1. Financing Options for African Universities by Amini Kajunju Director of Strategic Partnerships Africa Integras at the MCF/AAU HE Consultation November 22, 2016 Dakar, Senegal

2. The Problem / Opportunity
Youth bulge/dividend. Population growth
Higher demand for tertiary education
Long-lasting disinvestment away from higher education by governments
Poor infrastructure (e.g. overcrowded classrooms and dorms, old laboratories, old libraries)
Inadequate learning environment
Contribution to the brain drain

3. COMMON SOLUTIONS Public Universities Private Universities
Government transfers
Foreign government loans/grants (China, Israel)
Private banks
DFIs (OPIC/IFC)
Donations/Grants
Public-Private Partnerships (PPP)/BOT
Bonds?
Donations/Grants
Endowment/Savings
Private banks
DFIs (IFC)
Rent space
Public-Private Partnerships (PPP)
Bonds?

4. What is a PPP?
A long-term contract between a private party and a government agency
The private entity bears most of the risk during the life of the contract.
Best use of the resources and competitive advantage of the public and private sector
Asset is transferred back to the public entity after the end of contract. (BOT - Build, Operate, Transfer)

5. jj Typical SPV Structure for PPPsPPPs
Public Entity/University
PPP Agreement
Private Sector
(Special Purpose Vehicle)
(SPV)
Equity
Shareholding
Loan agreement
Debt
Subcontractors
Subcontractor
Operations
Subcontractor
Construction

6. Advantages: PPP for Social Enterprises
Finance the project over time vs large outlay of funds
Speed in completion of project. Use facilities sooner
One private entity (SPV) is accountable to all contractors/investors
Increased deployment of debt and equity/access to private sector funds

7. Advantages: PPP for Social Enterprises(continued)
Debt can be cheaper due to length of time and the willingness for DFIs to loan money
Solid returns for investors
Job creation/generation of economic activities/support of local entrepreneurs

8. Challenges: PPP for Social Enterprises
Cost of capital/the cost of pricing the equity risk
Credit risk and analysis/necessary cash flow to sustain payments
Long-term risk: non-payment, political unrest, higher cost of doing business/inflation, changes in the market/competition
Leadership transfer risk/stakeholder engagement
Human capacity/understanding of PPPs by governments and universities

9. Questions for Discussion
Due to a lack of a strong capital market, African universities have limited options for accessing public and private funds for infrastructure.
What role can African pension funds play in reducing the cost of capital?
Why are we not issuing bonds to build educational infrastructure in Africa? In the US, private and public universities issue bonds for all sorts of capital projects.
What role can foundations like the MasterCard Foundation or the Rockefeller Foundation play in becoming impact investors in education infrastructure?