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Final Ghana Country Report: Market Research Project on Low Income Private Schools October, 2010 Prepared for the International Finance Corporation (IFC) by: CDC Consult Limited P. O. BOX CT. 4723 Cantonments E Accra Tel: 233 (0302) 912645 Email:[email protected] VOLUME 1
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Page 1: Final Ghana Country Report - Edify · Final Ghana Country Report: Market Research Project on Low Income Private Schools Prepared for IFC by CDC Consult Limited 3 October,2010 Section

��

Final�Ghana�Country�Report:��Market�Research�Project�on�Low�Income�Private�Schools�

��

October,�2010��

Prepared�for�the�International�Finance�Corporation�(IFC)��by:��

CDC�Consult�Limited�P.��O.�BOX�CT.�4723�Cantonments�E�Accra�Tel:�233�(0302)�912645�

Email:[email protected]��

VOLUME�1�

Page 2: Final Ghana Country Report - Edify · Final Ghana Country Report: Market Research Project on Low Income Private Schools Prepared for IFC by CDC Consult Limited 3 October,2010 Section

Final�Ghana�Country�Report:��Market�Research�Project�on�Low�Income�Private�Schools� ��

�� Prepared�for�IFC�by�CDC�Consult�Limited�������������������������������������2�����������������������������������������������������������������October,2010���

Table�of�Contents��Section�� � Page�Ref.� �� LIST�OF�TABLES� 5� LIST�OF�FIGURES� 6� ABBREVIATIONS� 7� PART�I� 80.0� EXECUTIVE�SUMMARY� 9

� PART�II�1.0� INTRODUCTION� 161.1� Background�� 161.2� Objectives�of�the�Research� 161.3� Focus�of�the�Report� 171.4� Report�Organization� 17� �2.0� OVERVIEW�OF�RESEARCH�AND�METHODOLOGY 182.1� Coverage,�Selection,�Approach�and�Methodology 182.2� Challenges� 19� �3.0� OVERVIEW�OF�PRIVATE�SCHOOLS�SECTOR 203.1� Introduction�� 203.2� Number�of�Schools�in�Ghana� 20

3.3� Legal�Requirements� 213.4� Establishment�and�Registration�of�Private�Schools 223.5� Supervision�and�Co�Ordination 223.6� Governance� 22

3.7� Enrolment� 233.8� Fees� 233.9� Curricula� 233.10� Staff�of�the�School� 24

3.11� Private�Schools�Target�Market�and�Locations 243.12� Low�Income�Private�Schools� 24� PART�III��RESEARCH�FINDINGS4.0� FINDINGS�X�LOW�INCOME�PRIVATE�SCHOOLS 274.1� Introduction�� 274.2� Spread�of�Low�Income�Schools�and�Survey�Coverage 274.3� Legal�Registration,�Accreditation�and�Establishment�History 274.4� Enrolment�Levels,�Gender�Composition�and�Drop�Out 294.5� Status�of�School�Infrastructure�and�Facilities�� Availability�and�Adequacy� 304.6� Teaching�Staff,�Qualification,�Compensation�and�School�Performance 324.7� Financial�Management�Practices�in�Low�Income�Schools 354.8� Demand�and�Need�for�Financing 42

Page 3: Final Ghana Country Report - Edify · Final Ghana Country Report: Market Research Project on Low Income Private Schools Prepared for IFC by CDC Consult Limited 3 October,2010 Section

Final�Ghana�Country�Report:��Market�Research�Project�on�Low�Income�Private�Schools� ��

�� Prepared�for�IFC�by�CDC�Consult�Limited�������������������������������������3�����������������������������������������������������������������October,2010���

Section�� � Page�Ref.4.9� Borrowing�and�Repayment�Capacity�of�Low�Income�Schools 454.10� Socio�Economic�Conditions�of�Locations 50� �5.0� FINDINGS�ON�PARENTS�WITH�CHILDREN�IN�LOW�INCOME�PRIVATE�SCHOOLS� 515.1� Introduction�� 515.2� Occupational�Background�of�Parents 515.3� Income�Level�of�Parents� 525.4� Basis�of�Choice�of�Low�Income�School 535.5� Estimation�of�Proportion�of�Income�Spent�on�Education 53� �6.0� FINDINGS�X�FINANCIAL�INSTITUTIONS�SERVING�LOW�INCOME�SCHOOLS� 556.1� Introduction�� 556.2� Overview�of�Ghana^s�Financial�Sector 556.3� SME�Sector�and�Financial�Institutions 566.4� Institutions�Interviewed� 566.5� Operational�Capacity�and�Liquidity 566.6� Private�School�Lending�and�Practices 576.7� Barriers�to�Accessing�Loans�by�Schools 586.8� Requirements�for�Granting�Loans�to�Low�Income�Schools 596.9� Barriers�from�the�Perspective�of�Low�Income�Schools 60� �7.0� FINDINGS�X�ADVISORY�SERVICE�RPOVIDERS 627.1� Introduction�� 627.2� Legal�Structure�of�the�Establishment 627.3� Staff�Capacity� 627.4� Range�of�Business�Development�Services�Provided��� 637.5� Business�Development�Services�Provided�to�Schools 647.6� Fees�Charged�for�Business�Advisory�Service 647.7� Assessment�of�Willingness�to�Provide�Advisory�Service�to�Low�Income�Schools� 657.8� Specific�Areas�of�BDS�to�Offer�to�Low�Income�Private�Schools 667.9� Promotion�of�Advisory�Services 677.10� Ranking�of�Schools�Business�Development�Needs 687.11� Challenges�of�Low�Income�Private�Schools 697.12� Factors�Considered�in�Choosing�the�Service�Provider 697.13� Satisfaction�with�Advisory�Service�Received 707.14� Analyses�of�Schools�that�did�not�use�Advisory�Service 707.15� Willingness�to�Pay�for�Advisory Services 717.16� Importance�of�Advisory�Service�for�your�Business 727.17� Need�for�Business�Development�Service�Areas�in�Low�Income�Schools 727.18� Conclusion�on�BDS�for�Low�Income�Schools 73���

Page 4: Final Ghana Country Report - Edify · Final Ghana Country Report: Market Research Project on Low Income Private Schools Prepared for IFC by CDC Consult Limited 3 October,2010 Section

Final�Ghana�Country�Report:��Market�Research�Project�on�Low�Income�Private�Schools� ��

�� Prepared�for�IFC�by�CDC�Consult�Limited�������������������������������������4�����������������������������������������������������������������October,2010���

