UPDATED: New dawn for low-fees schools financing?

Low-fee schools have received sustained attention in recent times for both the right and wrong reasons. One of the biggest challenges they face is access finance to improve quality and expand operations. STEPHEN ONYEKWELU shines light on an indigenous drive to provide funds for these schools.

Realities of low-fee schools

At 7:30am, Muyibi Street in Olodi Apapa is already bubbly with activity; bus drivers hurl abusive words at each other to gain right of way, passengers complain about running late to work and sometimes traffic grinds to a halt as Lagos yellow bus drivers and concerned passengers step out to control traffic flow.

One remarkable feature on the 1.25 kilometres long street with over 200 residential buildings is the early morning school runs. Some of the houses on this street have been around for the past 100 years, judging from the rusty, coffee-brown corrugated roofing sheets and the architectural design commonly called face-me-I-face-you.

Mothers and housemaids walk the streets and shout intermittent notes of safety to children, who tend to run off on their own, all dressed up in a variety of school uniforms. Most of these children will end up in one of the over 10 private schools, which charge less than N10, 000 per term, on Muyibi street. These schools have been classified as low-fee private schools and have become common landmarks on almost every street on Mainland Lagos. This is however, not synonymous with Lagos as some other states in the country are witnessing similar scenario.

Low-fee schools specialised in the delivery of basic education have drawn attention for both helpful and unhelpful reasons.

“I like to take my child to school because education is very important. I have a daughter at the Bridge International Academies. I wake up by 4:00am to get things ready because the school resumes by 6:30 – 7:00am. My daughter is excited and she is good at phonics. I struggle to make ends meet but will see to it that my children become graduates,” Bukola Samson, a mother whose daughter is five years old, said during a visit to one of the low-fee schools run by the Bridge International Academies, a chain of private schools that delivers basic education with the low-fee school model in Lagos.

Field visits to 10 of such schools across Lagos: Ajegunle, Ikorodu and Alimosho local governments, five schools in Benin City, coupled with long hours of interview at the Association for Formidable Educational Development (AFED) secretariats in Lagos and Benin City show that many low cost schools are struggling to keep their doors open to the growing number of parents who come to them seeking basic education for their wards.

The realities

Many low cost schools in Lagos and Benin City can best be described as makeshift structures, located either in uncompleted church buildings, church multi-purpose halls, residential buildings (with tenants living alongside the schools) and crowded noisy environments (which makes learning a serious challenge).

During a visit to one of such schools, Brighter Future Nursery and Primary, School in Isolo area, the school was located in the type of building called face-me-I-face-you of 12 rooms. The school renovated and occupies six of the rooms.

When the reporter arrived at the school’s premises, 11:13am some of the tenants were busy preparing lunch and the aroma filled the air while pupils in each of the six classrooms chorused one repetitive rhyme or item of a lesson as instructed by the teacher.

“We used to stay in a smaller building across the street but as the number of our pupils grew, we had to expand into this building. We hope to eventually acquire a piece of land and build our permanent site,” the proprietor, who wishes to stay anonymous said.

The children drank water from a 50-litre covered bucket placed in front of one of the classrooms. All the pupils used one cup placed on the covered water container to drink. The classrooms were small, about 3 metres by 3 metres and contained over 10 pupils.

Three pupils were randomly selected from primary four (a girl and two boys) to read a comprehension passage from an English Language text meant for the class. The girl, eight years old, read fluently but could not identify some of the words when asked to pronounce or tell their meaning independently of the text. Between the two boys, one struggled to read with little comprehension but the other could not read at all. The proprietor in response said the latter had only joined his school in September 2018.

“I do this out of passion. The school operation has not been profitable but I am consistent because if I do not do this, there are many children who will not have access to education, simply because their parents cannot afford to send them to primary schools that charge higher fees. I am a teacher myself,” the proprietor said.

Kings and Queens Primary Nursery and Primary School situated in Ajegunle, is located within the same premises as a palm wine pub. Although the pub resumes around 4:00pm, the children are exposed to an unhygienic and noisy environment. Some of the teachers are indeed senior secondary school certificate holders and see teaching as pastime.

“I have teachers who are senior secondary certificate (SSCE) holders. But they tend to teach with passions. Currently, I have only two, I encourage my teachers to further their studies and obtain at least the National Certificate in Education (NCE),” Ahmed Usain, proprietor of Tawakalitu Schools, in Ajeromi Ifelodun, said.

