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Opportunity EduFinance
1 Fore St., London EC2Y 5EJ

Telephone: +44 (0)1865725304

© 2019 Opportunity International Education Finance functions under its US and UK affiliates. Opportunity International United Kingdom is registered as a charity in England and Wales (1107713) and in Scotland (SCO39692). Opportunity International United Statesis a 501(c)3 nonprofit.

Increasing Access to Education in Ecuador

By Hannah Hilali

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Opportunity EduFinance is now working with 28 Financial Institution partners in 17 countries globally.  Behind all these partnerships is the EduFinance Technical Assistance Facility (ETAF) team.  ETAF provides technical assistance (TA) to new and existing financial institution partners supporting their Education Finance products and services.  Our ETAF team is made up of financial experts based in Europe, Africa, Asia and Latin America – the team combined has over 78 years’ experience in more than 80 financial institutions worldwide. 

In August, Opportunity EduFinance’s ETAF team in Latin America supported Fundación ESPOIR to successfully launch three Education Finance loan products that will increase access to education for children, adolescents and adults in Ecuador.

Fundación ESPOIR is a non-profit microfinance institution headquartered in Ecuador’s capital city, Quito. Its mission is to promote the economic, social and health development of low-income micro-entrepreneurs in Ecuador with the purpose of improving their quality of life through the provision of financial and non-financial services. ESPOIR focuses on supporting female micro-entrepreneurs, especially those that live in rural areas who may struggle traditionally to get access to the financial services that ESPOIR offers. Approximately 79% of ESPOIR’s clients are estimated to be low-income women, 75% of which are rural-based.

Opportunity EduFinance has been working with ESPOIR since early 2018 to develop and launch ESPOIR’s Education Finance portfolio. Opportunity’s ETAF team has carried out market research, product development and staff training with ESPOIR. Based on the findings of the market research ESPOIR launched three education loan products this September:

  1. School Fee Loan to help finance tuition and education related expenses for parents whose income may fluctuate due to seasonal work.
  2. Tertiary Tuition Loan intended to finance liquidity requirements for the start and end of the semester for under-graduate and graduate courses.
  3. Vocational Loan which can help to finance short-term courses, or related technological expenses like computers or tablets, so that micro-entrepreneurs can gain new technical skill sets and improve their business.

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Increased access to education for rural areas

These financial products address the challenge that many of ESPOIR’s clients face: living in rural and remote regions far from urban cities, which means they have little or no access to quality education. Often students drop out of school due to a perceived lack of quality or usefulness of the education available to them. School drop-outs and adults with limited technical skills are often unable to find long-term sustainable and well paid work.

The Vocational Loan, for example, responds to this challenge by increasing access to short-term technical courses. The loan can be used to pay for course fees, or for the client to buy a computer or tablet so that they can access online courses.

Risk management reduces guarantee requirements

ETAF’s work with all Opportunity EduFinance partners includes looking at risk management.  With ESPOIR, Opportunity EduFinance generated algorithms to identify clients with good payment experience and verified their scores in Ecuador’s Credit Bureaus in order to create preapproved customer lists for predefined loan amounts (according to their level of risk). As ESPOIR focuses on rural micro-entrepreneurs, speed and ease of loan approval and disbursement is essential. Using ESPOIR’s pre-approved credit list means that clients need only reach the institution to be officially approved and to receive their educational loan disbursement.

If a client has a good repayment history with ESPOIR, no guarantors or guarantees are required as ESPOIR holds their payment history as their guarantee. The only documentation that the client needs to provide ESPOIR is the proof of payment that they are going to make, which must be related to education issues. Using this method, ESPOIR can disburse credit to its clients quickly, with levels of control that ensure that the loan is used for education related purposes. Controls which benefit both the customer and the financial institution.

In the coming few months Opportunity EduFinance’s ETAF team is also providing TA to CACMU credit union in Ecuador plus other financial institution partners globally in Peru, Kenya, Uganda, Cote d’Ivoire, and India.  Lukas Wellen, Opportunity EduFinance’s Director of Financial Products, comments:

“As we conduct our EduFinance operations in seventeen countries globally, our partners can confidently see that we understand their issues and that our approach is practical and solution orientated.  It is important for our financial institution partners that we have a long-term vision and we are able to support them in a variety of areas.  As well as providing advice, training and support including  product design and delivery it is clear that we also understand how areas such as risk management are important for financial institutions.  We constantly innovate to deliver on these areas developing new modules that can help our partners expand and grow.”

 

Learn more about ETAF and about Fundación ESPOIR.

 

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