Cost Sharing Schemes

Traditionally, training fees have been heavily subsidised, making only a very small contribution to covering the costs of TVET institutions. This can be a severe budgetary burden, in a context of scarce public resources. Some countries, such as South Africa, have implemented cost-sharing schemes, through the imposition of user fees to trainees or students enrolled in training courses. While some countries have opted for country-wide compulsory fees, others have left to individual training centres the possibility of setting the level of fees. In the former case, fees perceived by public institutions often accrue to the government, rather than remaining with institutions, this in turn translates into little incentives for the training institutions to develop market-oriented courses that could generate fee income. On the contrary, providing institutional autonomy to training centres to fix training fees has proved successful in some African countries.

 In general, trainees can contribute to sharing the burden of the training financing by paying upfront fees (covering a high percentage of the actual training cost), through loan schemes, or by paying ex-post a “graduate” tax as proposed in Ethiopia. Requiring students to contribute to training costs can actually help to foster commitment to learning. Evidence from Ghana shows that participants in the government’s free skill training and entrepreneurship programme (STEP) were consistently judged as being the least committed, with dropout rates of the order of 60 per cent at some institutions.

However, cost-recovery policies can also exclude disadvantaged candidates from training if there is no provision for assessing individual needs and supporting the poorest to overcome financial barriers. These risks can be mitigated by targeted subsidies directed at vulnerable groups in the form of scholarships and reduced fees. An AfDB funded project in Kenya is designed to improve the existing government bursary scheme as well as offer direct bursary support to disadvantaged secondary school students made up of AIDS orphans, girls and children from deprived rural arid and semi-arid land (ASAL) communities, like hard-to-reach nomadic communities. Of course, these measures might constitute an important burden on public budgets if the number of deserving candidates is high. Putting in place appropriate criteria to select the candidates can help achieve a balance between economic and social objectives. Nevertheless, screening requires the design of appropriate criteria, which should take into account the multi-dimensional nature of poverty. This includes not only the level of income but also the ability to access information. It is therefore crucial that screening criteria are backed by outreach strategies to reach the most disadvantaged target groups.