Zambia Knowledge Brief 2 Education July 2022 Financing Basic Education: The Financial Implications of Zambia’s Education for All Policy Summary and sanitation, and incentives to retain teachers in remote postings. With these improvements in input Zambia's new Education for All policy is an important standards – which are required to achieve the step forward for access to education. Zambia introduced government’s stated goal of universal quality general free and compulsory general education for the second education – the total cost of general education would time in 2011, but its implementation has been increase at least seven times from K12.1 billion in incomplete. In 2021, the government introduced the 2022 to between K79.2 and K93.1 billion in 2035 “Education for All” policy which abolished all formal and under lower and upper bound scenarios, respectively. informal fees in general education (pre-primary, primary, Even accounting for the large increases in the and both lower and upper secondary levels), with fees education budget planned over the next three years, replaced by compensatory increases in grants to this would leave a shortfall in annual funding of schools. This note presents simulation results of the between K3.7 and K17.6 billion in 2035. Without fiscal implications of the Education for All policy from additional resources or efforts to reduce the costs of 2022 to 2035.1 service provision, there is a significant risk that Enrollment is set to substantially increase as a result of Education for All will put further pressure on an the Education for All policy. We model enrollment trends already stressed system and lead to declines in based on the experiences of countries in Sub-Saharan quality and education outcomes. Africa that have introduced similar policies. These However, the introduction of measures to reduce scenarios are sensitive to assumptions regarding the costs and increase further the share of the budget demand response to the Education for All policy, allocated to education are likely to make the particularly during the period 2022-2025, but present a successful implementation of Education for All range within which the growth in enrollment is expected achievable. The note presents a range of cost-saving to fall. Across pre-primary, primary, and lower and upper policies, similar to those employed by other countries secondary education, total enrollment is projected to to reduce costs during periods of rapid system increase from 4.8 million in 2022 to between 7.3 and 8.7 expansion without negatively impacting learning. million in 2035. Compared to the “business as usual” These include rationalized use of teachers’ housing, scenario without the policy, in which enrollment administrative offices, and laboratories and improved increases to 6.3 million by 2035, this represents a large utilization of secondary school teachers. enrollment impact from the Education for All policy. Implementing these policies, alongside the increases While a step forward for access to education, this in education outlined in the Medium-Term Expenditure increase in enrollment will require significant Framework (MTEF) would make the Education for All investment. For each of our enrollment scenarios, we policy more affordable. However, our most expansive present cost projections that include enhancements to enrollment scenario would only be affordable if these input policies and standards in order to provide free cost-saving policies were coupled with further quality education, including increased school grants, increases in education’s share of the government improved provision of textbooks, school infrastructure budget. Financing Basic Education: The Financial Implications of Zambia’s Education for All Policy 1 Knowledge Brief 2 1. Introduction of the Public Expenditure Review (PER) in Education, the Government of Zambia, in particular the Ministry of Since 2014, education access in Zambia has Education and the Ministry of Finance and National stagnated, along with learning. In 2020, gross Planning, requested the World Bank team to model the enrollment rates (GERs) had fallen slightly from their fiscal implications of full implementation of the 2014 level to 97 percent in primary education and to 43 Education for All policy and to identify potential percent in secondary education. These levels of measures to enable the policy to be implemented in a enrollment are relatively low, particularly for secondary, fiscally sustainable way. where the average GER in lower-middle-income Free education is an important step toward universal countries is 70 percent. The learning that children access to education, with positive implications for acquire during their time in school is also relatively low. human capital and development. However, free In 2018, Zambia participated in the Organization for education entails large fiscal implications.2 Free Economic Co-operation and Development (OECD) education policies typically have three major impacts, Programme for International Student Assessment each of which increases the cost to the government of (PISA) for Development learning assessment. It providing education. First, these policies, as expected, showed that test scores for Zambian 15-year-olds were have impacts on enrollment. These typically include a 30 percent below the lower-middle-income average. one-off “surge” as a result of unenrolled students The challenges faced by the sector are likely to have entering schooling (see box 1), combined with a longer- worsened as a result of the COVID-19 pandemic which term increase in school populations as a result of saw the school system close or partially close for 28 increased intake and reduced dropout. These gains in weeks. As a result, the pandemic halted any progress enrollment increase a country’s overall level of education on improving learning outcomes and there is some attainment, improvement of which is associated with evidence that it reduced school attendance and increased levels of employment and income (World Bank enrollment. 2018) and higher rates of economic growth (Hanushek Zambia introduced free and compulsory general and Woessman 2021). In addition, increased educational education for the second time in 2011, but its attainment is typically associated with gains in health implementation has been incomplete. The and nutrition (Vogl 2012), and reduced incidence of early reintroduction of the policy in 2011 followed its marriage and childbirth (Osili and Long 2008). However, unsuccessful introduction in 2002. Since the these gains also have implications for both development reintroduction, formal fees have officially been and recurrent public expenditure on education, abolished at the primary level and replaced by grants necessitating large-scale construction of classrooms from the central government to support school and other infrastructure (including the opening of new expenditures previously financed by fees, such as schools) and increased provision of teachers and other utility bills, furniture, and maintenance; as well as inputs. Second, free education policies may increase the direct provision of teaching and learning materials share of school enrollment which is in the public sector (such as textbooks) to schools. Owing to inadequate (as a result of the increased difference in cost between financing, however, these grants have not replaced public and private schooling), further increasing the lost revenue from fees, and so a large share of overall number of students whose education is financed schools still charge informal fees. In addition, the from public expenditure. Third, free education policies compulsory element of the policy has not yet been require the replacement of lost revenue to schools from implemented at the primary level, and the policy has, fees with grants or direct inputs from the government, until recently, not yet been implemented at the directly increasing recurrent expenditure on a per- secondary level. On October 29, 2021, the Ministry of student basis, with further implications for public Finance and National Planning announced the expenditure. “Education for All” policy with a goal to “to provide accessible, equitable, quality and inclusive education to all learners.” The policy, operationalized through a circular issued on December 8, 2021, abolished all formal and informal fees in general education (pre- primary, primary, and both lower and upper secondary levels), with fees replaced by compensatory increases in grants to schools. As part Financing Basic Education: The Financial Implications of Zambia’s Education for All Policy 2 Knowledge Brief 2 Despite these large cost implications, free education policies are often announced without adequate Impacts of Education planning, leading to negative impacts on the quality of education. Failure to plan adequately for the for All on Public expansion in enrollment can lead to overcrowding and poor learning environments, while failure to replace 2. Enrollment lost revenue to schools from fees can both exacerbate these problems in schools and lead to 2.1 What were the impacts of free education policies on public continued levying of informal fees, undermining the enrollment in other countries? access goals of the policy. In some cases, free education policies have been fully