In Benin City, low-cost schools operate some at healthy locations and some others operate from uncompleted, dingy church buildings.

Low-cost schools service low-income neighbourhoods where waste management is inefficient and sometimes, these schools are located beside heads of dirt and clogged water channels, which produce unpleasant odours with negative health implications.

Four challenges and AFED

Some of the findings of the investigation show that low-cost schools face four challenges, which include government regulation, tax and revenue, managerial knowledge gap among the operators, and lack of funding opportunities.

Some proprietors who were interviewed during the investigation said they are not able to access loans and expand their operations. This, they said, was because they do not have ministry of education approval and risk closure of such school. Lack of access to finance means these schools are not able to improve and expand.

This explains the financial circle these schools are in. With government’s approval; banks are willing to give loans. But when there is no government approval, banks do not want to deal.

However, the Association for Formidable Educational Development (AFED) has emerged on the scene to help low-fee schools’ operators interface with government, particularly in Lagos State, where there has been appreciable milestones. The Association has also established a secretariat in Benin City.

Some low-cost school operators say in the midst of their struggles unscrupulous government officials take advantage of them. They come to harass the school owners and because school owners are afraid of their school being shut down, they are willing to comply. “So, waste management comes, local government agents come, personal income tax will come and even corporate income tax will come too.

“Government schools have failed in the sense that they are overcrowded and there is no transfer of knowledge. Parents want alternatives. One thing parents consider as strong measure of knowledge transfer is in the ability of their children to speak fluent English Language,” Ehi said.

Segmentico’s mission to change the narrative

Segmentico Ltd, an innovative financial company is breaking new ground in its push to increase access to funding for low-fee private schools at a time when the numbers of Nigeria’s out-of-school children are growing but the government’s ability to intervene is waning.

Low-fee private schools are filling the gap and providing formal education to children and wards of low income earning Nigerians, in a country where over 70 million people live below the poverty threshold of $1.90 a day (N685.43).

All the proprietors of low-fees who have been interviewed have said they are not able to access loans and expand their operations. This they said was because they do not have the ministry of education approval and risk closure of such school. Lack of access to finance means these schools are not able to improve and expand.

Since most of the low-fee schools are run by private individuals, most banks will not lend to this sector. There are between 18,000 – 25, 000 private schools in Lagos alone, all of which have created assets – land and buildings. As they expand, these schools need money to put up additional classrooms or a laboratory or some other facilities. Most of them borrow from private money lenders, paying up to 60 percent interest a year. This slows down improvement and expansion at these schools.

Segmentico has developed replicable sector-specific systems and processes, which allow for efficient and effective operations. The company currently serves more than 40 schools in Lagos and additional capital will allow the company to extend its successful model to more than 5,000 schools throughout the country over the next five years.

“We have disbursed over N10 million worth of loans and the repayment rate has been impressive 100 percent.” Wale Odeja, founder, Segmentico Ltd said. “But we have limited funds to provide loans to all applicants and the maximum loan amount is too small for some applicants.”

Segmentico has embarked on a journey of transforming into a leading, customer-centric, diversified lending company; it plans to continue building on its leadership position in the education finance space with an objective of positively transforming the education lending space in Nigeria. The core loan offering enables low-fee private schools to improve the quality of education and increase the capacity to educate more children from low-income households

The company has mapped out plans to expand across the country through strategic partnerships. It will continue to emphasise on building capabilities in risk and control, analytics, underwriting, information technology, people and brand to ensure that Segmentico delivers growth which is sustainable with robust asset quality.

“Our school’s partnership with Segmentico has enabled us to reach out to more children with all the opportunities that a good education can provide” “Abioye Funmilola, head, Rosemanuel Educational Services said.

Segmentico’s model is working because people have little faith in government schools and are willing to pay more for quality education, while schools with no access to bank credit are proving to be bankable as borrowers. The company was founded in March 2019 and is determined to focus on continuous innovation in products and services to remain relevant to changing customer needs, leveraging technology to deliver better customer experience.

Low-fees schools have also come together under the Association for Formidable Educational Development (AFED). This Association’s emergence on the scene is helping low fees schools’ operators interface with government, particularly in Lagos State, where there have been appreciable milestones. The Association has also established a secretariat in Benin City.