Global Market

Affordable Private Schools (APS) for the poor exist throughout the world and serve millions of children living in low-income areas. These schools are enterprising because they offer underserved communities alternatives in access and quality of education, and represent a new frontier for impact investing.

While most countries have a highly privileged private sector, educating children of the middle or upper class, APS serve a large population of the working poor and lower income families. Professor James Tooley’s research estimates that 100 million students in the developing world are attending these schools and paying less than $10 per month in school fees.

In many urban areas, Affordable Private Schools are serving the majority of children. Studies conducted have identified these low-cost private schools existence in urban slums and rural areas in countries such as India, Pakistan, Nigeria, Ghana, Kenya and China. Independently owned and operated, these schools are typically run by local entrepreneurs who realize the need and demand for private education services for the bottom of the pyramid. This budding market allows parents to have a viable option to educate their children and provide them with better educational opportunities.

The Model

The unique qualities that define APS are:

• Locally Managed: APS are managed by local entrepreneurs who oversee operations and instruction and ensure teachers are in the classroom.
• Market-Based Solution: The combined business and academic model makes these schools a sustainable, market-based solution to increasing the availability of low-cost, higher quality education for low-income populations.
• Demand Driven: Families of APS students are paying clients with rights to insist on quality.
• Sustainability: APS are sustainable enterprises, independently managed, providing a reliable source for education.
• Competition: Schools generate market demand and drive intense competition through school selection.
• Performance: Schools are social enterprises and put an emphasis on quality, efficiency and performance, justifying the modest tuition charged that allow them to become sustainable enterprises.

Why APS Are Important: Access and Quality

Two principal problems plague education systems across the globe: lack of access and quality of education.  Private education is emerging and effectively addressing these two issues and research already points to the benefits of private education for the poor in low income countries with respect to both access and quality.

Parents frustrated with the lack of accountability and results in government schools are turning to private schools to meet their educational needs.  APS are independently managed, enabling them to be nimble in implementing and measuring tactics that render positive results.  School directors can hire the most effective teachers and hold them accountable to quality standards. Evaluation is real-time and ongoing, and monthly school fees translate into a feedback loop that is dramatically shorter in comparison to the national and state-level performance. One recent study of several hundred schools across poor communities in three African countries showed that APS outperformed the government schools in independently designed and internationally evaluated math and reading assessments. Early research on the market also suggests that APS deliver higher quality education at a lower per-student cost than their government counterparts despite limited resources.

Market Opportunities and Challenges

Despite the recent growth of the market, APS suffer from weak industry infrastructure and require broad support in the form of financing, curriculum aids, management training and teacher training.

Many schools do not have a common platform upon which to share standards and best practices. Improved transparency is needed to ensure that parents are selecting the best schools for their children. Schools continue to have limited access to capital for school expansion and improvements due to a lack of financing options as necessary loan amounts tend to fall between traditional finance and microfinance loans.

APS also face hurdles in securing registration with their local governments. The Kenyan government, for example, requires schools to occupy a certain amount of land to be officially recognized, and most fall short of this standard. As a result, APS often lack access to funding and other benefits provided by the government. In Ghana, where APS endure the same hardship, students may even face exclusion from national exams for attending a private school unrecognized by the government.

Yet with disciplined support and investments to help perfect their business models, APS can lead an exciting education revolution in low-income communities around the world. The combination of a sustainable fee-for-service business model, local leadership and the pursuit of quality education make APS an excellent platform for increasing access to quality education in low-income communities.

Current Research has identified high levels of APS activity in Africa, Asia, and Latin America.

APS can also be referred to in the industry as "budget schools,” " private schools for the poor," "micro-schools" and "low-cost private schools," among other terms.

How to Contribute

The EnterprisingSchools team is constantly working to update and improve market summaries and country profiles. If you have materials or information that could help us in our efforts, please send an email to our Resource Team. EnterprisingSchools is a collaborative effort and it will grow more valuable through your contributions.