Leveraging Private Financing for Education
August 19, 2009 – 3:30 p.m.
|Presenters:||Timothy Ryan, International Finance Corporation (IFC)|
Grace Lang, USAID Afghanistan
Eugenia Topple, Rockdale and Gray Matters Capital Foundation/Grey Ghost Ventures
|Moderator: ||Suezan Lee, USAID Office of Education |
This session covered the issue of private financing of education in developing countries. The main topics of discussion included public vs. private education funding for schools, international private donor funding, as well as overviews of a number of case studies of privately funded education programs, with particular insight from program experiences in Haiti and India.
Private financing for education is a developing initiative to provide school and student loans for private schools. The focus of this type of financing is private education, a point of contention among international donors. However, in many countries large quantities of schools are private, such as in Haiti where 75 percent of primary schools are private. Most development funds come from private donors to the developing world. However, compared to developed countries, the credit extended to the developing world is very low.
Timothy Ryan from the IFC described the education finance programs that they have been able to implement worldwide. In 2005/2006 the corporation began to finance student loans; however, most student financing programs have not been overly successful. Many are run by governments and very few are sustainable. IFC believes that working with private sector donors can lead to successful programs that are sustainable. Ryan also stressed the importance of providing support to the students rather than just funding. IFC has developed financial literacy curricula so that students are educated about the borrowing process.
Haiti has one of the highest rates of private schooling in the world, making private financing in education a focus for USAID Haiti. Tuition rates were high and many parents could not afford to pay until the end of the harvest season, which was halfway through the school year. USAID Haiti started an initiative in which they loaned tuition money to the families, which they could then pay back after the harvest. Parents who wanted to participate in the program became part of the credit union. The pilot was a success and there has been a high repayment rate.
Grey Ghost Ventures is a private firm with an education financing program in India. Affordable private schools have opened across India because public education quality is so low. The venture funds these schools; they are locally managed and staffed. The schools are formed as trusts, and are supported by a finance corporation that was started by Grey Ghost which provides loans.
Key take away points from this discussion included acknowledging that order for a private financing program to work, a strong relationship with the government ministries and the mix of public/private schools is crucial. However, many challenges inhibit the growth of loan financing, especially if banks and loan credit bureaus are not developed in-country or are unwilling to share in the loan financing or risk-sharing. Private funding for education is a potential area for grown and a way to improve the education situation for marginalized populations in countries were public school quality is very low and private school is beyond the means of the majority of the population. Additionally, private financing for education could be more successful if paired with a financial literacy component in order to increase the prospect of sustainability.
To view the presentations, please click on link below:
IFC, Ryan :
Rockdale & Gray Matters Capital :
USAID, Lee :