Financing Public Training Institutions

In Africa, public pre-employment training is mostly financed by government’s budgetary allocations. Most budgetary resources finance operational expenses (in particular teachers’ salaries), while very little is allocated to investment, and maintenance of equipment. In Algeria and Senegal for instance 90 per cent of the government’s budget which is allocated to training, finances teachers’ salaries.

In parallel with improving the management capacity of public institutions, in its financial framework for TVET, Ethiopia is thinking of introducing performance-based budgetary allocations, linked with the autonomy of public institutions, which could create incentives to improve the quality and the responsiveness of the institutions to the labour market.

An additional source of income is represented by the sale of production and service activities (e.g. consulting services to local enterprises) of trainees. The exposure to the local market provides hands-on working experiences to trainees and allows them to keep their skills up to date (see Box 37. This approach has been followed by the Ethiopian government which aims to recover a substantial share of recurrent costs of public institutions through more systematic income-generating activities. In particular, it encourages the management of public institutions to develop tailor-made training offers for industry and business and to deepen the relationship with the private sector.

In order to increase the provision of funds to public institutions, several African countries have implemented a skills-development levy on companies. Levies are usually set between 1 per cent and 2 per cent of the total payroll of the enterprise; proceeds are used mainly to support public-sector training provision, with the emphasis on initial training at formal public training institutions.