Section�� � Page�Ref.8.0� FINDINGS�X�DEVELOPMENT�PARTNERS�AND�OTHER�STAKEHOLDERS 74

8.1� Introduction�� 74

8.2� Overview�of�USAID�Support� 74

8.3� Overview�of�DFID�Support�for�Education 75

8.4� Ghana�National�Association�of�Private�Schools�(GNAPS) 75

8.5� IDP�Rising�Schools�Programme 77� �9.0� CONCLUSIONS�AND�RECOMMENDATIONS 799.1� Conclusions�� 79

9.2� Recommendations�� 80

Page 5: Final Ghana Country Report - Edify · Final Ghana Country Report: Market Research Project on Low Income Private Schools Prepared for IFC by CDC Consult Limited 3 October,2010 Section

Final�Ghana�Country�Report:��Market�Research�Project�on�Low�Income�Private�Schools� ��

�� Prepared�for�IFC�by�CDC�Consult�Limited�������������������������������������5�����������������������������������������������������������������October,2010���

LIST�OF�TABLES�Table�Nos.� Page�Ref.� �3.1� Total�Number�of�Schools�in�Ghana�per�Type�of�School�and�Sector 204.1� Surveyed�Low�Income�Private�Schools�by�Categories 274.2� Legal�Status�of�Surveyed�Low�Income�Private�Schools 284.3� Grading�Status�of�Surveyed�Low�Income�Private�Schools 284.4� Years�in�Existence� 294.5� Low�Income�Schools�Enrolment�Statistics 294.6� Gender�Composition�of�Low�Income�Schools�Enrolment 294.7� Drop�Out�Ratios�for�Surveyed�Schools 304.8� Respondent�Schools�with�School�Facilities�and�Infrastructure 304.9� Input�Requirements�and�Availability 324.10� Analysis�of�Proportions�of�Teachers�in�Qualification�Groups����������������������� 334.11� Average�Staff�Turnover�Analysis 344.12� Average�Monthly�Teacher�Salary�for�Low�Income�Schools 344.13� BECE�Pass�Rate� 354.14� Funding�Sources�for�Low�Income�Schools� 364.15� Schools�with�Bank�Accounts 364.16� Income�Structure� 394.17� Analysis�of�Fees�Charged�by�Low�Income�Schools 404.18� Fee�Collection� 414.19� Combined�Common�Size�Ratios�E 2009/2010 414.20� Asset�and�Liability�Profile�of�Schools 424.21� Previous�Credit�History� 434.22� Estimated�Loan�Demand�by�Surveyed�Schools 444.23� Application�of�Desired�Loans 45� �5.1� Factors�Considered�by�Parents�in�the�Choice�of�Schools 535.2� Parents�Proportion�of�Income�Spent�on�Education 53� �6.1� Category�of�Institutions�Interviewed 566.2� Surveyed�Institutions�Focus,�Products�and�Services 566.3� Comparative�Analysis�of�Interest�Rates 586.4� Financial�Institution�Requirements�for�Granting�Loans 60� �7.1� General�Advisory�Services�Provided�� 637.2� Advisory�Services�Provided�to�Schools�by�Providers 647.3� Fees�Ranges�for�Advisory�Services 657.4� Promotion�of�Advisory�Services 677.5� Major� Business� Development� Needs� of� Schools� as� Perceived� by� Service�

Providers�67

7.6� Awareness,�Understanding�and�Usage�of�Business�Advisory�Services 697.7� Low�Income�School�Preferences�for�BDS 73

Page 6: Final Ghana Country Report - Edify · Final Ghana Country Report: Market Research Project on Low Income Private Schools Prepared for IFC by CDC Consult Limited 3 October,2010 Section

Final�Ghana�Country�Report:��Market�Research�Project�on�Low�Income�Private�Schools� ��

�� Prepared�for�IFC�by�CDC�Consult�Limited�������������������������������������6�����������������������������������������������������������������October,2010���

LIST�OF�FIGURES�

Figure�Nos.� � Page�Ref.

� �4.1� Gap�Analysis�of�Adequacy�of�Classroom,�Furniture�and�Core�Text�Books 32

4.2� Proportion�of�School�Levels�in�the�Fee�Ranges 38

� �5.1� Occupational�Distribution�of�Parents�and�Guardians 515.2� Monthly�Income�Range�Distribution 527.1� Legal�Structure�of�Advisory�Firms 627.2� Staff�Capacity�of�Advisory�Firms 637.3� Service�Providers�Assessment�of� the�Willingness�of�Private� Schools� to�Pay� for�

Advisory�Services�66

7.4� Basis�for�Choosing�Service�Providers 697.5� Satisfaction�with�Advisory�Service�Received 707.6� Reason�for�Not�Using�Advisory�Service 717.7� Willingness�to�Pay�for�Advisory�Service 717.8� Importance�of�Advisory�Service�for�Your�Business 72

Page 7: Final Ghana Country Report - Edify · Final Ghana Country Report: Market Research Project on Low Income Private Schools Prepared for IFC by CDC Consult Limited 3 October,2010 Section

Final�Ghana�Country�Report:��Market�Research�Project�on�Low�Income�Private�Schools� ��

�� Prepared�for�IFC�by�CDC�Consult�Limited�������������������������������������7�����������������������������������������������������������������October,2010���

ABBREVIATION�

FTI� FAST�TRACK�INITIATIVE��

GBF� GRASSROOTS�BUSINESS�FUND��

GES� GHANA�EDUCATION�SERVICE��

GET� GHANA�EDUCATION�TRUST��

GMC� GRAY�MATTERS�CAPITAL��

GNAPS� GHANA�NATIONAL�ASSOCIATION�OF�PRIVATE�SCHOOLS��

IFC� INTERNATIONAL�FINANCE�CORPORATION��

JHS� JUNIOR�SECONDARY�SCHOOL�

MFIS� MICRO�FINANCE�INSTITUTIONS��

MMDAs� METROPOLITAN,�MUNICIPAL�AND�DISTRICT�ASSEMBLIES��

MSME� MICRO�AND�SMALL�SCALE�ENTERPRISE��

NGOS� NON�GOVERNMENTAL�ORGANIZATIONS��

OSLC� OPPORTUNITY�SAVINGS�AND�LOANS�COMPANY�

RCBS� RURAL�AND�COMMUNITY�BANKS��

SAT� SINAPI�ABA�TRUST��

SFF� SCHOOL�FINANCE�FACILITY��

Page 8: Final Ghana Country Report - Edify · Final Ghana Country Report: Market Research Project on Low Income Private Schools Prepared for IFC by CDC Consult Limited 3 October,2010 Section

