Education: Opportunities at All Levels

From a development perspective, financing girls’ education may well be the world’s highest-return investment.  It is also a business opportunity.

Uneducated women have more children—typically leading to lower earning power, less financial independence, and higher infant, child, and maternal mortality rates. But with each year of primary and secondary schooling, female incomes rise by 10 to 20 percent, 

World Bank research shows, and those with university degrees can earn twice as much as those without.

Education opens up new benefits that students can later pass on to their children, families, and others in their community. That makes it an attractive, high-demand sector for private investors, whose work in the middle and lower end of the market have high impact and complement larger-scale government efforts. 

In one of India’s poorest states, Rajasthan, IFC’s $7.8 million equity investment is helping build Au Financiers, an innovative financial house targeting the large base-of-the-pyramid market. It seeks out high-potential clients who have never dealt with the financial system, then fuels their growth with tailor-made products. 

Among its many business lines, Au has financed more than 300 low-cost private educational institutions. In the distant outskirts of state capital Jaipur,  its $5,000 loan led to new science labs at JBN Senior Secondary School, where annual school fees range between  $40 and $150 and enrollment is almost equally split between girls and boys. Most of its graduates go on to university, something almost none of their parents had done before them.

In Ghana, IFC’s risk-sharing facility led the Trust Bank to finance the expansion of 25 local private schools, something almost no Ghanaian banks had previously done. The loans typically carry advisory support building the business skills of borrowers like Accra’s co-ed Mt. Olivet Methodist Academy, which took a $200,000 loan for a new building, allowing it to enroll more students in its program that qualifies  80 percent of graduates to go on the country’s best schools.  

The Middle East suffers from the world’s highest youth unemployment rate (25 percent), with female youth unemployment even higher at 30 percent or more, holding back even many university educated young women. In response, IFC and the Islamic Development have launched a new initiative, Education for Employment (e4e) that is expected to generate up to $2 billion over the next five years, bridging the gap between existing education and the skills and knowledge needed for employment. The e4e initiative will have a special emphasis on providing educational opportunities for girls and young women in the Arab world.