education finance perspectives of parents in uganda by christine kobugabe, geoffrey muzigiti and...

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Mountains of the Moon University

SCHOOL OF BUSINESS AND MANAGEMENT STUDIESP. O. Box 837, Fort Portal, Uganda; Tel: +256 773 352340, Website: www.mmu.ac.ug,; Email: [email protected] Slide 1/25

Education FinancePerspectives of parents in Uganda

By Christine Kobugabe, Geoffrey Muzigiti and Oliver Schmidt

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Presentation Outline

1. Introduction: Mountains of the Moon University2. In a nutshell: Education sector in Uganda3. Deciding investment into offspring’ education4. Improving education finance5. An emerging research agenda

Mountains of the Moon UniversityLake Saaka Campus – SBMS building

School of business and management studies (SBMS) – front side view

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1 Introduction: Mountains of the Moon University (MMU)

Þ 5 schools (= faculties); - agriculture- business and management studies

(SBMS)- informatics and computer sciences

(SOIC)- education, - public health [and nursing][- environmental studies]

Þ about 1,700 students; out of which approx. 900 SBMS

,, ,, 100 postgraduate,, ,, 45% female

Þ 25 programs at academic certificate (1 year), diploma (2 years), bachelor (3 years) as well as postgraduate level

Þ Research and other outreach programs in, agricultural value chains, education, entrepreneurship, microfinance, natural resource management, public health

Lake Saaka Campus – SBMS building

Backside view (from the crater)

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1 Introduction: Mountains of the Moon University (MMU)

It was conceived and founded by leaders of the business, faith-based and civic communities of the region. Together with the representatives of the 8 districts of the region, they are represented on the university board and council.

MMU is registered as a private company; however it is non profit. It is one of the most important employers (about 150 staff) in the region.

MMU’s vision and mission are a challenge under the condition of a. tuition-based business model (Kobugabe 2011). Whereas MMU endeavors to offer academic programs most relevant to development issues of the region, these may not ‘sell’ best (e. g. agriculture, microfinance, public health).

MMU has been relying on international donors (and in early years GoU) for its capital formation.

MMU was registered in 2004 and received a provisional license from NCHE in 2005.

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2 In a nutshell: Education sector in Uganda – Structure and years

Age In years

Level of education

3

Nursery

Primary

6 1213

1517 19

1824

21

Secondary - Advanced- Ordinary

Tertiary

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2 In a nutshell: Education sector in Uganda – Enrollment rates by levels

Age In years

Level of education

3

Nursery 20%

Primary 92.5%

6 1213

70%

1517

45%

1918

2421


Tertiary35%

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2 In a nutshell: Education sector in Uganda – Government financing

Age In years

Level of education

3

Nursery 0%

Primary 90%

6 1213

80%

1517

0%

1918

2421


Tertiary7%

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3 Deciding investment into offspring’ education

Private school

Government School

High Expectation

= Investment objective

Access to a high paying (formal) job

Minimum qualification to perform in the informal and/or agricultural sector;May be lucky to achieve government scholarship for higher education

Low Expectation

= Investment objective

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Investment objective

Risk RiskAppetite

InformationFinancialCapacity

Probability that the child ‘repays’; once

grown up

Probability that the child survives

Probability that environment changes render the investment

unprofitableProbability that the investor survives

Source of income Seasonality / Volatility

of sources of income

Financial obligations (e. g. other children)

Inflation

Assuredness of property

rightsLabor market

Education sector / education institution

,PEST’


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The independent variables are not independent from each other, though. They influence each other in various way, i. e. multi-collinarity is likely to be high.

We may assume that all four independent variables are shaped by the educational attainment of the investor. All other things equal, the more educated investor will apply more information, assess risk and financial capacity more differentiated and will form a different risk appetite than the less educated investor. Hence

(2) EID = f (I(E), R(E), RA(E), F(E)) => EID = f (E)

The education investment decision is a function of information, risk, risk appetite, and financial capacity (investment theory usually assumes that information and financial capacity are subsumed under risk)

(1) EID = f (I, R, RA, F).


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However, it might be doubted if parents act exclusively like rational investors (as e. g. Gary Becker seems to imply). Maybe the most sought after influence is culture.

