(Illustration by Mark Shaver) 

The Omega School in Kasoa, Ghana, is a U-shaped two-story cinder block building with cement floors, bathrooms, and clean water. The outside wall has been covered in plaster and painted with a rainbow of animals and letters. In the cramped courtyard, girls in pale yellow blouses and brown skirts and boys with button-down short-sleeve shirts and brown trousers produce a chaos of noise. Soon, recess is over and the voices dissipate as the students scurry into their classrooms for a meal of rice and stew served in plastic bowls. After lunch, a troupe of student-actors performs “The End of the Rich Family,” a play written by a 14-year-old classmate about the perils of alcohol, domestic violence, and lack of education.

The scene is what you’d expect from an elite private school in the developing world—except that the students at Omega-Kasoa come mostly from families mired in poverty. At a cost to parents of 1.2 cedi (about 75 cents) per day, an education at Omega Schools is within the grasp of many working poor who live in the town of Kasoa, which lies near the capital Accra 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 Pakistan to China, poor parents are investing their meager incomes in private education for their children. In some places, such as Lagos, Nigeria, these affordable private schools are educating more students than the government and providing a higher quality experience at a lower cost.1 This remarkable movement—of parents enrolling their children in low-cost private schools and children in poverty learning more effectively than their peers in government schools—is taking place almost entirely outside of government assistance or philanthropic support, sometimes even in the face of uncertain and steep regulatory hurdles. Any systemic attempt to educate the world’s poor ought to recognize the importance of affordable private schools and include measures to support their growth, improve their quality, and ultimately allow their graduates to integrate into the formal education system.

First, the good news. More children in places of poverty are attending school than ever before.2 Thanks to a major push by governments and donors, many countries have built a slew of schools, eliminated tuition for public schools, and mandated primary education for all their citizens. In India, for example, the April 2010 Right to Education Act legislated, for the first time, a constitutional right to free schooling for every child age 6 to 14.

Through public-private partnerships, giant education strides have been made in countries as diverse as Colombia, Turkey, and Bangladesh. Escuela Nueva has changed the way teachers reach children in rural communities and transformed Colombia’s national education policy. BRAC is operating the largest private, secular education system in the world, replicating a low-cost model for teaching children who had never enrolled in 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, have graduated from BRAC schools.

Intel’s corporate charity invests $100 million per year in global education. Much of it is devoted to training teachers to use technology effectively in classrooms and working with their governments to move away from curricula that rely on rote memorization toward ones that emphasize problem solving and collaboration. The William and Flora Hewlett Foundation teamed up with the Bill & Melinda Gates Foundation to pour $93 million into raising the quality of education in developing countries. Their first grant, in 2007, was to Pratham, an Indian nonprofit established with UNICEF that has pioneered learning materials and teacher training methods for basic literacy and numeracy skills. Pratham is working with 10 state governments in India to reach more than 10 million children.

Despite all these gains over the last decade, however, education remains elusive for many of the world’s poor. An estimated 69 million school-age children were not going to school in 2008, according to the United Nations Development Programme. Three-quarters of those children are in sub-Saharan Africa and Southern Asia. And more than 30 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 by the low quality of education they receive. The causes are myriad and multifaceted. Many teachers don’t show up for work in government classrooms, and when they do, many aren’t actually teaching. A team of World Bank researchers visited classrooms—unannounced—in Bangladesh, Ecuador, India, Indonesia, Peru, and Uganda. On average, 20 percent of the teachers were absent. And in India, when the researchers found teachers in their classrooms, only half were actually teaching when the World Bank team arrived. Part of the problem is a lack of accountability: In a 2005 World Bank survey, only 1 in 3,000 head teachers had ever fired a teacher for repeated absences.3

Classroom performance often degrades as space becomes crowded and pandemonium reigns; class sizes of 50, 60, and even more than 100 students are common across the developing world. Well-intentioned governments want kids in school, but many don’t have the resources to build enough facilities or hire enough teachers to meet demand and keep up with population growth.4

Ultimately, public schools in places of poverty—overcrowded and understaffed—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 cleanliness of the facilities, they can take their business elsewhere. School proprietors are forced to be responsive, and they have the power to fire underperforming or absentee teachers. As private schools compete for students with each other and with government schools, ideally they drive 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 a simple theory for why teachers in private schools outperform their counterparts in government schools. “We work harder,” he tells me in between lessons to 12- and 13-year-old students on the value of crop rotation. “Whether [government faculty] teach or not, they get paid. In private schools, if you don’t work hard, you don’t get paid. The owner will sack you.”

