Proud graduates… No jobs. How charity scholarships undermine education in the South

by Sasha Alyson

Our recent poll asked: Do you believe that most aid activity is rooted in assumptions of racial superiority? It generated this sharp criticism of World Vision, followed by a defense of that same NGO:

@gargarhafo: Especially @WorldVision in Kenya
@JamesOmuse1: I have personally witnessed people graduate under world vision scholarship.

Most developing countries experience an annual wave of proud, excited youth as they become the first in their family to graduate from high school, or from college, often helped by a foreign NGO or donor. Then comes the bad news: There’s no job for the new graduate. Those years of schooling did not help them develop the skills that employers want.

But scholarships for youth, especially for girls and young women, remain a fundraising favorite. It’s time to look at the full picture, now just the feel-good graduation ceremony.

Standing up at the ballgame

A college scholarship may benefit the recipient, although often it does not, because in most of the world – North and South alike – graduates greatly outnumber the jobs which require their degrees.(1) But even if the graduate is better off, this may weaken their country.

That seems counter-intuitive, so here are a couple of examples. If I stand up at the ball game, I can see better. But everybody behind me has a worse view. If I cut myself a bigger piece of the pie, then everybody else will get less.

Unless, of course, the pie gets bigger.

If the additional schooling created a workforce that could help existing businesses grow, plus entrepreneurs to create new businesses and jobs, plus government officials able and eager to create a healthy economic environment, then the pie would get bigger and we could all get more. But if that were the case, we’d see evidence of it – not evidence of widespread youth unemployment and under-employment, youth eager to migrate, and the petty crime born of despair.

Economists have generated a large body of research about what they call the “micro-macro paradox” in education. On a micro level, more education benefits some individuals. On a macro level, the impact on society is smaller, and may even be negative.(2) But in their fundraising appeals, the charities never discuss this paradox; they simply produce whatever data they find can about individual benefits — data which is usually outdated, from very different countries, and utterly irrelevant.(3)

There’s no paradox. When some people can claim more of the pie, merely because they hold a certificate which doesn’t help them make the pie bigger, then others will get less. Meanwhile, if money, time, attention, and other resources are poured into a school system that doesn’t work, that waste will drag the economy down.

Scholarships make it worse.

Now, into that system add scholarships paid for by faraway donors.

To start, imagine that I once had a factory where we made pretty good sausage.

It was a small enterprise, until an NGO arrived in town promising to feed the hungry. We’ll call it Whirled Vision. WV bought sausage from me, rice and vegetables from others, and soon, my business was growing. But someone else noticed the money changing hands, so they opened a sausage factory called Pigtopia, just down the road. With one difference: They’ve discovered that sawdust soaked in pig fat can substitute for part of the sausage filling. Some people may remark that it’s not quite as good, but the Whirled Vision staff eats at a high-end restaurant and is cheerfully unaware of these discussions. WV does like the lower price from Pigtopia, however, so they increase their purchases from my competitor.

Over the course of a generation, Pigtopia gradually increases the sawdust ratio until their sausages are 100% sawdust, pig fat and artificial flavorings. The change happens so slowly that no one really notices. Nobody actually likes the new sausage, some eat it because Whirled Vision gives it to them for free, others toss it in the trash. Meanwhile, I’ve gone out of business. People occasionally tell me, “Your sausage was great, but it was just too expensive!” Pigtopia drastically undercut my prices, while still keeping a big profit margin.

What happened? Those paying the cost, via donations to Whirled Vision, were different from those consuming (or throwing out) the sausage. Whirled Vision didn’t know that the sausage was stuffed with sawdust, nor did it investigate occasional complaints. It found people who would smile as they received the stuff, it sent photos to donors, and the money kept coming. Why ruin a good thing with unnecessary questions?

Schooling is more complicated than sausage, of course. Young people, even aware that many graduates cannot find a job, often choose to enter college, frequently working in the evening to pay their way. They’ve heard all their life that education is the road to success; that message overcomes their doubts. And what better options do they have? Even for those without scholarships, it’s more affordable because foreign donors have often paid for the construction and subsidize much of the overhead.

