A WORLD BANK STUDY Public Disclosure Authorized Public Disclosure Authorized Expanding Tertiary Education for Well-Paid Jobs Public Disclosure Authorized COMPETITIVENESS AND SHARED PROSPERITY IN Kenya Andreas Blom, Reehana Raza, Crispus Kiamba, Himdat Bayusuf, Public Disclosure Authorized and Mariam Adil Expanding Tertiary Education for Well-Paid Jobs WORLD BANK STUDY Expanding Tertiary Education for Well-Paid Jobs Competitiveness and Shared Prosperity in Kenya Andreas Blom, Reehana Raza, Crispus Kiamba, Himdat Bayusuf, and Mariam Adil © 2016 International Bank for Reconstruction and Development / The World Bank 1818 H Street NW, Washington, DC 20433 Telephone: 202-473-1000; Internet: www.worldbank.org Some rights reserved 1 2 3 4 19 18 17 16 World Bank Studies are published to communicate the results of the Bank’s work to the development com- munity with the least possible delay. The manuscript of this paper therefore has not been prepared in accordance with the procedures appropriate to formally edited texts. This work is a product of the staff of The World Bank with external contributions. The findings, inter- pretations, and conclusions expressed in this work do not necessarily reflect the views of The World Bank, its Board of Executive Directors, or the governments they represent. The World Bank does not guarantee the accuracy of the data included in this work. The boundaries, colors, denominations, and other information shown on any map in this work do not imply any judgment on the part of The World Bank concerning the legal status of any territory or the endorsement or acceptance of such boundaries. Nothing herein shall constitute or be considered to be a limitation upon or waiver of the privileges and immunities of The World Bank, all of which are specifically reserved. Rights and Permissions This work is available under the Creative Commons Attribution 3.0 IGO license (CC BY 3.0 IGO) http:// creativecommons.org/licenses/by/3.0/igo. Under the Creative Commons Attribution license, you are free to copy, distribute, transmit, and adapt this work, including for commercial purposes, under the following conditions: Attribution—Please cite the work as follows: Blom, Andreas, Reehana Raza, Crispus Kiamba, Himdat Bayusuf, and Mariam Adil. 2016. Expanding Tertiary Education for Well-Paid Jobs: Competitiveness and Shared Prosperity in Kenya. World Bank Studies. Washington, DC: World Bank. doi:10.1596/978-1-4648-0848-7. License: Creative Commons Attribution CC BY 3.0 IGO Translations—If you create a translation of this work, please add the following disclaimer along with the attribution: This translation was not created by The World Bank and should not be considered an official World Bank translation. The World Bank shall not be liable for any content or error in this translation. Adaptations—If you create an adaptation of this work, please add the following disclaimer along with the attribution: This is an adaptation of an original work by The World Bank. Views and opinions expressed in the adaptation are the sole responsibility of the author or authors of the adaptation and are not endorsed by The World Bank. Third-party content—The World Bank does not necessarily own each component of the content contained within the work. The World Bank therefore does not warrant that the use of any third-party-owned individual component or part contained in the work will not infringe on the rights of those third parties. The risk of claims resulting from such infringement rests solely with you. If you wish to reuse a component of the work, it is your responsibility to determine whether permission is needed for that reuse and to obtain permission from the copyright owner. Examples of components can include, but are not limited to, tables, figures, or images. All queries on rights and licenses should be addressed to the Publishing and Knowledge Division, The World Bank, 1818 H Street NW, Washington, DC 20433, USA; fax: 202-522-2625; e-mail: pubrights @worldbank.org. ISBN (paper): 978-1-4648-0848-7 ISBN (electronic): 978-1-4648-0849-4 DOI: 10.1596/978-1-4648-0848-7 Cover design: Debra Naylor, Naylor Design, Inc. Library of Congress Cataloging-in-Publication Data Names: Blom, Andreas, author. | Raza, Reehana, author. | Kiamba, Crispus, author. Title: Expanding tertiary education for well-paid jobs : competitiveness and shared prosperity in Kenya /Andreas Blom, Reehana Raza, Crispus Kiamba. Description: Washington, D.C. : World Bank, [2016] Identifiers: LCCN 2016009424 | ISBN 9781464808487 Subjects: LCSH: Education, Higher—Economic aspects—Kenya. | Universities and colleges—Kenya—Admission. | College graduates—Employment—Kenya. | Educational equalization—Kenya. Classification: LCC LC67.68.K4 B56 2016 | DDC 338.4/3378096762—dc23 LC record available at http://lccn.loc.gov/2016009424 Expanding Tertiary Education for Well-Paid Jobs • http://dx.doi.org/10.1596/978-1-4648-0848-7 Contents Acknowledgments ix About the Authors xi Abbreviations