. Hoekman No. 283 Meeting the Challenge of Chinese Enterprise Reform. Harry G. Broadman No. 284 Desert Locust Management: A Timefor Change. Steen R. Joffe No. 285 Sharing the Wealth: Privatization through Broad-based Ownership Strategies. Stuart W. Bell No. 286 Credit Policies and the Industrialization of Korea. Yoon Je Cho and Joon-Kyung Kim No. 287 East Asia's Environment: Principles and Prioritiesfor Action. Jeffrey S. 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All rights reserved Manufactured in the United States of America First printing December 1996 Discussion Papers present results of country analysis or research that are circulated to encourage discussion and comment within the development community. To present these results with the least possible delay, the typescript of this paper has not been prepared in accordance with the procedures appropriate to formal printed texts, and the World Bank accepts no responsibility for errors. Some sources cited in this paper may be informal documents that are not readily available. The findings, interpretations, and conclusions expressed in this paper are entirely those of the author(s) and should not be attributed in any manner to the World Bank, to its affiliated organizations, or to members of its Board of Executive Directors or the countries they represent. 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The complete backlist of publications from the World Bank is shown in the annual Index of Publications, which contains an alphabetical title list (with full ordering information) and indexes of subjects, authors, and countries and regions. The latest edition is available free of charge from the Distribution Unit, Office of the Publisher, The World Bank, 1818 H Street, N.W., Washington, D.C. 20433, U.S.A., or from Publications, The World Bank, 66, avenue d'Iena, 75116 Paris, France. lSSN: 0259-210X Florencia Castro-Leal is an economist in the World Bank's Poverty and Social Policy Department. Library of Congress Cataloging-in-Publication Data Castro-Leal, Florencia. Who benefits from public education spending in Malawi?: results from the recent education reform / Florencia Castro-Leal. p. cm. - (World Bank discussion papers ; 350) Includes bibliographical references (p. ). ISBN 0-8213-38374 1. Education, Elementary-Malawi-Finance-Statistics. 2. School enrollment-Malawi. 3. Finance, Public-Malawi-Statistics. 1. Title. 11. Series: World Bank discussion papers; 350. LB2826.6.M3C37 1996 379.1'1'096897-dc2l 96-48247 CIP  CONTENTS FOREWORD ..................... v ABSTTRACT ............................................................... vi ACKNOWLEDGMENTS .................... vii EXECUTIVE SUMMARY . . ix I. INTRODUCTION .1 HI. SCHOOL ENROLLMENT .2 Important gains in school attendance .2 Enrollment rates are low and the poorest children are least likely to be in school .3 The poorest girls are least likely to go to school and most likely to drop out .4 Enrollment rates are higher in the Northern region .5 There is considerable age/grade mismatch .6 Most primary school graduates never attend higher education .7 M. RECENT CHANGES IN ENROLLMENT: IMPORTANT INEQUITIES REMAIN IN PRIMARY EDUCATION . 9 IV. PUBLIC SPENDING ON EDUCATION .13 Public spending on education more than tripled .13 Public spending on primary education increased more than five-fold .14 Services and quality have deteriorated as enrollments have surged .16 Public spending on primary education increased, but bias against primary education persists .18 iii  V. WHO BENEFITS FROM PUBLIC EDUCATION SPENDING? ......... 21 Public spending in education has become more pro-poor ....................... 23 More primary school children are among the poor ................................ 29 Girls receive about half the public education spending received by boys .................................................... 30 Public primary education resources are smaller in the rural Center and rural South because enrollments still lag behind .............................. 30 VI. POLICY IMPLICATIONS .................................................... 34 Expanding access and reducing remaining inequities in education ...... 34 Increasing effectiveness and quality of primary education .................... 34 REFERENCES ...................................................35 APPENDIXES A: School enrollment and public education spending by quintiles, regions and gender .38 B: Methodology used to compute the distribution of education spending by socioeconomic groups .46 iv  FOREWORD The new Government of Malawi has made education, particularly primary education, its top priority. After public recurrent spending on education surged and primary school fees were abolished in 1994, Malawian households responded and primary-level enrollments jumped by more than 60 percent. Drawing upon our operational support to the Region, this study uses the Benefit Incidence Analysis to examine the distribution of public spending in education across different socioeconomic groups. The Malawi example shows that an effective way to increase the equity of public spending in education is to