Effects of capitation grant on education outcomes in Ghana

Abstract

This study provides an assessment of how capitation grant is impacting on key education outcomes in Ghana. In particular it provides an empirical platform for assessing how this policy is contributing to the achievement of the MDGs, and more. The key education outcome indicators which form the basis of the study are gross enrolment rates at the Junior High school level, the pass rates for the national examinations at the Junior High school level and the gap in the examination performance of boys and girls. It employs an econometric estimation model to assess how capitation grant affects these variables. Using district level data over the period 2005- 2007 and across the country, the study finds that capitation grant have not had any significant effect on these key education outcomes. The study concludes by noting that although the results are not consistent with a priori expectations, the findings may reflect the fact that the capitation grant in Ghana only started in 2005 and so it is too early to begin to see its effects. The inability of the study to account for demand-side factors may also be contributing to the results. However the study notes that these results may be a pointer to the fact that capitation grant alone cannot deliver on important education outcomes as enshrined in the MDGs.