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April 15, 2006

Political Economy of Education Riaz Ahmed Karachi University

Why MoE is Reviewing? USAID:

Data Sheet USAID Mission: Pakistan Program Title: Primary Education and Literacy Pillar: Economic Growth, Agriculture and Trade Strategic Objective: 391-003 Status: Continuing Planned FY 2005 Obligation: $20,573,000 DA; $46,100,000 ESF Prior Year Unobligated: $0 Proposed FY 2006 Obligation: $19,403,000 DA; $47,300,000 ESF Year of Initial Obligation: 2002

Estimated Year of Final Obligation: 2006

What have they achieved since 1998?

Literacy 1981 Pakistan 26.2 Rural 17.3 Urban 47.1

1998 2001 2003 2005* 45 50 51.6 52.4 74.4 40.5 41.6 42.8 64.7 67.8 69.7 70

Source: Economic Survey 1998-99, Labour Force Survey 2005-06


1998-99 1998-99 2002-03 2003-04 2003-04 Public SectorPrivate SecPublic SectorPublic SectorPrivate Sec Primary Schools 159,300 14,748 150,800 137,349 17,621 Middle Schools 18,100 12,550 28,000 13,728 15,000 High Schools 12,400 5,940 15,600 9,819 Secondary Vocational 580 (612, 1999) 1,505 585 636 Colleges (General) 840 139 964 1,066 British System 35 NA NA Professional Colleges 308 265 382 NA Universities 26 3 29 26 (+29 institutes and 55s Census of Private Education Institution in Pakistan, 1999-2000, conducted by FBS, Islamabad and Provincial Bureau's of Statistics and Federal Academy of Educational Planning and Management Islamabad.


1998-99 1998-99 2002-03 2003-04 2003-04 Total 2003-0 Public Private Public Public Private Primary Schools 18,169,000 4,568,890 18,220,000 13,967,020 5,828,336 19,795,356 Middle Schools 4,098,000 885,146 3,918,000 3,147,246 1,171,475 4,318,721 High Schools 1,702,000 305,798 1,589,000 1,497,496 491,091 1,988,587 Secondary Vocational Institutions 75,000 134,468 93,921 101,000 Colleges (General) 780,000 10,697 801,746 905,000 British System 4,705 Professional Colleges 163,445 49,231 163,852 NA Universities 91,637 1,390 126,870 218,275 Census of Private Education Institution in Pakistan, 1999-2000, conducted by FBS, Islamabad and Provincial Bureau's of Statistics and Federal Academy of Educational Planning and Management Islamabad.

Teachers Primary Schools Middle Schools High Schools Secondary Voc Colleges (General) British System Professional Colleges Universities

1998-99 1998-99 2002-03PublicSector 2003-04PublicSector 2003-04 Public Private Public Public Private 359,200 75,924 433,500 432,500 NA 89,700 106,381 238,300 112,479 126,872 152,700 94,609 278,000 276,900 7133 (9,253 in 1999) 4,597 7,273 8,535 26,942 2,482 27,911 29,730 1,049 8,861 4,626 9,841 NA 4,911 13 6,180 11,404

Census of Private Education Institution in Pakistan, 1999-2000, conducted by FBS, Islamabad and Provincial Bureau's of Statistics and Federal Academy of Educational Planning and Management Islamabad.

Distribution of Population % No formal education Below matric Matric Intermediate Degree and above Literate Illiterate

1998 0.8 24.7 8.4 3.4 3.8 45.6 54.3

Source: HouseHold Integrated Economic Survey 1998-99 and Labour Force Survey 2005-06

2003 0.6 33.7 9.7 3.9 3.8 51.6 48.4

2005 0.2 34.5 9.8 4.4 3.6 52.4 47.6

Industry Division % Agriculture, f orest ry, hunt ing and f ishing Manufacturing Construction Wholesale & Retail trade Transport, storage and communication Community, social and personal services Others (includes mining & quarrying,