funded in some Free education policies can lead to increased enrollment schools (typically in urban areas and those close to in public schools through a number of channels: trading centers) and left unfunded in others, increased enrollment of school-age children; reduced exacerbating existing inequities in education dropout rates throughout the education cycle; and a shift systems. However, careful planning and difficult of students from private to public education. In Sub- decisions in the pre-implementation phase can place Saharan Africa, the introduction or expansion of free the implementation of free education on a fiscally education policies has typically been associated with a sustainable footing. The government’s request for rapid increase in GERs. In Ghana, following the technical support in modeling the impact of the policy introduction of free primary education, GER increased is an important step in its successful implementation. from 59 percent to 106 percent within four years; in Ethiopia, following the abolition of primary fees in 1994, This note presents simulation results of the fiscal primary GER rose from 26 to 80 percent by 2004 (World implications of the Education for All policy from 2022 Bank 2009). In systems where the starting point for GER is to 2035. Specifically, the note simulates: (i) the higher, the rate of increase may be slower, but GER may enrollment impacts of the Education for All policy; (ii) still rise above 100 percent as a result of early and the fiscal implications of the policy and resulting overage enrollment. In Kenya, primary GERs rose from 88 enrollment impacts; (iii) potential policies to reduce percent to 105 percent in two years following the the financial burden; (iv) projected needs for introduction of free primary education in 2003 (World education financing; and (v) the impact of Education Bank 2009). In Botswana, by contrast, the primary GER for All on the composition of education expenditure. increased more gradually and took ten years to reach its Evidence from countries that have enacted free peak of 115 percent (Al-Samarrai et al. 2003). education policies along with available data, However, these gains in GER may not be sustained if predominantly from the Education Management policies are not fully implemented– for example, if grants Information System (EMIS) is used. In addition, the to schools do not adequately replace lost revenue from analysis uses a simulation tool developed by the fees, leading to the continued levying of informal fees by World Bank education team 3 to estimate the fiscal schools. In Tanzania, the primary GER rose rapidly from impacts of various policy parameters with relevance 2002, when free primary education was introduced, to to the implementation of Education for All at pre- 2008 before declining significantly as a result of primary, primary, and secondary levels.4 continuing informal fees; but the GER rose rapidly again following the introduction of a revised policy that prohibited such fees in 2015 (figure 1). Gains in GER may also not be sustained if construction of new schools and classrooms is not adequate to meet increased demand. This was the case in Uganda, where a rapid surge in the primary GER after the introduction of free primary education in 1997 was followed by a decline as a result of inadequate system expansion to meet demand (Sandefur 2022; UNESCO Institute for Statistics [UIS] data). Financing Basic Education: The Financial Implications of Zambia’s Education for All Policy 3 Knowledge Brief 2 In the context of Zambia, where free education has introduction of free high school was associated with a been officially in place but not fully implemented at relaxation in examination standards, secondary GER the primary level and until recently not in place at the rose rapidly from 68 percent to 78 percent in the first secondary level, we may expect a similar effect as the three years following the new policy (Sandefur 2022; recent reforms in Tanzania. However, the fact that, Adu-Ababio and Osei 2018; UIS data). despite the persistence of informal fees, the primary GER is close to 100 percent (97 percent in 2020) may mean the pace of expansion will be more constrained, 2.2 What are the likely scenarios for at least at the primary level. public primary and secondary At the secondary level, evidence from Sub-Saharan enrollment in Zambia under Africa is more limited. Both Uganda and Tanzania saw Education for All? 5 modest gains in secondary GER following the abolition Based on these different international experiences, of fees at the secondary level in 2008 and 2015, three potential scenarios are modeled for the likely respectively (figure 1). In Kenya, total secondary impact of Education for All in Zambia on enrollment in school enrollment doubled over a six-year period pre-primary, primary and secondary schools (table 1). following the introduction of free secondary education The scenarios differ in terms of the effects of in 2008 (Brudevold-Newman 2017). The continued use Education for All on the share of children attending 6 of high-stake examinations that control access to pre-primary education; entering primary education; secondary school can undermine the effect of fee dropping out and repeating grades; re-entering after abolition on enrollment. In Ghana, where the 2017 dropout; and transitioning from primary to lower secondary, and from lower secondary to upper secondary school. Figure 1. Enrollment Trajectories Under Free Primary Education: International Evidence Tanzania Uganda Source: authors’ estimates based on UNESCO Institute for Statistics and EMIS data. Note: Dashed lines represent missing data. Financing Basic Education: The Financial Implications of Zambia’s Education for All Policy 4 Knowledge Brief 2 Scenario 1, the “business as usual” (BAU) enrollment . The policy rapidly increases the share of students . scenario, provides an estimate for comparison who attend pre-primary school, with the pre-primary purposes of enrollment trends in a scenario in which GER increasing to 40 percent by 2025 (from 11 the new Education for All policy has not been percent now) and remaining at that level. introduced and enrollment in public schools increases As before, the new policy commitments result in all in a similar way as before. Rates of intake, repetition, children of primary school starting age enrolling in . and dropout remain the same, and the system expands school (compared to now, where only 96 percent only through the growth in the school-age population. enroll). In addition, however, there is an extra ‘surge’ of Scenario 2, the lower bound Education for All enrollment by older students who had never enrolled . (see box 1), meaning that the gross intake ratio rises . enrollment scenario, is one in which the impacts of the Education for All policy are in line with the lower end of to 115 percent from 2023-2024. It then falls to 100 experience in comparator countries. percent and remains at that rate. The policy increases the share of students who There is a matching ‘surge’ in re-enrollment of . attend pre-primary school, with the pre-primary GER previously dropped-out students, with the share of increasing to 20 percent by 2025 (from 11 percent students who have been dropped-out for two or more . now) and remaining at that level. years who re-enroll in school rising temporarily from 20 percent to 50 percent from 2023-2024, before . The policy results in all children of primary school starting age enrolling in school (compared to now, returning to the previous rate. The policy also substantially reduces the appeal of . when only 96 percent enroll). However, the policy does not affect the share of this private education, with the share of new primary- . intake that enrolls in private schools. school-age children who enroll in private schools . The removal of fees leads rates of dropout to reducing to 15 percent by 2025 (from 22 percent reduce by approximately one-half by 2025, while today). repetition rates will remain the same as currently. As before, the removal of fees leads rates of dropout The policy leads to improved levels of transition to reduce, but this reduction is more substantial – . from primary to lower secondary, with the share of with dropout rates falling to zero in lower grades – and the reduction occurs immediately in 2023. There . students transitioning increasing to 85 percent by 7 2025 (compared to now when only 70 percent is no change in repetition rates. transition). As before, the policy increases rates of transition The policy is partially successful at enabling more from primary to lower secondary, but the . students to transition from lower to upper improvement is more drastic, with the transition rate secondary, with 60 percent progressing from Grade rising to 90 percent by 2025 (compared to 2021 9 to Grade 10 by 2025 (compared to now when only when only 70 percent transitioned). 