FELIPE BARRERA-OSORIO ILYSE ZABLE WORLD BANK MARCH 31, 2010 A Characterization of the Private Segment of Kenya’s Educational Sector

Public-Private Partnerships (PPP) Several governments around the world are adopting novel strategies to reach the Millennium Development Goals  Governments are forming alliances with the private sector in primary education  Initiatives like PPPs require a dynamic private sector The private sector is an important player in education  Private providers, by having a more flexible, are more effective in providing education  The separation of roles between the finance role—lead by the government—and the provision role—lead by the private—can increase efficiency  Contract can serve as a vehicle of quality assurance by introducing clauses of specific delivery of quality of education  A pragmatic view states that the government alone cannot archive universal education, and that the private sector is an important player de facto that can help, especially reaching low-income households

The objective of the study This study presents a description of the private sector in education in Kenya  Presents new data that allows the characterization of private institutions in Kenya’s education sector We make use of a survey collected for the impact evaluation of Kenya’s Private School Support Program (KPSSP) and a follow-up case study  KPSSP aims to provide local currency financing and advisory services to private K-12 institutions  On December 7, 2006, IFC signed a risk-sharing agreement with K- Rep Bank (K-Rep) of up to 120 million Kenyan shillings ($1.7 million equivalent) on loans extended to eligible private schools in Kenya.

Characteristics of the sample of schools Baseline survey:  Information for 142 schools between September and November 2007 in Nyeri (19.2% of the sample); Nukuru (16.9%); Mombassa (24.6%), and Nairobi (39.2%)  The sample includes 798 teachers, and 8,863 students  68% are primary, 28% secondary, and 4% both primary and secondary  Sample of schools was chosen from a list of private providers Follow up case study:  Made between June and July 2009  35 schools from the original list  Schools that were able to get a loan through the program; schools that were in the process of applying; and schools that did not apply for the loan.

Characteristics of private schools

Characteristics of teachers

Characteristics of students

Schools’ average fees per term were around 18,800 KSH ($284) and 18,200 KSH (US$275) per term for primary and secondary

Active learning is the critical factor to induce gains in achievement. Copy from blackboard and “independent work” account for more than 50% of the time spend in the class.

30% of students reported math teacher missed at least one day of school in the past week (40% for English)

Sustainability of Schools The sustainability of schools depends on the stream of students, which in turn, determines the flow of revenues  The majority of the demand for these schools comes from nearby households Year of creation can be a strong indicator of the viability of the school These schools are observing a huge demand Liquidity constrains are binding for private schools  80% of schools indicated that they would access a bank loan at prevailing interest rates if they could, to be used predominantly for physical expansion and, secondarily, purchasing computers and other educational materials.  Own savings and net revenues were the predominant options for financing non-recurrent expenditures

There is a positive relationship between number of students and year of creation

There is demand for the schools…

….and they are either breaking even or making profits

Schools have difficulties in collecting fees. More than 50% of schools were not able to collect an average of around 15% of fees by the end of the term

Own savings and net revenues were main options for financing non-recurrent expenditures

Loan to be used predominantly for physical expansion and purchasing computers and other educational materials

Administrative capacity Schools reported employing 18 administrative staff  This number seems high given that the average school size is students. The majority of schools do not utilize computerized systems for accounting, payroll, tuition, and student and exam records Critical decision-making is distributed across different people

The use of computers is low

Three main messages The private education sector in Africa is growing fast, even more than the public counterpart The quality of private schools diverges enormously The private sector is reaching low-income populations, filling a vacuum that the government is leaving behind.

Some policy implications The study presents a mixed view of private institutions in Kenya’s education sector.  They are schools with fairy high level of infrastructure, with young qualified teachers.  They are schools with an “adequate” and growing number of students enrolled from middle- to low-income populations.  However, they are schools that face serious administrative challenges (they do not have systematic book-keeping or audited financial statements) These schools are hiring young teachers, with low experience and the minimum level of education required for the profession  Young teachers are open to new challenges  However, the schools are reaching very difficult populations: need experience teachers The KPSSP is proposing the establishment of a Local School Development Provider, which can provide educational services for the private sector  If the government is interested in PPPs, and the private sector is reaching low-income households, there are reasons for public intervention.  If the private sector is sorely for-profit, reaching well-off populations, an institution that provides technical and administrative support for schools should be financed by private funds.