Final�Ghana�Country�Report:��Market�Research�Project�on�Low�Income�Private�Schools� ��

�� Prepared�for�IFC�by�CDC�Consult�Limited�������������������������������������8�����������������������������������������������������������������October,2010���

������

PART�I�

Section�1.0� :� Executive�Summary

Page 9: Final Ghana Country Report - Edify · Final Ghana Country Report: Market Research Project on Low Income Private Schools Prepared for IFC by CDC Consult Limited 3 October,2010 Section

Final�Ghana�Country�Report:��Market�Research�Project�on�Low�Income�Private�Schools� ��

�� Prepared�for�IFC�by�CDC�Consult�Limited�������������������������������������9�����������������������������������������������������������������October,2010���

SECTION�0.0:� EXECUTIVE�SUMMARY��Background�Private� Schools� are� playing� very� useful� roles� in� the� educational� system� in�many� developing�countries�by�supporting�governments� in� their�commitment� to�providing�quality�education� for�all.�Most�of�the�private�schools�are,�however,�limited�in�their�ability�to�provide�quality�education�services�due� to� their� lack�of�access� to�appropriate� financial�and�business�advisory�services� to�help�them� improve�on�their�operations.�The�situation� is�even�more�critical� for�private�schools�located�in�low�income�areas,�serving�low�income�population.�These�low�income�private�schools�have�not�received�the�much�needed�financial�and�businesses�advisory�services�support�enjoyed�by�well�endowed�middle�to�upper�income�schools.��To�address�this,�a�low�income�private�school�sector�market�research�has�been�commissioned�by�the�International�Finance�Corporation�(IFC)�and� its�partners,�Gray�Matters�Capital�(GMC)�and�Grassroots�Business�Fund�(GBF)�as�part�of�a�School�Finance�Facility�(SFF)�Programme.��Overall�Objective�of�Research�and�Coverage�The� overall� objective� of� the� research� focuses� on� expanding� access� to� financial� and� advisory�services� to� low� income�private� schools� in�Ghana.� �A� total�of�1361� schools� considered� as� low�income� schools�were� selected�and� interviewed� from�80� low� income� communities�within�and�around� the�urban� towns�of�Accra�and�Kumasi.�A� total�of�18� financial� institutions,�22�business�advisory�services�providers�and�105�parents�were�also�interviewed.���Summary�of�Findings��Private�schools� in�general�are�very�complementary�to�the�public�schools.�Out�of�a�total�48,6882�basic�schools�for�2008/9�academic�year� (made�up�of�crèche,�kindergarten,�primary�and� junior�high�schools)�30.65%�(14,925)�are�private�schools.�Total�enrolment�for�both� public� and� private� schools� up� to� the� basic� level� for�2008/2009� academic� year� is� 6,334,678� of� which� the� private�schools�account� for�18%.�We�estimate� that� low� income�schools�constitute�about�40%�of�all�private� schools.�Private� schools�are�therefore� key� partners� for� the� realization� of� the� millennium�development� goal�of� achieving�Universal�Primary� Education� for�all�children�by�2015.� Indeed�available�national�records� from� the�Education�Management�Information�System�indicate�that�private�basic� schools� grew� by� 26%� from� 2006/2007� to� 2008/2009�academic�year�compared�to�9%�growth�in�public�schools�over�the�same�period.��

1 73 low income schools were selected from Accra and 63 from Kumasi 2 Education Management Information System (EMIS), March 2009

Private� sector� enrolment�constituted� 18%� of� total�enrolment� from� preschool�to� Junior�High�School� level�for� 2008/2009� academic�year.� Out� of� a� total� of�48,688� basic� schools,�private� sector� schools�constitute�30.65%.��(Source:� Ministry� of�Education,� EMIS� Statistics,�March�2009).�

Page 10: Final Ghana Country Report - Edify · Final Ghana Country Report: Market Research Project on Low Income Private Schools Prepared for IFC by CDC Consult Limited 3 October,2010 Section

Final�Ghana�Country�Report:��Market�Research�Project�on�Low�Income�Private�Schools� ��

�� Prepared�for�IFC�by�CDC�Consult�Limited�������������������������������������10�����������������������������������������������������������������October,2010�

Enrolment� in� the� 136� schools� surveyed� is� 29,718�representing�4.5%�of� total�private�school�enrolment�in�the�two�regions�and�translating�into�an�average�of�218�pupils�per�school.�Female�enrolment�for�the�low�income�schools�surveyed�constitutes�55%�compared�to� the� national� average� of� 49.5%,� returning� a�significant�statistical�difference�between� female�and�male�enrolment�in�private�low�income�schools.����44%� of� respondent� parents� with� children� in� low�income� schools� earn� below� GHC150� (US$107)� per�month�and�those�in�this�income�bracket�could�spend�as�high�as�48%�of� their�declared�wages�and�salaries�on�the�education�of�one�child.�More�than�50%�of�the�parents� are� self�employed� in� the� informal� sector�including� artisans,� cooked� food� sellers� and� petty�traders.�

An� estimated� 87%� of� the� low� income� schools� earn�below� GHC20,000� (US$14,285)� per� annum,� 44%� of�which� comes� from� tuition� fees,� 34%� from� extra�classes,�20%�from�feeding�cost�and�the�remaining�2%�from� other� sources.� The� cost� structure� is� mainly�driven� by� staff� cost� which� is� estimated� at� 42%� of�revenue� and� profit� before� interest� and� taxes� could�be�as�high�as�40%�of�revenue�generated�for�some�of�the�schools.��

Need�for�Financing;�Aggregate�Financing�Needs�and�Borrowing�Capacity�119�out�of�the�136�schools,�representing�87%�expressed�interest�in�obtaining�financing.�Out�of�this� number,� 80%� require� the� funds� to� support� infrastructure� expansion;� repairs� and�maintenance�to�building�and�equipment�(48%�of�respondents);�acquisition�of�school�bus�(42%�of�respondents)�and�teaching�and�learning�materials�(16%�of�respondents).��

The� aggregate� financing� needs� of� the� surveyed� low� income� schools� is� estimated� at�GH¢3,980,032� (US$2,842,880).� The� borrowing� capacity� of� the� schools,� based� on� their�estimated� free� cash� flow� is� projected� at� GH¢707,395� (US$505,282)� for� one� year� loan;�GH¢1,208,260�(US$863,042)�for�a�two�year�loan�and�GH¢1,563,151�(US$1,116,536)�for�a�three�year� loan.�When�estimated�revenue�was�enhanced�by�30%,�the�borrowing�capacity� increased�to� GH¢919,518� (US$656,798)� for� one� year� facility� and� GH¢2,032,053� (US$1,451,466)� for� a�three�year� facility.�The�results� indicate�a�gap�of�about�60%�between� the�aggregate� financing�need�and�borrowing�capacity�of�the�surveyed�schools.�����

