Class acts developing education at the BoP

By James Tulloch & Caroline Nehls

This blog draws on the findings from research conducted on innovative social enterprise models at the Base of the Pyramid for the World Bank Social Enterprise Innovations team by Endeva and Ashley Insight. The research and corresponding case studies are available on the World Bank and OECD's Innovation Policy Platform. Read the education findings here (not longer available).

Social enterprises, commercial businesses and other non-state actors are pioneering education innovations to help learners from low-income communities.

Although private sector involvement in education at the BoP remains controversial, when education systems in Asia, Africa and Latin America face a funding shortfall of $38 billion every year, and when 70 percent of sub-Saharan countries face acute teacher shortages, it is evident that the state is struggling to be the only game in town.

Universal primary education is within sight, yet about 250 million primary school-age children (40 percent) lack basic numeracy and literacy skills, despite more than half of them having completed four years of primary school. Scaled up schooling does not necessarily translate into scaled up learning.

Better learning is a systemic challenge facing education systems worldwide, as are equitable access to learning and cost-effective learning. Our research identifies emerging business model and product innovations tackling these challenges, whether via community collaborations, public-private partnerships or market-based solutions. These include:

• Low-cost chains of private schools: provide affordable K-12 schooling to low-income households in urban and peri-urban communities, offering highly-standardized education delivered by internally-trained teachers following a pre-defined pedagogy and lesson plans. Their ‘school-in-a-box’ model of uniform buildings, products and services constrains costs and leverages economies of scale to enable chain schools to charge relatively low fees while maintaining consistent quality of service. Omega Schools in Ghana offers primary and junior high school education to more than 20,000 children for an all-inclusive daily fee covering tuition, meals, uniforms, and learning materials.

• Loans for tertiary education: increases the accessibility and attractiveness of higher education for low-income students by providing credit based not on current household finances but future employability. Students borrowing from lenders like Lumni, UpSkill and Fundación Ventanas pay a percentage of their future income instead of interest payments. Lenders offer low interest rates, enabled through cost sharing with partner universities or, in the cases of FINAE, Eduloan and Ideal Invest, additional income generated from education bonds issued on capital markets. Established models have reached considerable scale with Eduloan financing 50,000-80,000 students annually.

• Low-cost teacher training and teaching materials: improve teaching quality and efficacy by providing teaching kits, by nurturing teacher networks to exchange best practices and by leveraging online resources. BridgeIT has used mobile phones to deliver professional development materials and educational resources to more than 15,000 teachers in 11 countries impacting more than 700,000 students. STIR Education has developed networks of more than 10,000 teachers in India and Uganda who share their own low-cost innovations, reaching more than 450,000 children.

• Management support services for schools: through school evaluations and subsequent recommendations or training, providers help public and private schools implement holistic school improvement programs that drive more efficient school management and better learning outcomes while replacing proxy measures of school quality (e.g. buildings, staff qualifications) with evidence-based indicators. Gray Matters India has assessed more than 1000 schools impacting more than 320,000 students and 15,000 teachers. It not only supplies schools with evaluations – testing students and teachers and surveying parent satisfaction – but also publishes school ratings that parents can consult when selecting schools.

What are the keys to these models?

These education innovations share some key characteristics that help explain their emergence. They are located within BoP communities and engage with local communities, most directly by employing local people, for example as para-teachers in chain schools. Their propositions have clear relevance and utility to their target communities and they are relatively affordable.

Standardization and ICT stand out as key levers for rapid growth and scale.

Vertically-integrated, build and operate chain schools use standardization to deliver economies of scale. Management support providers rely on standardized metrics and data analyses to assess schools, while nearly all suppliers of teacher trainings and teaching resources provide guidance on how best to implement materials and methods in class. BridgeIT’s videos come in a ready-to-use package with detailed lesson plans and teaching manuals.

ICT solutions can be potent catalyst. Enterprises implement ICT to lower process-related costs, increase the access to education, ensure teaching quality and to monitor learning progress. Chain schools automate registration, payroll and fee collection. Bridge International Academies collects schools fees via mobile phone payments. Omega managers use tablets to track and report enrolment, student (and staff) attendance and performance. Teacher training and resource providers use mobile phones to deliver their products while student loan providers like Eduloan accept repayments via mobile phone payments. Some school evaluation consultants offer digital or online self-evaluation tools for school management.

Success stories?

Several examples of these business model innovations have scaled rapidly, reached large numbers of students, and secured impressive investments as well as government and donor support. In terms of sustainability, many seem to hover between loss-making and breakeven. Commercial chain schools have yet to publicly record profits.

A major challenge is the low purchasing power of many BoP clients. Investing in education even when at a low cost requires ongoing payments over many years. While this investment can pay off with higher earnings in the long run, in the short run it can negatively reduce household earnings.

In terms of educational impacts, while many enterprises monitor their results and there are positive signals that learning is improving as a result (particularly among management support providers), much of the data is anecdotal or self-reported. In education it is difficult to assess direct impacts because the benefits of education take years to be realized. There is a need for more robust, independent data to properly understand how these education innovations are performing.

This blog is part of the October 2016 series on Exploring the social enterprise landscape, in partnership with the World Bank Group and endeva. Read the whole series for insight and opinion on policy, business models and definitions from social entrepreneurs, policy makers and facilitators around the world.