Private Schools for the Poor

All across the developing world, from Ghana to Pakistan to China, poor parents are turning away from public schools and investing their meager incomes in low-cost private education for their children?and seeing positive results.

The Omega School inKasoa, Ghana, is a U-shapedtwo-story cinderblock building with cementfloors, bathrooms, and clean water. The outside wallhas been covered in plaster and painted with a rainbow ofanimals and letters. In the cramped courtyard, girls in paleyellow blouses and brown skirts and boys with button-downshort-sleeve shirts and brown trousers produce a chaos ofnoise. Soon, recess is over and the voices dissipate as thestudents scurry into their classrooms for a meal of riceand stew served in plastic bowls. After lunch, a troupe ofstudent-actors performs "The End of the Rich Family," aplay written by a 14-year-old classmate about the perils ofalcohol, domestic violence, and lack of education.

The scene is what you'd expect from an elite private schoolin the developing world?except that the students at Omega-Kasoa come mostly from families mired in poverty. At a costto parents of 1.2 cedi (about 75 cents) per day, an educationat Omega Schools is within the grasp of many working poorwho live in the town of Kasoa, which lies near the capitalAccra on the main road to Cape Coast. The fee is all-inclusive,covering tuition, uniforms, lunch, books, and exams.

All across the developing world, from Ghana to Pakistanto China, poor parents are investing their meager incomesin private education for their children. In some places, suchas Lagos, Nigeria, these affordable private schools are educatingmore students than the government and providing ahigher quality experience at a lower cost.¹ This remarkablemovement?of parents enrolling their children in low-costprivate schools and children in povertylearning more effectively thantheir peers in government schools?is taking place almost entirely outsideof government assistance or philanthropic support,sometimes even in the face of uncertain and steep regulatoryhurdles. Any systemic attempt to educate the world'spoor ought to recognize the importance of affordable privateschools and include measures to support their growth,improve their quality, and ultimately allow their graduatesto integrate into the formal education system.

First, the good news. More children in places of povertyare attending school than ever before.² Thanks to a majorpush by governments and donors, many countries havebuilt a slew of schools, eliminated tuition for public schools,and mandated primary education for all their citizens. InIndia, for example, the April 2010 Right to Education Actlegislated, for the first time, a constitutional right to freeschooling for every child age 6 to 14.

Through public-private partnerships, giant educationstrides have been made in countries as diverse as Colombia,Turkey, and Bangladesh. Escuela Nueva has changed the wayteachers reach children in rural communities and transformedColombia's national education policy. BRAC is operating thelargest private, secular education system in the world, replicatinga low-cost model for teaching children who had never enrolledin or had dropped out of primary school in Bangladesh,Afghanistan, Pakistan, southern Sudan, Uganda, and Haiti.Nearly 5 million children, the majority of them girls, havegraduated from BRAC schools.

Intel's corporate charity invests $100 million per year in globaleducation. Much of it is devoted to training teachers to use technologyeffectively in classrooms and working with their governments tomove away from curricula that rely on rote memorization toward onesthat emphasize problem solving and collaboration. The William andFlora Hewlett Foundation teamed up with the Bill & Melinda GatesFoundation to pour $93 million into raising the quality of educationin developing countries. Their first grant, in 2007, was to Pratham,an Indian nonprofit established with UNICEF that has pioneeredlearning materials and teacher training methods for basic literacyand numeracy skills. Pratham is working with 10 state governmentsin India to reach more than 10 million children.

Despite all these gains over the last decade, however, educationremains elusive for many of the world's poor. An estimated 69 millionschool-age children were not going to school in 2008, according to theUnited Nations Development Programme. Three-quarters of thosechildren are in sub-Saharan Africa and Southern Asia. And more than30 percent of primary school students in sub-Saharan Africa drop out.

Part of the problem is accountability: In a World Bank study, only 1 in 3,000 head teachers had ever fired a teacher for repeated absences.

