Leveraging ODA to
Build Enduring Development Institutions:
The Case for
Vocational Education and Training
Speech by Dr Ngozi Okonjo-Iweala
June 23, 2017
Annual Conference of
Swiss Development Cooperation
École polytechnique
fédérale de Lausanne, Switzerland
1. Opening
remarks
·I am so happy to be here today to join
you in your reflections on the importance of vocational education and training.
But I would like to discuss the topic in the context of institutions and why
they are necessary as the bedrock of all aspects of sustainable development and
a stable and successful and fair society.
·It is important to talk about this
context of institutions today because Switzerland is an important player in the
field of development aid and cooperation, spending over US$ 3.5 billion a year
on bilateral and multilateral ODA. Some of that goes to support institution
building in countries of focus in Africa and South Asia. Not too many donors focus
on institution building, so I want to congratulate Switzerland and urge it to
stay the course. Congratulations also on a steady increase in ODA since the
early 2000s, both in volume terms as well as percentage of GNI. You are now at
0.52% of GNI, well above the OECD average, and commendably most of the aid is
untied.
·So let me get back to institutions.
What do I mean by institutions? According to Douglass North, the Nobel Prize
winning economist, “institutions are the humanly devised constraints that
structure political, economic, and social interaction. They consist of both
informal constraints (sanctions, taboos, customs, traditions, and codes of
conduct), and formal rules (constitutions, laws, property rights). Throughout
history, institutions have been devised by human beings to create order and
reduce uncertainty in exchange.”
·So, whether we are talking about
education, health, politics, economics, or civil society, it is through solid
institutions that rules, laws and social norms enable people to work
together effectively and peacefully; they define how power is managed and used,
how states and societies make and implement decisions, and how they measure and
account for the results.
·Strong institutions are the foundation
for human development, economic growth, and well-functioning societies. They
help to reduce corruption, promote transparency and ensure that decision-making
processes are more inclusive and representative, all of which help to build
trust in governments.
2. Switzerland,
a model of strong institutions
·For an example of this you need to look
no further than this country. Switzerland is a country built on strong
institutions that are the envy of the world. It has a long history of social
harmony, economic stability and long-term, rational decision-making.
·Strong educational institutions are at
the core of Switzerland’s success enabling the creation of a broad,
educated, and secure middle class. Switzerland devotes a larger share of public
expenditure to education than almost any other OECD country, allocating US$
16,090 per student, compared with the OECD average of US$ 9,487. This enables
the recruitment and retention of highly qualified teachers who
receive average salaries at the primary and upper secondary levels that
are nearly double the average salaries of their peers in other OECD countries.
·Switzerland is a particular leader in
its approach to vocational training. I don’t know how many of you saw a very
interesting article in the Financial Times of June 16 on the issue of vocational
education and training in the US. It is titled, “Paying Young Americans to
Learn.” There, Switzerland is raised along with Germany as one of the countries
where vocational training receives as much attention as university degrees. So
Switzerland has a global reputation for good vocational training institutions.
·More than 65% of students in upper
secondary education in Switzerland were enrolled in pre-vocational or
vocational programmes. And these vocational education programmes are highly
practical, with 90% of students combining school and work-based learning,
unlike other OECD countries that are only school-based. This system equips
individuals to find well-paying jobs and provides the country with a
high-skilled workforce that has contributed significantly to its economic
success.
·Perhaps this is why Switzerland also
has such an extraordinary track record for innovation. Although best known for
its precision clocks and watches, I probably don’t need to tell you that this
is also the birthplace of everything from Velcro, aluminium foil and stock
cubes, to the electric toothbrush.
·Switzerland’s public transport network
similarly reflects the strength and performance of its institutions. At its
core are railways, which connect almost every corner of the country integrating
the Swiss Federal Railways (SBB) with private railways and every other form of
public transport. Like everything else, the efficiency of the system is judged
by high standards. Perhaps that is why the SBB’s drop from 95.9% of trains on
time in 2007 to 95.8% in the following year made news headlines.
·The fact is, there is a reason why so
few people outside Switzerland can name the Swiss President (presently, Doris
Leuthard) and yet so many are willing to put their money here and send their
children to Swiss finishing schools. It is because they trust Swiss
institutions.
