Monday, February 13, 2017

THE CASE FOR SCHOOL FEES

In the last week the mad rush back to school has been further coloured by the horror at rising school fees demanded to join S1 and S5.

Parents have been lamenting the registration, tuition, development and any number of fees that school administrations are slapping on the financial obligations they want their intending parents to meet before their children can be allowed admission.

It’s understandable that coming from the festive season that financial matters would be sensitive. So much so that if parents had their way they would have government regulate how much schools, even private ones, can charge as fees.

I always have a problem when people try to subvert the forces of supply and demand. In this case it means that schools can charge high fees because there is not enough supply of quality schools and the effective demand – parents willing to pay, exist.

"By creating some arbitrary cap on school fees, especially if its falls below the cost of producing the service or not high enough to justify the investment, would discourage investment in the sector and create the very situation that is causing high fees in the first place, which is lack of schools...

In the 1980s there were people within government who thought land lords in Kampala were charging too  much rent.  They were pushing for government to cap rents in Kampala as way to stop the “lecherous capitalists”. Thankfully government shooed them away, arguing that to regulate rents would discourage much needed investment in the sector.

The result of this sensible policy is that not only do we have a large stock of housing available but also there are segments for all income levels. But to illustrate how big the housing deficit was in the 1980s, that despite three decades of investment the numbers show that we still have at least a 50,000 housing deficit in Kampala alone. This is the equivalent of 60 apartment complexes the size of Bugolobi flats.

If government hadn’t taken the leap of faith people’s garages would still be acceptable living quarters.

To bring school fees down two things have to be done.

To begin with government needs to improve the quality of its own schools.

Our private schools cannot compete with the best in the region in terms of learning environment and academic outcomes. This is because our private schools have a low benchmark to beat. A businessman need not do too much but just a little above the public schools to make money. So because our government schools are so bereft of facilities and teaching staff our private schools are not very much better.

This would entail government schools living up to the basic requirements required of schools. Its hard for government to crack the whip on school standards when its own establishments are the number one culprit.

Secondly, government should let the market decide the fees structure. School owners cannot hike fees indefinitely. The market cannot allow it.

As more investment flows into the sector standards will improve, as schools seek to differentiate themselves. Also the weak schools will fall by the way side and be taken over by new owners with the required muscle to carry on with the investment. Or they will be merged into bigger schools which can take advantage of the economies of scale to provide a more affordable service.

Government’s concern should be to get as many children getting a quality education as possible. 

Given its inadequacy in fulfilling this obligation it should not disallow the private sector from stepping in, until it gets its act together  -- if ever.

A case can be made for subsidising education. But one hesitates to begin the discussion as subsidies are easily abused and would further distort the sector.

"Parents’ pain is real. It is no consolation to them but the pain can be temporary, if we allow more and more investment into the sector or permanent, if in trying to keep fees artificially low we starve the sector of new development...


In the last case when government is forced to lift the fees cap – as it inevitably will, fees will jump to find their real level. But we need not learn the hard way.

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