CASE STUDIES OF SUCCESSFUL REFORMS TO ADDRESS THE CHALLENGES OF FINANCING EDUCATION SYSTEMS EFFECTIVELY JUNE 2023 Ensuring the Adequacy of Education Finance through Domestic Resource Mobilization The Case of Sierra Leone 1. What was the problem? Historically, education expenditure in Sierra Leone has been insufficient to provide quality education to all school-age children. Although real government expenditure on education increased on average by 11 percent per year between 2008 and 2014, this increase was barely adequate to keep up with rapidly expanding enrollment figures, with the total number of students enrolled in primary and secondary education rising from 709,875 to 1,809,563 between 2001 and 2015 (UNESCO Institute for Statistics (UIS), 2023a; UIS, 2023b). In 2012, per-student expenditure on primary education was 5.7 percent of gross domestic product (GDP) per capita, compared to an average of 11.1 percent in sub-Saharan Africa (UIS, 2023c). The lack of education finance stemmed from a low level of prioritization of education within public spending. Public spending on education as a share of the government budget was 10.5 percent in 2017 (Figure 1). With the overall level of public expenditure low at only 17–23 percent of GDP, this left the level of expenditure on education extremely low, at an average 2.5 percent of GDP—well below the average of 3.4 percent in sub-Saharan Africa during the same period and below the average of 3.1 percent for low-income countries (UIS, 2023d). FIGURE 1 Public spending on education in Sierra Leone and sources of changes 160.00 30.0% 140.00 25.0% 120.00 100.00 20.0% School in Sierra Leone. 80.00 15.0% Photo by Annie Spratt on Unsplash 60.00 10.0% 40.00 20.00 5.0% – 0.0% 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Government expenditure on education, constant US$, million (2020 prices) Government expenditure on education, total (% of GDP) General government total expenditure (as % of GDP) Government expenditure on education, total (% of government expenditure) Source: World Bank (2023); Ministry of Finance (MoF) (2021a); MoF (2021b); MoF (2022); International Monetary Fund (IMF) (2023a). CASE STUDIES OF SUCCESSFUL REFORMS TO ADDRESS THE CHALLENGES OF FINANCING EDUCATION SYSTEMS EFFECTIVELY SIERRA LEONE’S EDUCATION SYSTEM The education system in Sierra Leone is divided into pre-primary education (three years, starting at age three), primary education (six years, starting at age six), junior secondary education (three years, starting at age 12), senior secondary education, and higher education. Primary and junior secondary education together comprise basic education, which is compulsory for all children. Transitioning from one level to another is typically based on performance in national level examinations. Starting at the secondary level, students can follow either a general academic program or opt for one of the technical and vocational education and training programs. There are three categories of schools: (a) government schools that are funded and managed by the government; (b) government-assisted schools that receive financial assistance from the government but are owned by non-government organizations such as missions or a community; and (c) private schools that are privately owned, funded, and managed without financial assistance from the government. Source: World Bank (2021). With education’s share of GDP static (Figure 1), spending grew purely as a side-effect of economic growth and 2. What has been done to tackle proved inadequate to meet the growing needs of Sierra the problem? Leone’s rapidly expanding education system. In an ongoing resource-constrained environment, With low levels of funding, it is unsurprising that learning amid growing public concern about the underfunding outcomes were poor. Children lacked basic foundational of education, Sierra Leone secured rapid increases in numeracy and literacy skills. As of 2017, only 6 percent education finance by prioritizing education within public achieved minimum levels of proficiency in early-grade reading spending. As the country recovered from the Ebola crisis skills, compared with an average of 17 percent in sub-Saharan (2014–2016), schools reopened after a prolonged nine- Africa, 15 percent in low-income countries, and much higher month closure and school enrollment increased fractionally proportions in other regional countries (Figure 2). These poor in 2017.1 In the March 2018 general elections, the Sierra learning outcomes are explained in part by an insufficient Leone People’s Party—the opposition party led by Julius number of teachers and a shortage of teaching and learning Maada Bio—came to power on a platform of investing for materials, resulting directly from the lack of education funding free, quality education. The new administration placed (World Bank, 2021). The West Africa Ebola crisis in 2014–16 education at the heart of the National Development Plan posed additional challenges as it led to the closure of schools 2019–2023: “A New Direction for Improving People’s Lives for nine months, thus entailing one lost year of learning through Education, Inclusive Growth, and Building a Resilient (Powers and Azzi-Huck, 2016). Economy.” In August, the government launched its flagship program on Free Quality School Education (FSQE), which FIGURE 2 Learning outcomes in Sierra Leone and committed the government to abolishing school fees and regional peers providing equivalent financing to schools, with additional 80 support to improve quality and initiatives to enhance teacher deployment, training, and monitoring. The government also Proportion of students in Grade 2 or 3 70 committed to providing free textbooks for core subjects to achieving at least a minimum 60 further reduce the burden of costs on parents.2 proficiency level (%) 50 40 30 20 1 Primary and secondary enrolment increased four percent from 1.981 million in 2016 to 2.059 in 2017 (MBSSE, 2022b). 