44 percent progress). The policy is substantially successful at increasing the rate of improvement in the transition to upper The result of these trends is that primary GER is 95 secondary, with 70 percent progressing from Grade 9 percent in 2035, while lower and upper secondary GERs to Grade 10 by 2025 (compared to now when only 44 are 80 and 51 percent, respectively. percent progress). Scenario 3, the upper bound Education for All enrollment The result of these trends is that primary GER rises to scenario, is one in which the impacts of the Education for above 100 percent in 2023 and remains at that level, All policy are in line with the upper end of experience in and is 100 percent in 2035, while lower and upper comparable countries. The upper bound enrollment secondary GERs are 93 and 72 percent respectively in scenario represents a substantial achievement of the 2035. goals of the government’s Education for All policy in terms of access and would result in near-universal enrollment in primary and lower secondary schooling, albeit with continuing gaps in access in pre-primary and upper secondary (see Table 1). Financing Basic Education: The Financial Implications of Zambia’s Education for All Policy 5 Knowledge Brief 2 Table 1. Enrollment Scenarios: Summary Baseline/ Lower bound Upper bound Parameter BAU value 2035 target 2035 target Pre-primary gross enrollment ratio 11% 20% 40% Primary gross enrollment ratio 89% 95% 100% Lower secondary gross enrollment ratio 69% 80% 93% Upper secondary gross enrollment ratio 35% 51% 72% Pre-primary share of private enrollment 35% 20% 20% Primary Intake* 96% 100% 100% Share of intake in private sector 22% 22% 10% Re-enrollment of students 2+ years after dropout** 25% 25% 25% Promotion rate (primary, average) 93% 94% 95% Transition rate: primary to lower secondary 70% 85% 90% Transition rate: lower to upper secondary 44% 60% 70% Promotion rate (secondary, average) 88% 89% 92% Repetition rate (primary, average) 5.1% 5.1% 5.1% Repetition rate (secondary, average) 2.4% 2.4% 2.4% Dropout rates (primary, average) 4.1% 1.6% 0.6% Dropout rates (secondary, average) 12.4% 8.4% 5.9% Notes: * In upper bound primary intake is modelled to reach 115 percent in 2022-25 before returning to 100 percent. ** In upper bound re-enrollment is modelled to rise to 50 percent in 2023-24 before returning to 25 percent. Targets may reach stated levels prior to 2035. Changes in promotion and dropout are typically modelled to be achieved by 2025 in lower bound enrollment scenario and 2022 in upper bound scenario. GERs reach higher levels than stated before declining prior to 2035. Dropout rates for secondary include a lower-upper transition point in Grade 9. See online annex for full details of scenarios, including target years. In both the Education for All scenarios, enrollment Compared to the ‘business as usual’ scenario, in which is set to increase substantially compared to the enrollment increases to 6.3 million by 2035, this business as usual scenario. Across pre-primary, represents a large enrollment impact. While a positive primary, and secondary education, total enrollment step forward for access to education, this increase in is projected to increase from 4.8 million in 2022 enrollment will require significant investment. The next to between 7.3 and 8.7 million in 2035 (figure 2). section will explore the cost implications. Figure 2. Scenarios for Total Pre-Primary, Primary and Secondary Enrollment (Million Students) Source: Authors’ estimates based on the simulation model Financing Basic Education: The Financial Implications of Zambia’s Education for All Policy 6 Knowledge Brief 2 Box 1. The ‘surge’ problem In addition to the longer-term impacts on enrollment, the introduction or expansion of free education policies is typically associated with a one-off ‘surge’ of enrollments as school-age children who have not previously been enrolled enter the system. This ‘surge’ typically enters education in lower primary grades (although it may include older children) over 1-2 years and works its way through the education system over the full general education cycle. In Tanzania, for example, the gross intake ratio to the first grade of primary education increased from 100 percent in 2014 to 123 percent in 2016 following the introduction of the fee- free basic education policy in 2015, before declining to 110 percent by 2018. This may be accompanied by a concurrent ‘surge’ in re-enrollment, with students who have previously dropped out incentivized to return to school by the Education for All policy. This ‘surge’ poses additional challenges for system capacity, particularly for infrastructure. Accommodating this one-off larger cohort of learners can accelerate the need for constructing additional classrooms and other facilities and hiring additional teachers, intensifying the fiscal challenge of system expansion. Excessively rapid construction and hiring, in addition to posing a fiscal challenge, are likely to encounter challenges of quality and logistics. Moreover, rapid construction to meet this challenge can lead to classrooms and other infrastructure sitting empty and teachers being under-utilized once the surge passes through each school cycle. It may be appropriate to employ temporary measures, such as a higher than usual use of double shifts and year-round schooling (see section 4), to manage the surge without necessitating an excessively rapid pace of construction and hiring. Cost Implications of 3. Education for All These increases in enrollment, while representing a the lower and upper bound enrollment scenarios based on existing input policies and standards. Second, we present cost projections that include enhancements to large step forward in access to education, have input policies and standards in order to provide free significant cost implications. Building on these quality education. Third, we identify potential changes enrollment scenarios, this section presents projections to input policies and standards that may enable the of the annual cost of providing free education from pre- government to reduce the cost of Education for All to a primary through to upper secondary level in the period to more fiscally sustainable level and present cost 2035 and compare these costs to the education budget projections for both enrollment scenarios incorporating in order to estimate financing gaps. For each of the these savings. Education for All enrollment scenarios, we present cost projections based on three distinct sets of policies and standards for school inputs, such as infrastructure and teachers (table 2). First, we present cost projections for Table 2. Enrollment Scenarios and Input Policies and Standards Enrollment Lower bound enrollment Upper bound enrollment scenarios Input policies and Existing inputs: Full implementation of More fiscally standards Education for All: sustainable policies: Existing levels of Existing inputs + Existing inputs + Full per- student/ per- enhancements in line with implementation of school expenditure government policies and Education for All + fiscal goals to achieve quality free sustainability adjustments education Note: see Annex for complete details of input policies and standards scenarios. Financing Basic Education: The Financial Implications of Zambia’s Education for All Policy 7 Knowledge Brief 2 Figure 3. Cost Scenarios Based on Existing Input Standards (Billion K) a. General education 9 b. All levels of education 90 100 Upper bound 80 90 Lower bound 70 80 Billion Kwacha Billion Kwacha 60 70 BAU 50 60 40 50 30 40 20 30 10 20 Education 0 10 budget 2022 2025 2030 2035 0 2034 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2035 BAU Lower bound Upper bound Source: Authors’ estimates based on the simulation model 3.1 Existing input projections these assumptions, we predict the total education budget to increase steadily and reach K90.7 billion by The gains in education access enabled by the 2035. Comparing these projections of the education Education for All policy have significant budget, with the spending needs outlined in figure 3 implications for costs even before the additional shows that there would be no projected financing gap per-student expenditure entailed by the policy is under the ‘business as usual’ and lower bound taken into account. Even assuming no changes in enrollment scenarios. Even with the more expansive the current rates of per-student spending—except to upper bound enrollment scenario, only a small account for inflation—the expansion of the system financing gap emerges and reaches K 0.94 billion by would substantially increase the cost of providing 8 2035, equivalent to one percent of the total education general education. Under the lower bound budget. These initial projections suggest that without enrollment scenario, the annual cost increases five any additional inputs to schools to replace lost revenue times from K12.1 billion in 2022 to K65.1 billion in from fees or provide improvements in the quality of 2035. Under the upper bound enrollment scenario, education, the expansion in enrollment arising from the the cost rises further to K76.4 billion in 2035 (figure Education for All policy is affordable and sustainable. 