Beyond their role as educators, teachers serve as mentors, motivators, and role models, guiding students through the challenges of life and helping them discover their true potential. Their impact reaches far beyond the classroom walls.
Amidst the admiration and reverence for teachers, it is essential to shed light on a pressing concern: there economic wellbeing. While their impact is immeasurable, their financial well-being often remains overlooked. The disparity between their invaluable contributions and their often modest salaries is a stark reminder of the need for change.
The third annual meeting of the Ethiopian Teachers Association, which took place in Jigjiga last month, proved to be a unique event that captured the attention of many. What set it apart from previous gatherings was a statement made by none other than the Minister of Education, Birhanu Nega (Prof.). His words sparked a wave of discussions and left an indelible mark on the minds of attendees.
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In his remarks, the Minister alluded to an intriguing proposal—the establishment of a Teachers’ Bank.
However, the details surrounding this proposal have been veiled in secrecy thus far, leaving everyone eager for more information.
Yohannes Benti (PhD), the president of the Ethiopian Teachers’ Association, has shed light on the Ministry’s intentions. According to him, the “Ministry aims to bolster the economic well-being of teachers by helping to establish a cooperative bank.”
Further insights were provided by Aseged Mesisa, the head of Teachers’ Development and Management at the Ministry of Education (MoE).Aseged revealed that the envisioned bank would be a cooperative bank, intricately tied to the broader goal of improving teachers’ financial well-being.
By empowering teachers economically, the Ministry seeks to maintain the highest standards of education and ensure the existence of a sustainable teaching workforce, according to Aseged.
The cooperative bank holds promise, as it is poised to play a significant role in granting teachers access to a wide array of financial services, including much-needed loans. In a world where traditional banks have shown reluctance in extending such services to individuals without collateral, this initiative is a breath of fresh air.
Although still in its nascent stages, the proposal has ignited passionate discussions among various stakeholders, garnering both resounding support and calls for thorough deliberation.
Andinet Gebrekidan, a devoted teacher at Misrak Goh Secondary School, finds the news of establishing a Teachers Association Bank to be profoundly significant and meaningful. It’s not because he believes that a considerable number of Ethiopian teachers, like himself, can directly afford to purchase shares. With a monthly gross salary of 9,000 birr, Andinet understands the financial constraints.
However, he firmly believes that this initiative will have a discernible positive impact on the promotion and advancement of teaching as a respected profession.
“Teaching is an esteemed profession that plays a pivotal role in shaping the future. Unfortunately, societal perceptions and economic challenges often undermine our professional effectiveness,” Andinet said.
Voice filled with hope, he says: “If this visionary plan becomes a reality, it will breathe new life into our morale and elevate the educational achievements of our great nation.”
On the other hand, Mulugeta Chala, a passionate teacher serving at Cambridge International Academy with a monthly salary of 54,000 birr, recognizes the financial hurdles that teachers may encounter – hence the establishment of the Teachers Association Bank—a proactive initiative designed to strengthen economic resilience among educators.
Mulugeta highlights the dual benefits of the bank, stating: “The idea of establishing the bank holds immense value for both teachers and the educational institution as a whole.”
He envisions a safety net for educators who may face unexpected financial crises, enabling them to focus on their vital roles without undue distractions. Mulugeta firmly believes that the bank could serve as a crucial support system and eagerly expressed his readiness to invest in this endeavor.
Within the ever-evolving landscape of educational institutions, Mulugeta’s insights shed light on the prevailing income disparity experienced by educators. However, it’s crucial to note that Mulugeta’s case is somewhat unique.
According to the latest data provided by the Ministry, the country boasts a workforce of over 700,000 identified educators spanning from primary to university levels.
The report reveals that their monthly gross salaries range from 4,500 to 16,000 birr.
Despite the government’s considerable budget allocation to education, this investment has not translated into adequate compensation for teachers. The frequency with which salaries are cited as a factor impacting teachers’ motivation and morale underscores the pressing nature of the issue, which directly influences the outcomes of the education system.
Seifemichael Tesfaye, a 42-year-old principal at US Academy, views the proposed establishment as a potential game-changer for the entire teaching community. He acknowledges the economic struggles faced by educators and the urgent need to recognize their invaluable contributions within Ethiopia’s economic landscape.
“This initiative has the potential to provide a strategic solution that enhances teachers’ economic well-being and improves their overall efficiency,” he asserts.
Having experienced the challenges of being a teacher himself, Seifemichael intimately understands the hardships endured by educators. He notes that the noble profession has not received the recognition it truly deserves.
