EduFinance Ghana: Building on Progress
Some of EduFinance’s earliest market research and technical assistance work started in Ghana. Around 2008, Opportunity International’s long-time financial institution partners in Ghana started recognizing that low-fee schools and parents were already borrowing for education related needs, despite not having dedicated EduFinance products to offer them.
That early work with our Ghana partners to design, pilot and redesign dedicated loan products for school improvement and school fees would ultimately be scaled into our EduFinance Technical Assistance Facility offered to 91 financial institutions in 27 countries in Africa, Asia and Latin America to date.
The through line of Opportunity EduFinance’s work in Ghana has centered around building on progress.
By first listening to our financial institution partners, we were able to identify existing market demand by schools and parents for capital.
Building on this, we worked to design unique EduFinance loan products that meet the needs of low-fee schools and parents, providing technical assistance to our partners to implement them.
Once our Ghana partners established a strong portfolio of school borrowers, we expanded our services in 2016 to offer these school owners a holistic program to continue improving their quality of education through school development planning and professional development training.
EduFinance has now started another phase of building on progress in Ghana. Our EduFinance Technical Assistance team recently conducted a new ‘roadshow’ of meetings with prospective and current partners to identify opportunities to expand investment into more schools. By engaging wider branch networks to offer EduFinance loan products, we have an opportunity to link local school owners and parents in more remote regions to the capital they need, ultimately benefiting children in these areas with more access to quality education.
"Much has changed in Ghana since EduFinance first launched there with its first loan in 2008. Since then, primary school enrolment rates have risen sharply, from 73% to 86%. I am excited to build on this progress in Ghana, and to take the EduFinance program to more schools in hard-to-reach places, providing better educational opportunities for those who most need it." - Andrew McCusker, Head of Opportunity EduFinance
To learn more about this new phase of expansion in Ghana, we sat down with our EduFinance Technical Assistance Advisors leading this work.
Richard Amuzu, EduFinance Technical Assistance Advisor for Ghana, also consults for the World Bank and the Ghanaian Ministry of Finance. Through his work for the Ghana Association of Microfinance Institutions Network (GHAMFIN) he is well informed on developments in the education market.
Jane Aik, EduFinance Technical Assistance Advisor for Africa, has more than twenty years’ experience in the sector and has been delivering roadshows and working strategically with financial institutions in Ghana for several years.
Can you give us an overview children's access to quality education across Ghana?
Richard: There is a need to improve children’s access to quality education across Ghana. The government has a lot of public schools but is not able to absorb all school-aged pupils. In recent research we did in Accra, the Ashanti Region, and the Western Region we interviewed 318 schools and 150 school leaders and found there was a lot of potential for quality education on the private side to support the strained capacity of the public sector.
In Ghana, many families prefer to send their children to private school, as they think they provide a better-quality education for basic education. There is a need for more private schools, as currently they are not able to meet the demand from parents. This was made worse by Covid-19 with the need for social distancing and less space in classrooms. Based on my experience there is a huge potential in the market for financial institutions to tap into this market and provide loans to those who are really in need of support.
Jane: Something unique to Ghana’s market is that some schools ask parents to pay on a daily basis, and they pay for lunch and daily tuition together. This solution works for parents who only have to make a daily payment each time, expanding school access to a wider range of lower-income families. In some cases, they give the parents a choice between a daily, weekly, monthly or termly rate, and many parents prefer to pay daily.
Richard: This can help both parents and schools to manage their cash flows. However, there is also a challenge if a child doesn’t attend and pay the daily school fee or withdraws from the school completely as schools may lose cash flow.
What feedback have you received from financial institutions during recent roadshow meetings in Ghana?
Richard: At roadshows where we present the business and impact cases for EduFinance to financial institution senior leadership, there has been a lot of interest. Many of them are already lending for education but do not have an education finance product as part of their portfolio. They already support schools and parents and guardians, but without naming it.
A key takeaway for me is that financial institutions initially see education as just another generic product they are offering, but when we elaborate about the impact, they appreciate that they are actually doing much more. They want to partner with us to support local schools in this way when they can see the impact.
What are the biggest barriers to mobilizing more private capital investment into the education sector in Ghana?
Jane: In August 2019 there was a massive shake-up, and many Savings and Loans were closed while others merged. Many of them were not strong enough due to governance structures and getting debt funding became a problem, so the overall number of financial institutions went down. In 2020, there were more issues as many were fearing another shake-up.
Richard: The shake-up was quite a challenge as it cut across all institutions in the financial sector. This resulted in a dwindled confidence for a while, and this was a barrier for mobilizing capital and fund managers were slow to invest. Now the institutions have stabilized and all those who are operating are in good standing and are safe to do business with.
The challenge with education finance is that many of the financial institutions need to have some funding in order to lend. Partnerships, such as Opportunity EduFinance’s partnership with Oikocredit are really important for this reason.
Richard, as a Ghanaian yourself, why are you choosing to work in Ghana’s education sector?
Richard: This is my life story; education means a lot to me. I come from a humble background. My mother was a food seller, and my father was a fisherman and then a driver. Schooling has really helped me. I was a brilliant student; a school prefect and I had the best grades. Because of financial challenges I wanted to do TVET as an apprentice although I had 8 straight A’s, as I would get paid. Instead, my father convinced me to further my education to university level to develop my brain. I was offered Engineering Science as a technical program, this was very challenging and I realized I needed time to learn. After this I did a business degree and then a masters.
While I was at university my parents’ business declined and I had to work every holiday. I would sell washing powder in the market. Within 3 months I had made enough for all my school fees for the next semester and my parents were surprised I had managed this.
I care about working for Opportunity EduFinance because I am part of offering support for less privileged students. If I had been able to access support or a loan it would have reduced the stress of going to sell and hustle to raise funds. A lot of parents lack the support and as part of this team I can help people so they can have access to funding or financial support to upgrade themselves and get as far as they want to get with their dreams.