increase the total allocation of public resources to primary education while easing the constraints on the demand for education faced by poor households. Recent public budgetary changes favoring primary-level spending, the removal of all primary school fees and the surge in enrollments at this level had a significant impact on the distribution of public education spending in Malawi. This is a very significant development. The challenge in the near future is to maintain current enrollment levels in primary schools and simultaneously to improve the quality of education. A decline in school enrollments among the poor would mean that the Malawian education reform could run the risk that recent gains in allocating resources to them would be reversed. The Poverty and Social Policy Department hopes that policymakers, researchers, and practitioners engaged in the design of education reform programs will find this study useful and timely. Ishrat Husain Director Poverty and Social Policy Department v  ABSTRACT Malawi's education system is hampered by problems of poor access, high repetition and drop-out rates, poor infrastructure and inequality. To address this situation the new Governtment of Malawi has made education, particularly primary education, its top priority. After public recurrent spending on education surged and primary school fees were abolished in 1994, Malawian households responded and primary-level enrollments jumped by more than 60 percent. This study uses the Benefit Incidence Analysis to examine the distribution of public spending in education across different socioeconomic groups before and after these changes. Recent public budgetary changes favoring primary-level spending, the removal of all primary school fees and the surge in enrollments at this level had a significant impact on the distribution of public education spending in Malawi. In 1994-5, the poorest one-fifth of the population received 16 percent of all public education spending compared to only 10 percent in 1990-1, while the share going to the richest one-fifth of the population declined from 38 to 25 percent between the same years. The Malawi example shows that an effective way to increase the equity of public spending in education is to increase the total allocation of public resources to primary education while easing the constraints on the demand for education faced by poor households. The challenge in the near future is to maintain current enrollment levels in primary schools and simultaneously to improve the quality of education. A decline in school enrollments among the poor would mean that the Malawian education reform could run the risk that recent gains in allocating resources to them would be reversed. vi  ACKNOWLEDGMENTS This study was a background paper to the report: Malawi Human Resources and Poverty - Profile and Priorities for Action; prepared at the request of the Government of Malawi as the World Bank's input for their Poverty Alleviation Program. The author expresses her gratitude to the Government of Malawi for its support and cooperation in providing information and data reviewed in this study. The author gratefully acknowledges the support received from Helena Ribe in producing this paper. David Bruns provided generous and timely information on macroeconomic indicators, public education spending and enrollments in Malawi. The author also wishes to thank Trina Haque, Ingeborg Kleppe, Peter Ngomba, Carolyn Winter and Mulugeta Wodajo for very helpful comments on an earlier draft. Meera Venkataraman provided excellent computational analysis of household survey data. vii   EXECUTIVE SUMMARY Malawi's education system is hampered by problems of poor access, high repetition and drop-out rates, poor infrastructure and inequality. To redress this situation the new Government of Malawi (GOM) made education, particularly primary education, its top priority. In 1994, public recurrent spending on education more than tripled in real terms compared with its level in 1990; it went from 268 million Malawi Kwacha (MK) to MK900 million, expressed in constant 1995 MK. Primary-level spending more than five-fold in real terms during the same pefiod, and its share has increased from less than half to almost three- quarters of total public education spending. This has been a very positive and needed development. As a result of the recent education reform, the share of public education resources received by the poor increased substantially between 1990/1 and 1994/5 (see Table A). In 1990/1, the poorest quintile received only 10 percent of all public education spending, while the share going to the richest quintile was 38 percent. In 1994/5, there was a substantial reduction in the inequality of public expenditures for education; the share received by the poorest quiintile increased to 16 percent and the share going to the richest quintile decreased to 25 percent. Table A Incidence of public education spending on the poorest and richest quintiles, 1990/1 and 1994/5, percentae share Education spending benefiting: Educational Year the poorest 20% of the the richest 20% of th Level population (