DEEPEN - Developing Effective Private Education Nigeria | Accion ‘My School Plus’: Financial support for low-cost schools
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Accion ‘My School Plus’: Financial support for low-cost schools

DEEPEN research on ‘School as a Sustainable Business’ revealed private schools’ challenges in accessing formal finance and provided banks with previously unavailable information on the sector. As a result, Accion Microfinance Bank has partnered with DEEPEN to provide loans to low- and medium-cost schools at single-digit interest rates.

Using a sample of private schools in Lagos, the assessment aimed to identify the constraints in the market for the provision of financial and non-financial services to schools.

Specifically, the research uncovered the following:

  • High levels of cash transactions as an estimated 38% of private schools have no bank accounts.
  • The sector generates almost $800million income per year; a third of which is not captured by the financial sector
  • About $160 million of the sector’s $450 million expenses are also uncaptured by financial service providers
  • Prevalence of weak cash flow management and fee collection systems

The opportunities for financial service providers include:

  • Banking unbanked schools, parents and teachers
  • Increased income and expenditure capture
  • Increased lending for property, vehicles, fixtures &fittings
  • Increased financing of school fees
  • Increased saving

These findings and opportunities were presented to stakeholders at a Finance Forum held in June 2014.

Using the information provided by DEEPEN, Accion Microfinance Bank developed a product called ‘My School Plus’ to provide low- and medium-cost schools with affordable loans (at 9% interest) for the following uses:

  • Improvement of facilities
  • Purchase of assets
  • Working capital financing –to tackle irregularity in payment of fees by parents

With DEEPEN’s support, the bank is piloting the loan scheme and has already disbursed N54.8million to 120 private schools. Accion also plans to increase its’ loan portfolio to private schools to N540 million over the next 5 years.

According to Bunmi Lawson, the Managing Director of Accion, ‘DEEPEN’s report and presentation have been helpful in terms of providing information about the market and opportunities. In the past we focused on public schools but we have seen the opportunity presented by the low-cost schools.’

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