xv Chapter 1 Executive Summary 1 Introduction 1 Rationale for the Three Focus Areas 2 The Key Numbers: A Tertiary Education System under Pressure 5 Key Findings: Quality and Relevance 5 Key Findings: Student Financing 7 Key Findings: Regulatory Oversight and Management of the Higher Education Sector 9 Policy Options 11 Improving Governance through the Process of Expansion 13 Notes 14 References 14 Chapter 2 Quality and Relevance 17 Objective 17 Introduction 17 The Youth Bulge and the Expected Tsunami of Secondary Educated Graduates 19 Limited Relevance of Programs 21 Policy Recommendations 23 Expansion without Quality 25 Policy Recommendations 28 Inequitable Expansion 29 Policy Recommendations 31 Conclusion 32 Notes 33 References 34 Expanding Tertiary Education for Well-Paid Jobs • http://dx.doi.org/10.1596/978-1-4648-0848-7 v vi Contents Chapter 3 Student Loans: A Tool for Equitable Expansion 37 Introduction 37 Why Student Loans? 40 Student Loans in Kenya 43 Challenge 1: Meeting Demand for Loans 44 Challenge 2: Targeting 47 Challenge 3: Weak Recovery Mechanisms 51 Notes 53 References 53 Chapter 4 Governance of Post-Secondary Education in Kenya 55 Introduction 55 The National Vision: The Context of Reforms in Higher Education 56 The Higher Education Legal and Institutional Framework 57 The Governance and Management of Kenyan Higher Education 64 Conclusion: Challenges, Opportunities, and Recommendations 73 Notes 75 References 75 Boxes 3.1 HELB Loans at a Glance 43 3.2 Chilean Loan Scheme—A Focus on Equity 50 4.1 Status of Universities in Kenya, 2014 59 Figures 2.1 Enrollment in Primary and Secondary Education in Kenya, 2001–13 20 2.2 Changes in Kenyan Post-Secondary Enrollment: TVET and Universities 22 2.3 Percentage of Firms in Kenya Identifying an Inadequately Educated Workforce as a Major Constraint 26 2.4 Average Loans per Income Group 31 3.1 Projections for Rise in Number of Students Transitioning from Secondary to Post-Secondary Education 39 3.2 Rationale for Student Loans 41 3.3 Average Loans, by Income Group 48 3.4 Comparison of Household Incomes of Loan Applicants and Recipients to Average Households in Kenya 49 Expanding Tertiary Education for Well-Paid Jobs • http://dx.doi.org/10.1596/978-1-4648-0848-7 Contents vii Tables 2.1 Undergraduate Enrollment in Science-Related Disciplines as a Proportion of Total Undergraduate Enrollment in Kenyan Universities 23 3.1 Projections for HELB Funding Needs 45 3.2 Average Household Income of Loan Applicants and Recipients in Comparison with GDP per Capita 47 3.3 HELB Loan Recovery Status 51 3.4 Loan Book as of June 30, 2014 51 4.1 Student Enrollment in Public and Private Universities 58 Expanding Tertiary Education for Well-Paid Jobs • http://dx.doi.org/10.1596/978-1-4648-0848-7 Acknowledgments These policy notes were authored by a World Bank team comprising Reehana Raza (senior human development economist), Himdat Bayusuf (education specialist), Mariam Adil (consultant), Crispus Kiamba (consultant), and Andreas Blom (team lead). The team is grateful to Kenyan policy makers and their important collaboration with the government agencies. The team extends its gratitude to the Norwegian government for funding for World Bank staff time through its Africa Post-Basic Trust Fund. All errors and omissions are those of the authors. Expanding Tertiary Education for Well-Paid Jobs • http://dx.doi.org/10.1596/978-1-4648-0848-7 ix About the Authors Andreas Blom is a lead economist in the World Bank’s Education Global Practice and focuses on Africa. He supports management in implementing strategies to improve the quality of the World Bank’s education portfolio in Africa and serves as a resource person for tertiary education in the region, supporting tertiary edu- cation teams and projects in Africa. He is also the task team leader of the Africa Centers of Excellence project. He specializes in the economic policy analysis of human capital and creation of knowledge, and their efficient use in society. Andreas has previously worked with the government of India to improve the quality of, access to, and financing of its higher education system. Furthermore, he has worked with the government of Pakistan to provide more and better train- ing opportunities to Pakistani youths. He started his career in the World Bank in the Latin America and the Caribbean region, where he worked for seven years on higher education, training, labor markets, and public spending. He has pub- lished several global and regional studies on the financing of higher education, student loans, labor markets, quality of education, and science, technology, and innovation. Andreas holds a master’s degree in development economics from the University of Aarhus, Denmark. Reehana Raza is a senior economist in the World Bank’s Education Global Practice, where she focuses on skills development in eastern and southern Africa. She also provides cross-support to South Asia in the areas of skills and social protection.