Using AI to Predict Client Profiles and Provide Innovative Lending Solutions - Discussion with Jackfruit Finance

In the education finance landscape, bridging the gap between affordable private schools and access to capital remains a formidable challenge. Jackfruit Finance, a Kenya-based partner of Opportunity International, was founded with the goal to transform the way schools offering affordable education can access financial stability.

In an insightful conversation between Julius Omoding, Senior Technical Assistance Advisor & Regional Director for Africa, Opportunity EduFinance, and Robert Alhadeff, CEO and Founder, Jackfruit Finance, as part of Financial Inclusion Week, the focus converged on the challenges and innovations driving financial inclusion for these schools.

This discussion delved into their pioneering AI-driven lending model; using AI to predict client profiles and provide innovative education finance lending. This enables Jackfruit to provide larger, more secure, and extended-term loans, setting them apart from rapid digital lending services. Additionally, they discuss insights into the challenges faced, lessons learned, and the promising future of leveraging technology in education finance.

Addressing Financial Challenges in Affordable Private Schools

Affordable private schools, often founded by teachers aiming to create educational opportunities, encounter hurdles in accessing loans. Many of these institutions face difficulties due to the absence of standardized financial documentation required by conventional lenders.

Robert’s first touchpoint in education was his initial experience in rural Uganda, where he helped restructure educational NGOs, and helped 85 children get sent to schools in Uganda. Witnessing the struggle of children in accessing schooling laid the groundwork for an innovative approach that focuses on financial solutions for such establishments.

Initially assuming most schools in rural areas of Uganda to be government-run, he learnt that they were in fact mostly private and lacked access to affordable financing. This realization inspired Jackfruit Finance's mission to expand support to a larger scale. Despite starting in Uganda, a tech opportunity led Robert to Kenya, where the lessons learned in Uganda continued to guide their journey for accessible financial solutions in education.

Increasing Financial Access through Technology

Opportunity EduFinance is thrilled to partner with Jackfruit Finance due to their commitment to designing a transformative financial solution that promotes accessibility. Jackfruit Finance's innovative solution revolves around a special app designed to gather vital information from schools. The app removes the need for detailed financial paperwork that traditional lenders usually demand. Their technology makes it easier for schools that struggle to provide typical financial reports to access much-needed funds. By using a tech-forward approach, they have made sure that these schools, often overlooked by regular lenders, can now get the financial support they need.

Central to Jackfruit’s mission is the emphasis on financial inclusion. By tailoring their lending model specifically to schools serving economically challenged communities, Jackfruit Finance has provided loans to 144 schools without a single default, a testament to their meticulous approach in assessing a school's ability to repay a loan beyond just financial metrics.

“We've had no defaults, which is amazing. It's like the absolute core to what we do.” – Robert Alhadeff

Ensuring Inclusivity and Affordability

The onboarding process for schools partnering with Jackfruit Finance is streamlined and accessible. Robert explains that reaching out to their team through email, phone, or their website initiates the process. A team member then visits the school to assess its needs and determine the best financial solution. To address previous challenges where schools presented informal classroom designs and material cost estimates, Jackfruit now provides standardized project plans created by professional architects, simplifying the process. They have also established connections with school bus distributors, leveraging their network and expertise to reduce costs for schools. This education-specific approach aims to alleviate financial strain on schools. Ultimately, the primary focus remains on assuring the affordability of a loan without burdening the schools financially.

Jackfruit Finance's approach is not just about offering financial support; instead, it’s about making sure schools can pay back loans without struggling. This means schools can utilize their funds wisely, improving education for children in areas that are often overlooked.

“As we talk about financial inclusion, we're seeing how low-cost schools can grow and ultimately how the education space can become much better, and how we can get more children into affordable schools”.  – Julius Omoding

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Implementing AI in Education & Challenges Faced

Julius and Robert also talked about the future of AI in education. Their discussion emphasized the pivotal role of technology, particularly AI, in Jackfruit Finance's approach to aiding affordable schools. Their AI tools enable a comprehensive evaluation of a school's financial health. Their AI-driven lending model facilitates larger, secure, and longer-term loans, distinguishing them from quick digital lending, ensuring proper underwriting and financial sustainability for schools.

“As technology begins to grow, we are beginning to see the integration of that technology with all the things that schools need.” – Robert Alhadeff

However, integrating technology into school systems presented hurdles for Jackfruit Finance. The adoption of their tech solutions varied among schools, primarily due to behavioural changes required and resource constraints within the educational institutions themselves. Some schools struggled to adapt to the new systems or lacked the necessary training to effectively utilize the technology.

Despite these obstacles, Jackfruit Finance persisted in refining their approach. They initiated discussions with Opportunity EduFinance to explore training programs aimed at addressing the issue and subsequently successfully participated in the technical assistance training provided by Opportunity EduFinance. This collaborative effort aims to empower schools through education and support in embracing technological advancements. By offering training programs, they sought to equip schools with the skills needed to efficiently handle the provided accounting apps and other tech tools. 

Looking Ahead: Vision for Educational Empowerment

Jackfruit Finance envisions a future where their impact extends far beyond mere financial assistance. The goal is to empower schools to excel, guiding parents in informed decision-making while aiding global financial institutions in offering tailored support to education.

The mission of Jackfruit Finance transcends financial aid. It aims to create a transparent ecosystem, ensuring quality education is not just accessible but also a realistic choice for all, irrespective of economic backgrounds. As Jackfruit Finance continues its journey, the focus remains resolute—to redefine the narrative of education financing and ensure that quality education becomes a tangible reality, enriching lives, and shaping futures.

Read our blog about launching the EduQuality program in Western Kenya.