Those fortunate enough to attend school are often let down bythe low quality of education they receive. The causes are myriad andmultifaceted. Many teachers don't show up for work in governmentclassrooms, and when they do, many aren't actually teaching. A teamof World Bank researchers visited classrooms?unannounced?inBangladesh, Ecuador, India, Indonesia, Peru, and Uganda. On average,20 percent of the teachers were absent. And in India, when theresearchers found teachers in their classrooms, only half were actuallyteaching when the World Bank team arrived. Part of the problemis a lack of accountability: In a 2005 World Bank survey, only 1 in3,000 head teachers had ever fired a teacher for repeated absences.³

Classroom performance often degrades as space becomescrowded and pandemonium reigns; class sizes of 50, 60, and evenmore than 100 students are common across the developing world.Well-intentioned governments want kids in school, but many don'thave the resources to build enough facilities or hire enough teachersto meet demand and keep up with population growth.⁴

Ultimately, public schools in places of poverty?overcrowded andunderstaffed?are not immediately accountable to students or parents.Affordable private schools offer an alternative. Parents are customers,and if they're not satisfied with the performance of the faculty or cleanlinessof the facilities, they can take their business elsewhere. Schoolproprietors are forced to be responsive, and they have the power to fireunderperforming or absentee teachers. As private schools compete forstudents with each other and with government schools, ideally theydrive up the quality of education offerings for the poor.

Omega Schools: Low Costs, High Scores

Isaac Asiedu, a science teacher at an Omega school in Accra, has asimple theory for why teachers in private schools outperform theircounterparts in government schools. "We work harder," he tells mein between lessons to 12- and 13-year-old students on the value ofcrop rotation. "Whether [government faculty] teach or not, theyget paid. In private schools, if you don't work hard, you don't getpaid. The owner will sack you."

I met Evelyn Addison as she sat on the steps of Omega-Kasoa'sbuilding. She says that sending her kids to private school had seemedout of the question. Her four boys and one girl, ranging in age from5 to 14, had been in government schools, but she says governmentteachers go on strike over a lack of pay with distressing frequency,interrupting the kids' studies. She discovered Omega and realizedthat tuition was within her grasp, especially once she started sellingbread and fried eggs in front of the school. She earns three cedis(roughly $1.80) profit per 10 loaves sold, and her average takeis 10 cedis per school day. "Government schools don't keep kids inclassrooms," Addison says. "They roam about during the day." At herkids' previous government school, their teachers didn't reach out toher to discuss her child's progress. In comparison, Omega teacherscall her periodically and know her children's names.

The premise that an energetic private sector in education couldlead to greater efficiency and improved quality isn't a new idea. In 1991,the World Bank published a report on five countries that spannedLatin America, Africa, and Asia. It controlled for socioeconomic backgroundsand found that students in private schools outperformed studentsin public school on verbal and math achievement tests; also, theper-student costs for private schools were less than public schools.⁵

"Anything that deals with education development that doesn'ttake into account low-cost private schools is just barking up thewrong tree," says James Tooley, a professor of education policy atNewcastle University in the United Kingdom. "They are the crest ofthe wave, in many places serving the majority of poor kids."

Tooley has spent the past decade researching the global ubiquityof private schools in places of deep poverty. In a seminal study, he andhis colleagues scoured regions of China, Ghana, India, Kenya, andNigeria to understand how the poor were educating their children.Systematically counting each of the hundreds of primary and secondaryschools in slum areas in Lagos, Hyderabad, and other cities,Tooley's team found more private schools than government schools.More impoverished parents in these communities were sending theirchildren to private schools than any other type of school, at a costof a few dollars a month to upwards of $15 per month.⁶

Other researchers also have uncovered vibrant ecosystems ofprivate schools among the poor. The Centre for Development andEnterprise, a think tank in South Africa, mapped all the schools insix geographic areas across three provinces. In a 2010 study, it found117 private schools operating in a variety of locales, from abandonedfactories to shopping centers to shacks, accounting for 30 percentof the schools in those areas.⁷

So how were the students in Tooley's study faring? When Tooleycompared their test results in math and English, students from affordableprivate schools scored better than their peers at governmentschools. In Hyderabad, the results weren't even close. The averagescores were 22 percentage points better in math, and even strongerin English. More surprising, Tooley calculated that the feat was accomplishedat 25 to 50 percent of the teacher salary costs.

