Implementation of Cost Sharing in the Ethiopian Higher Education Landscape: Critical Assessment and the Way Forward

Higher education participation in Ethiopia is very low (about 1.5 per cent) and is the major source of the critical shortage of educated and skilled human resource. The higher education system in Ethiopia is moving away from exclusive and dismally low enrolments towards increasing participation. To expand access, to redress inequitable subsidies by taxpayers to a small proportion of the age cohort and to diversify revenue the introduction of cost sharing is necessitated to supplement public finance. Cost sharing serves as an alternative non‐governmental source supplementing revenue opening more opportunities and making students responsible citizens and customers. It also has a profound effect on improving the management and academic efficiency of the higher education institutions. In the expanding system, covering the full tuition and food and room cost for a small proportion of the age cohort from the taxpayers’ money is inappropriate and inequitable distribution of resources. A significant number of students are enrolled in fee‐paying programs in public and private institutions. A modified model of the Australian type Graduate Tax, as a more attractive, simple and manageable scheme is adopted in the Ethiopian higher education landscape. The scheme is expected to ensure equitable access to students of any background, as there is no need to stipulate income of parents to arrive at the repayment amounts. Immediate removal of all subsidies to food and room, calculating appropriate tuition fees and costs, provision of every citizen a tax identification number (TIN) and decentralization and strengthening the tax collection and information system are essential for successful implementation of cost sharing in Ethiopia. These improvements enhance the confidence of both public and university community and improves cost recovery.