·Just consider the opposite. Without
strong institutions, the sustainability of economic growth and development –
and even the sustainability of the state itself – is at stake. You need only
look at fragile states, such as Yemen, Sudan and Somalia, to see evidence of
this.
·This is one reason why institution
building will play such an important part in our achieving the Sustainable
Development Goals, and why Switzerland will become the epicentre of the work
that gets us there. With Geneva home to representatives of around 175 states,
nearly three dozen international institutions, bodies and secretariats –
including Gavi, the organisation which I chair and to which Switzerland is
one of the newest donors (thank you!) – hundreds of NGOs and corporates,
and where 200,000 people come every year to have dialogues, Switzerland is
where people come to figure out how we survive and thrive together in this
complex world.
3. How
do we build strong institutions?
·But strong institutions are not easy to
build; they require time and sustained effort.
·To take another Swiss example, an
institution that goes to the very core of Swiss culture is the Commune. This
bottom-up institution underpins social cohesion within Switzerland and it is
through this that the government and its institutions are held to account. Yet
the commune is something that was not conceived, engineered or designed, but
was formed iteratively over centuries.
·Indeed, the strongest institutions were
not created overnight, but rather they have emerged through time, sculpted by
process. The US Bill of Rights, which forms an integral part of
that most revered of American institutions, the US Constitution, is a classic
example. It is after all made up of amendments. The point is that it can be
difficult to get things right first time.
·In fact, history has shown that some of
the strongest institutions have come about through a process of struggle. That
doesn’t necessarily mean through conflict, but through a long-term process of
development interconnected with broader social development. Think evolution,
not revolution. This kind of struggle can provide conditions that produce a
testing environment, the iterative loops that can lead to subtle changes, to
solutions, allowing systems to co-evolve and ultimately creating a context that
can help provide legitimacy.
·The fact that strong institutions are
not easy to build, requiring time and sustained effort, presents a quandrary
for the development community. Donors, and their tax payers, often have
shorter-term expectations with an emphasis on seeing visible results quickly. This
means aid is typically project-based, focusing on more easily measurable
outputs.
·This has left institution-building
somewhat of an orphan. It is actually quite difficult to tease out what is
institution building in most countries’s ODA. Most have it under governance and
peace. The good news is that more development funding flows to governance and
peace than any other sector. This amounted to US$ 17.3 billion –
or 15.7% of all ODA – in 2012 according to the OECD. The bad
news is that this figure appears to be on the decline, having fallen from 17.9%
from three years prior. Moreover, only around half of this was designed
to directly strengthen public sector and legal institutions (the rest was
designed to support civil society, media and peace-building efforts). Switzerland
is the exception to this, investing more into state reform than almost any
other sector.
·Perhaps even more telling is that only
one third of this support is channelled through the public sector institutions
it is designed to support, with the majority flowing to NGOs or multilateral
organisations. And most of this is for project-based interventions rather
than direct disbursements into national budget systems.
·Why? Because, this provides donors with
easier accountability and more measurable and immediate results. But how can we
effectively build these institutions if we aren’t willing to invest in
them? While parallel structures are easier to build, at the end of the day
it is a lack of strong institutions that makes states fragile.
·The relative lack of support for
institution building is a particular challenge in rapidly growing economies –
such as Nigeria and India – where institutional development has not kept pace
with economic growth. Donors are increasingly disengaging from these countries
as they reach middle income status, even where those countries continue to need
support to strengthen their institutions.
4. First-hand
account
·My first-hand experience in two terms
as Nigeria’s Finance Minister, 2003-2006 and 2011-2015, convinced me that the
true road to sustainable and inclusive growth lies with the development of
institutions. Let me just take a moment to tell you why and link it to our
health and education agenda.
·When I first became Finance Minister in
Nigeria in 2013, I found very weak systems, processes, rules, and
regulations—in short, very weak institutions in our public financial management
system. Virtually all transactions were cash-based. There was nothing on a
technological or electronic platform, meaning that if I wanted to pay the wage
bill of a Ministry, we did it in cash transferring monies to the Ministry’s
bank account for payments. To compound matters, there was no clarity on the
number of civil servants on the payroll. Ministries would send differing
numbers each month, sometimes making the wage bill and recurrent government
expenditures high, and unpredictable. The cash-based transactions and lack of firm
payroll numbers left room for manipulation and corruption. Unscrupulous civil
servants in collusion added phantom workers to the payroll and collected their
paychecks. This phenomenon was known as ghost workers. Ghost workers even
retired to become ghost pensioners!