The school in Kasoa is part of a chain of 10 Omega schools inGhana serving 6,000 students. The schools offer nursery through theequivalent of grade 9, with plans under way to continue adding gradelevels as students move up in age. It costsroughly $70,000 for a new school, whichincludes the price of land and constructionof a 12-classroom building, along with anoffice, kitchen, toilets, and a computer lab.

Omega co-founder Ken Donkoh completedprimary school with 70 students inhis classroom. Only five went on to secondaryschool. "You had to be exceptional,"Donkoh says. "Teachers were virtuallyabsent; we had to teach ourselves." Hesays he was fortunate to have had an olderbrother who made it to secondary school,showing him a path out of poverty througheducation. Donkoh graduated from collegeand worked in Ghana for several aid organizations, including Oxfamand USAID, focusing his time on helping small-scale farmers launchbusinesses. While he was studying for his MBA, Donkoh came acrossTooley's findings and sent him a business plan to launch a for-profitchain of affordable private schools. Together, they started Omega.

To finance the expansion of Omega, Donkoh and Tooley turnedto Edify, a US nonprofit that helps education entrepreneurs grow andimprove their schools, with a focus on Christian schools in the developingworld. Chris Crane, Edify's founder, had heard about Tooley'sresearch when he was running Opportunity International, one of theworld's largest microfinance institutions. He created a fund withinOpportunity to lend money to school proprietors in the developingworld, and eventually left to launch Edify. (Disclosure: As the directorof international giving for the David Weekley Family Foundation,which supports Edify, I helped draft Edify's business plan.)

Traditional microcredit doesn't work well for these "edu-preneurs,"because they need more capital than the typical marketplaceseller, who might use $50 for fabric and $100 to buy a sewing machine.For a school, a new set of latrines might cost several hundred dollars,and a classroom can run a few thousand dollars. Yet for commercialbanks, it's not profitable to make small loans to such risky borrowers.

To encourage and support the capital market for affordable privateschools, Edify makes no-interest loans that can convert into grants tomicrofinance institutions that dedicate the money to funding loansfor affordable private schools. For companies like Omega, however,Edify charges interest on the loan. In a little more than a year, Edifyhas sent more than $2 million to two microfinance institutions inthe Dominican Republic, one in Ghana, plus the Omega Schools.The microfinance institutions, in turn, have made more than 300loans to schools for everything from new classrooms to computers.

Gray Matters Capital: Rating Private Schools

Gray Matters Capital, a foundation in Atlanta established by real estatedeveloper Bob Pattillo, set out to create measurable markers for schoolsuccess and a marketplace where parents can have access to moreinformation and better transparency when making their decisions.

In Hyderabad, Gray Matters worked with the Indian microfinancerating company Micro Credit Rating International Limited(M-Cril) to create a rating system for affordable private schools. Itmeasures a private school's financial performance, governance andstrategy, academic performance, learningenvironment, and student and parentalengagement. Since starting the programin 2009, Gray Matters and M-Cril haverecruited more than 360 schools in Hyderabadand New Delhi to go through therating process. The rating draws on financialinformation and student test scoresas well as feedback from parents, students,staff, and the school owner. The agencycharges $250 to schools with fewer than250 students enrolled, and up to $650 forschools with more than 1,000 students.Gray Matters promoted the rating programin part by offering rated schools achance to apply for microgrants (of about $400) that pay for thingslike library books and teacher training seminars.

