Promoting Sustainable Change in Africa (Part 2 of 3)

In Africa, microfinance is also being used to fuel African entrepreneurs who are establishing low-cost alternatives to poorly-performing government-run schools.

According to James Tooley, author of a three-year study on private schools in Africa and head of a $100 million Education Fund for Orient Global, “…parents are abandoning public schools en masse to send their children to budget private schools. In the shantytowns of Lagos, Nigeria, for instance, or the poor rural areas surrounding Accra, Ghana, or in Africa’s largest slum, Kibera, Kenya, the majority of school children—up to 75%--are enrolled in private schools.”

Opportunity International has used Tooley’s research to launch its “Microschools Opportunity Fund” which provides loans to Africans who open schools in poor neighborhoods. According to Opportunity International, “Microschools are now operating in 50 neighborhoods and towns in Ghana in a pilot program. The program incorporates what Opportunity International has learned from providing loans over many years to ‘edupreneurs’ who have opened schools for the poor in Africa, Asia and Latin America. “

Echoing the need for capital to support African “endupreneurs” is Emeka Okafor, who served as the director for TED Global 2007. “In the past, aid agencies have literally thrown billions trying to get schools to improve their curriculum or teaching. These interventions are not sustainable and fade away as soon as the donor-funded experts move on.”

While microfinance strategies undoubtedly offer potential for sustainable change in Africa, Dr. Joseph Ackermann, Chairman of the Management Board of Deutsche Bank describes four obstacles that have kept it from achieving scale and economic viability there:

1.) a lack of well-educated managerial talent to drive organizational growth;
2.) a limited communications and technology infrastructure, which is needed to achieve an efficient delivery of financial services;
3.) the perceived political risk among investors; and
4.) a pattern of capital flight out of Africa, among the wealthy, to Europe and the U.S.

“Despite these challenges,” Ackermann says, “…we believe microfinance can play a major role in the continent’s development. Tribal customs, particularly in rural areas, support a tradition of trust and self-reliance…In addition, the international donor community is ready to consider an investment strategy for Africa as an alternative to the failed policies of direct aid and large-scale infrastructure projects.”

Promoting Sustainable Change in Africa (Part 2 of 3)

Susan Herr