Promoting Best Practices in SME Finance

CapPlus’ research into the market potential for financing low-fee private schools as an impactful SME sector continues, this time in Abidjan, Côte d’Ivoire. We thank UBS Optimus for funding this original field research and are pleased to share our new report: Banking on Education in Abidjan.

Abidjan’s private schools educate 54% of the city’s school children, including 70% of secondary school students – significantly higher than we’ve seen in other cities due to the government’s decision to partner with private schools to educate secondary students. As in other cities, the market is growing: 7% per year for the past 20 years.

We estimate 2,400 private schools operate in Abidjan, representing a $200 million market potential for financial institutions to extend credit and $153 million in cash transactions that could be captured.

More than half of Accra’s children attend private schools, including children in lower-income households. To learn more about these schools and their demand for finance, CapitalPlus Exchange conducted market research in partnership with the IDP Foundation, Inc. Researchers interviewed a random sample of 242 school proprietors in seven low-income districts, providing the basis for projecting characteristics and market potential for the entire private school sector in Accra.

Low cost private schools represent a growing SME segment that is vastly underbanked. These schools educate millions of low-income children, and offer an opportunity to improve the quality of education in Africa. CapPlus researchers interviewed 998 school proprietors in five African cities and concluded that financial institutions can support schools in growing, improving their financial management and the children’s learning outcomes – all as a profit-generating line of business.

To explore the market opportunity for financing private schools from a banker’s perspective, CapPlus interviewed managers at financial institutions in nine countries to learn their view on delivering profitable services that help schools build infrastructure, run operations, and improve education quality. The bottom line: schools are a larger opportunity than first-movers have captured. This paper explores the reasons why, and provides recommendations for pursuing this market segment.

More than 80% of Kampala’s children are educated in low-cost private schools. This article summarizes CapPlus’ findings after interviewing 223 school proprietors as well as local education officials.

Trying to serve a rural, low income population is never an easy task for a financial institution – and providing finance to the affordable private primary schools that serve this market is even tougher. A unique pairing of a funder, the IDP Foundation based in Chicago, Illinois, and an MFI lender in Ghana, Sinapi Aba, developed a formula that profitably serves this market, reaching the “higher hanging fruit” among private schools. The program demonstrates that commercial financial institutions can be sustainably lending to low cost private schools.

Read the complete market analysis CapPlus conducted on low-cost schools in Kampala in 2016.

Read about CapPlus’ SBBN, the first global network dedicated to the use of peer learning and industry building to increase access to SME finance.