Seifemichael emphasizes the profound impact of meager salaries on teachers’ efficiency and their ability to support their families. For him, teaching extends far beyond a mere monthly wage—it is a sacred vocation that shapes the destiny of a nation.
Startling findings have emerged from studies, indicating that teachers today earn less than their counterparts did two decades ago.
The 2023 edition of the esteemed Organization for Economic Co-operation and Development (OECD) report, ‘Education at a Glance,’ exposes a disconcerting reality: in a staggering one-third of countries, teachers’ salaries have plummeted in real terms since the year 2000. The global financial crisis of 2009 dealt a severe blow to educators worldwide, resulting in stagnant or reduced average salaries, with any semblance of recovery only surfacing after 2013.
Recognizing the ongoing challenges despite concerted efforts to address them, both the Ministry and the Association have acknowledged the need to explore alternative solutions beyond simple salary increments.
Given the prevailing economic crisis in Ethiopia and the constraints that hinder substantial salary raises for teachers, the MoE has undertaken a series of initiatives to tackle this pressing issue head-on. Notably, in the year 2016-2017, the Ministry took an initial step by allocating housing to 120,000 teachers, aiming to mitigate some of the economic burdens they face.
Building upon this foundation, the Ministry’s latest proposal is to establish a dedicated Teachers’ Bank—a promising solution to further address teachers’ economic needs, according to the Ministry.
Similarly, the Teachers Association has outlined an ambitious strategic five-year plan (2023-2028) aimed at achieving financial self-sufficiency and creating a stronger economic foundation for teachers.
“With the education sector’s vast impact on over 30 million stakeholders, including students, it is crucial to establish a robust economic framework that identifies the specific benefits, regulations, and monitoring mechanisms required. Creating an association bank is ideally one of the best solutions,” explained Yohannes, emphasizing the need for further study before implementing this initiative.
While the proposed initiative is still in its infancy and requires further articulation, the concept of Teachers Banks is by no means alien to the global stage. These member-owned financial institutions have long existed to serve the unique financial requirements of specific occupational or communal groups, with teachers being a prime example.
Examples abound, including the National Education Association (NEA) Credit Union in the United States, the Tamil Nadu Teachers Cooperative Bank in India, and Teachers Mutual Bank Limited in Australia, which primarily serves retired teachers and university students pursuing education.
While the specific structures and successes of these initiatives may vary, their underlying objective remains consistent: to provide tangible benefits to the educational community.
“As the proposal continues to develop, it holds the potential to reshape the lives of teachers and create a positive ripple effect throughout Ethiopian society. Establishing a Cooperative Bank is one step,” said Aseged, expressing optimism.
The proposed bank aligns with the existing practice of microfinance debit and credit systems. This tailored approach could provide teachers with access to financial services.
While the concept of a Teachers’ Bank is not entirely new, the precise details regarding its establishment and the necessary regulatory frameworks remain to be addressed. Currently, there is limited information available on how exactly the bank will be established. One persistent question is whether the existing legal framework can accommodate the establishment of such a bank without encountering difficulties.
Sharing insights on the matter, a senior bank executive, who preferred to remain anonymous, expressed support for the idea: “Having a feature bank like this would be beneficial. However, it is important to acknowledge that the current legal framework may not adequately address the unique needs of banks of this nature.”
Fekadu Degefie, vice governor and Chief Economist at the National Bank of Ethiopia (NBE), argues that he does not see any gaps in the existing legal framework to serve specialized banks. “If a bank like Addis International could be established through credit associations, why not envision the possibility of establishing a Teachers Association Bank in the country?”
The vice governor proposes that the association could pool their resources and sell shares to individuals to facilitate the establishment of the bank.
The Senior Executive, challenges the vice governor’s argument highlighting the challenges posed by the minimum paid-up capital requirement for instance.
While the minimum paid-up capital required for the establishment of banks three decades ago was 10 million birr, it has now increased to five billion birr. According to the Executive, such a high capital requirement makes it challenging to establish specialized banks like the one envisioned within the education sector.
To overcome this hurdle, banks like Addis International Bank S.C initially adopted a cooperative structure to bypass the minimum paid-up capital requirement, the Executive states, explaining: when the specific bank was established, the minimum paid-up capital requirement was 75 million birr.
The senior executive firmly believes that the discrepancies between the establishment phase and the current operations of other banks, such as the Cooperative Bank of Oromia, clearly illustrate the limitations of the existing legal framework.
Furthermore, existing regulations pertaining to loan disbursements continue to present obstacles for the operation of specialized banks. However, the idea of establishing a Teachers’ Bank instills hope that it could ultimately contribute to improving the living standards of teachers and strengthening the education sector as a whole.
