AI in education: market insights

• In Event: AI in Education: Evidence, Trends, and Market Insights

Proposal

Education is a powerful catalyst for breaking the cycle of poverty and fostering economic mobility, yet millions of children in Africa lack access to quality education due to systemic challenges. Low-fee private schools have emerged as vital alternatives to public schools in underserved communities, potentially offering better educational outcomes at affordable costs. With private schools in Sub-Saharan Africa already accounting for more than 20% of all pupils, a number that is expected to rise to 33%, they play a critical role in the region. However, these schools often face significant financial barriers that limit their ability to provide the necessary infrastructure, resources, and quality teaching.

A financial institution (FI) addresses these challenges by pioneering an AI-driven solution to revolutionize educational finance across Africa. Central to their strategy is an advanced AI-powered credit scoring platform that assesses creditworthiness using over 300 unique data points per school. This platform, integrated with predictive analytics, forecasts a school’s financial health, enabling early intervention and tailored support to prevent financial distress. This approach aligns with Sustainable Development Goal 4: Quality Education, leveraging technology to foster financial inclusion for low-income private schools.

Its initial deployment in Kenya, supporting 324 low-fee private schools and reaching 138,000 children, has shown significant success. The IF has observed a 100% loan repayment performance, a reduction in loan turnaround time from three weeks to 36 hours, and a promise of improved educational outcomes linked to the FI’s school management software which flags potential financial risks and enables timely interventions.

A critical lesson to be learned is how the offer of partner benefits can incentivize loan payments by schools. The IF incentives initiatives span across diverse areas such as Water, Sanitation, and Hygiene (WASH) initiatives, EdTech programs to upskill teachers, and weekly dance therapy classes that promote social-emotional learning. To date, the IF has distributed more than 120,000 textbooks and provided fresh water to more than 20,000 students. These interventions help to maintain loan repayment rates at 100% and contribute to an effective educational environment. Additionally, the IF is planning to integrate generative feedback mechanisms into a digital interface accessible to schools to deliver real-time credit scores, allow data submission, and offer recommendations for improving credit scores.

The impact of these interventions is assessed through financial and educational metrics, including improved loan repayment rates, reduced turnaround times, and enhanced literacy and numeracy rates.

Author

• Sandeep Aneja, Kaizenvest