1998 47.25 9.96 6.26 13.87 5.48 15.36 0.92

2003 43.1 13.7 5.8 14.8 5.7 15 1.9

el ectr i ci ty, gas & water , f i nanci ng, i nsur ance, r eal estate & busi ness ser vi ces and acti vi ti es not adequatel y def i ned) Source: HouseHold Integrated Economic Survey 1998-99 and Labour Force Survey 2005-06

2005 44 14.1 6.1 14 5.7 13.9 2.1

Occupational Groups % 1999 Legislators, senior officials and managers 11 Professionals 2.2 Technicians and associate professionals 4.2 Clerks 1.6 Service workers and shop & market sales w orkers 4.6 Skilled agricultural and fishery workers 40 Craft and related trades wo rkers 15.1 Plant and machine operators and assemblers 3.3 Elementary (unskilled) o ccupations 18.1 Source: HouseHold Integrated Economic Survey 1998-99 and Labour Force Survey 2005-06

2003 11.5 2 4.9 1.6 5.2 34.9 15.9 3.7 20.3

2005 11.5 1.8 5.1 1.5 4.9 36.5 16 4.2 18.5

Private Sector in Education “As a result of a review of the nationalization policy of education institutions, the Federal Government decided that the public sector alone could not shoulder the responsibility of imparting education at all levels. It was, therefore, decided to encourage the private sector to play its due role in the promotion and development of educational opportunities especially in the rural areas. This policy has resulted in the establishment of an estimated 30,000 private educational institutions at all levels with an enrolment of approximately 3 million students. Most of these institutions impart education from playgroup to postgraduate level. Some schools have been established on community basis, while individuals own others.� Source: Economic Survey 2005, Chapter 11 pg 145

Private Sector in Education 125 state schools in Sindh have been handed over to private individuals thru ‘adopt a school program’ “The proposed package of incentives for private sector, particularly in rural areas and also urban slums, includes: •Provision of land free of cost/ and or at concession rates in rural areas •Basic Utilities such as Sui gas, etc. to be assessed at noncommercial rates. •Liberal grant of charter •Exemption of custom duties on import of educational equipment •Exemption of 50% income tax to private sector institution for faculty, management, and support staff. “ Source: Ministry of Education, Govt of Sindh,

Private Sector in Education “Private schooling has now become important for the country. Enrolment in private primary schools is now in the order of 42 percent of total enrolment (2004). During 2004, at the middle school level, the private sector had a share of 37 percent of total enrolment.�

Source: Economic Survey 2005, Chapter 11 pg 145

Public Sector

Unable to Meet Demand •Pakistan currently suffers from large fiscal and trade deficits, •absence of a strong middle class •and weak foreign investment. •mere 2.6 per cent of the population is enrolled in higher education, •Despite these bleak statistics, ...vast majority new schools are private. •Public sector has been unable to keep up with the demand •Student enrollments grow sharply with each year •benefits of earning a college degree become more evident, •By 2010, Pakistan needs to accommodate 1.3 million higher edu students •Government: easy for the private sector to establish colleges and universities. As a result, a record 49 new universities and other degree awarding institutes (most of them private) have been established since 1999. Source: Private Universities in Pakistan By Robert Sedgwick Editor, WENR,

Room for Private Sector

•The crisis in education extends to the primary and secondary levels •Student/teacher ratios in primary schools are extremely poor, •sometimes averaging 55 to 1.