Highlights�of�financial�management�indicators� of� low� income� private�schools:�� 44%� of� low� income� school�

revenue�comes�from�tuition�fees,�34%� from�extra�classes�and�20%�from�feeding;�

� Staff�cost�represent�about�42%�of�revenue�generated;�

� 99� out� of� 136� schools�representing� 73%� have� bank�accounts;�

� Profit� before� interest� and� taxes�could� be� as� high� as� 40%� of�revenue;�

� Accounts�are�held�with�universal�banks,� savings� and� loans�companies� and� rural� &�community�banks�;�

� 50�out�of�136�schools�have�taken�loans� averaging� GHC4,963�(US$3,471)� at� average� interest�rate�of�36%�with�repayment�term�of�17months.��

Page 11: Final Ghana Country Report - Edify · Final Ghana Country Report: Market Research Project on Low Income Private Schools Prepared for IFC by CDC Consult Limited 3 October,2010 Section

Final�Ghana�Country�Report:��Market�Research�Project�on�Low�Income�Private�Schools� ��

�� Prepared�for�IFC�by�CDC�Consult�Limited�������������������������������������11�����������������������������������������������������������������October,2010�

Financial�Institutions�Ghana^s�financial�sector�has�experienced�significant�growth�over�the�past�10�years.�In�addition�to�universal�banks�with�over�700�branches,�there�are�microfinance�institutions�including�savings�and� loans�companies,�rural�and�community�banks�as�well�as�financial�NGOs�providing�services�to�micro�and�small�businesses�such�as� low� income�schools.�73%�of�the�schools�maintain�bank�accounts,�about�50%�of�which�are�held�with�universal�banks.�24%�of� the� respondent� schools�have�previously�obtained�credit�to�meet�operational�and�infrastructure�expansion�needs.����A�total�of�14�financial�institutions�(out�of�the�18�interviewed)�that�provided�loans�to�low�income�schools� have� among� them� a� total� of� 169� loans� with� existing� portfolio� of� GH¢1,897,211�(US$1,335,151).� Loan� values� range� between� GH¢319� (US$228)� and� GH¢20,000� (US$14,285)�with�average�repayment�period�for�the�loans�and�interest�rate�returning�a�mean�of�14�months�and�51%�per�annum�respectively.�All�but�one�of�the�financial� institutions�expressed� interest� in�supporting� low� income� schools� with� loans.� For� the� schools� to� be� considered� for� support�however,�they�need�to�meet�minimum�requirements�such�as�financial�statements�(or�cashflow);�Ghana� Education� Service� accreditation� and� in� some� cases� collateral.� Most� of� the� schools�however�complained�about�rigid�repayment�schedules�and�high�interest�rates�from�the�financial�institutions�which�deny�them�access�to�facilities�from�the�financial�institutions.�On�the�issue�of�portfolio� and� institutional� guarantees� (underwriting),� respondent� financial� institutions�suggested�50%�to�75%�coverage�and�a�fee�that�is�not�overburdening.���Business�Development�Advisory�Services�As� is� typical�of�most� small�businesses,� low� income� schools�do�not�use�business�development�advisory� services.�Awareness� of� business� development� services� among� the� surveyed� schools�range� from�33%�to�70%� for�various�types�of�advisory�service.�Usage� is�however,� low�with�the�highest�recorded�as�24%� for�accounting�and�auditing�service.�Utilization�of�advisory�service� is�limited�by� cost�of�advisory� service�and�access.�Willingness� to�pay� for�advisory� service�by� the�schools�is�low�with�only�50.6%�of�respondents�expressing�willingness�to�pay,�although�61%�rate�business�advisory�service�as�very� important.�Priority�business�advisory�service�areas�requested�by� the� schools� are� accounting;� business� management� training� and� business� management�advisory�services.���Conclusion�and�Recommendations�Ghana� is�experiencing� growth� in� the�private� schools� sector� and� this� is�expected� to� continue�given�the�overall�performance�of�private�schools�especially�at�the�basic�education�level.�Deriving�from�this�general�growth,�it�is�expected�that�low�income�schools�will�also�increase�in�number�by�at� least�7%�per�annum.�The� low� income�schools,� like�other�micro�and�small�enterprises,�could�be�good�businesses� to�be� financed�by�microfinance� institutions�and�other� formal� institutions.�For�most�of�these�schools,�access�to�suitable�financial�products�and�usage�of�business�advisory�service� are� low.� Financial� institutions� are� not� adequately�meeting� the� needs� of� low� income�schools�and�loan�products�are�not�tailored�to�the�cashflow�structure�of�the�schools.�The�schools�on� the�other�hand�are�also�not�well�positioned� to�subscribe� to�existing�products�and�services�offered�by� the� financial� institutions�due� largely� to� inadequate� record�keeping�practices,�weak�

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Final�Ghana�Country�Report:��Market�Research�Project�on�Low�Income�Private�Schools� ��

�� Prepared�for�IFC�by�CDC�Consult�Limited�������������������������������������12�����������������������������������������������������������������October,2010�

management�and�other�related�operational�challenges.���Low�income�private�schools�however,�deserve�more�support�given�the�crucial�roles�they�play�in�low� income� communities� including� the� provision� of� alternative� quality� education,� stemming�child�labour,�as�many�of�the�pupils�in�low�income�communities�could�be�out�of�school,�increased�enrolment�of�the�girl�child�and�employment�generation.�A�concerted�effort�is�therefore�needed�from�all�stakeholders�in�the�sector�to�support�the�low�income�schools.���To� further� expand� access� to� financial� and� advisory� service� for� low� income� schools� three�intervention�models�are�proposed�for�consideration.���Option�1�envisages�the�establishment�of�an�expanded�nLow�Income�Private�Schools�Guarantee�Fundo�by�stakeholders�to�provide�a�wide�range�of�guarantee�products� including�portfolio�and�institutional� guarantees� for�MFIs� and� finance�houses� interested� in�working�with� low� income�schools.�The�guarantee� fund�will�also�provide� for�matching�grants� to� finance� improvement�of�the�capacity�of�the�partner�MFIs�and�funds�to�be�used�for�improving�the�capacity�of�low�income�schools� in�partnership�with�accredited� local�business�advisory�service�providers.�The�minimum�amount�for�the�guarantee�fund�could�be�pegged�at�US$3.0�million�which�is�about�105%�of�the�estimated� financing� needs� of� the� surveyed� schools.� Such� a� fund� will� be� managed� by� an�independent� fund� manager� or� outsourced� to� the� existing� Eximguaranty� Company,� Ghana�Limited.���Option�2�envisages�the�creation�of�a�nLow�Income�Private�Schools�Fundo�for�lending�to�selected�microfinance� institutions�and�other� finance�houses�at�concessionary�rates�for�purposes�of�on�lending�to� low� income�schools�within�predetermined� interest�rate�ranges.�The�fund�will�make�provision�for�strengthening�the�capacity�of�MFIs�and�the� low� income�schools�through�advisory�service�providers.�Service�providers�could�come�from�either�within�the�MFI�(as� is�practiced�by�Sinapi�Aba�Trust)�or� from�an�accredited� list�of�Service�Providers� (as� is�done�by� the�Mitchelle�Group).����Option� 3� focuses� on� the� establishment� of� a� nLow� Income� School� Finance� Companyo� to� be�owned�by�different�stakeholders.�The�proposed�company�will�operate�two�main�service�lines�on�nschool� financingo� and� nschool� capacity� buildingo.� Under� the� school� financing,� the� finance�house�will� lend� to� qualifying�MFIs� for� on�lending� to� low� income� schools.� It�will� on� its� own�however,� lend�directly�only� to� schools� in�middle� to�high� income� ranges.�The� school� capacity�building�service�line�will�provide�capacity�building�for�MFIs�to�undertake�effective�lending�to�low�income�schools�as�well�as�provide�capacity�building�including�training�to�the�low�income�schools�through�accredited�business�advisory�service�providers.�The�minimum�capital� for�setting�up�a�finance�house�is�GHC7,�000,000�(US$5,000,000).�

Other�general�recommendations�to�improve�the�operating�environment�for�low�income�schools�include:��

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Final�Ghana�Country�Report:��Market�Research�Project�on�Low�Income�Private�Schools� ��

�� Prepared�for�IFC�by�CDC�Consult�Limited�������������������������������������13�����������������������������������������������������������������October,2010�

� The�need� for�a�clear�policy� framework� for� low� income�schools� that�spell�out�strategies� to�support�the�low�income�schools;��

�� Promotion�of�effective�partnership�between�local�microfinance�institutions�and�low�income�

schools�through�effective�client�relationship�management�and�sustained�discussions;���� Improved�monitoring� framework�by� the�Ghana�Education� Service� in�partnership�with� the�

Ghana� National� Association� of� Private� Schools� (GNAPS),� to� ensure� compliance�with� the�Education�Act,� 2008.�An� improved�monitoring� framework� especially� at� the�metropolitan,�municipal�and�district�levels�will�enhance�the�quality�of�the�schools�and�their�operations.��

�� To�ensure�that�schools�are�not�established�without�the�knowledge�of�the�Ghana�Education�

Service,�the�Ministry�of�Education�should�liaise�with�the�Ministry�of�Justice�to�prevail�on�the�Registrar� General^s� Department� to� register� only� schools�with� clearance� from� the� Ghana�Education�Service.�This�will�ensure�that�school� locations�are�known�to�the�GES�to�facilitate�monitoring.��

�� Stakeholders� in� the� low� income� private� schools� sector� should� promote� information�

exchange� among� themselves� to� share� lessons� and� further� improve� on� support� for� the�sector.��

�� Metropolitan,�Municipal�and�District�Assemblies� (MMDAs)�are�encouraged� to� show�more�

interest�in�the�development�of�infrastructure�to�be�shared�by�low�income�private�schools�in�the� respective�districts�on� fee�paying�arrangements�as�part�of�efforts� towards�promoting�public�private�partnerships.����

�����

��

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Final�Ghana�Country�Report:��Market�Research�Project�on�Low�Income�Private�Schools� ��

�� Prepared�for�IFC�by�CDC�Consult�Limited�������������������������������������14�����������������������������������������������������������������October,2010�

���

PART�II��Section��1.0� :� Introduction�

Section�2.0� :� Overview�of�Research�and�Methodology�

Section�3.0� :� Overview�of�the�Private�School�Sector�in�Ghana�

��

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Final�Ghana�Country�Report:��Market�Research�Project�on�Low�Income�Private�Schools� ��

�� Prepared�for�IFC�by�CDC�Consult�Limited�������������������������������������15�����������������������������������������������������������������October,2010�

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Final�Ghana�Country�Report:��Market�Research�Project�on�Low�Income�Private�Schools� ��

�� Prepared�for�IFC�by�CDC�Consult�Limited�������������������������������������16�����������������������������������������������������������������October,2010�

SECTION�1.0:���INTRODUCTION��1.1 Background��

Private� Schools� are� playing� very� crucial� roles� in� the� education� system� in�many� developing�countries�by�supporting�governments� in� their�commitment� to�providing�quality�education� for�all.�Most�of�the�private�schools�are,�however,�limited�in�their�ability�to�provide�quality�education�services�due�to�their� lack�of�access�to�appropriate� finance�and�advisory�services�to�help�them�improve� their� operations.� International� Finance� Corporation� (nIFCo),� the� private� sector�investment�arm�of�the�World�Bank�Group,� launched�the�Africa�Schools�program�to�respond�to�these�needs.�The�program�was�piloted�in�Ghana�in�2005�and�has�since�been�replicated�in�Kenya�(2007)�and�Rwanda� (2008).�The�program�works�with� local� financial� institutions�to�expand�and�improve� lending� to� schools,� with� a� parallel� advisory� services� program� that� helps� schools�improve� their�management� systems� and�operations.� �As�part�of� the� IFC�Program,� schools� in�Ghana,�Kenya�and�Rwanda�have�been�helped�to�access� finance�as�well�as�training�though�the�beneficiary� schools� have� actually� remained�middle� income� schools� leaving� out� low� income�schools.����Gray�Matters�Capital� (GMC)� is� the�charitable�arm�of� the�social� investment�group,�Gray�Ghost�Ventures,� and� uses� philanthropic� capital� to� research� and� co�create� initiatives� in� developing�countries� to� build� sustainable,� replicable� business� models� for� the� benefit� of� underserved�populations.� � GMC� has� partnered� with� Grassroots� Business� Fund� (GBF),� a� not�for�profit�organization� with� a� mission� to� build� and� support� high�impact� intermediary� business�organizations� that�provide� sustainable�economic�opportunities� to� thousands�of�people�at� the�base�of�the�economic�pyramid.� �GMC�and�GBF�are,� independently�of� IFC,�collaborating�on�the�School�Finance�Facility�Program�(SFF)�as�co�investors�and�donors.� �The�SFF� is�a�demonstration�investment� and� grant� program� whose� objective� is� to� encourage� banks� and� microfinance�institutions� to�make� loans� available� to� low�income� private� school� operators.� � An� important�component� of� the� SFF� is� to� partially� fund� and� disseminate�market� research� on� low� income�private�schools.� 1.2�� Objectives�of�the�Research�

