A comparison of market assessments of LCPSs in twelve countries in Sub-Saharan Africa and Latin America and the Caribbean

• In Event: Highlighted Session: The viability and appropriateness of investments in low-cost private schools to enhance access to quality education in LMICs

Proposal

CATALYZE EduFinance seeks to improve and sustain learning outcomes for vulnerable and marginalized children and youth in Africa, and Latin America and the Caribbean. The activity strategically uses U.S. government resources to crowd-in private capital for non-state schools (low-cost private schools, community or faith-based schools, pre-primary care centers, and tertiary institutions) and address the educational funding gaps in a set of target, partner countries. EduFinance increases access to low-cost, quality education by partnering with the private sector to facilitate innovations in financing and service delivery.

CATALYZE EduFinance conducted market assessments in the Democratic Republic of Congo, Kenya, Rwanda, South Africa, Tanzania, and Zambia to inform the design of an EduFinance activity in each country. Market assessments utilized USAID’s Five-Point Framework diagnostic tool for mobilizing finance for development, adapted to education financing. The Framework covers: 1) enabling conditions; 2) requiring financing (demand); 3) providing financing (supply); 4) financial infrastructure; and 6) intermediaries and facilitators. To analyze the five dimensions, research teams conducted interviews with key stakeholders such as government officials, non-state education providers, in-country financial industry experts, as well as extensive reviews of academic research, laws, regulations, and official publications relevant to each market.

Market assessments found that despite impressive improvements in primary school enrollment rates, learner outcomes remain low as government investment in education cannot keep pace with increased demand. The lack of capacity in government schools and parents’ willingness to pay for quality education, even among low-income households, has created strong demand for non-state education providers in urban and peri-urban areas. The demand for private schools in these countries is expected to grow on the back of a young, growing, and rapidly urbanizing population and parents that are willing to pay for quality education. Education, however, remains an underleveraged and undervalued asset class. Many non-state education providers are unable to expand infrastructure or invest in additional teaching resources due to inadequate access to affordable financing. Banks and microfinance organisations are unwilling to lend to these schools due to a lack of management capacity, or a perception that these schools are high risk borrowers. Despite being operational for a number of years these schools are not seen as credit worthy businesses, thus greatly limiting their growth and response to demand for quality education. Economic fallout of COVID-19 and the extended school closures in the last 18 months have further exacerbated the situation. Analysis of assessment data will point to opportunities for closing this funding gap.

The presentation will close with a discussion of lessons learned and unforeseen benefits from conducting these market assessments.

Author

• Michael Tetelman, Palladium International