I met Evelyn Addison as she sat on the steps of Omega-Kasoa’s building. She says that sending her kids to private school had seemed out of the question. Her four boys and one girl, ranging in age from 5 to 14, had been in government schools, but she says government teachers go on strike over a lack of pay with distressing frequency, interrupting the kids’ studies. She discovered Omega and realized that tuition was within her grasp, especially once she started selling bread and fried eggs in front of the school. She earns three cedis (roughly $1.80) profit per 10 loaves sold, and her average take is 10 cedis per school day. “Government schools don’t keep kids in classrooms,” Addison says. “They roam about during the day.” At her kids’ previous government school, their teachers didn’t reach out to her to discuss her child’s progress. In comparison, Omega teachers call her periodically and know her children’s names.

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

“Anything that deals with education development that doesn’t take into account low-cost private schools is just barking up the wrong tree,” says James Tooley, a professor of education policy at Newcastle University in the United Kingdom. “They are the crest of the wave, in many places serving the majority of poor kids.”

Tooley has spent the past decade researching the global ubiquity of private schools in places of deep poverty. In a seminal study, he and his colleagues scoured regions of China, Ghana, India, Kenya, and Nigeria to understand how the poor were educating their children. Systematically counting each of the hundreds of primary and secondary schools 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 their children to private schools than any other type of school, at a cost of a few dollars a month to upwards of $15 per month.6

Other researchers also have uncovered vibrant ecosystems of private schools among the poor. The Centre for Development and Enterprise, a think tank in South Africa, mapped all the schools in six geographic areas across three provinces. In a 2010 study, it found 117 private schools operating in a variety of locales, from abandoned factories to shopping centers to shacks, accounting for 30 percent of the schools in those areas.7

So how were the students in Tooley’s study faring? When Tooley compared their test results in math and English, students from affordable private schools scored better than their peers at government schools. In Hyderabad, the results weren’t even close. The average scores were 22 percentage points better in math, and even stronger in English. More surprising, Tooley calculated that the feat was accomplished at 25 to 50 percent of the teacher salary costs.

The school in Kasoa is part of a chain of 10 Omega schools in Ghana serving 6,000 students. The schools offer nursery through the equivalent of grade 9, with plans under way to continue adding grade levels as students move up in age. It costs roughly $70,000 for a new school, which includes the price of land and construction of a 12-classroom building, along with an office, kitchen, toilets, and a computer lab.

Omega co-founder Ken Donkoh completed primary school with 70 students in his classroom. Only five went on to secondary school. “You had to be exceptional,” Donkoh says. “Teachers were virtually absent; we had to teach ourselves.” He says he was fortunate to have had an older brother who made it to secondary school, showing him a path out of poverty through education. Donkoh graduated from college and worked in Ghana for several aid organizations, including Oxfam and USAID, focusing his time on helping small-scale farmers launch businesses. While he was studying for his MBA, Donkoh came across Tooley’s findings and sent him a business plan to launch a for-profit chain of affordable private schools. Together, they started Omega.

To finance the expansion of Omega, Donkoh and Tooley turned to Edify, a US nonprofit that helps education entrepreneurs grow and improve their schools, with a focus on Christian schools in the developing world. Chris Crane, Edify’s founder, had heard about Tooley’s research when he was running Opportunity International, one of the world’s largest microfinance institutions. He created a fund within Opportunity to lend money to school proprietors in the developing world, and eventually left to launch Edify. (Disclosure: As the director of 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 marketplace seller, 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 commercial banks, it’s not profitable to make small loans to such risky borrowers.

To encourage and support the capital market for affordable private schools, Edify makes no-interest loans that can convert into grants to microfinance institutions that dedicate the money to funding loans for affordable private schools. For companies like Omega, however, Edify charges interest on the loan. In a little more than a year, Edify has sent more than $2 million to two microfinance institutions in the Dominican Republic, one in Ghana, plus the Omega Schools. The microfinance institutions, in turn, have made more than 300 loans 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 estate developer Bob Pattillo, set out to create measurable markers for school success and a marketplace where parents can have access to more information and better transparency when making their decisions.

In Hyderabad, Gray Matters worked with the Indian microfinance rating company Micro Credit Rating International Limited(M-Cril) to create a rating system for affordable private schools. It measures a private school’s financial performance, governance and strategy, academic performance, learning environment, and student and parental engagement. Since starting the program in 2009, Gray Matters and M-Cril have recruited more than 360 schools in Hyderabad and New Delhi to go through the rating process. The rating draws on financial information and student test scores as well as feedback from parents, students, staff, and the school owner. The agency charges $250 to schools with fewer than 250 students enrolled, and up to $650 for schools with more than 1,000 students. Gray Matters promoted the rating program in part by offering rated schools a chance to apply for microgrants (of about $400) that pay for things like library books and teacher training seminars.