Other factors also contribute to weak economies and joblessness, but failed schools, which go through the motions without offering the education that’s needed, are a big one. It was inevitable that sausage quality would drop when the people paying for it were far removed from those eating it. Likewise, every dollar that flows into a school system with no accountability, without demanding any benefit for students, asking merely that the charity make faraway donors feel good, will tend to lower the quality of education.

Comments from Twitter

We announced this story on Twitter, where readers made these comments. Please add your own comments at the bottom of this page., @yorubablogger: Honestly, you are right. The new trend in Nigeria right now is that, while you’re schooling in College for your certificate, you get a relevant handy skill on the side. This is because the trend of graduates not finding employment is very high here.

Nomadic African, @MphileSihlongo1: Interesting analysis. There is need to study not just unemployment but also under employment. If a Correctional Facility advertises a post, and you start receiving applications with a wide range of certificates, surely you have a problem…

howohowo, @howohowo1: Many studies shows that the output ratio is the highest for investing basic education stage, that is, 9 yrs schooling in most countries, which is only sponsored by the state & supported by families. Wise leaders & parents must understand this in poor states. NGO=unreliable!, @yorubablogger: It seems the whole certificate thing is not a sure way out of poverty in Nigeria. And a phrase has gotten very popular among our youths in Nigeria now, it is, “school is scam”. This is because in Nigeria now, people only go to school to please their parents. Thank you!!

Nomadic African, @MphileSihlongo1: Specifically, the article touches on Top Down planning esp. the Whirled Vision example. That example is what is wrong with the NGO/Charity approach. The writer even sums up nicely by saying,why upset the wheel. Most NGOs are there to keep the ball in motion….

@rafaalghwell: Yes many national education systems are poor but there are many, many cases when a student needs financial support (called scholarship) just to sit for an exam. They should be denied that just because it comes from an NGO? These systems are far beyond an NGO mandate to fix.
[Sasha replies: You are avoiding the issues of (a) how that money makes the system worse, which I’ve explained; and (b) whether it does that student any good whatsoever to sit for the exam.]

LetterFromDumaguete, @DumagueteLetter: SCHOLARSHIP SCAMS. There’s a moral to this story. We like to think of education as a merit good, unless it becomes a scam. And a great scam is when teachers pretend to teach, and students pretend to learn. Caveat emptor (to donors and recipients).

Notes and Sources

Top illustration by Gillian Callison / Pixabay

  1. “The unemployment rate for young college graduates exceeds that of the general population, and about 41 percent of recent college graduates — and 33.8 percent of all college graduates — are underemployed in that they are working in jobs that don’t require a college degree, according to new data from the Federal Reserve Bank of New York,” reports Inside Higher Ed. That referred to the end of 2019, before the pandemic. It was about the U.S.; numbers in the global South appear to be far worse, although good data is not available. Note also that the graduates were more likely to be unemployed than others. That illustrates another dynamic. If you’re hiring somebody for a job which doesn’t require a lot of schooling, who would you prefer: Someone without a degree, who’s eager for the job – or someone with a degree, also eager for a job, but who will always be watching for an opportunity to jump ship and grab something better?
  2. Google for “micro-macro paradox education” to see the extensive literature on this topic. In one study, researchers looked at 40 years of data in India, attempting to explain “high returns to education at the micro level and small or negative coefficients on education growth in growth regressions at the macro level.” They hypothesized that “in India educated people find privately rewarding jobs in a sector in which social returns are low, namely the government sector.” (“Private versus social returns to human capital: Education and economic growth in India,” by Matthias Schündeln and John Playforth, European Economic Review, February 2014.)
  3. In their fundraising appeals, UNICEF, Save the Children, and many others have resorted to outright deceit. I’ve documented some examples in “Masters of deceit,” “Snake oil for the 21st century” and “Save the Children tells donors half the story.”

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