Economic Input to the Design of the DFID Malawi Education Portfolio

The importance of the Malawi Education Sector Reform Programme impact, improved learning outcomes manifested through enhanced quality education, lies at the centre of economic growth theory as well as education economics. Education economists treat expenditures on education as investment flows that build human capital, generating increased income and growth. Macroeconomists have demonstrated that sustainable long term growth in equilibrium can only be sustained though innovation and human capital accumulation putting education to the centre of most development strategies.

In order to evaluate the benefits of DFID’s proposed Sector Budget Support (SBS) investment in Malawi’s education sector, this economic assessment has looked at the benefits of 2013/14 investment in each of 4 priority areas: teacher training, textbooks, school improvement grants, and school construction. The evaluation of benefits is based on findings from available research literature.

Results were calculated for each of the 4 investment areas and all provide substantial returns with benefits to cost ratios ranging from 2.97 up to 4.68 and internal rates of return from 15.5% up to 20.2%.

In conclusion, these results provide robust justification for Option 1 of the business case, which is a £14 million SBS investment in 2013/14.

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