Funding Private Universities in Ghana: Challenges and opportunities
Private universities in Ghana are relatively young. Thirty years ago there was no private university in the country. Statistics from the National Accreditation Board indicates that there are sixty one (61) Private University Colleges as compared to nine (9) Public Universities and seven Quasi Public Tertiary Institutions. Private Universities had a total student population of 228,347. In this short period of time, their contribution to tertiary education has been enormous.
Private universities have widened access for people who are both studying and working, since their schedules are more flexible. A few of them have been pioneers in certain programs.
In health care, for example, the physician assistants’ course was introduced by a private university. Graduates from such courses are making great contributions in the health care industry. I also wish to mention the area of Space Science Technology that is being pioneered by a private university with limited resources. The first university for applied science is a private one.
In spite of these sterling achievements, private universities faces serious challenges. They compete with the public universities in the area of recruitment and retention of highly qualified faculty. There is the ubiquitous lack of finances for expansion as well as inadequate infrastructure in terms of lecture halls and halls of residence for students and staff. Funding challenges for ill-resourced libraries and laboratories are also acute. Recent salary increment for government workers makes the compensation packages of public universities more attractive than what most of the private universities can afford.
In well-endowed countries, universities receive funding from a variety of sources including government agencies, not-for-profit organizations and business interests. Such sponsors publish various types of solicitations, announcing the availability of funding to support to projects within specific areas of interest. The sponsorship falls into four main groups:
Grant
Grants are a type of financial assistance for the conduct of research or other programs as specified in an approved proposal. They are normally awarded by sponsors whose purpose in supporting research is scientific, cultural or philanthropic.
Contract
Contracts provide a mechanism for procurement of a product or service with specific obligations for both sponsor and recipient. Typically, a research topic and the methods for conducting the research are specified in detail by the sponsor. In general, there are greater performance expectations associated with contracts, including project milestones and detailed deliverables (e.g. reports). The arrangement is usually designed to benefit the sponsor by achieving an expected outcome or product.
Cooperative Agreement
A cooperative agreement is an award similar to a grant, but in which the sponsor’s staff may be actively involved in proposal preparation and may also have substantial involvement in research activities once the award has been made.
Gift, Endowment
A gift or endowment is a voluntary, non-reciprocal transfer of money or property form a donor to an institution. The donor may be an individual, a corporation or a non- profit organization. The donor does not expect anything of value in return other than recognition and does not exert control over expenditure of the funds. A gift may meet the interests of the donor and can be restricted or unrestricted. A restricted gift is a contribution designated for a specific purpose, program, or project. If the donor does not specify any restrictions, the gift is unrestricted and the institution allocates the funds according to its own discretion.
Royalties
A university may have developed patented discoveries that have resulted in royalties and other income through a university’s department or center for commercialization.
A university‘s function in such sponsorship deals is to possess and offer a range of funding-related tools to discover potential sources of support and identify the best matches for particular projects and needs. For many reasons, these funding sources mentioned above are woefully undeveloped in Ghana.
Consequently, private universities in Ghana do not have access to these funding sources from both home and abroad and they have to rely mainly on internally generated funds and loans that attract abnormally high interest rates form banks to develop and grow.
Public universities on the other hand are subsidized by the government and I think it is good and natural that Government assists them. At the same time, government should not deprive private universities of government interventions such as the Ghana Education Trust Fund (GETFund), state scholarships and research grants and even subsidies for infrastructure expansion. Such assistance to private universities should also be normal and natural because, after all, taxes paid by Ghanaians are used by the government to subsidize students of public universities.
As at now, a large number of students study in private universities and they also deserve to benefit from education grants, subsidies, scholarship and other facilities that are financed by taxes paid by their parent and guardians.
In preparing for this address, I contacted some well-informed individuals on the matter of applying the GETFund to private universities and I was told that some years back, the government considered that, but it was found out that a number of private universities registered the land on which the universities were built in the name of the proprietors and not the universities. The authorities found it impossible to apply the GETFund to develop private individual properties.
In Ghana the entire public university system is composed of autonomous, property-owning institutions whose independence is guaranteed by an Act of Parliament. Apart from the appointment of a chancellor and a few other individuals on the governing councils of the universities, their governance is therefore similar to the not-for-profit private universities.
I am choosing my words carefully when I characterize private universities as not-for profit. This characterization is different from ‘’non-profit ‘’ that to me a misnomer. Every universities, private or public, has the objective to earn a profit, which is simply a surplus of revenues over expenditure. The important consideration is that the universities do not dispense these profits to owners or shareholders, but reinvests these profits in institutional activities that serve the public interest. In that sense, both public and private universities are therefore better described as ‘not-for-profit’ rather as ‘non-profit.
All universities are competing for students, faculty members and financial resources. The so-called public universities have an advantage here in that part of their budgets comes directly form state resources. Sadly, these subsidies are also dwindling. Consequently, the proportion of income that comes from student fees continues to grow as is the case with private universities. In reality therefore, the concept of public universities assumes the character of a ‘publicly- supported university.
Basically, universities, both private and public are building the human capital of the nation. Apart from contributing to economic development, they also enhance non-monetary benefits to society such as healthier lifestyle choices, improved parenting and immunization, greater civic participation and increased social cohesion.
Considering all the factors mention above one can hazard the point that the distinction between public and private institution is blurred.
Consequently, I would wish that governments, especially those in developing countries such as ours, would consider all universities, public and private, as public good that have to be supported in equal measure.
There are few measures the government can take to help private universities. First of all it should abandon the corporate tax it wants private universities to pay. As said repeatedly, private universities like the public ones are not-for profit and surpluses, if any, are not for the benefit of any individual, but are ploughed back into building the universities.
Apart from abolishing corporate tax, the government can further help by waiving all taxes on inputs required for teaching, learning and innovation including materials imported for infrastructural development.
One area of concern to private universities if the fees charged by the National Accreditation Board and the mentoring institutions. The fees are on the high side and they make a serious dent into the finances of private institutions.
I also wish to briefly touch on the issue of granting of Charter to private universities to award their own degrees. It is not about accreditation, a job that is performed excellently by the National Accreditation Board, (although their fees are exorbitant as just mentioned) where courses and programs are scrutinized before they are run by institutions, both public and private.
Presently, private universities have to work hard for years to be chartered, while newly built public universities get their charters to award their degree certificates as soon as they started operating. This is not fair.
The process or road map to charter must be well defined and transparent so as to remove any suspicions of bias. This will encourage private institutions to know what to do every stage in the process towards chartering. A chartered university has more clout as far as attracting students and faculty members are concerned. It does not have to pay high fees to mentoring institution. Chartering has the potential to improve the financial state of private universities.
Financing universities in Africa is not an easy undertaking. The private ones face much more challenges with financing. There is the suggestion of establishing banks that will meet the needs of the universities, much in the same way as banks are established to assist industry and agriculture.
Sadly, Ghana does not have a good track record in such matters. A bank that was established to help agriculture, the most important segment of our economy has not fared well over the years and is almost at the point of collapse. The one for industry has not fared better either. I therefore do not think any bank established to help education will do any better. We just do not have that culture. In any case as far as Ghana is concerned our banks are just too poor to specialize in any segment of our socio-economic endeavor.
The richest bank in Africa is the Standard Bank Group with total assets of 184.4 billion USD (as at 31-12-2011). Indeed the first four places are taken by South African banks. In the fifth position is the National bank of Egypt with total assets of 50.7 billion USD. Position 6 to 15 are occupied by North African Banks. The richest Nigerian bank is the First Bank of Nigeria with total assets of 17.4 billion USD. At the 17th position is Ecobank Group that is headquartered in Togo and is therefore listed as a Togolese bank.
The richest Ghanaian bank is GCB Bank Ltd at position 121 with total assets of 1.5 billion. Projected on the world scene, GCB Bank Ltd may not qualify as a credit union. In this situation, even the richest bank in Ghana will be of little help to education.
One important thing that the government must do is the articulate a credible national development plan that clearly spells out the direction and speed of national development. Such a plan will serve as a guide for institutions to develop programs and courses that will feed into the plan. In the absence of such a plan, universities, especially the private ones have to be more innovative in course offering and curriculum, and sometimes indulge in significant academic adventure.
A national development plan will spur growth of industries and other institutions that can partner universities in their development through research grants and other instruments. The general prosperity that comes with industrialization and private sector development will eventually lead to individuals and institutions setting up endowment funds and offering grants and gifts to universities.
A national development plan, in a way, can guide the government to offer competitive contracts to universities, both public and private, to conduct the research and other activities that are believed to be in the broader public interest.
There is real or perceived abuse of the so-called protocol admissions into public tertiary institutions. It is estimated that in some institutions, protocol admission make up 30% of all admissions. This means that students from well-connected backgrounds gain advantage over mostly poor students in the admission process in public universities. The effect is that more qualified but economically and socially disadvantaged students are displaced. Some of them eventually gain admissions into private universities and there is no reason why they should not be assisted financially.
Private universities can help themselves in a number of ways. They should step up efforts to improve their fundraising infrastructure by engaging competent fundraising staff, providing them with the necessary professional development, including training in grant writing for both faculty and staff as well as accessing fundraising technology. They will then be able to secure donations from alumni and alumni organizations and other businesses.
Fundraising targeted at alumni and their businesses will not be successful if private universities do not instill a culture of philanthropic giving in their students through consistent and intentional philanthropy education during the years students are on campus. When students are saturated with the spirit of philanthropy, it will not be difficult for them to contribute later on in their working life.
Private universities must therefore invest in sophisticated databases that more accurately capture their alumni capacity. The only way to reach out to and pursue alumni with the capacity to give is to have accurate data on them. I must admit that even in the area of mobilizing resources from alumni, private universities in Ghana are disadvantaged just because they have not been in operation for a long time and therefore do not have a large army of alumni members. In other parts of the world, where tertiary institutions have existed for centuries, universities have hundreds of thousands if not millions of alumni members and there is all probability that a lot of them will be sufficiently well-endowed to assist their alma mata in many ways.
Private universities should seek partnerships with others in business in developing their institutions, especially in areas that are not core to university function such as hostels for students and canteen facilities.
Private universities should work diligently to uphold and strengthen their image and also engage in programmes that will shape the national dialogue on the contribution of private universities in national development. Your good works should be adequately and forcefully advertised.
Private universities should be proactive in looking for and establishing contacts with businesses and institutions that are likely to employ their graduates. Such businesses are more likely to set up grants that may help the universities or give packages for students.
It will also be helpful if universities get to know the business community especially with respect to what they do, because this will help them propose areas of research that can be conducted by the university with mutual benefits.
This all calls for a well-functioning and professional fund raising offices in the universities as previously indicated.
It is well known that the world of business, especially manufacturing, is not doing well in Ghana. That notwithstanding, I believe businesses and other civil society organizations can still set something aside, however modest, to give grants and gifts and establish endowment funds for the benefit of private universities.
Private universities have come to stay and are going to play an increasingly vital role in preparing the human capital needed for the development of Ghana. All segments of society: government, universities, businesses, civil society organizations as well as individuals have to put resources together to help.
The road ahead may be long and rough,but working with perseverance, I think we can make it.
God Bless Regent University, God bless Ghana.
Thank you