3, panel a). However, this finding rests on two assumptions. First, it Financing gap. These additional costs for general assumes that the large increases in the share of the education have implications for the entire education education budget seen in the current MTEF are budget. We estimate the financing gap, the sustained over the next 10-15 years. Second, it takes no difference between the public resources available account of the government’s commitments under the and the resources required to implement the policy to replace lost revenue from fees, or to Education for All policy, by using a two-step significantly improve the quality of education and approach. First, we use projections of gross address other key challenges the sector faces. The next domestic product (GDP) growth, total public section outlines a set of projections that attempt to spending, and the share of government spending capture the additional costs associated with a more allocated for education from the government to comprehensive implementation of the policy. project education funding between 2022 and 2024 (Table 3). From 2025 onwards, we project real GDP to grow at 4.5 percent per annum and assume the level of public expenditure as a share of GDP, and the share of public expenditure allocated to education, remain close to their 2024 levels. With Financing Basic Education: The Financial Implications of Zambia’s Education for All Policy 8 Knowledge Brief 2 Table 3. Macroeconomic and Fiscal Framework for the Government Budget Projections 2021 2022 2023 2024 2025-2035 Government Expenditure (billions) total government (excl. amortization) 134 132 150 166 - total government (incl. amortization) 137 173 178 212 - Government spending as % of GDP excluding amortization 36.4 28.3 28.4 27.8 27.0 including amortization 37.2 37.1 33.6 35.5 35.0 Ministry of Education Expenditure (billions) - 14 19 24 - Education spending as % of total government spending excluding amortization - 10.4 12.9 14.7 14.7 including amortization - 8.0 11.0 11.5 11.3 Nominal GDP (billions) 367 466 529 597 - Real GDP growth (%) 3.3 3.5 3.7 4.4 4.5 . Source: Government of Zambia Medium Term Expenditure Framework and Budget Circular for 2022. 3.2 Full implementation projections: Bursaries: Even with fees abolished, achieving the additional costs related to achieving government’s desired goal of universal education is universal quality education likely to require an expansion of the existing bursary Additional per-student spending, over and above existing scheme to support all orphans and vulnerable children levels, will be required if the Education for All policy is to (OVCs). At the current time, only around 3 percent of be implemented successfully. A fundamental aspect of the primary and secondary school students receive 13 policy is to increase the amount of grant finance provided to government bursaries. As an estimated 15 percent of primary and secondary schools to replace revenue lost from school-age children are OVCs (Swartz 2019), this fees. In addition, in order to achieve the government’s suggests the current scheme is not reaching all stated goal to “provide accessible, equitable, quality and qualifying students. In the full implementation . inclusive education to all learners,” there is a need for projections, 15 percent of all primary and secondary increased investment in a number of areas, including students would receive a bursary starting in 2023. support for vulnerable students and ensuring adequate learning environments. These include policies and Pupil-stream ratios: The government’s goal is a pupil- standards established by the government – for example, stream ratio of not more than 40 pupils per stream at with regard to class sizes – as well as investments both primary and secondary levels. The current pupil- suggested by the experience of other countries, such as stream ratio of 39.4 at the primary level is within this enhanced incentives to maintain teachers in remote target, but the secondary ratio of 47.5 falls short, schools. We, therefore, simulate “full implementation” cost representing overcrowding in some schools. In order to . projections for both the lower and upper bound enrollment measure the cost of providing adequate learning scenarios, which include the following additional costs.10 environments to all students, the full implementation projections include a reduction in the secondary pupil- . School grants: The Education for All policy requires stream ratio from its current level of 47.5 pupils per increased levels of primary and secondary school grants 14 stream to 40.0 by 2030. to replace revenue previously provided in the form of fees.11 Data from the Living Conditions Survey 2015 Latrines: The current pupil-latrine ratios of 42:1 at the suggest that the average household contributed K334 per primary level and 46:1 at secondary fall short of the primary student and K948 per secondary student per government’s target of 25:1. Expanding the education year. We model expanding school grants to partially system while maintaining these poor levels of replace this expenditure and increase the average grant sanitation may pose risks to students, particularly in amount per student from the current K54 to K270 at the the context of COVID-19. The full implementation primary level and from the current K366 to K800 at the projections include an improvement in pupil-latrine 12 secondary level, from 2023. It should be noted that ratio to 25:1 in primary and secondary schools by 2030. strengthening the school grants system, including allocation, delivery, and monitoring mechanisms, is also important for the effective implementation of Education for All (see box 3). Financing Basic Education: The Financial Implications of Zambia’s Education for All Policy 9 Knowledge Brief 2 . Textbooks: The current pupil-textbook ratios of 2.9 15 students per textbook (in core subjects) at the primary between K79.2 and K93.1 billion in 2035 under the lower and upper bound scenarios, respectively level and 4.6 at the secondary level are inadequate and (figure 4, panel a). The main contributors to these may contribute to Zambia’s poor learning outcomes. In rising costs are teachers’ salaries, accounting for order to achieve the government’s goal of quality 75 percent of expenditure in primary and secondary education, we model an increase in provision of education by 2035; school grants, accounting for textbooks leading to an improvement in pupil-textbook 11 percent; and construction of teacher housing . ratios to 2.0 at both primary and secondary levels by and classrooms, accounting for 4 percent. 2030. Achieving this rate of expansion would entail the hiring of approximately 105,000 new teachers at Incentives for teachers in hard-to-reach postings: Rapid the primary and secondary levels by 2035, and expansion of the education system may exacerbate construction of 53,000 classrooms, 35,000 existing inequities in the distribution of teachers between teachers houses and more than 180,000 latrines. schools (see box 2). In order to help address these Such a rate of investment is likely to pose logistical inequities, the full implementation projections include a as well as fiscal challenges, in terms of expanding reformed and expanded scheme to reward teachers teacher training pipelines and ensuring adequate working in remote schools. In order to have a meaningful system capacity for the supervision of teachers incentive effect, we model the introduction of an incentive and works. that provides an amount equivalent to 30 percent of the salary to the ten percent of teachers who are working in Financing gap. As noted above, assuming the the most remote schools.16 As the effect of the incentive education budget meets the MTEF projections and will be to increase the share of teachers working in these increases to 14.7 percent of the government schools, we model the share of teachers working in these spending by 2024 and remains at this level until schools and receiving the incentive to increase to 20 2035, it is projected to increase to K90.7 billion by percent by 2030. 17 2035. This means that by 2035, the financing gap in the lower bound scenario would be K3.7 billion in The impacts of these additional investments on costs are 2035 and K17.6 billion in the upper bound substantial, as seen in figure 4. With these improvements enrollment scenario (figure 4, panel b). For context, in input standards—which are required to achieve the this latter financing gap would amount to one-fifth government’s stated goal of universal quality general of the entire education budget. education—the total cost of general education would increase at least 6.5 times, from K12.1 billion in 2022 to Figure 4. Cost Projections with Full Implementation of Education for All (Billion K) a. General education b. All levels of education 100 120 90 Lower bound, full 100 implementation 80 Upper bound 70 Billion Kwacha Billion Kwacha 60 80 Upper bound, full Lower bound 50 implementation 60 40 30 40 20 10 Education 20 budget 0 2022 2025 2030 2035 0 BAU Lower bound Upper bound Source: Authors’ estimates based on the simulation model Financing Basic Education: The Financial Implications of Zambia’s Education for All Policy 10 Knowledge Brief 2 Box 2. Teacher Distribution Teachers are the single most important input to learning (Bold et al. 2017), and in many countries teachers’ emoluments account for the vast majority of education spending. In Zambia, personal emoluments accounted for 97 percent of primary education expenditure, and 67 percent of secondary expenditure, in 2021, the majority of which was for teachers’ salaries (World Bank 2022). Policies and sector strategies often focus on achieving an adequate national supply of teachers, measured through the national school pupil- teacher