10 2 The FQSE represented a second attempt to abolish school fees in Sierra 0 Leone. A previous attempt in 2010 had been unsuccessful as a result Mathematics Reading of inadequate financing. The government abolished some formal tuition Sierra Leone (2017) Benin (2014) Sub-Saharan Africa (2017) fees in 2010 but schools continued to charge other fees—including Burkina Faso (2014) Ghana (2017) Low Income Countries (2017) books, school management fees, and others—which were larger than Senegal (2014) the abolished fees, thus negating the benefits for households. The FQSE prohibited schools from charging such fees and provided compensatory Source: UIS (2022a); UIS (2022b). financing to schools. ENSURING THE ADEQUACY OF EDUCATION FINANCE THROUGH DOMESTIC RESOURCE MOBILIZATION: THE CASE OF SIERRA LEONE In addition to implementing free education, the government, 2019, funding appears to have been diverted from Defence, with the support from donors, implemented a wide range Social Protection, and Public Order and Safety in particular, of investments to boost education access and quality, as well as from General Public Services (which includes including: expanding school feeding programs; providing debt service).3 school buses and assistive devices for children with special Development partners have also played an important role needs; investing in education infrastructure through the in supporting the government’s commitment to education, renovation and construction of additional classrooms contributing 45 percent of primary and secondary education and schools, the procurement of school furniture, the expenditure in 2021 (World Bank, 2021). construction of science laboratories, the provision of hostels for girls, and investments in internet connectivity; delivering accelerated learning at non-formal accelerated learning centers; and establishing additional learning centers for literacy programs. 3. What has been the outcome on the adequacy of spending for education? The government also carried out wider reforms, including: improving teacher licensure; redeploying qualified teachers The result of the government’s prioritization of education to remote areas; updating and improving policy frameworks was a rapid increase in real education spending. Real for education; updating curricula; and reversing a ban on education spending increased by more than 50 percent in four young mothers re-enrolling in school. years, from US$93 million in 2017 to US$141 million budgeted Adequately financing the FQSE and these investments in in 2021, and per capita spending rose from US$12.5 in 2017 quality required a rapid increase in education spending. to US$17.4 in 2021 (Figure 3). The average annual growth of To do so, the government first expanded the share of overall real public spending in education in Sierra Leone was 7 percent public expenditure as a share of GDP, from 23.4 percent in between 2018 and 2023, compared to a global average of 4 2017 to 28.3 percent in 2021. This expansion was driven percent between 1999 and 2015 (Al-Samarrai et al., 2019) (the by expenditures relating to the COVID-19 pandemic and decomposition analysis confirms that the increased level of financed in part by rapid increases in the national public debt public expenditure and the greater share of public expenditure (IMF, 2023b). Second, the government quickly increased the share of public expenditure earmarked for education (World 3 When classified following the international standard Classification for Bank, 2021), from an average of 11.3 percent in 2016–17 the Functions of Government (COFOG), according to World Bank (2023), to 12.2 percent in 2019 and 12.8 percent in 2022 (World the General Public Services sector fell from a 63.4% share of the budget Bank, 2023). In order to achieve such a rapid increase, the in 2017 to 60.9% in 2019, Defence from 4.9% to 3.2%, Social Protection government had to divert funding from other sectors—to from 5.7% to 3.9%, Economic Affairs from 4.7% to 4.5%, and Public Order and Safety from 1.9% to 1.1%. In addition to debt servicing, General Public “pinch money from every other ministry,” as President Bio Services includes general services, executive and legislative bodies, described it (The Economist, 2022). Between 2017 and financial and fiscal affairs, external affairs, and overseas aid. FIGURE 3 Total education spending and per capita education spending $160 $20 $140 $120 $15 $100 US$, million US$ $80 $10 $60 $40 $5 $20 $– $0 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Education spending (constant 2020 