·I was horrified to see the corruption
in government caused by the absence of a financial management system. With the
president’s support, I requested the World Bank and DFID to help; USAID also
pitched in. With the support of about US$ 92 million in concessional loans from
the World Bank, we set about building an electronic payments platform for the
federal government, the Government Integrated Financial Management Information
System, or GIFMIS. We set up a biometric system to capture and identify all
civil servants and eventually pensioners with a system known as
IPPIS—Integrated Personnel and Payroll Information System. We also developed
the Treasury Single Account (TSA) so that the Ministry of Finance could have an
overview of all government accounts. These three systems resulted in much
stronger financial management institutions. By 2015, we were able to weed out
over 65,000 ghost workers, saving the government over US$ 1.1 billion in
fraudulent payroll costs.
·But building these institutions was not
easy. Those benefitting—the vested interests fought back, stalling and blocking
installation of these systems. In and of themselves, getting the software and
hardware and trained staff in place was not easy. It took 10 years to build the
systems. When I left government after my first stint in 2006, the pace of work
slowed considerably and almost ground to a halt. Completion of these systems
was one of the strong motivating factors for my going back for a second term in
2011-2015.
·This example illustrates what I tried
to say earlier. Institution building takes time. It requires staying power but
the payoffs can be large if you get it right. Not doing it is costly. How can
you finance health, and education, especially vocational education and training
sustainably, for young people if domestic resources are being siphoned off due
to the absence of strong financial management systems and institutions?
5. Challenges
·What I have just said speaks volumes
about why it is so important to build strong institutions across sectors in
developing countries. I have given you an example of financial institutions in
Nigeria. In health, we have seen in Gavi that one of the biggest
differentiators in the performance of countries’ immunisation programs is the
strength of their health institutions, and especially, personnel systems. That
is why Gavi is investing heavily in strengthening leadership and management in
immunisation. The University of Rwanda, for example, now has a Centre of
Excellence partially funded by Gavi which is devoted to training healthcare
professionals across East Africa, creating strong supply chains through strong
management.
·So what about educational institutions,
particularly in Africa and particularly for vocational education and training.
Education today in Africa is a crisis. Today, 300 million out of 350 million
children and youth in Africa are not on track to reach minimum levels of
secondary school skills by the time they leave school. This is one-third of all
children that are not learning around the world. Of these, 240 million are not
on track to even achieve primary level learning. Less than 10% continue to
post-secondary education to gain skills needed for employment. Yet today our
international support for education - all combined education ODA from donor
countries and international institutions - amount to less than $10 per child in
Sub-Saharan Africa, barely enough money to buy a single textbook!
·As we look ahead, these numbers will
just get worse – and a large share of Africa’s growing youth population will be
left without the necessary skills for a rapidly changing job market. On current
trends, by 2030, close to 370 million (up from the 300 million today) children and
young people in Africa will not be on track to obtain basic secondary level
skills. That is 4 out of 5 children and young people in Africa.
·What’s even more alarming is that
Africa will represent an increasing share of the world’s out-of-school and
uneducated populations of young people. While Africa will have one-third of the
world’s children, it will be home to 70 percent of the world’s children who are
out-of-school, more than 60 percent of all children not on track to achieve
primary level skills, and nearly 45 percent of the world’s children who will
not be on track to obtain basic secondary level skills by 2030.
·With large parts of the population with
no skills and no opportunity, it’s not surprising that forecasts show that in
2030, 90% of the world’s poor will be in Africa and half of the world’s poor
will be African young people.
·These shocking numbers should ring
alarm bells for us all, as we know far too well that the lack of quality
education, skills, and jobs for young people can create vicious cycles of high
population growth, economic failure, forced migration, and threats to peace and
security. The far-reaching economic, social and political repercussions caused
by the skills gap will pose significant risks to stability in the region. As
current events sadly demonstrate, discontented, jobless youth are easy prey for
extremists who exploit their anger at being left behind.
·On the other hand, around the world, 40
percent of employers feel they cannot find candidates with the necessary
skills. This issue will only be amplified in the coming years. As technological
changes expand and current tasks and occupations become obsolete, we will need
to train people for new skills, new qualifications, and learning how to learn.