ratio (PTR). But the poor distribution of teachers between districts and schools, particularly between remote and less remote areas, means that even in countries where the national PTR is adequate can have large shares of schools with unacceptably high PTRs (Mulkeen 2010), which can reduce the efficiency of this major driver of spending. A number of countries, including Mozambique, Lesotho, and Mauritius, have maintained relatively equitable distributions of teachers during periods of rapid system expansion. In others, however, including Zimbabwe and Kenya, the equity of the distribution of teachers has worsened in the last decade, increasing the share of schools with inadequate staffing (Bashir et al. 2018). In Zambia, there are large variations in PTRs between provinces, with primary PTRs ranging from 38 in Copperbelt to 79 in the Eastern region, and secondary PTRs varying to a similar extent (World Bank 2022). Although data on the variation within provinces between schools was not available, historical evidence suggests that as recently as 2008, 80 percent of the variation in school PTRs in Zambia was unexplained by local factors – among the rates in a group of countries with a similar level of education system development, substantially higher than in Burundi, Mozambique, or Gambia (Bashir et al. 2018). Without improvements in distribution, maintaining national PTRs of below 40:1 will not be adequate to ensure that all schools have acceptable PTRs, necessitating wasteful additional hiring. Overcoming poor distribution of teachers requires policies to both (i) ensure that newly deployed targets are properly targeted to the neediest provinces/schools and (ii) ensure that teachers posted to understaffed schools remain in those postings. At the secondary level, there is a need to ensure subject balancing since there is specialization. Deploying teachers equitably: In most countries, including Zambia, the allocation of teaching places to provinces is conducted at the national level and the allocation of newly deployed teachers to schools at the local level. Clear rules are required at both levels to ensure the targeting of new teachers to the neediest schools—not only those that have a PTR above the policy goal but among that group, prioritizing those with particularly poor staffing. In Malawi, the introduction of a computer-based tool to help districts target teachers to the most understaffed schools in 2018 enabled one-half of the teachers in that year to be allocated to schools with PTR above 100, a large improvement over previous allocations (Asim et al. 2022). In Indonesia, however, similar planned reforms were frustrated by resistance from elites (Rosser and Fahmi 2017). Clear and reliable data on the location of teachers, aligned between central and local governments and between education management and payroll systems, are an essential prerequisite for clear and transparent targeting rules that can be enforced by officials (Asim et al. 2019). Results-based financing can help to align incentives – in Tanzania, a system that financially rewarded districts for improvements in the share of schools with an acceptable PTR led to improvements in the equity of teacher distribution in 92 percent of the country’s districts (Moran et al. 2021). Maintaining teachers in remote schools: Once teachers have been deployed appropriately, there is a need to ensure they remain in previously understaffed schools. These schools are typically in remote areas with significant hardship. Countries may opt to require teachers, particularly when first qualified, to remain in hardship postings for a fixed period. However, evidence from China suggests that if not complemented with incentives, these rules-based approaches are often associated with low attendance by teachers resentful of being placed in hardship postings (Liao et al. 2019). An alternative approach is to provide some sort of hardship allowance to teachers in such postings, but these allowances are often too small or poorly targeted to have much of an effect. In Brazil, for example, a trial allowance to reward teachers serving in the outer neighborhoods of São Paulo was too small to have any incentive effect (Rosa 2019), while in Chile, the allowance is overly complex and its delivery unreliable, again undermining the incentive effect (Hinze-Pifer and Méndez 2016). Financing Basic Education: The Financial Implications of Zambia’s Education for All Policy 11 Knowledge Brief 2 Box 2. Continued In Malawi, a scheme, originally intended to reward one-third of teachers, was ultimately made available to more than 80 percent of teachers and had a value of less than one-seventh the average salary, and teachers often retained access to the allowance after they left qualifying schools, removing any incentive effect (Asim et al. 2019). In Gambia, however, an allowance with a strict but data-driven definition, with a value of between 30–40 percent of the typical salary, successfully increased the availability of qualified teachers in eligible schools (Pugatch and Schroeder 2014). Teacher housing is often used as an additional incentive to retain teachers in hardship postings, including in Benin, Cote d’Ivoire, Ghana, and Mauritania, among others. However, it is a high-cost approach, with accommodation for three teachers typically costing more than a classroom (Bashir et al. 2018); evidence from Ghana and Malawi suggests that offering housing is of limited value as an incentive for teachers to remain in remote postings, typically because it is of poor quality compared to what is available in nearby trading centers (Gad 2015; Asim et al. 2019). Zambia’s current allowance for teachers in rural schools is comparatively poorly aligned with the targeted schools: a recent analysis found only 40 percent alignment between the schools eligible for the allowance and those who receive it (Chelwa et al. 2019). The allowance’s current value, approximately 20 percent, may also be too low to exercise a meaningful incentive effect. Aligning eligibility for the allowance with a tighter range of schools, based on a simple and transparent definition of remoteness, would likely enable an increase in the value of the allowance and resulting incentive effect without a large increase in cost. However, successful implementation of an allowance requires improvements in administrative capacity to address weaknesses in teacher management systems which allow teachers to transfer to less remote postings while retaining access to the allowance (Asim et al. 2019). 3.3 More fiscally sustainable projections: policy options for fiscal sustainability Recurrent cost savings. Recurrent costs account for the majority of expenditure, with teacher salaries alone The previous set of projections showed that the accounting for two-thirds of primary expenditure in Education for All policy and the required system 2035 in the full implementation projections with the improvements will require a level of funding that is upper bound enrollment scenario. unlikely to be available over the next 13 years. Without these additional resources or efforts to reduce the 1. Improve utilization of secondary school teachers. costs of service provision, there is a significant risk that The current secondary pupil-teacher ratio is low at the Education for All policy will put further pressure on 25 students per teacher, and these teachers are an already stressed system, leading to declining quality somewhat weakly utilized, with a teacher-stream and poorer education outcomes. This section outlines ratio of 1.8 teachers per stream. This suggests that some common policies that countries have utilized to the typical school has more teachers than are make fee abolition and the resulting system expansion needed at any given time to teach the students in more affordable while at the same time ensuring that attendance. Achieving improvements in pupil-stream education quality does not decline. These are not ratios can be made more feasible by simultaneously intended as recommendations but one potential set of improving teacher-stream ratios. Although a options that the government may wish to consider to teacher-stream ratio of 1:1 is generally not possible achieve a more fiscally sustainable path to universal at the secondary level as a result of the need for basic primary and secondary education. subject specialist teachers, a level of 1.8 suggests More fiscally sustainable polices projections. In order there may be scope for some improvements in to estimate the impacts of these potential options, this utilization. We model the reduction of this ratio to section presents projections of “more fiscally 1.5 by 2025, reducing the additional teachers sustainable policies”, which maintain the improvements required substantially from 73,000 to 53,000. in school inputs introduced under the full implementation projections, but with adjustments to reduce costs. These cost-saving measures are divided into recurrent cost savings and infrastructure cost savings. Financing Basic Education: The Financial Implications of Zambia’s Education for All Policy 12 Knowledge Brief 2 Infrastructure cost savings. Although a smaller Evidence from a range of countries suggests that component of the overall cost challenge compared to construction of teachers’ houses is of