Funding of the TEVET System in Malawi – Practice and Experiences

1. Funding of the TEVET System in Malawi – Practice and Experiences A presentation by TEVETA to the Invited Guests at the 10th Anniversary Celebrations of the Botswana Training Authority (BOTA) at BOTA House on 2nd March 2011

2. Main Objectives of Presentation To briefly articulate the role of TEVET in national development To provide an overview of the funding and financing mechanism of the TEVET system in Malawi To share some challenges regarding the TEVET funding model used in Malawi.

3. Layout of Presentation Introduction Establishment of TEVETA Funding of the TEVET System Levy Collection in practice Uses of TEVET Levy Successes and Challenges faced in collecting TEVET levy

4. Malawi is predominantly an importing and consuming nation. Current development efforts are to shift to a producing and exporting nation. • To be able to export the country has to produce products that are competitive at the international market. • To be able to produce such quality products, the Malawi workforce needs to be highly skilled. • The role of TEVETA is to create a conducive environment for private sector led economic growth Introduction

5. The TEVET Authority was established by the Act of Parliament (Act No. 6 of 1999) after two studies conducted with support from DANIDA and GTZ. • The studies indicated that Malawi required a rigorous reform in the management of the TEVET system, including the funding and financing mechanism. TEVETA Background

6. To monitor gaps between supply of and demand for skills; • To promote an integrated, demand-driven, competency-based modular technical, entrepreneurial and vocational education and training system; • To support the adoption and application off appropriate technologies; 4 To promote managerial and business skills and spirit of entrepreneurial culture with regard to both wage and self-employment; 5. To facilitate sound and sustainable financing and funding mechanisms and; 6. To facilitate and bring the expertise and moderate the different interests of all stakeholders. TEVETA - Objectives

7. TEVETA’s Strategic Mission & Vision The mission of TEVETA in the 2007-2012 strategic plan is: “todirect sustainable acquisition of internationally competitive and recognizable technical, entrepreneurial and vocational skills by the Malawian workforce” The vision is: “an adequate and sustainable generation of internationally competitive skilled workforce capable of spearheading the country’s production and export-led socio-economic growth in a socially responsible manner”

8. TEVETA Goals in the Strategic Plan • To maintain labour market information for policy and program planning • To broaden equitable access to quality technical, entrepreneurial and vocational education and training • To effectively regulate the training market • To maintain an adequate and sustainable funding and financing mechanism for the TEVET system.

9. Background of TEVET funding • Technical and Vocational Education and Training in Malawi was initially funded using the Industrial Training Fund (ITF) defined under the Industrial Training Act. • The ITF was only levied on employers who engaged artisans in technical skills at workplace. • The amount due to the Fund was based on a calculation linked to wages of those skilled artisans. • Those that did not engage artisans were exempted from contributions to this ITF. • The new Training Environment demanded different approaches to training.

10. Background – Financing of TEVET system The study by GTZ and DANIDA in 1998 concluded that the then Industrial Training Fund was inadequate for the new desired training environment in the country. The report showed that the Malawi Government was a major investor in training in Malawi. Hence the introduction of the new funding and financing mechanism

11. Background – TEVET Fund • The TEVET fund, created by the TEVET Act, is non-governmental and this levy does not go to Ministry of Finance. It is collected by TEVETA. • The TEVET Fund is administered by the TEVET Authority on the basis of Annual Action plan and Budget approved by the TEVETA Board. • In this fund, Section 29 of the TEVET Act defines the following components: • TEVET Levy (from public and private sector) • Parliamentary Appropriations • Grants and donations from within and outside Malawi.

12. Background – TEVET Fund In practice, this fund has the following components: • Government levy at 1% of total basic emoluments • Private Sector employers at 1% of total basic emoluments • Specific interventions from donors for certain activities. (DFID, CIDA, NAC, Global Fund, etc) • Miscellaneous income from registration and accreditation of training providers, grant or donations, fees for programs, publications, seminars, consultancy, etc.

13. Levy collection • More companies are becoming levy compliant due to increasing understand of the use and value of levy and the legal requirements • TEVET levy has been rising over the years from K30 million in 2000 to the forecast of K680 million in 2010/11 Achievements

14. Levy Growth

15. Uses of TEVET levy • TEVET levy is used to fund programs approved by the TEVETA Board. • As TEVETA advocate demand-driven approaches to program implementation, programs range from demands from Private Sector Employers who pay the TEVET levy to demands from the various groups from the informal sector who do not pay the levy.

16. TEVETA Programs • Private Sector Training Programs consist of : • Common Tailor-made courses • Company-specific Training Programs • TEVETA working with Industrial Groupings or Associations • On an annual basis, TEVETA spends large sums in excess of K80 million under these programs and this is, at least, 10% of its total income.

17. TEVETA Programs TEVETA is given the mandate of managing the apprenticeship scheme • TEVETA selects students into technical colleges • TEVETA buys appropriate tools for the training providers. • TEVETA pays training subsidies to training providers • TEVETA attaches students and instructors to industry • TEVETA carries out programs of upgrading teachers in TECHVOC up to a minimum of diploma level.

18. TEVETA Programs TEVETA manages several programs for the informal sector under the following initiatives: • Skills Development Initiative • On-the-job Training with Partners involved with development programs • Small Enterprise Development • Training of youths through Facilitation Units • Training of Orphaned and Vulnerable Youths through special Projects. Some of these programs are implemented using TEVETA Resources while others have donor support. The demands for different skills training programs are much larger than TEVETA can implement due to resource constraints within TEVETA.

19. TEVETA Programs Quality Assurance programs include: • Standards and Curriculum Development • Registration and Accreditation of Training Providers (and the related grading thereof) • Assessment and Certification Levy Collection • The process involves verifying payroll information in what is called “inspection”. TEVETA has to collect the TEVET levy from employers and this is what funds TEVETA programs

20. TEVETA Programs Planning Monitoring and Evaluation • Labour Market information • Planning • Monitoring • Evaluation Information Education and communication • Information dissemination • Marketing • Public relations Service centres • TEVETA has decentralised Service Centres that act like Satellite Centres of the TEVETA Secretariat. • These Service Centres are implementing agents of TEVETA Programs approved by the TEVETA Board in the three catchment areas of Malawi.

21. Governance and Management • TEVETA operates under the direction of a Board that is appointed by the Minister after receiving nominations from various constituencies defined in the TEVET Act. • The TEVETA Board is composed of several persons appointed from the 14 constituencies of relevant stakeholders. • The Board entrusts the running/implementation of TEVETA programs to management. • As a guide from the Board, the governance costs for management and the Board take a maximum total of 30% of the TEVETA Budget.

22. Government’s position has compromised the output of programs run by TEVETA. The TEVET Act provides for legal action if employers don’t pay. • Conflicting roles of collecting levy and using the private sector for training • discounted wage negatively affecting attachment • TEVETA governance structure is too lean for the mandate. Challenges

23. Insufficient funds to support stakeholders in training matters. - Technology gap - Limited access - Youth empowerment - Failure to promptly respond to training needs • The subsidy amount for training materials in colleges in some trades is so minimal that college may not buy meaningful training materials Challenges

24. TEVETA is contemplating the use of the Malawi Revenue Authority as is the case in other countries like Tanzania. • There is need for TEVETA to expand the governance structure to effectively carry out its functions. Conclusion

25. THANK YOU SO MUCH FOR YOUR LISTENING MAY GOD BLESS YOU