How rates of return have influenced the Kenyan government to invest in education

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Students in Kenya in a lecture


Investment is expenditure on goods and services that do not directly satisfy consumers wants, but which are used in the production of goods and services that do satisfy those wants.

The rate of return to education is calculated by using the total cost of education during a certain period compared with increased real earning of workers to arrive at an estimate of the benefits of society had received because of investment in education.

A commonly used measure to determine whether investment in education or in any other project, is worthwhile is the internal rate of return. This measure compares the current and future value of costs and benefits arising from education. Both private and social rates of return can be calculated to judge the returns of further investment in education for individuals and governments.

Investment in human capital is an important determinant of individuals’ earning capacity and employment prospects and therefore plays an important role in determining the level and distribution of income in society, firms’ productivity and economic growth. Education has also been associated with various non-economic benefits, including greater social cohesion, lower crime, and better health.

Education is a tool of change that helps to spread knowledge in the society generally and this has a beneficial effect on the economy, it helps to bring about improvement and innovations by promoting research and inquiring attitudes of mind.

Also, education brings about a literate, knowledgeable, critical, and electorate citizenry, which the society value a lot that is why the Kenyan government should invest in education.

While the government invests in education it considers several factors to ensure the investment does not go to waste but return positively and highly.

Since the 1980s the government of Kenya has invested more on women education unlike in the past where the woman was not given much consideration to education. Considering the increase in population resulting in an employment, the government gives priority to women education because educated women tend to have smaller families making population manageable.

The government fosters the girl child education through seminars and workshops where people are enlightened about the girl child education and where females are given the opportunity to participate in various workshops. This helps to remove the gender disparities that were in the past.

The Kenyan government has over the recent years been facing the problem of HIV/AIDS pandemic where many young schools going children are infected or affected by this pandemic. This is due to problems of poverty thereby falling prey to social evils and finally dropping out of school.

This has led the government into investing more on basic education so that learners in basic levels of education get enlightened about HIV/AIDS pandemic and how to curb it, the curriculum of both basic and higher education has incorporated subjects whereby HIV/AIDS is taught, this is fundamental to the society since the expenditure on importation of ARVs is reduced.

When people are properly educated on HIV/AIDS and its dangers they tend to avoid its causes and instead engage in constructive work that leads to the growth of an individual and the economy at large.

The government has done this by providing youth funds that help them in joining poly-techniques where they acquire skills to better themselves and society in general.

The government has invested has invested in extra curriculum activities in both basic and higher education where talents are nurtured and discovered during such events like drama and sports. The government sets aside time for these events and facilitates the events in the educational calendar. This opportunity helps to ensure no talent is lost to society and that those with ability will be recognized and promoted by the system.

When these abilities are promoted they reach up to the international levels where by the individual and the country is recognized for producing great talents and abilities and awarded for the same and this helps in the growth of an economy. For instance, Kenya is highly recognized for produce massive Olympic talents.

The government sponsors vocational education where by learners are encouraged to at least gain a certificate to join poly-techniques thus reducing school dropouts. This has helped to reduce the levels of insecurity and terrorism since unemployment is curbed. Unemployment being the major problem Kenya is facing now, making unemployed youth idle and thus involving themselves into crime related activities such as stealing, raping, terrorism etc.

Through vocational training sponsored by the government, many youths acquire various technical skills such as carpentry, masonry, metal work, tailoring, cooking among others. These skills provide the youths with opportunity and ability to generate income thus reducing the crime rate, this is beneficial to the development of the country since a lesser crime-free country leading to economic growth.

Education is the key to employment in the modern sector of the economy, where earning is usually much higher than they are in the ‘traditional sector.’ Therefore, Kenyan government provides subsidies in higher education through independent government bodies like HELB, to increase economic productivity of the student whereby the tax system becomes more progressive that is its designed to hit the rich hard as they say goes, “the higher the higher you pay.” This is a great boost to the government in terms of economic growth through taxes such as pay as you earn PAYE.

We are living in the computer era, where everything is digital. This has prompted the Kenyan government to invest heavily in ICT both at lower and higher education. In lower education, the government has rolled out a plan to ensure that at least every child has a mini laptop. Through this initiative, the children will grow embracing technology, thus leading to an innovative generation which might lead to solutions to various problems facing the society.

Also, in secondary school computer studies have been inculcated into the curriculum to ensure at least each student has the basic computer knowledge. ICT education helps to bring about improvement and innovations by promoting research and inquiry attitudes of mind.


Education delivers a variety of benefits at many levels. These include benefits for individuals, benefits for companies, and benefits for society. Individuals profit from investment in education through higher wages. No less important are the lower probability of unemployment and higher rates of labor force participation for more highly educated individuals. Firms reap benefits from education via the higher productivity of their employees. Better-educated employees are not only more productive but also raise the productivity of their less-educated colleagues. Societies benefit from education through the direct effect of higher productivity on growth. Several additional benefits including better public health and greater social cohesion have also been found. The social rate of return to education is higher than the private rates of return to education that why the government invests into education.

It's for the reason above that the government has appropriately been a concern with widening the opportunity for young men and women to get professional and technical training through government subsidies and funding educational buildings and it has made education at primary level free or at a low price at governmentally operated schools.


Blaug, M., Education and the Employment Problem in Developing Countries, I.L.O., 1974. 

Woodhall, M., Cost Benefit Analysis in Educational Planning in Fundamentals of Educational Planning by International Institute of Education Planning, No. 13.

H. O. Ayot, Economics of Education, 1992.

Blaug, M., Education and the Employment Problem in Developing Countries, I.L.O., 1974.

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