The� overall� objective� of� the� research� focused� on� expanding� access� to� financial� services� and�advisory�services�by�low�income�private�schools�in�Ghana.�In�this�respect�the�project�conducted�an� overview� of� the� contribution� of� the� low� income� private� school� sector�within� the� larger�universe�of�private�and�government�schools�as�well�as�a�comprehensive�survey�of� low� income�private�school�operators.��In�addition�to�surveying�low�income�schools,�the�project���conducted�an�assessment�of�financial�and�advisory�services�providers�with�a�track�record�or�interest�in�the�education� space�and�preferably�with� low� income� schools�directly.�The� specific�objectives�and�scope�of�work�is�presented�as�appendix�6.0�in�Volume�2.�

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Final�Ghana�Country�Report:��Market�Research�Project�on�Low�Income�Private�Schools� ��

�� Prepared�for�IFC�by�CDC�Consult�Limited�������������������������������������17�����������������������������������������������������������������October,2010�

1.3� Focus�of�the�Report�

The� report�on� findings�and� recommendations� is�modeled� largely�on� the� requirements�of� the�assignment�as�provided� in� the� terms�of� reference.� �The� specific�areas�addressed� in�different�sections�of�the�report�are�presented�below.���

1. What� are� the� estimated� aggregate� access,� demand� and� need� for� financing,� and� the�estimated�aggregate�repayment�capacity�of�low�income�private�schools?��

2. What� are� the� characteristics� of� the� existing� low� income� private� school� financing� facilities�offered�by�financial�institutions�and�what�are�the�perceived�obstacles�to�and�recommended�interventions�for�expanded�lending?�

3. What� are� the� characteristics� of� the� advisory� services� that� low� income� schools� need� and�demand,�and�what�is�their�ability�and�willingness�to�pay�for�such�support?�

4. What� are� the� characteristics� of� the� advisory� services� that� financial� services� providers�perceive�as�necessary�to�advance�their�ability�to�lend�to�low�income�schools?�

5. What� are� the� recommended�minimum� underwriting� standards� for� low� income� schools� to�access�commercial� loans�and�the�recommended�minimum�eligibility�criteria�for� low� income�schools� to� access� advisory� services�with� respect� to,� but� not� limited� to� school� fee� levels,�minimum�enrollment,�legal�status,�registration�status�etc.;�

6. What� is� the� estimated� willingness� of� financial� institutions� to� lend� and� advisory� services�entities�to�work�with�low�income�private�schools�given�the�recommendations�made�in�point�5?��Provide�a�list�of�interested�financial�and�advisory�services�providers.�

1.4� Report�Organization��

The�report� is�organized� in�2�main�volumes.� �Volume�1� is� the�main�report�on� the� findings�and�recommendations.�Volume�2�is�the�appendix�supporting�the�report.��

�Volume�1�is�organized�in�four�main�parts:� Part�I : The�Executive�Summary�presents�highlights�of� the� research� findings�and�

recommendations.�

Part�II : Part�II�has�three�main�sections�comprising�Introduction�and�Background�to�the�Research;�Overview�of�the�Research�Approach�and�Methodology�and�Overview�of�the�Private�Schools�Sector�in�Ghana.�

Part�III : Part� III� presents� the� research� findings.� It� has� five� main� components�focusing� on� Low� Income� Private� Schools;� Parents� and� Guardians� with�Children�and�Wards� in�Low� Income�Private�Schools;�Financial� Institutions�serving�Low�Income�Private�Schools;�Business�Advisory�Services�Providers;�Development�Partners,�School�Association�and�other�Stakeholders.�

Part�IV : Part�IV�presents�the�Conclusions�and�Recommendations.�

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Final�Ghana�Country�Report:��Market�Research�Project�on�Low�Income�Private�Schools� ��

�� Prepared�for�IFC�by�CDC�Consult�Limited�������������������������������������18�����������������������������������������������������������������October,2010�

SECTION�2.0:� OVERVIEW�OF�RESEARCH�AND�METHODOLOGY��

2.1� Coverage,�Selection,�Approach�and�Methodology���The�research�was�undertaken�in�the�low�income�areas�within�and�around� the�urban� towns�of�Accra�and�Kumasi�between�the� period� of� July� 7th� to� August� 18th� 2010.� It� covered� 136�identified� low� income� private� schools;� 105� parents� and�guardians�with�children�and�wards�in�the�low�income�schools;�advisory� services� providers� and� financial� institutions� that�provide�financing�to�private�schools.��

The�research�was�organized� in� two�main�segments�with� the�first� segment� focusing� on� the� schools� identified� in� low�income� areas� in� and� around� the� two� urban� areas� of� Accra�and� Kumasi.� Enumerators� of� the� research� team� visited� the�identified� schools� and� administered� the� questionnaires� to�either�school�proprietors�(owners)�or�administrators�or�head�teachers.� The� school� interviews� also� provided� the�opportunity� to�observe� the� status�of� infrastructure�and� the�general� environment�of� the� schools.�Parents�who� reside�or�work� in�the�neighbourhood�were�also� interviewed�as�part�of�the�research�process.��

To�place�the�survey�in�context,�the�research�team�adopted�an�operational� definition� of� low� income� schools� to� serve� as�guide�in�selecting�the�locations�and�schools.�� �nLow�income�private�schools�are�privately�funded�and�managed�schools�located�in�low�income�sub�urban�and�rural�areas�(as�classified�by�the�Ghana�Statistical�Service)� � in�and�around�Accra�and�Kumasi�and�which�are�classified�by�the�GES�as�grade�qC^�and�qD^�or�are�unrecognized��

