Introducing Education Finance

Nathan Byrd

About the Author:

Nathan Byrd

Nathan is the Head of Education Finance for Opportunity International.

Opportunity International’s Education Finance program is about breaking the poverty cycle – period. Through a combination of innovative savings, lending, insurance and financial education products and services, we have a single guiding vision:

“To expand and improve educational opportunities to the working poor in some of the most economically disadvantaged populations around the globe, and to do so sustainably, so that every child we touch has the opportunity to break the cycle of poverty within their family.”

Education, as any parent knows, is the pathway out of poverty. Parents in Sub-Saharan Africa spend, beyond survival necessities of food, water and shelter, more on education than on any other cost. The World Bank has also shown in a recent study of the region that, on average, an extra year of primary school for a child translates to a 10-20% rise in eventual income, while an extra year of secondary school means a 15-25% rise in eventual income.

Translated to real numbers, this means that a woman in Uganda who has never gone to school might earn an income of US$490 per year (Uganda’s average annual income per capita), while an woman who has completed her secondary education can be expected to earn an income of US$2,205 to US$6,693.

Strictly in economic terms, what tool in existence is more powerful than one that has been proven to increase economic productivity by between 450% and 1,366% over the course of someone’s lifetime?

How, then, can we work to ensure that the children of the working poor have access to such a powerful tool?

At Opportunity, we have developed an Education Finance program designed to address the major challenges to educational completion that children face in Sub-Saharan Africa – and in much of the rest of the developed world.

1. School Fee Loans
Through School Fee Loans to parents of primary and secondary school children, we reach the poorest economically active parents and offer them a unique loan product that allows them to manage the high cost of education. By doing the same for university and technical school students, we have become one of the first private entities in Africa able to build a real bridge over the financial barriers that prevent poor families from accessing higher education financing.

2. School Improvement Loans
We provide School Improvement Loans to school proprietors. This allows us to help school owners build and expand schools in poor communities where education is usually too far away. We can also help them actively address questions surrounding the low quality of education, which often leads to high dropout rates.

3. Child Savings Accounts
Child Savings Accounts, often combined with our Youth Financial Education in Schools, are two services that go hand-in-hand. We use them to address the relevance of education to real employability post-schooling, which has recently surfaced as a major threat to educational completion. By enabling children to both understand the importance of savings and actively participate in savings themselves, we are not only protecting children’s livelihoods – we are teaching them financial management that goes well beyond basic lessons.

4. Insurance + Savings
We have partnered with MicroEnsure to develop the first mass-market educational insurance product for poor families in Africa. For the first time in Africa, a bank in Malawi can now tell millions of parents – whose average life expectancy is as low as 43 years old – that if something should happen to them, Opportunity will ensure that their children have the resources needed to continue their education and continue their journey out of poverty.

This, above all, is what we wish to do as a bank. We want to be a beacon of hope to industrious, poor parents whose children’s futures lie in a precarious balance between hardship and hard work. This is precisely what our Education Finance Program is providing today to hundreds of thousands of families.

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