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Making Economic Growth work for the Poor
A devolved approach to funding Universal Primary Education in Kenya

» by Volker Hüls

The Kenyan economy is growing. The gains are shared by the better off and do not reach the poor. The government has taken a first step to better distribute these benefits by introducing free primary education in 2003. Claims that this has put more poor children into schools are increasingly difficult to make. Rather, it appears that a proportion of the higher enrolment rates are due to a re-distribution from private schools. Worse, the provision of a "free" service has not created more schools, not employed more teachers, nor given poor families the means to send their children to school. Direct and opportunity costs other than fees continue to keep the poor away and make them loose out on the benefits of free primary education. The quality of education both in terms of facilities and availability of teachers has gone down. This paper therefore argues that while gaps in the demand side of primary education must be covered more comprehensively, the supply side in particular must receive dedicated and timely support to achieve Millennium Development Goal 2 in Kenya.
"The pursuit of free primary education has to be embedded into a wider policy environment to yield the intended effects. In particular, hidden and opportunity cost for poor families to send children to school must be cushioned through targeted transfers"
It proposes a devolved funding mechanism as the key policy instrument to address this gap and enable communities to directly and inclusively invest in their future through primary education. This will be a tangible way of making economic growth work for the Poor in Kenya.

The paper analyses the economic situation and the trend for growth in Kenya. It identifies the problems holding back the achievement of universal primary education in Kenya. Availability of fiscal space to address these problems is outlined, and a package of policy options to bring the gains of this to the poor is presented. It is argued that creating demand through the free primary education programme must be better supported and, most crucially, matched with a more targeted support to the supply of education services to get more poor children into quality education. Consequently, the pursuit of free primary education has to be embedded into a wider policy environment to yield the intended effects. In particular, hidden and opportunity cost for poor families to send children to school must be cushioned through targeted transfers; teachers must be paid a more competitive salary that has performance rewarding elements; and schools must be built, equipped and maintained where none or too few exist.

A number of these policy options are already pursued by the government. It has embarked on piloting cash transfer systems to benefit the poorest, methods to reduce teacher absence have been tried, and the government has made funds for sector growth available. Based on this portfolio of options, the paper submits that while these will have impact, a major obstacle to an efficient and effective expansion of the primary education is the current way of its administration. It argues that centralized delivery is its main obstacle, and that decentralization is a more suitable approach to service delivery in the education sector. It is then demonstrated that the government has appropriate fiscal transfer mechanism in place and proposed to create an education funding envelope in an existing devolved development fund that is already in place. It is argued that this will address a number of constraints on the sector and is the best approach to achieving the Millennium Development Goal for primary education in Kenya by 2015.

© Volker Hüls 2007.

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