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

Genia Topple, executive director of Gray Matters, draws a comparison to the rise of independent companies that track the performance of microfinance institutions. Commercial investors poured money into microfinance in part because of the increased transparency and availability of data. They gained confidence in the market. Gray Matters hopes the same will be true for affordable private schools once the industry agrees on a set of standards and a critical mass of schools gets rated by independent agencies.

In early 2009, Pattillo put his own money behind this idea and formed the Indian School Finance Company (ISFC) to lend money to affordable private schools. By the end of 2010, ISFC had made 240 loans totaling $4.2 million, for an average loan size of $17,500. That capital led to 33,000 additional students attending private school and 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 wild flowers in private education, Bridge International Academies is pursuing a different tack. Its leadership hopes to refine the perfect tulip and mass-produce it. Bridge’s innovation is to apply the management lessons of Henry Ford and Ray Kroc to the production of educated children in Kenya, mitigating the hurdles of starting schools with faculty who aren’t qualified to teach and with school managers who aren’t accustomed to building a business.

In the shantytowns of Nairobi, Kenya, co-founders Phil Frei, Jay Kimmelman, and Shannon May are taking an approach similar to the one McDonald’s uses to open restaurants, in which every school is rolled out in nearly identical fashion. Bridge’s buildings are modest by any standard. With wood poles and corrugated metal sheeting as walls and rooftop, the typical school is a shiny, spartan box. A classroom costs about $1,800. The buildings are constructed according to precise parameters, and the teaching is scripted down to the word. And for the price of an Extra Value Meal, about $4, a student gets a month of schooling. The for-profit enterprise—with investors such as Omidyar Network and education company Pearson—launched its first school in 2009 and now has 60.

Bridge breaks down each hour of classroom time. A carefully mapped curriculum, Kimmelman says, “ensures we can take a larger pool of teachers who aren’t great pedagogical teachers” and make them effective in the classroom. Bridge scripts each lesson, so the teacher knows exactly what to say and when to say it. “We take the best research and data on teaching and boil it down to a lesson plan that tells a teacher ‘You should write this on the board, and ask this question,’” he says.

To those who may criticize this approach as too rigid or creatively stifling, the rejoinder is pragmatic. The problem of educating so many children is simply overwhelming, and turning an adult with a secondary school education into a functional teacher of primary school students requires a focus on repeating proven practices. There’s no need for every teacher to discover for himself a unique set of tools to impart lessons on algebra or world history. Nor is there a need for entrepreneurial genius from the school manager. In theory, the “school in a box” concept makes starting and running a school for poor children as easy as opening a box and following the set of directions inside. Everything from building plans, curriculum, and tuition payments to performance monitoring is preplanned and organized by a team at Bridge headquarters in Nairobi.

Village Schools: Motivating Self-Sufficiency

As Bridge tries to saturate the slums of urban Kenya with its network of private schools, Village Schools International is touching off a building boom of schools in rural Africa. With 21 secondary schools spread across Tanzania, and another 10 under construction, the nonprofit provides donations from the West to help people in villages build schools for their children. (Disclosure: My foundation funds Village Schools and I serve on its board of directors.)

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

Village Schools makes exceptions for two interventions. To achieve gender parity in the classroom, it raises money to subsidize tuition for girls, lowering its annual fee to $35 (boys pay $110). The result is that girls comprise 54 percent of all students enrolled at Village Schools, a strong showing for rural Africa. And Westerners are recruited to teach English in four-month to yearlong stints. Out of respect and to blend in, they live with Tanzanian teachers and receive about the same pay.

Steve and Susan Vinton, co-founders of Village Schools, were American missionaries building schools and health clinics in the Democratic Republic of the Congo when war drove them out of the country. Waiting for the violence to subside, the Vintons resettled in a peaceful village in western Tanzania and taught a group of secondary students who were the first in their families to advance that far educationally.

Godfrey Hiari and Emmanueli Masumbuko, also co-founders of Village Schools, grew up in families where hunger was a daily presence and secondary school was a phantom dream. As student council leaders, they rallied their peers to build new classrooms to expand their school. Upon graduation, “they began to realize this problem wasn’t just in their village,” recounts their teacher, Steve Vinton, “this problem was in villages all over the country.” So Hiari and Masumbuko decided to tackle the problem the only way they knew: They walked from village to village to convince skeptical farmers that they could make the bricks to start their own schools.

Led by Hiari and Masumbuko, Village Schools is now educating 6,300 children who otherwise would be turned away from government schools, accepting all the B, C, and D students who failed to gain entrance into government secondary schools through a competitive national exam. Village Schools gives new life to the rejects; by the time these students take the next set of national exams, they excel. More than 95 percent of the 2,080 test takers from Village Schools over the past four years have passed, a far better success rate than the 50 percent attained by the average public school serving the highest achieving students in the same districts.

