The transformation of Makerere University’s financing system was a pioneering effort unlike any other undertaken in Africa. The University introduced three interrelated measures: alternative financing strategies, demand-driven courses and new management structures. With these measures, the University was able to diversify its sources of income, better utilise its facilities, restore authority to the management team and achieve greater autonomy from the government.
The financial crisis faced by as other countries in during the seventies and eighties left no other alternative to the government to allow the institutions of higher education than to seek diversified sources of funding. The devastated conditions of the institutions created a climate where any change was likely to be viewed as an improvement. The of took advantage of the situation and transformed its system of financial management and turned the institution from the verge of collapse to one which sets an example for the rest of the continent (Court, 2000).
Makerere introduced three interrelated measures: (a) Implementing alternative financing strategies; (b) introducing demand-driven courses; and (c) installing new management structures.
Significant effects of these measures within the university have been: diversification of income sources, better utilization of facilities and managerial devolution and greater autonomy from government.
Concretelly, Makerere diversified its income sources in four ways:
Encouraging privately sponsored students
Commercializing service units
Enforcing user fees
Institutionalizing consultancy arrangements.
Generate complementary and alternative measures to the public financing of the university to guarantee its existence.
Encouraging privately sponsored students
The total enrolment rose from 6,996 in 1992/1993 with only 458 private students to 18,446 in 1998/1999 with 10,194 private students. Faculties are allowed to retain 45 per cent of the earned income. Commerce, Law, Education and the Humanities which can be taught at night, are the most popular privately sponsored programmes. Today, 80 per cent of students are self-financed.
Commercializing service units and enforcing user fees
The Bookshop and the Bakery are now contracted out to private management. The bookshop gave the university a profit of six million shillings in 1997. The Guest House and the Printery are now managed by the University on a commercial basis. Non-tuition user fees are now strictly applied with additional revenue for the institution.
Institutionalising consultancy arrangements
Makerere has established the Makerere University Consultancy Bureau, a limited liability company with a 51 per cent share owned by Makerere staff as individuals and 49 per cent by the university as an entity. The bureau manages the consultancy activities in business, organizational development, water and sanitation, and public health. A data base is maintained linking consultant skills to task requirements.
Demand-driven academic reforms
The choice of the courses, mode and timing of the delivery have been demand-driven to facilitate the expansion of the privately-sponsored enrollment resulting in substantial additional income.
After installing new management structures, rapid expansion of enrollment and major changes in funding patterns have been linked with radical changes in management. Autonomy and internal decentralization have enabled managerial changes to facilitate the diversification of income. Faculties now determine their own development through financial committees that receive a portion of the earned revenue and decide on its allocation and distribution. The University Secretary has lost exclusive financial authority. A performance-based incentive structure has been introduced in which staff remuneration is based on ranks. Those who pay fees demand value for money with a built-in efficiency measure.
The University has reduced its dependence on government funding from 83 per cent in 1995/1996 to 69 per cent in 1998/1999.
The revenue gained from private students rose from 4 to 10 billion shillings during the three year period of 1995/1996 to 1998/1999.
Funds gained from non-government sources are allocated according to prescribed ratios to library enrichment, faculty development, staff salary supplementation, building maintenance and some construction. Professors can now earn over US$1,300 per month with the possibility of added supplementation from evening classes.
The performance-based incentive structure coupled with the ‘value for money' demand from the fee-paying students have raised the standards of teaching as well as staff and student accountability.
The power of privatization engendered by the fee-paying students has spread an entrepreneurial ethos within and beyond the university.
While Makerere is addressing important institutional issues in financial management, the government has started addressing some of the systemic issues in this area. The most important of them are given below:
Greater operational autonomy for higher educational institutions, especially in relation to financial and revenue policy; Block grant for institutions eligible for public subsidies, on a progressively declining basis related to performance measured by agreed indicators including (unit cost per student and facility utilization); An expectation that institutions will reduce their unit costs through the expansion of evening and vacation programmes and delivery of distance education.
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