Formula-based decentralization of non-personnel, non-capital (“Bab 2”) spending in Egyptian education: Problems and possible solutions
In the last two years Egypt has made great strides in the financial decentralization of its education sector. At least two significant efforts have already been made. First, a pilot process of decentralizing Bab 2 (expendable materials) spending to three pilot governorates (Fayoum, Ismailia, and Luxor) has been carried out (down to school level), starting in 2009 (though the design and policy dialogue work started in 2007). Second, a process of decentralizing certain aspects of Bab 6 (infrastructure and equipment) spending to all governorates (and even down to idaras) has started in August of 2009. These processes have been characterized by several features which, in the Egyptian context, are innovative and perhaps remarkable, and it is these features that allow the allocation of this expenditure to be called “decentralized.” First, the funding is allocated via a transparent formula: all actors can see how much is being allocated to themselves and to others, and why. Similarly the allocation is by a formula, thus minimizing or entirely eliminating budgetary transactions costs and a “begging” or negotiating mentality. The formula is “fair” in that it has simple components such as enrollment, poverty (as proxied by the regional values of Egypt’s HDI index). Second, the formula allocates money in such a way as to allow the recipients considerable discretion in how to use the money: what to purchase, when, and from whom. These processes are not “perfect” in that, for instance, with regard to the Bab 6 allocations, there are certain restrictions on the use of the funding (a large percentage can only be used for technical schools, or for ICT equipment for preparatory schools). But, it is a significant beginning towards decentralized education finance.