limited effect in recurrent costs – accounting for only 9 percent of attracting teachers to remain in remote postings and overall general education expenditure in 2035 in the significantly more expensive than lower-cost full implementation projections with the upper bound approaches, such as incentive payments (Bashir et al. enrollment scenario – infrastructure constitutes a key 2018). It may be appropriate to restrict the component of the fiscal and logistical challenge, construction of additional teachers’ houses to the particularly given the need to construct additional most remote schools where alternative infrastructure in advance of projected enrollment accommodation may be hardest to find, or transport expansion (see box 1). To moderate the costs from a nearby trading center may be more difficult. necessary to provide new infrastructure, the following We model an approach where the current number of policy options have been explored: teachers’ houses per school is maintained only in the one-fifth of schools that are more remote.18 (This 1. Increase use of shifts and year-round staggered would still require construction of 4,560 houses by schooling at the primary level. The number of new 2035, a significant reduction from 35,000 under classrooms required can be reduced, without current norms). negative impacts on learning, through better utilization of infrastructure. Multiple shifts are a key 3. Rationalize other school infrastructure. Although tool employed by other countries which have administration offices such as head teacher’s offices undergone a rapid expansion of secondary are an important aspect of school infrastructure, education, particularly in Latin America. Although Zambia appears to be making unusually high use of double shifts and year-round schooling do not these buildings, with an average of 2.8 offices per reduce the need for additional teachers, they can school at the primary level and 2.7 at the secondary substantially reduce the pace at which countries level. We model a reduced provision of these offices have to construct additional classrooms. Evidence in new schools constructed, reducing the national from countries, including Brazil, Chile, and Guinea, average to two offices per school at both primary and suggests that the temporary use of multiple shifts secondary levels by 2030. In addition, given the large- can provide significant cost reductions (Bray 2008). scale increase in the number of secondary schools In addition, countries, including Ghana, have made operating, the cost of equipping every school with a use of year-round schooling to reduce pressure on laboratory is an additional source of costs that could classrooms during periods of rapid system be temporarily reduced by the use of shared and expansion (Takyi, Azerigyik, and Amponsah 2019). mobile laboratories as well as low-cost science kits, The effect of these policies will be to increase the which do not require a dedicated laboratory and have stream-classroom ratio, in other words, the number been successful in Zimbabwe and Ghana (GPE 2019). of classes utilizing each classroom. We model an We model a decrease in the share of schools with increase in the stream-classroom ratio at the their own laboratory to 60 percent by 2030, reducing primary level from the current 1.45 to 1.60, matching the number of laboratories to be constructed by 2035 the secondary ratio, by 2025, reflecting the use of from 2,400 to 1,200 (in the upper bound enrollment double shifts and/or year-round schooling in the scenario). majority of schools. This measure would reduce the The cost reductions that can be achieved through number of new primary classrooms required by these cost savings are substantial. Figure 5 shows the 2035 from 28,000 to 18,000. It is important to note, cost projections under full implementation with more however, that the use of these measures should be a fiscally sustainable policies for both the lower and temporary measure, as long-run evidence from upper bound enrollment scenarios. By 2035, the annual Brazil, Mexico, and Ethiopia suggests that moving savings from these more fiscally sustainable policies, away from shifts once the necessary infrastructure in comparison to only the full implementation policies is in place can have beneficial impacts on learning (figure 4), reach K 6 billion annually.19 (Rosa et al. 2022, Cabrera-Hernandez 2020, and Orkin 2013). 2. Rationalize the provision of teachers’ houses. Construction of teachers’ houses constitutes a key driver of infrastructure costs in the projections. Financing Basic Education: The Financial Implications of Zambia’s Education for All Policy 13 Knowledge Brief 2 Figure 5. Cost Scenarios with Full Implementation and More Fiscally Sustainable Policies (Billion K) a. General education b. All levels of education 100 2025 2030 2035 120 90 Upper bound, more Gap, upper bound; 8.6 100 fiscally sustainable 80 Lower bound, full 70 Upper bound, full implementation Billion Kwacha Billion Kwacha 80 60 implementation Lower bound, more 50 60 fiscally sustainable 40 30 40 20 Education 20 10 budget 0 0 full sustain. full sustain. 2027 2028 2029 2030 2032 2033 2034 2035 2031 2022 2023 2024 2025 2026 Lower bound Upper bound Source: Authors’ estimates based on the simulation model Note: in panel a ‘full’ denotes full implementation and ‘sustain’ denotes full implementation with more fiscally sustainable policies. Financing gap. With these cost reductions, it is our projections assume that the overall education budget possible for Zambia to substantively reduce the follows the MTEF projections and increases from 10.4 financing gap even while fully implementing the percent of government spending in 2022 to 14.7 percent Education for All policy and achieving near-universal in 2024 and remains at that level until 2035. However, this access to primary and lower secondary education and share of public expenditure falls below levels seen in substantial improvements in access to pre-primary recent years in Zambia. For example, in 2016, 17.5 percent and upper secondary education. By 2035, under the of total government spending was devoted to education. more fiscally sustainable policies projections, total The MTEF projections also fall short of the global education expenditure is expected to increase to aspiration of public spending of education equivalent to between 87 and 99 billion under the lower and upper 20 percent of the government budget. bound enrollment scenarios respectively. Recall that, Increasing the priority afforded to education in the based on the assumptions outlined in Table 3, budget beyond the MTEF projections would fill the education spending is projected to increase to K90.7 projected financing gap. Figure 6 demonstrates the billion by 2035. This implies that there is no financing trajectory of the financing gap in the lower and upper gap in 2035 under the lower bound enrollment bound enrollment scenarios. As stated in the previous scenario, but a gap persists of K8.6 billion, equivalent section, if the government is able to realize the MTEF to about nine percent of the overall education budget, share of education in total government spending (14.7 in the upper bound enrollment scenario (figure 5, panel percent) and maintain this over the next 13 years, there b). is no projected financing gap under the lower bound 3.4 Addressing the financing gap scenario (figure 6, panel a). However, under the upper bound scenario a significant financing gap remains through increased resource even if it is assumed that the MTEF projections are mobilization achieved (figure 6, panel b). Increasing the share of If the Education for All policy is successful, it is likely government spending allocated to education is one that enrollment expansion will be more similar to our way of closing this gap. We estimate that education’s upper bound enrollment scenarios. If this is the case, share in total spending would need to rise to 16.5 what options are available to fill the relatively large percent from 2025 to close the financing gap through financing gaps shown in our projections? Recall that greater government spending. Financing Basic Education: The Financial Implications of Zambia’s Education for All Policy 14 Knowledge Brief 2 Figure 6. Financing Gap with Full Implementation and More Fiscally Sustainable Policies (Billion K ) Panel A. Lower bound enrollment scenario Panel B. Upper bound enrollment scenario 25 Education budget at 10.4% of 40 government spending (current) Education budget at 10.4% of 20 Financing gap (billion Kwacha) Financing gap (billion Kwacha) 30 government spending (current) 15 20 10 10 Education budget as in the 5 MTEF and constant after 2025 0 0 Education budget as in the MTEF Education budget as in the MTEF and and 16.5% of government spending -5 -10 constant after 2025 after 2025 -10 -20 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 Source: Authors’ estimates based on the simulation model The MTEF assumptions of large increases public Composition of education spending are critical to the overall affordability of the Education for All policy. As Table 3 4. Education Expenditure shows, government education spending is expected to Recurrent expenditures, primarily teachers’ salaries, increase from 10.4 to 14.7 percent of government account for the