•Only 57 percent of boys and 44 percent of girls enrolled at the primary school •Dropout rate during the first five years of primary school is around 70 percent. •Secondary level: 46 percent of boys are enrolled in school and only 32 percent for girls. •Illiteracy: extremely high, particularly among girls 72 percent. •Among males, illiteracy is 43 percent. •Overall deterioration=> alternative forms of education. •Since 90s private English medium schools and madrasahs have proliferated throughout the country. Source: Private Universities in Pakistan By Robert Sedgwick Editor, WENR,

Rising Private Sector •1979: government commission: consequences of nationalization •poor participation rates at all levels of education, •the public sector could not be the country’s sole provider of education. •By the mid-1980s, private educational institutions were allowed to operate on the condition that they comply with government-recognized standards. •1991: there were only two recognized private universities in Pakistan: Aga Khan University established in 1983; and Lahore University of Management Sciences established in 1985. •1997:10 private universities •2002: 20. •2004: 53 Source: Private Universities in Pakistan By Robert Sedgwick Editor, WENR,

Private Sector Beyond Reach of Many •Quality of private universities varies widely •Most have American model of higher education •features 4-year bachelor's degree and system of credits. •Private sector: costly. •Most expensive: IQRA University/Asian Management Institute, •Charges yearly US$2,200. •Most private sector US$1,000 and $1,500. •Average per capita income: US$277 per year, •Private institutions beyond the reach of most Pakistanis. Source: Private Universities in Pakistan By Robert Sedgwick Editor, WENR,

Private Sector Supporters/Detractors


higher quality efficiently rare closures/class suspensions students more apt to complete degree international standards of competence and accountability.

Detractors commercialization two-tiered system based on wealth. “cram schools� prepare students for board exams, Source: Private Universities in Pakistan By Robert Sedgwick Editor, WENR,

Low Education Status? “The reasons for Pakistan’s low educational status are varied but one important factor is that Pakistan’s educational system is highly fragmented and segmented. It has, therefore, created some intractable problems in the optimal utilization of human resources under the given labor market conditions.” ( a notorious Pakistani banker) Source: HouseHold Integrated Economic Survey 1998-99 and Labour Force Survey 2005-06

Low Education Status? Lowest 40% share of household income 1993-2003


Highest 20% share of household income 1993-2003


Source:Unicef Pakistan Statistics:

Low Education Status? HEC Allocation 2004-05 (million Rs) 1 Universities 2 Institutes 3 Centers 4 HEC 5 Promotion of Research 6 Inter-University 7 Lump provision of HEC Total:

5497.470 354.034 242.853 162.000 300.000 158.000 281.251 6995.608

Source:Higher Education Commission

Rs 850 billion

needed to improve higher education, says World Bank “Dec 10 2005: A World Bank mission met Finance, Revenue, Economic Affairs and Statistics, HEC officials to review the reform strategy for higher education in Pakistan. •Enrolment in Pak unis likely to increase to 1.7 million from 0.5 million. •Pakistan needs to produce 3,000 teachers every year to meet the demand. The salary of faculty members should be output based and not linked with the government pay scales •Rs 850 billion for operational, training and infrastructure development in 10yrs HE in the Medium Term Development Framework (MTDF). •introduction of public-private partnership, •improvement of the regulatory framework, •minimum basic standard for accreditation of private sector universities “

Source:Daily Times, Saturday, December 10, 2005

Cost of Private University Education

“Private sector schools are also costly. The most expensive of the private universities is the IQRA University/Asian Management Institute, which, which charges an annual tuition of nearly US$2,200. However, most private sector universities are priced between US$1,000 and $1,500. In a country where the average per capita income is estimated to be US$277 per year, this puts private institutions beyond the reach of most Pakistanis. “ Source:Daily Times, Saturday, December 10, 2005

Approach of World Bank “The 11 examples reveal answers to two questions: (1) In justifying World Bank support for private and public education, what have been the rationales for Bank lending in education (sectoral/subsectoral) in some of the client countries? (2) In countries where private sector presence exists alongside publicly financed and provided education, how has the Bank encouraged the private sector to thrive?�

Source: Trends in Private Sector Development in World Bank Education Projects by Shobhana Sosale, The World Bank:

USAID: $200m

Summary: USAID’s education program provides the training, technical assistance, and infrastructure needed to enable education officials, citizens, and the private sector to deliver and maintain high quality education programs throughout Pakistan. The program improves classroom instruction in public and community schools in Pakistan’s most impoverished areas: Sindh and Balochistan provinces and in the Federally Administered Tribal Areas (FATAs) that border Afghanistan. USAID is also making higher education more accessible to the poor, and ensuring secondary school students have useful work skills. Source:



Outputs, Activities

FY 2005 Program:

•Improve the Quality of Basic Education ($18,934,000 DA; $22,250,000 ESF). •Capacity building and support for systemic (ESR) education sector reform at both the national & district level •National policies for literacy, information communications technology, and early childhood education will be developed and implemented. •A national teacher education strategy •Public/private partnerships for schools will be encouraged.



Principal grantees and contractors •Research Triangle Institute, •Academy for Educational Development, •Children’s Resources International, •The Aga Khan Foundation, and •Associates in Development (?)



Improve Quality of Workforce ($5,050,000 ESF)

“Responding to the private-sector’s frustration at the lack of skills that secondary school graduates possess, this new activity will help introduce work-related curricula and provide secondary school students with intensive training aimed at developing a cadre of employable youth. Emphases will include essential English, applied math and information-communications-technology (ICT) skills, work habits and attitudes, and interpersonal and teamwork skills, thus enabling students to enter on career track jobs or continue in job-related technical training or higher education with better fundamental skills.”




Institutions of Higher Education ($1,639,000 DA; $18,800,000 ESF).

To Expand human capital base in Pakistan, USAID will provide •550merit-based within Pakistan scholarships: business & agriculture •and 100 merit-based US scholarships; •expand school teacher training; •establish an independent examination board for university aspirants; •and renovate a recently denationalized college to make it a center of academic excellence in Pakistan. •Science and technology exchanges with leading U.S. institutions. Principal grantees include: United States Educational Foundation, the Government of Pakistan’s Higher Education Commission, Aga Khan University, and Forman Christian College. Source:


Performance and Results •1,798 communities in 10 districts developed school improvement plans •256 schools have completed the improvements :

•such as boundary walls to separate the classrooms needed to increase girls’ enrollment. •16,000 teachers, 1,900 administrators and 2,089 school management committees trained.

•School reconstruction began in the FATAs bordering Afghanistan. •USAID’s early childhood education has outperformed expectations:

•Attendance is 10% higher, on average, compared to classrooms without early childhood education programs. •Most importantly, the Ministry of Education has adopted the program for expansion country-wide. Source:


Performance and Results •110 teachers and school administrators completed a six-month training program (for mathematics, science, and English-as-a-Second Language) at leading teaching institutions in the United States.

•Results are uniformly positive. Teaching approaches and skills have improved, as have their understanding and appreciation of the United States. •With USAID encouragement •8 Pakistani corporations contributed $345,000 to improve 70 public schools benefiting nearly 10,000 students, •and a computer company donated $147,000 for equipping computer labs at two provincial teacher colleges and nine teacher resource centers. Source:

ESR Action Plan •Building Public-Private Partnership through restructured Education Foundations, joint ventures, leasing and other innovative initiatives. ♦ Bringing suitable equilibrium in Private vs. Public Sector Education. Private sector school survey (FBS, 2001) 36,096 private institutions in Pakistan. 66.4% lie in Punjab, 17.9% in Sindh. 39% in rural and 61% in urban areas. 14,758 schools (43.5%) in the primary sector, 12,250 (37%) in the middle, 5,940 (17.5%) in secondary 695 (2%) in higher secondary and above. Private sector investment in education 0.7% of GNP Small private sector presence the Government of Pakistan is committed to provide institutional incentives and safeguards to the private sector on the one hand, whilst improving quality of public sector education on the other. Source: Education Sector Reforms: Action Plan (2001 – 2005)

