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Building School Capacity: Takeaways from a decade in Ghana

December 2018

Irene Pritzker

Chair & Co-Founder

Lily Baah

Lily Baah began her school on a shoestring, in Apaaso, Ghana in 2005, with six nursery students. Fees were minimal based on a family’s ability to pay, and at one point she opened a cleaning agency to keep the low-fee private school afloat. Sometimes, as payment for tuition, she accepted farm produce, which she served in the school’s canteen.[1] However, Lily noticed that her enrollment grew as parents realized that the students at Baah Memorial School were speaking English and performing better than their peers at other schools.

Banks wouldn’t lend the money needed to build more classrooms, but the very determined Lily got the job done anyway with help from the Rising Schools Program, a partnership between the IDP Foundation, Inc. (IDPF) and Ghanaian microfinance institution Sinapi Aba. Launched in 2009, the program was the first of its kind to provide financial literacy and school management training along with credit at below-market rates to low-fee private school owners serving low-income families in Ghana.

IDPF considers low-fee private schools to be schools that charge less than 742 Ghanaian cedis in annual fees (approximately US$154), and these are the schools that are IDPF’s target market. These are schools to which no bank will lend.

With eight loans, totaling about 134,000 Ghanaian cedis (approximately US$27,000 based off today’s exchange rates), Lily was able to build 11 classrooms and a three-story multipurpose building, allowing her to add grade levels and further increase her enrollment from 200 students in 2010 to 650 in 2018. In addition, the loans have paid for a school bus and repaired an old vehicle, plus gender-separated restrooms and a dormitory, thus increasing her enrollment even more.

Today, Baah Memorial is a financially self-sufficient social enterprise providing education to students from nursery through junior high.

Lily Baah at Baah Memorial School in Apaaso, Ghana

Baah Memorial and hundreds of other low-fee private schools like it might not have expanded today without access to credit. Most of these schools are born of necessity, serving pupils who often have no other viable means of education because these families are on the economic margins of society. Yet bootstrapped low-fee private schools don’t receive support from governments or big donor agencies, so they have little to no chance to grow or improve. Banks won’t lend to them because they regard them as too risky, and even if they did the cost of borrowing for small business owners in Ghana is high. What IDPF did was de-risk the circumstances.

IDPF seeds the Rising Schools Program using a combination of philanthropic capital and low-interest loans. This makes possible a reduced cost of funds to Sinapi Aba, enabling it to earn a profit on the below market-rate loans it makes to proprietors — so long as the schools are successful enough to repay the loans. If the schools are successful, providing an affordable option to education for kids that parents are demanding, the program becomes replicable and scalable — a sustainable solution.

Since launching in 2009, the program has provided training to almost 600 low-fee private school proprietors (approximately 140,000 students), ensuring that they develop the financial and management acumen necessary to achieve stability. The program has also disbursed more than 500 loans to those same proprietors, averaging around US$3,500 each. The school proprietors, as a whole, have proven to be an excellent credit risk. Since the program’s inception, the loan repayment rate, defined as the percentage of total loan volume that is current on payments due, has ranged between 90% and 95%.

Figuring out how to lend profitably to social entrepreneurs serving families of severely limited means in the developing world is challenging in the best of circumstances. For a program to be transformational, it requires creative thinking and partners with complementary skills that include tolerance for risk, patience and adversity grounded in a deep sense of social obligation.

Having seen how empowering these loans can be if diligently administered and coupled with financial and management training, I’ve been thinking about lessons for others who are in a position to offer or advance financially self-sustaining solutions in emerging and frontier markets. Some takeaways from the experience:

· Find a local partner and LISTEN to local needs. In emerging markets, drawing from the experience of local partners is crucial to navigating challenges relating to distribution, logistics and infrastructure, while spending time in the field alongside partners is key to gaining first-hand insight into the source of the problems that communities are facing. In our case, Sinapi Aba’s expertise and extensive geographical footprint in Ghana proved invaluable when reaching out to schools with a survey questionnaire to validate the market for a loan program, determine what the program should look like and devise a plan to execute it step by step.

· Tap into local cultural identity and talent. With input from local children’s education experts and government representatives, IDPF tapped Sesame Workshop to create a set of teaching modules that inspire the academic, social and emotional development of children through child-centered techniques. Each module is delivered through an interactive, in-person training that includes a 10-minute teacher training video and a workbook specifically designed for West African classrooms to guide discussions. The videos feature fun and playful interactions between the beloved Sesame Workshop Muppets Zobi and Kami, with Matilda Asante in the role of their favorite teacher.

· Don’t forget the advocacy piece. With an eye on the broader educational ecosystem, we maintain close relationships with government officials in Ghana as well as NGOs and big donor agencies that fund educational initiatives in developing countries. One of our long-term goals is to focus the conversation more on evidence and delivering quality in the classroom. Ultimately, we hope to encourage experimentation around public-private partnerships that would include support for low-fee private schools, recognizing their importance in educating economically disadvantaged children who don’t have access to dedicated teachers and affordable education.

· Be prepared to pivot or hit pause. Operating and regulatory environments in emerging markets can change unexpectedly. Ghana in 2017 experienced a convergence of economic challenges: high inflation, surging borrowing costs, a continuing plunge in the exchange rate for the local currency, and a deterioration in the balance of trade. Sinapi Aba, meanwhile, had to absorb cost increases as it completed its transition to a savings and loan institution. Schools could still access loans, but we weren’t able to expand proprietor training sessions. Basically, we had to step back and wait for conditions to stabilize.

Now, having worked our way through this stress test, we are well positioned for rapid expansion — and I’m more optimistic than ever about exporting our model beyond Ghana. Countless aspiring owner-operators of schools in the developing world, who see a need in their communities and decide to do something about it, deserve a shot at becoming the next Lily Baah.


Baah Memorial School
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