In classrooms across Nigeria’s Edo state, teachers are equipped with information systems designed to better instruct and track the progress of pupils in an effort to encourage children to stay in school.
The programme — dubbed Edo Best — provides services from Bridge International Academies, a US company that began operating private, low-cost schools in Africa with backing from donors and social impact investors but which is increasingly focused on providing support to state-run systems.
“By investing in social enterprises and other non-state actors, investors can improve government schools and help to create more high-quality learning opportunities, ultimately helping to transform the development path of low- and middle-income countries,” says Jay Kimmelman, Bridge chief executive.
His organisation’s approach, which has elicited both praise for impact and criticism over quality and price, highlights the considerable scope but also the potential pitfalls of impact investing in Africa, notably in the highly sensitive and politicised field of education.
Amit Bouri, head of the Global Impact Investing Network, an association for impact investors, says a survey of its members suggested that sub-saharan Africa has become one of the top regions targeted by funds, accounting for 14 per cent of their assets under management. Education — like healthcare — is becoming a sector of interest, although it only accounts for 4 per cent of assets invested in the region.
“It’s still early days,” Bouri says. “Capital deployed has not caught up with the level of interest, partly because finding a role can be complicated because of the state.”
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On paper, there is enormous potential for investors, including those with a focus on social impact.
The continent’s young population is expanding, and the need for additional funding is clear.
There is a chronic undersupply of teachers, and wide variations in the quality of education provided.
There is interest from groups including Novastar Ventures, backed by the UK’S Department for International Development (DFID) through its Impact Fund which is managed via CDC; and Invest isseurs & Partenaires, a Paris based Africa-focused vehicle that is preparing an education fund in partnership with the government of Monaco.
Bridge International Academies began operating private, low-cost schools in Africa with backing from donors and social impact investors.
Its recent study in francophone Africa highlighted the scope for greater technical and vocational training; the potential to support the private sector for schooling; and opportunities in ancillary services, such as teacher training, student loans and equipment supplies.
But, as with the other pillar of “human capital” — health — there are tensions for investors.
Many aspects of both medicine and teaching are considered by civil society to be the domain of government, with an imperative for equity and fair access.
That is why a number of investors and providers alike have focused on supporting state provision. Amel Karboul, head of the Education Outcomes Fund, is exploring a three-year programme co-funded by DFID and the government of Ghana, which will link payments to improving attendance in the country’s schools.
One difficulty for such projects is how to measure performance effectively, and the distortion that such metrics risk creating. Sam Freedman, head of Ark Education Partnerships Group, a non-profit consultancy that advises a number of African countries, says: “It’s incredibly difficult to measure outcomes in education. Even in the UK, if you make organisations financially dependent on the measure, they will start focusing everything on it rather than the education.”
“In countries where accountability data is relative weak, it’s even harder,” he adds. “You have to collect data yourself with nothing to cross reference.”
If measurement is difficult for funders, another challenge is a lack of projects in which to invest. “Most schools in Africa are predominantly mom and pop operators,” he says.
“They don’t have the risk profile that would make people want to invest in them, nor the capacity to grow, nor any sign of quality or ability to develop quality.”
Oliver Sabot, head of Nova Pioneer, a network of low-cost schools based in Kenya, sees a funding gap for education projects.
“There’s a missing middle,” he says. “If you are looking for a small amount of seed funding to get an idea going, there is a fair number of opportunities.
If you are a large operator with a strong track record that is profitable, there are lots of backers.
But the path in-between is barren. There are few players who are able or willing to work with teams in that middle portion.”
He also points to a barrier to school operations in many cities in Africa: property prices, which undermine efforts to keep costs low.
“For any school or university, it’s one of the biggest impediments,” he says.
“It would unlock huge growth if some big funders came together and created a pool of capital for education property.”
He highlights a number of new entrepreneurial school operators, but adds: “It’s a small number when you think about the scale of the continent.
Even if you believe the private sector should only have a sliver of the sector, given the needs of the next 10 or 20 years, we need to seed entrepreneurs and managers.”
“They don’t have the risk profile that would make people want to invest in them, nor the capacity to grow, nor any sign of quality or ability to develop quality “