US$, million) Education spending per capita (constant 2020, US$) Source: World Bank (2023); MoF (2021a); MoF (2021b); MoF (2022); IMF (2023a). CASE STUDIES OF SUCCESSFUL REFORMS TO ADDRESS THE CHALLENGES OF FINANCING EDUCATION SYSTEMS EFFECTIVELY FIGURE 4 School enrollment and number of teachers in basic education 3,500,000 80,000 67,291 3,131,440 3,000,000 63,351 70,000 2,695,590 60,000 2,500,000 50,764 61,957 49,512 2,654,306 59,296 49,250 50,000 2,000,000 1,981,273 2,063,961 1,982,475 1,839,842 40,000 1,500,000 30,000 1,000,000 20,000 500,000 10,000 – – 2015 2016 2017 2018 2019 2020 2021 Pupils (left axis) Teachers (right axis) Source: MEST (2017), MEST (2018), MBSSE (2022b), AGSL (2020), AGSL (2021). for education were the primary contributors to this increase, in enrollment. In fact, after a rapid increase of almost 25 compared to GDP growth; see Appendix 1). percent between 2017 and 2018, the number of teachers fell by 8 percent between 2018 and 2021 (Figure 4) due to This additional funding has enabled a rapid expansion a policy intervention that resulted in the removal of “ghost” of the school system. Thanks to the increased funding, teachers from the payroll (MBSSE, 2022). The result is that between 2018 and 2021, through the FQSE reforms, the the national pupil-teacher ratio at primary level rose from government was able to lower costs for households by 27 students per teacher in 2017 to 45 in 2021. However, abolishing fees, which led to higher demand for schooling. the number of qualified teachers in schools increased by At the same time, it strengthened supply by hiring additional 11 percent between 2018 and 2021, suggesting that the teachers and expanding the number of schools. The number government prioritized improving the quality of the teacher of schools increased from 10,747 in 2028 to 12,168 in 2021 workforce over sheer numbers (MBSSE, 2022). (13 percent); the number of approved schools receiving government funding rose from 4,872 to 8,676 (78 percent); and the number of schools receiving financial and material support from the government grew from 4,387 to 6,829. FIGURE 5 Basic education spending per pupil During the 2018–21 period, enrollment numbers grew by 58 40 percent, from 2 million to 3.1 million pupils (Figure 4). Higher 35.73 35.57 public education expenditure has also been accompanied by 35 31.19 improvements in student retention: the primary completion 27.87 30 rate has improved from 78 percent in 2018 to 95 percent 25.90 in 2021 (Ministry of Basic and Senior Secondary Education 25 23.51 (MBSSE), 2022b). 20 However, this expansion has not yet consistently been accompanied by the hoped-for increases in per-student 15 inputs. Although total per capita education spending has 10 increased (Figure 3), surging enrollment means that, despite greater funding, spending on basic education per pupil has 5 continued to decline (Figure 5). 0 2015 2016 2017 2018 2019 2020 The provision of teachers—which typically accounts for the majority of basic education spending in low- Basic education spending per pupil (constant 2020 US$) income countries—provides an illustrative example. The Source: World Bank (2023); MoF (2021a); MoF (2021b); MoF (2022); AGSL (2020); number of teachers has failed to keep pace with growth AGSL (2021). ENSURING THE ADEQUACY OF EDUCATION FINANCE THROUGH DOMESTIC RESOURCE MOBILIZATION: THE CASE OF SIERRA LEONE TABLE 1 Total cost of implementing the plan and financing gap 2022 2023 2024 2025 2026 Total ESP projected costs (Le, millions) 1,551,846 2,198,303 2,144,689 2,310,624 2,450,381 10,655,843 Projected resources for education (Le, millions) 1,402,203 1,497,232 1,605,562 1,724,194 1,838,424 8,067,615 TOTAL PROJECTED DONOR FINANCING (LE, MILLIONS) Total expected available resources (Le, millions) 1,402,203 1,497,232 1,605,562 1,724,194 1,838,424 8,067,615 Financing gap (Le, millions) 149,643 701,071 539,127 586,430 611,957 2,588,228 Financing gap (US$, millions) 13 62 47 51 54 227 Financing gap (percent) 11 47 34 34 33 32 Source: MBSSE (2022a). Despite the large increase in education spending, it rapid economic growth or a major shift in the tax base, the remains inadequate to fully finance the government’s education share of spending needs to rise. In this connection, goal of universalizing basic education. The government’s the case of Sierra Leone is striking since the increase arose 2022–2026 Education Sector Plan (ESP), “Transforming in response to a shift in government priorities, reallocating Learning for All,” lays out its medium-term plan to achieve government resources toward education and away from universal basic education and raise the quality of teaching other sectors. Other countries which have experienced and learning; nearly one-third still remains unfunded (Table 1). large increases in terms of education expenditures appear to have been able to do so thanks to economic growth (Senegal, for example). 