In recent years universities in Africa have come under increasing pressure from governments and donors to improve their efficiency. A World Bank report in 1988 suggested that African universities were amongst the most inefficient in the developing world. The attack on African higher education mirrors a trend to be found in higher education systems worldwide as institutions used to a large degree of autonomy and preferential funding come under increasing scrutiny.
In Ghana, a response to these pressures has been made by the Ministry of Education and the country's three universities. A new system of programme linked budgeting (PLB), to be introduced in 1996, aims to reform the way universities are funded and thereby to improve their efficiency. A case study undertaken in 1993 analysed the new budgeting system to be introduced and found that it was PLB in name only. The need for political and institutional stability had in fact led to the development of an input based model which almost entirely neglected output measures. Despite a positive attempt at budgetary reform, the specification of the model seriously impaired its ability to affect the economic behaviour of the universities in ways likely to improve efficiency. In the worst case, the new budgeting system could even cause a deterioration in efficiency.
The lessons of this study are applicable to both the developing and developed world. Governments, sensitive to the difficulties of introducing radical change in institutional funding, tend to adulterate the pursuit of economic efficiency when political expediency becomes a priority. This study of the Ghanaian universities suggests that ignoring the economic effects of changes in funding may be attractive but may, in fact, lead to decreases in efficiency and result in more severe difficulties -both economic and political -being faced in the longer term.