The financing of low-cost, non-state schools in Africa

Thesis

Much of the literature on the phenomenon of low-cost schools focuses on South Asia with little research on this in Africa. This study investigates if there is a shortfall in state provision of early-years and primary education in Africa, and if so, what the contributing factors are and what role low-cost schools are playing. The study investigates how such schools are funded, if they are able to access finance, and if not, what the barriers to finance are.

Research in seven African cities, involved listing state and non-state schools in low-income communities in order to establish the extent of low-cost schools. 1,390 schools were surveyed to identify factors contributing to the shortfall in state provision and shortfall in finance. Two case studies of low-cost school operators in Lagos and Nairobi were performed using semi-structured interviews.

The study finds a 52% shortfall in state provision of education ranging from 14% in Dar es Salaam to 86% in Kampala. The political economy of education impacts policy, regulation and funding of schools with African governments adopting a colonial legacy model of Western education which assumes majority state provision of primary education. However, early-years education is a priority for low-income households with 65% of low-cost schools providing early-years and primary education. With asymmetry of education quality information, locality and accountability are important in households establishing trust with schools.

Low-cost schools receive no state funding, rely almost entirely on households paying fees and only 15% have been able to access conventional finance. Barriers include lack of certification and institutional voids where schools are unbanked. New financial intermediaries are emerging to address the institutional void similar to the role played by micro-finance institutions with micro-entrepreneurs. Non-conventional finance, such as impact investing, has started to invest in the sector but faces political economy opposition and institutional voids - requiring intermediaries to reach small schools. Central bank concessionary finance is found to play a role, as seen in the Lagos case study.

If governments recognised low-cost schools as partners in education and certified them, finance to the sector could increase. Access to concessionary blended finance (conventional, unconventional, central bank, philanthropy and aid) could be used to attract unbanked schools and meet their demand for finance. Governments could leverage off the low-cost school sector’s existing physical and human infrastructure to absorb out-of-school children and provide early-years education to many more children to the benefit of societies and economic development across Africa.

Authors: Hinton, PF

• DOI: 10.5287/ora-j01kex5o5
• Type of award: DPhil
• Level of award: Doctoral
• Awarding institution: University of Oxford
• Language: English
• Keywords: sub-Sahara Africa; economicsof education; Low-cost schools; ploitical ecoomy of non-state education; finance; financing of schools
• Subjects: Non-state education finance in Africa