(3) EID = f (E, C)

Culture is, at least to the economist, a rather vague concept. E. g. in Uganda, it is argued that attitudes towards education vary systematically between tribes. However, it has so far not been shown that the resulting EID (a) does indeed vary systematically and (b) that it can not be explained by I, R, RA and F.

Hereafter, we consider sex of respondents as a proxy for culture, because the male and female sexes constitute gender, i. e. socially (culturally) constructed roles, attitudes and behavioral pattern (e. g. Hamaus/Meier zu Selhausen 2012).

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3 Deciding investment into offspring’ education Overview of the data-sets

GBPD = Gender-balanced product development project; 493 purposively (‘snowball’) sampled semi-urban respondents; 491 valid questionnaires ; June-July 2011Central, Western and Mid-Northern regions of Uganda

RFG = Rural Farmers’ Groups cash flow & credit use assessment; 414 respondents from 42 randomly sampled groups; Oct 2012Western and South-Western regions of Uganda

GBPD RFG0

150

300

450

600

FemaleMalesex not indicated

Number of respondents

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3 Deciding investment into offspring’ education Respondents’ profile, by educational attainment and gender

Low education medium education Higher education0%

20%

40%

60%

80%

100%

Low education medium education Higher education0%

20%

40%

60%

80%

100%

MaleFemale

GBPD RFG

GBPD; low education = less than O-level; medium education = O-level; higher education = beyond O-level

RFG; low education = Primary; medium education = Secondary; higher education = Tertiary

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0 1 2 30

1

2

3

4

5

6

Female (GBPD)Female (RFG)Male (GBPD)Male (RFG)

3 Deciding investment into offspring’ education Respondents’ number of children, by educational attainment and gender

low education medium education high education

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GBPD RFG0.00

10.00

20.00

30.00

40.00

50.00

60.00

70.00

80.00

90.00

TotalMale respondentsFemale respondents

Euro

3 Deciding investment into offspring’ educationAmount spent per child per term

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%

3 Deciding investment into offspring’ educationEducation spending as% of respondent’s income

GBPD RFG0

25

50

75

100

Male respondentFemale respondent

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3 Deciding investment into offspring’ education Relationship (R2) between education spending and respondent’s education

Total education spending

Female (GBPD)

Female (RFG) Male (GBPD) Male (RFG)

Low education -6.7% -5.8% -8.8% -6.2%

Medium education 2.9% 6.4% 14.3% 6.8%

High education 5.6% 17.4% -6.2% -0.9%

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+

Medium education

Low education

High education

-

R2 with total education spending Female

Male

3 Deciding investment into offspring’ education Relationship (R2) between education spending and respondent’s education

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3 Deciding investment into offspring’ education Summing up

The investment choices of Ugandan Parents’ for their children’s education are shaped by their own educational attainment and by their gender.

1) Many women invest a large portion of their income into their children’s investment. Contrary to Ugandan myth, this is often absolutely larger than men’s contribution.

2) Higher educated women invest more into education than less educated women.

3) Institutions matter: Investment decisions of both men and women differ between rural and urban settings. In particular, more educated urban women have less children than less educated urban women. Rural men want many children; rather than better educated children.

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4 Improving education finance: Available options

Sources of Funds

School fees Loans from both regulated and Unregulated institution (emergency in nature)

Government Financing (primary and secondary level)

Parents Income

Sale of property

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FI Product Development

Purely school fees commitment savings account

Combined annual savings and loan product

Accumulated Savings

Savings Loan

4 Improving education finance: New product concepts

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5 Education Finance: An emerging research agenda

1) Would the findings of the exploratory study stand in a robust setting?2) What is the impact of risk and risk appetite towards investment in

children’s education; and what shapes risk and risk appetite?3) What is the impact of time-inconsistent choices; and (if problematic)

how might it be contained?4) What is the impact of financial product interventions; what are the

alternatives?5) Can better education finance lead to better education quality?6) What is the potential (and potential design) of combined financial

instruments?

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Thank you very much for listening

We are looking forward to questions and discussion

Dr. Oliver SchmidtAg. Dean, School of Business and Management Studies ([email protected])

Christine Kobugabe,Head of Department, Business and Management ([email protected])

Geoffrey MuzigitiHead of Department, Banking and Microfinance ([email protected])

mailto:[email protected]

mailto:[email protected]

education finance perspectives of parents in uganda by christine kobugabe, geoffrey muzigiti and...

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