Private Sector Existing incentives

•Exemption from tax •Income •Income of computer training institution •Full time teachers or researchers (50%) •Import of equipment •Electricity tariff at domestic rate •Free land or on concessional rates in rural areas •Concessional financing for establishing rural schools •thru Education Foundations and credit through Khushali Bank and other Source: Education Sector Reforms: Action Plan (2001 – 2005)

Other Plans for support of Private Sector Education •National Education Foundation (NEF) restructured •NEF offices in FANA, FATA& AJK support Public Private Partnership •Private sector and NGO institutions integrated at national and provincial •Special cell of MoE supports expatriate Pakistanis. •Private Sector/NGOs encouraged to set self-financed •Private Sector Cells to facilitate registration, regulation and meeting standards. Source: Education Sector Reforms: Action Plan (2001 – 2005)

Private Sector

Demand Based Education •Key implementation strategy under ESR: •recognition of demand-based education rather than a supply-side orientation •Evidence: survey of Federal Bureau of Statistics (2001) •on the private sector, •GoP: role: enabler and facilitator, not provider •Public sector institution encouraged to offer demandbased cost-shared education options •An attractive Student Loan Scheme is with national and international Development Finance Institutions (DFIs). Source: Education Sector Reforms: Action Plan (2001 – 2005)


Implementation Strategies •The Education Sector Reforms •accompanied by specific strategies •flexible financing package •Action Plan 2001-05 based on the National Education Policy 1998-2010 •Rehabilitation of existing infrastructure in elementary education •50% of ESR funds for this program. •Initiative to address: •quality learning + •teacher training and resource centers. Source: Education Sector Reforms: Action Plan (2001 – 2005)

World Bank Says about Private Participation in Education

“Public education systems in many developing countries face a number of challenges. Curricula are often outdated; textbooks are in short supply; and pupil/teacher ratios are well above desired levels. Student retention rates and international test scores are both low. Studies show that most public funding of education benefits higher income households. There is growing evidence that private participation in education can improve effectiveness in developing countries in a cost-effective manner and without compromising equity. In addition, a number of studies demonstrate that private participation can encourage the public sector to improve the quality and efficiency of public schools. Competition among providers of services can lower costs and improve responsiveness to the needs of consumers. “ Source:

World Bank Says

“As we at the International Finance Corporation (the private sector lending arm of the World Bank Group) have moved into new investment areas, such as infrastructure and health, we have also become aware of the potential to participate in private sector education investments. However, there was little information to guide us on the types of investment opportunities available in private education in developing countries, let alone information on how best to evaluate prospective private education projects. We therefore worked with support from education specialists at the World Bank to commission a global study of private education in developing countries. The study used detailed case studies of private education companies to draw conclusions on the key elements for successful investments in these types of companies�. B i r g i t ta K a n t o l a Vice President, Finance and Planning International Finance Corporation March 1999) Source: The Global Education IndustryLessons from Private Education in Developing Countries JAMES TOOLEY ublication48pdf?.pdf

World Bank Says Consumers of education suffer from the ‘information’ problem, allowing devious business people to take advantage of their ignorance (Barr, 1993) • The private sector could not engage in the requisite research and development and quality control to raise standards, which needs the resources of government; hence any role for the private sector in education will inevitably be limited (Molnar, 1996).


Lessons from the global education industry “Our modest proposal has highlighted ways in which private education in developing countries could be enhanced. With policy-makers informed of the potential of the private sector, with investment encouraged, with regulatory regimes liberalised, with private companies contracted to take over inadequate state provision, with comprehensive student loan systems or vouchers in place, the private education sector could be in a strong position to further the promotion of equitable development.�


World Bank Says

“The second way of channelling funding for disadvantaged students The key features for viable schemes, we noted, were: • Avoid funding schools irrespective of their student numbers – in other words, per capita funding of schools is the preferred option • Be careful to weigh up the benefits of public subsidy of private schools with the disbenefits that excessive regulation as a result of such subsidy could cause. •Only per capita subsidy forces institutions to market mechanisms to keep standards high. “ Source: