User charges for education: The ability and willingness to pay in Malawi

Abstract

Investment in education is generally recognized as essential for a country's long term economic and social development. However, present macroeconomic conditions have limited allocation of public resources for education. Policymakers are seeking alternative sources of finance, one of which is the tapping of private household resources via user charges. This paper addresses two main issues involved in mobilizing resources by this method: (i) the ability and willingness of families to pay; and (ii) the possible expansion of enrollment that might be accomplished, given public budget constraints. The data on Malawi suggest the following: (i) a moderate fee increase is unlikely to precipitate a large dropout rate among students; (ii) excess demand will more than compensate for those students who do drop out due to the fee increase; and (iii) since fee increases will have a stronger impact on lower income families, they should be linked with equity measures such as scholarships.

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