Critiquing and Supporting a Movement

Despite the significant presence and success of private schools across the developing world, some experts urge caution and raise important questions. The most significant challenge is whether a finite pool of outside resources is better directed at improving government education and policy, which influences so many more lives. In all other industrialized nations, the government is responsible for educating its citizens. Are proponents of private education letting underperforming governments off the hook, inadvertently allowing leaders to redirect education dollars elsewhere?

The Intel Foundation works with charter and private schools, says Executive Director Wendy Hawkins, but it places a special emphasis on public education. “We have a strong bias in favor of government-supported schools—that’s where the kids are, and where the need is greatest,” says Hawkins. She argues that persuading governments to alter 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 with government is near impossible. Between corruption, ineptitude, and indifference, meager resources don’t reach the poor. It’s untenable to expect weak governments to provide adequate education for their most vulnerable people. Meanwhile, it’s unfair to students to make them wait until their government is fixed before they get a chance to learn. So as other actors on the education stage partner with governments to produce long-term change, the private sector charges ahead to fill in the gaps. Society benefits when students have choices from both public and private schools.

Critics also point out that private sector schools typically offer low pay and recruit untrained and unqualified people to teach, whereas most government schools are required to hire government-certified teachers. A certified teacher usually can command a higher salary at a government school (though nonpayment of that salary leads to countless strikes by teachers). Without adhering to national standards, how can private schools know they’re hiring good teachers? Many supporters of private schools don’t believe certification correlates to excellence in teaching or motivation to work with kids, though some concede that their teachers are often less experienced in the classroom. But their accountability to parents and headmasters, and the fact that many come from the same neighborhoods as their students, serve as mitigating factors.

It’s not surprising that some governments have given private schools the cold shoulder. Stefan Schirmer, author of the Centre for Development and Enterprise’s study in South Africa, writes: “Many people—including some government officials—regard private schools as fly-by-night institutions run by unscrupulous operators who are trying to fleece gullible parents. However, rather than being dupes, it appears as if parents are acting rationally to access better schooling for their children. The schools themselves had mostly been in 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 exercising caution 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 without control,” says Anthony Gyasi-Fosu, CEO of Sinapi Aba Trust, which is pioneering loans to schools in Ghana. “They fear unscrupulous people potentially taking advantage of the situation. They’re worried because there’s no system to monitor or regulate to make sure genuine people are running the schools. ”

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

Rather than stifle entrepreneurship in education, governments should welcome the growth of private schools as a complementary path to educating all children in the country. This is especially true because ministries of education in developing countries have far fewer resources than needed to educate all children. They can begin by lowering the bureaucratic obstacles to licensing private schools. The honest proprietors will want the legitimacy of government oversight, if it’s not arbitrarily onerous and applied by corrupt local officials. Of greatest importance to parents, students should be allowed to sit for national exams, which determine their future opportunities for secondary school and university.

If affordable private schooling is a desirable option for the poor, how can philanthropists, policymakers, and the development community support this movement? Tooley suggests that donors invest in the public goods that would help sustain—and protect—the growing legions of low-cost private schools. National trade associations can persuade governments to make regulations more practical and realistic for school proprietors serving the poor and shield the ones facing undue pressure from government action and local corruption.

Currently, officials from India to Tanzania are enforcing rules for private schools that government schools don’t come close to meeting. Even private schools with political favor and community support still run into bureaucratic roadblocks, often manned by corrupt officials who see regulations as an opportunity to solicit bribes. The edicts range from the square footage of playground space to the materials used in construction. Instead of focusing on facilities, the emphasis should be placed on education outcomes. Of course, school buildings need to be safe, but while government inspectors pore over construction minutiae, Indians are enrolling their kids in private schools that plaster their walls with photos of students holding test scores.

Impact investors concerned about education in the developing world could apportion a fraction of their investments to affordable private schools or lending agencies that serve edu-preneurs. A more radical notion, which mirrors the US school choice debate, is to give scholarships to poor families and let them decide how to spend their education dollars. The Indian government subsidizes some private schools, and more dollars could be channeled to funding scholarships for the poorest students to attend high-performing schools.

Entrepreneurs working at the bottom of the economic pyramid are solving the problem of educating the world’s poorest people. They seize the opportunity to serve customers who need a better product, and in the process they create a community that’s better educated. Like all businesses, these affordable private schools need more capital, more trained workers, and rule of law for operating their enterprises. An unexpected industry is blooming—one that could brighten the prospects of the materially poor.

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