5. What are the lessons learned for Until universal basic education is achieved, rapid increases in spending may not directly lead to increases in quality. other countries? Increased spending on education has contributed to a surge in enrollment and supported students remaining longer in school, The case of Sierra Leone shows how large increases in but there is still a financing gap and per-student expenditure has spending on education are possible even in a resource- declined. Sustained improvements in education expenditure constrained context. The country’s experience suggests the are likely to be required to ensure that improvements in per- following lessons for other countries: student spending and quality can be achieved. Rapid increases in education’s share of public spending require strong political will. The government that came to power in 2018 saw education and human capital development as central to national development and had a clear political Acknowledgments mandate to invest in education, having made such investment This study was authored by Clara Picanyol with Ravinder a pillar of its campaign. As soon as it came to office, the Casley Gera, with financial support from the World Bank government moved quickly to implement the policies it had Education Finance and Reform global team. The authors been campaigning for, harnessing the momentum created by would like to thank the World Bank team in Sierra Leone, its victory. The donor community also played an important including Mari Shojo and Afra Rahman Chowdhury, for their role in supporting increased spending on education, with a guidance and inputs; Cyprian Kamary, Ministry of Finance, number of programs aligned with government priorities. Sierra Leone, and Manos Antoninis, UNESCO, for valuable Rapid increases in education spending may require technical inputs; and Samer Al-Samarrai and Pedro Cerdan- sacrifices in the funding of other sectors. Unless there is Infantes of the World Bank for leadership and oversight. 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Available at: https://databank.worldbank. OECD PPP Programme. Download Service. Available at: https:// org/source/education-statistics-%5e-all-indicators#. Accessed data.worldbank.org/indicator/NY.GDP.PCAP.PP.KD. Accessed February 14, 2023. February 15, 2023. APPENDIX. public consumption dropped, as did industry and exports. Since then, the economy has recovered due chiefly to an Sources of increase in public spending expansion of the agriculture sector and normalization of the on education in Sierra Leone service sector and industry. Government spending as a percentage of GDP has oscillated In order to understand the sources of the increase in public in the last two decades and does not show any significant, spending in education, we decompose it into its main fiscal sustained increase that can explain the increase in education components using a simple formula to disaggregate changes spending in absolute terms. However, education spending as in public education spending into three component parts: a percentage of government spending has increased very T ≡ YGE (1) where T is total public spending on education, significantly since 2018 and, accordingly, this is the likely Y is GDP, G is total government spending as a percentage source of the increase in absolute terms. of GDP, and E is total public spending on education as a percentage of total government spending (Al-Sammarai et al., To more precisely estimate the sources of increased public 2019). Sierra Leone has experienced economic growth since spending, we further calculate the contribution of each 2002, with the exception of a sharp GDP drop in 2014–15 source using the equation from Al-Samarrai et al. (2019). To (Figure A1). This contraction was due to two external shocks assess the differences in recent years vis-à-vis changes in happening at the same time: the Ebola epidemic and the previous years, we also calculate the contributions to public collapse of iron ore prices. As a consequence, private and increases in education between 2014 and 2017. FIGURE A1 Economic growth (Y) and size of government (G) GDP, PPP (constant 2017 international US$, millions) General government total expenditure (as % of GDP) 15,000 30 10,000 20 5,000 10 – 0 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 Source: World Bank (2023); IMF (2023). CASE STUDIES OF SUCCESSFUL REFORMS TO ADDRESS THE CHALLENGES OF FINANCING EDUCATION SYSTEMS EFFECTIVELY The decomposition shows that the changes in the overall FIGURE A2 Decomposition of changes in public level of government expenditure has been the main driver of spending on education increased education spending in recent years, followed by 60% the higher priority the government has given to education. On 50% the other hand, the decomposition shows how the share of education in the public budget was not positively contributing 40% % change between years indicated to increased education spending between 2014 and 2017, 30% meaning that there was a clear policy shift regarding the 20% education budget between 2017 and 2019. 10% 0% –10% –20% –30% –40% –50% Change between Change between 2017 and 2021 2014 and 2017 Contribution of share of education in total government budget to growth in education spending Contribution of total government spending growth to growth in education spending Contribution of GDP growth to growth in education spending Government expenditure on education, constant 2020 US$ million Source: Authors’ calculations based on formula from Al-Samarrai et al. (2019) and data from World Bank (2023) and IMF (2023).