majority of expenditures in all scenarios, spending between 2022 and 2024. If these increases but are set to decline as a share of the total. In the more do not materialize, the financing gaps associated with fiscally sustainable policies projections, teachers' our projections are significantly higher. In our lower salaries account for 75 percent of expenditure across bound scenario, if the share of government spending is primary and secondary education in 2035 (figure 7). This kept at its 2022 level, the financing gap would be as represents a reduction from the current level where much as K 22 billion in 2035. In our upper bound approximately 78 percent of expenditures are on scenario, the gap would increase to K 35 billion in teachers’ salaries. Other recurrent costs, such as school 2035. These projections serve to highlight how critical grants, are set to increase from 7 percent of total increasing government spending on education is to the recurrent expenditures in general education in 2022 to 19 affordability of the Education for All policy. percent by 2035, reflecting increased expenditure on grants, bursaries, textbooks and boarding fees. Financing Basic Education: The Financial Implications of Zambia’s Education for All Policy 15 Knowledge Brief 2 Figure 7. Breakdown of Expenditure with Full Implementation and More Fiscally Sustainable Policies (Billion K) a. Lower bound enrollment scenario b. Upper bound enrollment scenario 100 100 80 80 Billion Kwacha Billion Kwacha 60 60 40 40 20 20 0 0 2034 2035 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 Teachers' salaries Other recurrent costs Teachers' salaries Other recurrent costs Development costs Development costs Source: Authors’ estimates based on the simulation model Box 3. Using School Grants to Support Free Quality Education Grants for schools are an essential part of a successful free education policy. Providing grants to schools is the simplest way to replace revenue lost to schools from the abolition of formal and informal fees with similarly fungible resources, enabling schools to maintain quality levels and reducing the likelihood that they will attempt to levy informal fees. In addition, this decentralized approach to providing resources is flexible enough to accommodate rapid system expansion, while the centralized provision of inputs is more likely to encounter challenges of capacity. However, there are a number of potential pitfalls that can affect the efficiency and impact of grant schemes and undermine their role in supporting free education policies. Inadequate finance. Countries that introduce free education policies frequently do not adequately finance grants to an extent that can replace revenue lost by schools from the abolishment of fees. In Zambia, despite the free primary education policy, grants to schools covered only 64 percent of the typical primary school’s required operating budget in 2014, a key driver of the continued use of informal fees by schools (World Bank 2016). Full implementation of free education necessitates a grant level that is adequate to replace all lost revenue (with support from in-kind resources to schools, where appropriate, such as textbooks). Weak allocation of finance. Formulae for allocation of finance to schools vary widely between countries. Some countries, including Lesotho and Ethiopia, have formulae that are heavily based on enrollment and prioritize equal per-student allocations. However, such formulae may not pay adequate attention to the different disadvantages faced by schools from their location, facilities, and student backgrounds (Lefoku and Deffous 2014; Kelil and Jebena 2014). By contrast, other countries, including Malawi, use formulae with a small enrollment-based component, which leads to large variations in per-student finance which disproportionately punish larger schools (Nampota and Chiwaula 2014). Zambia’s current school grants formula is relatively well-balanced, including elements of remoteness (a good proxy for school conditions), enrollment, and a gender component. However, there is no reflection of poverty levels in the current allocation, with the result that provinces with lower poverty levels may receive a larger share of grants than those with higher poverty levels; there may be a case for revising the formula to reflect the different poverty levels of each province to promote equality (World Bank 2022). Financing Basic Education: The Financial Implications of Zambia’s Education for All Policy 16 Knowledge Brief 2 Box 3. Continued In addition, these main grants are only two among a total of ten overlapping grant schemes at primary and secondary levels (World Bank 2022). Some rationalization and streamlining of this portfolio may improve the capacity of the grant system to coherently and consistently target resources to the neediest schools. Late or incomplete delivery to schools. In a large number of countries, schools rarely receive their full entitlement to grants on time, and in some cases not all. Recent evidence suggests that Lesotho, Uganda and Kenya have all struggled with the timely delivery of grants on either an annual or termly basis (Lefoko and Deffous 2014; Kayabwe and Nabacwa 2014; Njihia and Nderitu 2014), while in Ethiopia, low awareness at the school level of the grant formula means that schools are uncertain whether they have received an adequate amount (Kelil and Jabena 2014). In Zambia, 67 percent of schools said their grants were frequently delayed in 2014, and 28 percent of primary and 30 percent of secondary schools reported non-receipt of their most recent grant (World Bank 2016), the result of both under-execution of grant budgets and problems of delivery. Direct disbursement to schools, introduced in Zambia in January 2022, can be highly effective in eliminating delays and misdirection of grant finance: in Tanzania, such a reform increased the share of schools receiving grants on time each month from 74 percent to 100 percent within one year (World Bank 2017). Poor execution or oversight of expenditure. Even if grants are delivered to schools in full and in a timely manner, there is a need to ensure their proper management at the school level. As grants become more central to the education system, the risk of mis- or under-utilization at the school level deepens. Many countries employ a spending formula to guide the use of grant funds according to particular areas of investment; however, systems which have attempted to maintain extensive central control of the use of grants, such as in Kenya, have tended to undermine schools’ own budgeting processes (Njihia and Nderitu 2014). By contrast, a higher degree of autonomy in spending can backfire if it is not accompanied by the requisite capacity among school management committees (SMCs) who manage the funds. In Lesotho and Uganda, a lack of such training has led to poor supervision of construction and other investments (Lefoko and Deffous 2014; Kayabwe and Nabacwa 2014). In Zambia, the absorption rate of grants is relatively high at almost 100 percent; however, this reflects in part the low level of grants reaching schools, and a higher level of school capacity is likely to be required to maintain this high absorption rate if grants are expanded to support free education. Experimental evidence from Pakistan suggests that a program of training and fresh elections for SMCs led to improvements in school infrastructure (Asim and Riaz 2020), while evidence from Indonesia and Uganda suggests training of SMCs combined with measures to strengthen their links with communities led to improvements in school outcomes (Pradhan et al. 2011; Barr et al 2012). . Principles of effective school grants. Based on international experiences with free education, the following principles should be followed to achieve a well-functioning system of school grants: . A set of expenditures covered by the grant which includes all costs previously financed by formal and . informal fees as defined by the Education for All policy. Budgeting that provides schools with adequate funds to cover the costs expected to be covered by the grant. . . Allocation formulae which respond properly to the different needs of different schools, including enrollment, location, and existing facilities. . Clear and transparent formulae to ensure accountability. . Full execution of budgeted finance for grants. Regular, timely, and accurate delivery of grants to schools, preferably direct from the central level. Strong school-level management and governance mechanisms to ensure proper use of grants, including well-capacitated community committees. Financing Basic Education: The Financial Implications of Zambia’s Education for All Policy 17 Knowledge Brief 2 5.Conclusions The results of our simulations are concerning in terms of the fiscal sustainability of Education for All. In our Expanding access to general education is an important upper bound enrollment scenario, assuming the step for countries to raise their human capital and help to education budget follows the government projections ensure sustained economic growth (Bashir et al., 2018). for 2022-2024 and remains constant as a share of the The introduction of the Education for All policy is a government budget in 2025-2035, we estimate a promising opportunity for Zambia to make progress