Affordable Private Schools (APS) Sector Analysis Report – 2012

Gray Matters Capital
Publication Date:
Mon, 03/09/2012 - 17:25
File Size:
1.54 MB

Executive Summary by Author:

It is now a common knowledge that Affordable Private Schools (APS) exist in most of the developing countries in the world. Several studies1 conducted in the recent past have identified the existence of low-cost private schools in urban and rural areas across countries such as India, Pakistan, Bangladesh, Nigeria, Ghana, Kenya, Dominican Republic, South Africa, China and other countries. These schools are independently owned and operated by local entrepreneurs to serve a large population of the working poor and lower income families by charging lower fees. APS has a potential to provide access to good quality education to the low income communities across the world.
Much has been written and published regarding the profile of APS in many countries. The argument has always been whether the schools in the APS sector perform better than or not when compared to public schools. To take this dialogue forward, in this report we have tried to put forth a more realistic stance by recognizing that there are both good as well as poor performing schools in the APS sector. About 50% of the schools in the APS sector are delivering acceptable quality education to low income communities. Yet, there is the other half which performs below expectation. Often, such poor performing schools create an unfavorable impression for the whole APS sector. The objective of this report is to highlight this difference and bring forward the fact that all the APS schools do not perform uniformly. It is crucial that the APS ecosystem differentiates between the two and provides support accordingly. Schools that are not performing well need more targeted support and handholding from the APS ecosystem. While progressive APS needs solutions, products and services which can help them improve further. This is where an outcome based rating and accreditation model will help monitoring performance of such schools.
In the first section - Balancing Act: Low Fees vs. High Performance, the report looks at the fine balance that the APS tries to strike between education quality and fees charged. In our analysis we found that a strong correlation exists between the fees that APS charge and the student learning outcome. Because of this relationship, it appears that below a certain threshold of fees, APS might find it difficult to perform well. From the sample of 200 APS, it is observed that none of the schools charging below INR400 per month (USD 8) are able to perform well. They either lack basic facilities and resources required to create conducive learning environment or are financially unsustainable. However, this does not imply that if one increases fees beyond this threshold, the performance would automatically improve further. This is where other factors such as pedagogy, teacher competency, curriculum, and management competency come into play.
In the second section - Top 20 vs. Bottom 20 APS, we have compared top 20 APS with bottom 20 APS to understand what is driving this difference. We found out that the teaching quality is the key differentiating factor. The other contributing factors are management competency, parent engagement practices, availability of financial surplus and of learning infrastructure like library, computer lab, digital class room, science lab and activity tools.
Success of APS schools has motivated many APS leaders to start more than one school. One third of the schools in this sector belong to a school chain that has at least two schools under the same brand name. These school leaders are progressive and are eager to replicate the success of their first school. In the third section - Chain Schools – Are APS ready?, such chain schools are studied in further detail. It appears that, not all the schools in a chain are able to perform as well as their first school. School management is the key to its success. Chain schools with a professional management team have performed much better than family run or individual run schools.
The success of the APS sector and increasing opportunities in it has resulted in rising competition in the APS sector. There are about two to five new schools starting every year in growing communities. Larger chain schools (called as corporate schools) that were primarily focused on the lower middle-income market (fee range of >INR1500 (USD 30)) are now attracting the relatively affluent APS parents (Example: Gowtham Model Schools, Sri Chaitanya Schools and Narayana Concept Schools etc. in Hyderabad). In the fourth section - Rising Competition in the APS Sector, we have presented a summary of the changing competitive landscape based on our survey of school leaders and parents.
The growth and success of APS provides lot of opportunities for solution providers, investors and donors. In the last section - Conclusion: Opportunities in the APS Sector, we have summarized some of these opportunities like technology enabled learning solutions, innovative teacher training programs, school infrastructure leasing, school management/advisory services, school accreditation, leadership mentoring and access to resources. In the appendix, this report presents some of the performance indicators of the APS sector such as student learning outcome, teaching quality, financial performance, enrollment, fees and facilities based on the assessment data. The aim is to provide basic facts and figures on the APS sector to help improve understanding of these schools by sharing most up-to-date data with all the stakeholders.
We sincerely hope that the insights presented in this report will help you better understand the opportunities and challenges presented by APS sector, thereby enabling better flow of resources and solutions to these schools.
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