The goal is to establish a recognized set of standards and catalyzea marketplace for ratings information. Gray Matters wants toinstill an expectation among parents to demand an independentreport card on a school, and to encourage school proprietors to seekan independent rating to differentiate themselves from competitors.

Genia Topple, executive director of Gray Matters, draws a comparisonto the rise of independent companies that track the performanceof microfinance institutions. Commercial investors pouredmoney into microfinance in part because of the increased transparencyand availability of data. They gained confidence in the market.Gray Matters hopes the same will be true for affordable privateschools once the industry agrees on a set of standards and a criticalmass of schools gets rated by independent agencies.

In early 2009, Pattillo put his own money behind this idea andformed the Indian School Finance Company (ISFC) to lend moneyto affordable private schools. By the end of 2010, ISFC had made 240loans totaling $4.2 million, for an average loan size of $17,500. Thatcapital led to 33,000 additional students attending private schooland created 950 new school jobs, according to Steve Hardgrave,founding director of ISFC.

Bridge International Academies: The Chain School

Whereas Gray Matters and Edify are cultivating thousands of wildflowers in private education, Bridge International Academies ispursuing a different tack. Its leadership hopes to refine the perfecttulip and mass-produce it. Bridge's innovation is to apply themanagement lessons of Henry Ford and Ray Kroc to the productionof educated children in Kenya, mitigating the hurdles of startingschools with faculty who aren't qualified to teach and with schoolmanagers who aren't accustomed to building a business.

In the shantytowns of Nairobi, Kenya, co-founders Phil Frei, JayKimmelman, and Shannon May are taking an approach similar tothe one McDonald's uses to open restaurants, in which every schoolis rolled out in nearly identical fashion. Bridge's buildings are modestby any standard. With wood poles and corrugated metal sheetingas walls and rooftop, the typical school is a shiny, spartan box. Aclassroom costs about $1,800. The buildings are constructed accordingto precise parameters, and the teaching is scripted down to theword. And for the price of an Extra ValueMeal, about $4, a student gets a month ofschooling. The for-profit enterprise?withinvestors such as Omidyar Network andeducation company Pearson?launchedits first school in 2009 and now has 60.

Bridge breaks down each hour of classroomtime. A carefully mapped curriculum,Kimmelman says, "ensures we cantake a larger pool of teachers who aren'tgreat pedagogical teachers" and makethem effective in the classroom. Bridgescripts each lesson, so the teacher knowsexactly what to say and when to say it."We take the best research and data onteaching and boil it down to a lesson plan that tells a teacher ?Youshould write this on the board, and ask this question,'" he says.

To those who may criticize this approach as too rigid or creativelystifling, the rejoinder is pragmatic. The problem of educating somany children is simply overwhelming, and turning an adult witha secondary school education into a functional teacher of primaryschool students requires a focus on repeating proven practices.There's no need for every teacher to discover for himself a unique setof tools to impart lessons on algebra or world history. Nor is there aneed for entrepreneurial genius from the school manager. In theory,the "school in a box" concept makes starting and running a schoolfor poor children as easy as opening a box and following the set ofdirections inside. Everything from building plans, curriculum, andtuition payments to performance monitoring is preplanned and organizedby a team at Bridge headquarters in Nairobi.

Village Schools: Motivating Self-Sufficiency

As Bridge tries to saturate the slums of urban Kenya with its networkof private schools, Village Schools International is touching off abuilding boom of schools in rural Africa. With 21 secondary schoolsspread across Tanzania, and another 10 under construction, the nonprofitprovides donations from the West to help people in villagesbuild schools for their children. (Disclosure: My foundation fundsVillage Schools and I serve on its board of directors.)