Some estimate that half of the jobs we do now are at risk of being automated by
2050. The challenge for Africa is how to prepare for these new trends, so its
young people are not left further behind. Vocational education and training
will be central to creating the 20 million new jobs needed on this continent to
absorb job market entrants in the next decade.
6. Opportunities
·So, what can be done? There is some
good news. For the past two years, I have been honoured to be a member of the
International Commission on Financing Global Education Opportunity – also known
as the Education Commission. We are a group of 27 world leaders committed to
ensuring every child’s right to a quality education, under the leadership of UN
Special Envoy for Global Education Gordon Brown.
·The Commission produced a
ground-breaking report last September called The Learning Generation that sets
out a vision for getting all young people into school and learning within a
generation. We found that if countries progress at the pace of the 25% fastest
improvers, we can significantly improve education outcomes and give every child
an opportunity to learn within a generation.
·The need for rapid expansion of skills
relevant to the world of work will require tailored and practical approaches.
Today’s theme is “Vocational Education Creates Prospects” – and for Africa, I
could not agree more.
·But African schools, on average, lag
behind the rest of the world in terms of the availability of vocational
training and post-secondary education. On average in countries around the
world, nearly 30 percent of upper-secondary school students attend a vocational
secondary school; in Africa, it is less than 20 percent.
·I believe however there is an
enormous opportunity to leapfrog into an education future by:
i. learning
from existing models that have proven results, including yours here in
Switzerland
ii. leveraging
innovation,
iii. partnerships
with the non-state sector including employers, and
iv. accessing
more and better finance for vocational training and education
Opportunity 1: Learning from existing models and investing in what works
·For any reform effort to succeed, we
need a focus on performance, results, and learning from what works. Existing
models like Switzerland’s highly respected vocational training and
apprenticeship programs and Germany's Vocational Gymnasia offer many keys to
success. Many of you are very familiar with these approaches. But I think the
key is to not just focus on the classroom, but to combine school with
work-based learning. In America, under the vocational program mentioned in the
FT article, they also pay the students so they earn a wage.
·African countries can also learn from
your successes and that of other countries that have more recently developed
such as South Korea. In two generations, Korea has gone from being a
country with mass illiteracy to becoming an economic powerhouse. Skills
development has played a central role in driving Korea’s rapid economic
development, with strong leadership from the government to ensure the supply of
a skilled workforce. Korea’s education system is now one of the highest
performing in the world.
Opportunity 2: Innovation
·Innovation and developing new and
creative ways to achieve results will be critical to meet the education
challenges ahead. Harnessing technology for teaching and learning provides an
exciting opportunity to transform and modernize vocational training. Technology
and career-oriented online training can play a significant role in addressing
the skills and provision gap.
·The Commission recommends that
governments and employers create common digital learning platforms to bring
together online and offline content that is mapped, certified, and sequenced in
ways that are relevant and consistent with national curricula and local labour
market needs.
·Governments and employers should also
act to address gaps in provision by incentivizing and investing in the
development of high-quality, demand-driven content tailored to local curricula,
standards, and needs. This will be especially important in ensuring that
digital learning can help reach and engage those at greatest risk of
educational exclusion who often stand to gain the most – adolescent girls,
refugees, street children, children with disabilities, adults who lack basic
skills, and young people with less resources to reinforce learning outside the
classroom.
·Technological innovation could allow
African governments to quickly expand post-secondary education and skills
training without having to follow the expensive, and for many African
governments, unaffordable “brick and mortar approach”. Modern technology
opens an avenue with online learning, which can enrol students at a fraction of
the costs of a "brick and mortar" university. Many organizations are
jumping into this field. For example, UNICAF, an online university in
Africa, currently enrols nearly 10,000 students at a fraction of the cost of
most brick and mortar universities and plans to expand to 100,000 students by
2020.
Opportunity 3: Partnerships with non-state actors
·The private sector has a broad and
vital role to play. As an employer, it is essential that the sector has a
strong voice in advocating for education and ensuring it stays relevant for
future skills needs.
·As an investor, the private sector
plays an important role in the expansion of private and innovative financing
for education and increasing the focus on results in educational investment.
