Enhancing Access to Education with Microfinance Loans for Low-Cost Private Schools
Microfinance Gateway inteviews Kashf Foundation winner of the European Microfinance Award on Microfinance and Access to Education:
Microfinance Gateway: Kashf Foundation won the European Microfinance Award for its credit program for low-cost private schools, at a ceremony held at the European Investment Bank in Luxembourg. Congratulations! Can you please tell us about the Foundation’s work? Who are your clients and how do you serve them?
Zafar: Kashf Foundation started in 1996 as a Grameen replicator but over the years we have moved towards an individual appraisal-backed lending methodology. Kashf provides a suite of financial and non-financial services to meet the multitude of needs faced by low-income households, especially women. These include:
- Access to finance through micro-credit and micro-savings;
- Access to social safety nets via micro-health insurance and life insurance;
- Access to capacity building services such as financial management trainings, business development trainings, and vocational trainings; and
- Access to social advocacy interventions such as mainstream media campaigns, social theatre, and gender justice trainings.
Kashf’s client base includes women from low-income households, earning less than USD 2/day/capita (in the first loan cycle). The average age of clients is 37, 30% of Kashf clients have not even availed primary education, and the average family size of clients is 6.
Kashf also has a specialized product for low-cost private schools, which offers access to microfinance, school management trainings for school owners, and pedagogy skills trainings for teachers. The client demographic for this product is slightly more mature, as clients are running their own schools and have better levels of education and lower dependency ratios.
Microfinance Gateway: Universal access to primary education is critical for economic development and growth and it requires substantial investments. Do you think MFIs are in a good position to finance education? What can MFIs do to have a positive impact on access to low-cost high-quality education for children?
Zafar: MFIs are well-placed to meet the immediate needs of small low-cost private schools in Pakistan. A majority of these schools are in rented premises, are not registered, and do not have very high profit margins; consequently they do not have access to credit from banks for improvements or additions. Their profits are usually spread out and/or not high enough to make significant investments.
MFIs can learn from Kashf’s experience and include quality enhancement and capacity building components to their programs, which can help increase the positive impact of the financial investment in the school. Our research has shown that after accessing the Kashf product, 69% of schools saw an improvement in enrollment, 15% of schools set up library corners at their schools, 11% more schools started using work-plans and lesson-plans for their classes, and 29% more schools marked emergency exits and routes in their schools.