Parents, students, and people in the community do nearly all thework of constructing the school. They haul countless buckets of sandand water for mixing cement, quarry hundreds of stones for the foundation,and make tens of thousands of mud bricks by hand. Only afterthe people have donated land and finished making the bricks does VillageSchools deliver the materials that the village can't otherwise provide:metal roofing, cement, glass windows, and teachers. This ensuresthat resources flow to the communities demonstrating the deepestcommitment to education and the strongest ability to work together.The people in the village take pride of ownership of the campus afterinvesting their hopes and sweat into its creation. They pay tuition tocover the operating costs for the school, and when a tornado rips off aroof, they don't wait for the foreigners to arrive to repair their school.

Village Schools makes exceptions for two interventions. To achievegender parity in the classroom, it raises money to subsidize tuitionfor girls, lowering its annual fee to $35 (boys pay $110). The result isthat girls comprise 54 percent of all studentsenrolled at Village Schools, a strongshowing for rural Africa. And Westernersare recruited to teach English in four-monthto yearlong stints. Out of respectand to blend in, they live with Tanzanianteachers and receive about the same pay.

Steve and Susan Vinton, co-foundersof Village Schools, were American missionariesbuilding schools and healthclinics in the Democratic Republic of theCongo when war drove them out of thecountry. Waiting for the violence to subside,the Vintons resettled in a peacefulvillage in western Tanzania and taughta group of secondary students who were the first in their familiesto advance that far educationally.

Godfrey Hiari and Emmanueli Masumbuko, also co-foundersof Village Schools, grew up in families where hunger was a dailypresence and secondary school was a phantom dream. As studentcouncil leaders, they rallied their peers to build new classrooms toexpand their school. Upon graduation, "they began to realize thisproblem wasn't just in their village," recounts their teacher, SteveVinton, "this problem was in villages all over the country." So Hiariand Masumbuko decided to tackle the problem the only way theyknew: They walked from village to village to convince skepticalfarmers that they could make the bricks to start their own schools.

Led by Hiari and Masumbuko, Village Schools is now educating6,300 children who otherwise would be turned away from governmentschools, accepting all the B, C, and D students who failed to gainentrance into government secondary schools through a competitivenational exam. Village Schools gives new life to the rejects; by thetime these students take the next set of national exams, they excel.More than 95 percent of the 2,080 test takers from Village Schoolsover the past four years have passed, a far better success rate thanthe 50 percent attained by the average public school serving thehighest achieving students in the same districts.

Critiquing and Supporting a Movement

Despite the significant presence and success of private schoolsacross the developing world, some experts urge caution and raiseimportant questions. The most significant challenge is whether afinite pool of outside resources is better directed at improving governmenteducation and policy, which influences so many more lives.In all other industrialized nations, the government is responsible foreducating its citizens. Are proponents of private education lettingunderperforming governments off the hook, inadvertently allowingleaders to redirect education dollars elsewhere?

The Intel Foundation works with charter and private schools, saysExecutive Director Wendy Hawkins, but it places a special emphasison public education. "We have a strong bias in favor of government-supportedschools?that's where the kids are, and where the need isgreatest," says Hawkins. She argues that persuading governments toalter policy and redeploy funding leads to systemic and lasting change.

The most significant challenge to private schools is whether outside resources are better directed at improving government education and policy.

Some advocates for the private sector argue that working withgovernment is near impossible. Between corruption, ineptitude,and indifference, meager resources don't reach the poor. It's untenableto expect weak governments to provide adequate education fortheir most vulnerable people. Meanwhile, it's unfair to students tomake them wait until their government is fixed before they get achance to learn. So as other actors on the education stage partnerwith governments to produce long-term change, the private sectorcharges ahead to fill in the gaps. Society benefits when studentshave choices from both public and private schools.