·As a direct provider of schooling- both
vocational and otherwise- the private sector is playing an expanding role in
many countries, which brings considerable opportunities as well as challenges.
·As corporate citizens,
socially-responsible private sector organizations contribute financially to
education, impact the education and skills agenda through their operating
models, and can help influence public and policy debate around vocational
education and training.
·The success of the private sector
depends not only on the future skills of the workforce but on the health and
success of the economy as a whole. Governments must recognize that the private
sector is much more than just an education provider or investor – much like
civil society organizations, the private sector has a powerful leadership and
advocacy role to play as well.
·There is great potential for
employer-led innovation. Effective training models are proving very successful
in supporting transitions into work and further learning. The best models –
like those used here in Switzerland – involve employers from the start of
program design and offer meaningful exposure to real jobs. Learning is
hands-on, often combining practical work-focused skills with theoretical
knowledge and the development of soft skills. Young people should be given the
chance to intensively practice and embed skills over time and gain
qualifications or accreditations to signal their skills to future employers.
Critically, young people should be supported to gain general transferable and
academic skills alongside any job-specific training, to enable them to work
flexibly in the future or pursue further learning.
·To expand the role of employers in
education, governments should give employer organizations a seat at the table
in the development of education and skills policy – and include the informal
sector wherever possible. Sadly, on my continent, this is far from being the
case. We really need to push hard for reform here. Governments should also
invite and encourage employers to innovate in the design and delivery of
training, and ensure that skills systems are sufficiently flexible to make this
possible.
·Partnering with high-profile employers
and industry bodies can enable governments to promote the value of investing in
skills and raise the status of vocational training to employers. Governments
can also find ways to incentivize or require employers to invest in skills
using fiscal incentives through the tax system. Such investments have delivered
high returns.
·Strengthening the links between
education and employment also requires giving parents, teachers, and young
people better information on labour market needs and the employment outcomes of
different learning pathways. Better information will help young people choose
training which is most likely to suit their needs and lead to good job
outcomes, and force education providers to focus more on their outcomes and on
the relevance of training to employers’ needs.
Opportunity 4: Finance
·Creating new and strengthening existing
vocational training institutions and programs of course costs money. Countries
need to mobilize more and better domestic resources for education, and this
should be complemented by increased international financing to improve
effectiveness.
·The Commission has also put forward a
game-changing proposal for an International Finance Facility for Education
which would bring together multilateral development banks alongside public and
private donors to raise $10 billion or more in additional financing per
year for education by 2020.
·In summary, you can see that building
strong vocational education and training programs in place requires building
strong institutions that can learn from what works, innovate, and partner with
non-state actors to deliver good outcomes. But this takes time. And the
question I have for donors is whether they can take the time and patience to
build these institutions in an environment increasingly hostile to aid. My hope
and wish is that the answer to this question is in the affirmative and
Switzerland will lead the way given its long tradition of great and durable institutions.
·So what can Switzerland do? First and
foremost, share its strong and successful experience in building vocational
education and training programs with developing countries, especially in
Africa. I urge you to find ways to substantially expand on the work you are
doing now in Africa in this area. Devote more resources and leverage them
better for institution building in African countries, especially in the area of
vocational training. Stay the course. Building institutions requires long-term
commitment. In addition, we need to measure results more easily to encourage
your taxpayers.
Conclusion
·Ladies and gentlemen, let me conclude
by acknowledging that, even as we gather here to discuss some concrete
development challenges, we all realise that we live now in uncertain times
where some are turning away from multilateralism towards unilateralism, from
international to domestic agendas, times where the gap between the long-term
needs of poor countries and the short-term expectations of rich ones who are
donors may be widening.
·Times like these leave us worried and
troubled, but it is times like these that demand true leadership. I know that
in its own low-key and programmatic way, Switzerland can provide the leadership
needed by donors to stay the course in the poorest countries and build for the
long term. As xxx once said, (pick)
o “A genuine leader is
not a searcher for consensus but a molder of consensus.” – MLK
o “The ultimate
measure of a man is not where he stands in moments of comfort and convenience,
but where he stands at times of challenge and controversy.” – MLK
o “It is better to
lead from behind and to put others in front, especially when you celebrate victory
when nice things occur. You take the front line when there is danger. Then
people will appreciate your leadership.” - Mandela
·Thank you, ladies and gentlemen.
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