financing gap of K17.6 billion per year by 2035—a gap of toward fulfilling Sustainable Development Goal 4 by more than one-fifth of the current education budget. In achieving universal access to education. However, the practice, even with an increase in the share of public logistical and fiscal challenges involved in successfully expenditure allocated to education, such a large implementing Education for All are substantial. Using the financing gap is likely to lead to inconsistent modeling tool developed by the World Bank, we estimate implementation of Education for All, overcrowding, and the likely enrollment impacts of Education for All at both declining learning outcomes. the primary and secondary levels (including the provision . However, with some measures to reduce costs and of enhanced school grants and bursaries) and of restore the share of public expenditure that is used for expanding the education system to meet the resulting education to previous levels, the government’s goal of increase in demand. universalizing access to primary and secondary . education may be achievable. The cost-saving policies Our cost projections are sensitive to the assumptions made on the evolution of enrollment between 2022 and presented in this note, such as the expanded use of 2025. We model a lower bound scenario that corresponds shifts and year-round schooling; rationalized use of to some of the more limited impacts seen from policies teachers’ housing, administrative offices, and like this in other countries where intake rates increased to laboratories; and improved utilization of secondary cover all school starting age children, and transitions from school teachers, while not intended as primary to lower secondary and from lower to upper recommendations, are potential options that the secondary increase. Our second scenario looks at far government may wish to consider to achieve a more larger enrollment increases that correspond to fiscally sustainable path to free and universal basic universalizing primary education, with a reduced share of primary and secondary education. With these policies, enrollment in the private sector; near-universalizing lower fulfillment of the government’s commitment to increase secondary education, with GERs rising to above 90 education funding by 2024 as stipulated in the MTEF percent; and approximately doubling access to both pre- and further increase it to 16.5 percent of public primary and upper secondary; by 2035. While these expenditure is likely to be adequate, at least in the short enrollment scenarios provide a plausible range of term, to support the cost of general education under the outcomes from the government’s policy commitments it is Education for All policy. This is only one set of possible important to recognize that they are just forecasts. The policy options to ensure that the policy is a success. The actual impacts on enrollment will depend critically on simulation model, developed to undertake the costings overall levels of funding and the related policy decisions, outlined in this brief, also enables policymakers to outlined in this note, on how effectively the available explore a wider range of reforms and explore trade-offs funding is utilized to raise enrollment levels and improve between options to ensure that the policy is affordable education quality. The simulation model developed by the and sustainable. World Bank provides policymakers with the means to explore a wide range of potential enrollment responses to Acknowledgements the Education for All policy and the resulting changes in This knowledge brief was prepared by Dmitry Chugunov, overall enrollment. Ravinder Casley Gera, Mupuwaliywa Mupuwaliywa and Mashekwa Maboshe. It was prepared under the overall guidance of Safaa El-Kogali and with support from Samer Al-Samarrai. The brief benefitted from comments and advice from Sahr Kpundeh, Inaam Ul Haq, Kebede Feda, Samson Kwalingana, Hiroshi Saeki, Yevgeniya Savchenko and Rama Venkateswaran. The brief was edited by Douglas Voss and GCSTI and laid out by Evan Kindle. Financing Basic Education: The Financial Implications of Zambia’s Education for All Policy 18 Knowledge Brief 2 References Adu-Ababio, K. and Osei, R.D. 2018. "Effects of an education reform on household poverty and inequality: A microsimulation analysis on the free Senior High School policy in Ghana," WIDER Working Paper Series wp-2018-147, World Institute for Development Economic Research (UNU-WIDER). Al-Samarrai, S. 2003. “Financing primary education for all: public expenditure and education outcomes in Africa.” Brighton: Institute of Development Studies. Asim, S. and Casley Gera, R. 2022. What Matters for Learning in Malawi? Insights from a Longitudinal Schools Survey. Forthcoming. 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As of 2019, the rates were 96.9 percent at the primary and 39.3 at the secondary. 3 The tool, designed for use by policymakers, is a Microsoft Excel-based simulation that employs a reconstructive cohort method to calculate the student enrollment flow, using Government population projections and recent trends in student promotion and retention based on historical education data. The tool is also an output of the analysis described in the note and is publicly available. 4 Zambia’s education system includes four years of pre-primary, seven years of primary, two years of lower secondary, and three years of upper secondary education. 5 The scenarios are primarily informed by the experiences of Botswana and the earlier, less successful reforms in Tanzania and Uganda (lower bound); and Kenya, Ghana, and the most recent reforms in Tanzania (upper bound), with adjustments made for Zambia based on differences in the pre-policy enrollment trends. 6 Using the projected number of 7-year-olds from the Government, the model applies a historical gross intake rate to the first grade of primary education as a baseline to estimate the number of new entrants to primary education. 7 The rate of repetition in Grade 8 remains unchanged at 2.8 percent. 8 Our model includes the cost of infrastructure, teacher salaries, textbooks, school grants, and boarding fees for boarding students, but does not include teacher development, education administration, and other sector-level costs. Unit costs, including teacher salaries, are time-adjusted – held constant as percentage of projected GDP per capita to align with inflation and GDP growth. Our model uses a unit cost for classrooms which is an average of the contractor and community models employed by Government, plus the cost of furniture. In a future iteration of the model, it may be possible to allow for modelling of different shares of new construction employing each model. Our model assumes a constant school size; see Section 3.1. 9 Pre-primary, primary, and lower and upper secondary education. 10 For changes to input standards, such as pupil-stream ratios and pupil-latrine ratios, the model captures the cost of achieving these standards at existing schools as well as new schools. 11 The school expenses covered by grants under the revised policy include utility bills; rehabilitation and maintenance of school infrastructure and purchase of desks; wages for support staff; continuing professional development; health and nutrition; office equipment; and general administrative costs (Ministry of Education, 2021). 12 Although the government has specified new grant amounts under the Education for All policy, available data did not enable robust simulation of exact grant costs under these guidelines. A future iteration of this note could conduct this analysis with adequate school-level data. School grant amounts held constant as a share of GDP per capita. 13 An additional, currently unknown number of students receive bursaries through the Constituency Development Fund. 14 As both teacher-stream ratios and stream-classroom ratios are measured on a per-stream basis, the pupil-stream ratio has implications for both teacher and classroom requirements. 15 Textbooks for four main school subjects are considered in the analysis (English, Life Skills, Math, Zambian Languages). 16 We envision these as approximately the most remote one-fifth of schools. If detailed school-level data on pupil-teacher ratios (PTRs) are made available a future iteration of the analysis can provide more detailed projections (see Asim et al., 2019, for an example). 17 The level of 30 percent is suggested by the experience of Gambia, which introduced an allowance in 2006 of approximately 30 percent in value that led 24 percent of the teachers in qualifying regions to request transfers to hardship positions (Mulkeen, 2010). 18 This is approximated by allowing the national average number of teachers’ houses per school to reduce from the current 4.5 at the primary level to 1.0, and from the current 7.7 at the secondary level to 1.5, by 2030. 19 Additional savings may be achieved through efficiency gains achieved through improved enforcement of the automatic promotion policy. We estimate that reducing repetition by approximately one-half in all primary and secondary grades from 2025 onwards would reduce the overall cost of general education by an additional K 0.6 billion by 2035. Financing Basic Education: The Financial Implications of Zambia’s Education for All Policy 20