Critics also point out that private sector schools typically offer lowpay and recruit untrained and unqualified people to teach, whereasmost government schools are required to hire government-certifiedteachers. A certified teacher usually can command a higher salaryat a government school (though nonpayment of that salary leads tocountless strikes by teachers). Without adhering to national standards,how can private schools know they're hiring good teachers? Manysupporters of private schools don't believe certification correlatesto excellence in teaching or motivation to work with kids, thoughsome concede that their teachers are often less experienced in theclassroom. But their accountability to parents and headmasters, andthe fact that many come from the same neighborhoods as their students,serve as mitigating factors.

It's not surprising that some governments have given privateschools the cold shoulder. Stefan Schirmer, author of the Centrefor Development and Enterprise's study in South Africa, writes:"Many people?including some government officials?regard privateschools as fly-by-night institutions run by unscrupulous operatorswho are trying to fleece gullible parents. However, rather than beingdupes, it appears as if parents are acting rationally to access betterschooling for their children. The schools themselves had mostly beenin existence for a number of years and had grown ?taller and fatter'as their growing reputations made them increasingly popular."⁸

Still, government officials have legitimate reasons for exercisingcaution when it comes to the private sector expanding into education.They "know the importance of the private sector's participation,but they're worried about the mushrooming of schools withoutcontrol," says Anthony Gyasi-Fosu, CEO of Sinapi Aba Trust, whichis pioneering loans to schools in Ghana. "They fear unscrupulouspeople potentially taking advantage of the situation. They're worriedbecause there's no system to monitor or regulate to make suregenuine people are running the schools. "

A profit-driven entrepreneur may be tempted to cut corners, andif customer decisions ride on standardized test scores, then schoolowners will tend to focus on rote memorization to improve scores.They may not invest in creative thinking or the arts or experimentwith new learning styles. There can be a tension between more profitsand better education that doesn't exist in government schools.

Rather than stifle entrepreneurship in education, governmentsshould welcome the growth of private schools as a complementarypath to educating all children in the country. This is especiallytrue because ministries of education in developing countries havefar fewer resources than needed to educate all children. They canbegin by lowering the bureaucratic obstacles to licensing privateschools. The honest proprietors will want the legitimacy of governmentoversight, if it's not arbitrarily onerous and applied by corruptlocal officials. Of greatest importance to parents, students shouldbe allowed to sit for national exams, which determine their futureopportunities for secondary school and university.

If affordable private schooling is a desirable option for the poor,how can philanthropists, policymakers, and the development communitysupport this movement? Tooley suggests that donors investin the public goods that would help sustain?and protect?the growinglegions of low-cost private schools. National trade associationscan persuade governments to make regulations more practical andrealistic for school proprietors serving the poor and shield the onesfacing undue pressure from government action and local corruption.

Currently, officials from India to Tanzania are enforcing rules forprivate schools that government schools don't come close to meeting.Even private schools with political favor and community support stillrun into bureaucratic roadblocks, often manned by corrupt officialswho see regulations as an opportunity to solicit bribes. The edictsrange from the square footage of playground space to the materialsused in construction. Instead of focusing on facilities, the emphasisshould be placed on education outcomes. Of course, school buildingsneed to be safe, but while government inspectors pore over constructionminutiae, Indians are enrolling their kids in private schools thatplaster their walls with photos of students holding test scores.

Impact investors concerned about education in the developingworld could apportion a fraction of their investments to affordableprivate schools or lending agencies that serve edu-preneurs. A moreradical notion, which mirrors the US school choice debate, is to givescholarships to poor families and let them decide how to spend theireducation dollars. The Indian government subsidizes some privateschools, and more dollars could be channeled to funding scholarshipsfor the poorest students to attend high-performing schools.

Entrepreneurs working at the bottom of the economic pyramidare solving the problem of educating the world's poorest people.They seize the opportunity to serve customers who need a betterproduct, and in the process they create a community that's bettereducated. Like all businesses, these affordable private schools needmore capital, more trained workers, and rule of law for operatingtheir enterprises. An unexpected industry is blooming?one thatcould brighten the prospects of the materially poor.