As�part�of�the�methodology,�quotas�for�the�various�levels�of�schools�to�be�included�in�the�survey�were�agreed�with�the�Enumerators�and�adhered�to�as�part�of�the� field�work.�The� low� income�areas�were� zoned� into�geographical�areas�with� strict�quotas�provided� to� the�Enumerators� to�ensure� the� attainment� of� the� needed� coverage� that� will� reflect� different� conditions� and�objectivity� in� the� sample.� Screener� questions� were� used� to� assess� the� suitability� of� the�identified� schools� for� inclusion� in� the� sample� of� low� income� schools.� Well�structured�questionnaires�(please�see�Volume�2)�were�used�for�the�face�to�face� interviews�which� in�most�cases�were�carried�out� in�two�stages:� �the�first�stage�was�mainly� introductory�and�the�second�focused�on�the�collection�of�follow�up�data�and�validation�of�data.������

The� second� segment� of� the� research� focused�mainly� on� interview� of� financial� institutions,�business� advisory� service� providers,� selected� development� partners,� Non�Governmental�Organizations�(NGOs)�supporting�education,�School�Association�Representatives�and�the�Ghana�

Coverage�of�survey:�

� 136�schools�surveyed�comprising�73�and�63�from�Accra�and��Kumasi�zones�respectively;�

� Low�income�private�schools�selected�from�80�communities;�

� 105�parents�comprising�50�and�55�from�Accra�and�Kumasi�zones�respectively;�

� 18�financial�institutions�comprising�1�Universal�Bank;�4�Rural�and�Community�Banks;�10�Savings�and�Loans�Companies�and�1�Financial�NGOs�from�Accra�&�Kumasi;�

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Final�Ghana�Country�Report:��Market�Research�Project�on�Low�Income�Private�Schools� ��

�� Prepared�for�IFC�by�CDC�Consult�Limited�������������������������������������19�����������������������������������������������������������������October,2010�

Education�Service� (GES).�The�selection�of� financial� institutions� for� inclusion� in� the�survey�was�driven� by� the� feedback� obtained� from� the� low� income� schools� on� sources� of� finance� and�institutions�supporting�the�schools�with�credit�facilities�and�other�related�financing�transactions.�

2.2� Challenges�

The� research� team� received� cooperation� and� support� from�most� of� the� respondents� in� the�various�respondent�categories.� Individuals�and� institutions� that�declined�participation�were� in�the�minority.�A�number�of�challenges�were�however�encountered�and�are�presented.���

o Poor�record�keeping�Poor�record�keeping� including� financial�and�operational�records� in�the� low� income�private�schools�was�a�major�challenge�for�the�research�team.�Most�of�the�low�income�schools�have�very�poor�record�keeping�culture.�As�a�result,���three�year�historical�data�on�enrolment�and�financial�performance�for�example�were�non�existent�in�some�of�the�schools.�In�a�number�of�instances� school� proprietors� had� to� piece� data� together� from� different� documents� to�provide�the�statistics,���others�were�unable�to�provide�the�information.�The�research�team�in�a�number�of�instances�had�to�estimate�revenue�of�the�schools�through�the�use�of�enrolment�numbers�and�average�fees�charged.��

o Respondent�fatigue�

The� research� team� noted� respondent� fatigue� on� the� part� of� the� low� income� schools� in�particular�and�this�was�attributed�to�several�surveys�that�they�have�participated� in.�This� is�understandable�given�the�increasing�high�interest�in�low�income�schools�which�has�brought�in�its�wake�the�conduct�of�surveys�to�establish�issues�affecting�this�very�important�segment�of� the� education� sector.� The� effect� of� this� on� the� research� is� that,� in� a� number� of� the�participating� low� income�schools,�the�enthusiasm� level�was� low,�thus�causing�delays� in�the�data�collection�process.�

o Inadequate�portfolio�data�on�schools�within�financial�institutions�In� a� number� of� the� respondent� financial� institutions,� there� was� either� reluctance� in�providing� portfolio� data� or� probably� non�availability� of� disaggregated� portfolio� data� to�facilitate�a�review�of�the�performance�of�school�loans�in�the�institutions.��We�were�therefore�limited� in�our�ability�to�fully�determine�the�quality�and�performance�of�private�school� loan�portfolio.�

o School�grading��A�key�criteria�in�the�adopted�operational�definition�of�low�income�schools�is�the�reliance�on�the�GES�grading�of�qC^�and�qD^.���The�field�work�established�that�the�grading�has�no�relevance�on�the�field.��Field�Enumerators�were�of�the�view�that�some�of�the�Schools�which�reported�as�Grade� qB^� � �actually�have� infrastructure�and� facilities�similar�to�those�of�Grade� qD^.� �The�research�team�therefore�had�to�include�17�Schools�that�are�reported�to�be�Grade�qB^�schools�in� the� sample.� �The� justification� for� their� inclusion� includes� similar� infrastructure�and� fee�levels�as�the�qC^�and�qD^�categories.�

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Final�Ghana�Country�Report:��Market�Research�Project�on�Low�Income�Private�Schools� ��

�� Prepared�for�IFC�by�CDC�Consult�Limited�������������������������������������20�����������������������������������������������������������������October,2010�

3.0 �������OVERVIEW�OF�PRIVATE�SCHOOLS�SECTOR��

3.1� �Introduction��

Notwithstanding�government^s�efforts�to�expand�and�provide�access�to�education�especially�at�the�basic� level,� it� is� clear� that� government� alone�will�not�be� in� a�position� to� address� all� the�requirements� at� the� basic� education� levels,� and� the� private� sector� is� needed� in� the�development�of�basic�education�and�indeed�up�to�the�tertiary�level�.�Private�schools�in�general�are� schools� which� are� privately� managed� and� funded.� There� are� two� types:� registered� or�unregistered.�Registered�schools�are�those�that�have�met�state�regulations�and�are� inspected.�Unregistered�private�schools�are�those�that�either�have�not�applied�to�be�registered�or�have�not�(yet)� been� said� to� have� met� those� regulations.3� The� Ghana� Education� Act� defines� private�institutions� as�an� institution�which� is� nmaintained�neither�wholly�nor� in�part� from� central�or�local�government�fundso.�

3.2� �Number�of�Schools�in�Ghana�

Table� 3.1� shows� the� type� of� schools� within� Ghana^s� education� system� from� Pre�School� to�Tertiary� level.� The� distribution� of� the� school� types� are� spread� between� public� and� private�sectors.�Available�data�from�the�Education�Management�Information�System�indicate�that�there�are�more�public� sector� schools� than�private� schools� from� the�basic� level� to� secondary� level.�Crèche�and�Kindergarten�are�a�total�of�20,594�with�private�sector�contributing�38.8%.�Private�sector� share� in� schools� at� the� Primary,� Junior�High� School� and� Senior�High� School� is� 24.5%,�25.1%�and�26.4%�respectively.�At�the�Vocational�school�level�however,�the�private�sector�has�a�55%�share.�In�the�area�of�Teacher�Training�College�there�are�no�private�schools.���Table�3.1:�Total�Number�of�Schools�in�Ghana�per�Type�of�School�and�Sector�Sector� Crèche�and�

Kindergarten�

Primary JHS SHS Vocational� Teacher�

Training�

College�

No.� %� No.� % No. % No. % No.� %� No. %

Public�� 12,597� 61.2� 13,510� 75.5 7,656 74.9 493 73.5 133� 44.9� 38 100.0

Private�� 7,997� 38.8� 4,371� 24.5 2,557 25.1 177 26.4 163� 55.1� 0 0

Total�� 20,594� 100.0� 17,881� 100.0 10,213 100.0 670 100.0 296� 100.0� 38 100.0

Sources:�Education�Statistics,�March�2009,�EMIS,�Ministry�of�Education,�Ghana�

Over� the� years�however,�private� sector� schools�have�experienced�higher� growth� than�public�schools.� Information� obtained� from� Educational�Management� Information� System� from� the�Ministry�of�Education�indicate�that�private�sector�schools�in�the�basic�sector�grew�by�26%�from�

3 James�Tooley�&�Pauline�Dixon;�Private�Education�is�Good�for�the�Poor,�A�Study�of�Private�Schools�Serving�the�Poor�in�Low�Income�Countries,�Cato�Institute.�Page�7

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Final�Ghana�Country�Report:��Market�Research�Project�on�Low�Income�Private�Schools� ��

�� Prepared�for�IFC�by�CDC�Consult�Limited�������������������������������������21�����������������������������������������������������������������October,2010�

11,865�for�the�2006/2007�academic�year�to�14,925�for�the�2008/2009�academic�year�compared�to�public� sector� schools� that� recorded�a�growth�of�9%� from�30,985� to�33,763�over� the� same�period.�Industry�observers�believe�that�the�number�of�private�schools�reported�by�the�Ministry�of� Education� is� grossly� understated� because� the� schools� are� not� known� to� the�Ministry� and�Ghana�Education�Service�and�in�addition�not�all�private�schools�comply�with�the�requirement�to�complete� input� forms� for� the� system.�GNAPs� estimates� that� there� are� about� 20,000� private�schools,� almost�one� and�half� times� the�declared� figure.�Actual�number�of�private� schools� in�Ghana�is�therefore�difficult�to�estimate.�

3.3 Legal�Requirements�

Education�in�general�including�private�schools�is�expected�to�operate�within�a�well�defined�legal�framework.� � The� significant� provisions� are� in� The� 1992� Constitution� which� constitute� the�supreme�law�of�the�land;�Education�Act,�2008�Act�778�and�The�Children^s�Act,�Act�560.�

The� specific� laws� under� which� a� school� business� structure� could� be� registered� are� The�Companies� Code,� 1963� (Act� 179)� for� Companies;� The� Partnership� Act� 1962� (Act� 152)� for�Partnerships�and�the�Business�Name�Act,�1962�(Act�151)�for�Sole�Proprietorships.�

Other�rules�and�regulations�are�issued�by�the�Ghana�Education�Service�(GES).�

Legislation� Focus�

Article� 38� sub�section� 2� of� the�1992�Constitution�

�nThe�Government�shall�within�two�years�after�parliament�first�meets�after�coming�into�force� of� this� constitution� draw� up� a� programme� for� the� implementation�within� the�following�ten�years�for�the�provision�of�a�free,�compulsory�universal�basic�educationo.��

In�1996,�the�Free�Compulsory�Universal�Basic�Education�Programme�was� launched.� It�was�a�ten�(10)�year�programme�designed�to�establish�the�policy�framework,�strategies�and�activities�to�achieve�free�and�compulsory�basic�education�for�all�children�of�school�going�age.����Notwithstanding� this�provision,� it� is�still�clear� that�government�alone�cannot�provide�Basic�Education.�

The� Children^s�Act� 1998,� Act�560�

Section�6�(2):�Every�child�has�the�right�to� life,�dignity,�respect,� leisure,� liberty,�health,�education�and�shelter�from�his�parents.�

Section� 8� (1):� No� person� shall� deprive� a� child� access� to� education,� immunisation,�adequate�diet,�clothing,�shelter,�medical�attention�or�any�other�thing�required�for�his�development.�

Section� 10� (2):� A� disabled� child� has� a� right� to� special� care,� education� and� training�wherever�possible�to�develop�his�maximum�potential�and�be�self�reliant.�

Section�47�(1):�A�parent�or�any�other�person�who�is�legally�liable�to�maintain�a�child�or�contribute� towards� the� maintenance� of� the� child� is� under� a� duty� to� supply� the�necessaries�of�health,�life,�education�and�reasonable�shelter�for�the�child.��

Section�47�(2):�For�the�purpose�of�this�section,�education�means�basic�education.�

The� Education�Act,� 2008� (Act�

The�Act�declared�primary�education�to�be�compulsory�and�a�parent�not�sending�a�child�to�school�was� liable�to�a�fine.� It�also�made�provision� for�the�establishment�of�private�

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Final�Ghana�Country�Report:��Market�Research�Project�on�Low�Income�Private�Schools� ��

�� Prepared�for�IFC�by�CDC�Consult�Limited�������������������������������������22�����������������������������������������������������������������October,2010�

Legislation� Focus�

778)� educational�institutions.

The� Companies�Code� 1963� (Act�179)�

The�Act�provides�for�the�registration�of�businesses�as�companies�limited�by�liability.

The� Business�Names� Act� 1963�(Act�151)�

Every� individual�(and� indeed,�a�company)�may�carry�on�business�under�a�name�other�than�his/her�or� its�own�name.�Such�a�name� is�known�as�a�business�name.�Under�the�Registration�of�Business�Names�Act,�1962� (Act�151),� such�names�must�be� registered�with�the�Registrar�of�Business�Names.�

3.4� Establishment�and�Registration�of�Private�Schools�

The�1992�Constitution� states� that� nEvery�person� shall�have� the� right,�at�his�own�expense,� to�establish�and�maintain�a�private� school�or� schools�at�all� levels�and�of� such� categories�and� in�accordance� such� conditions� as� may� be� provided� by� law.o4� A� number� of� regulations� have�emanated� from� the� Education� Act� 2008,� (Act� 778)� which� specifies� requirements� for� the�establishment�of�private� institutions� in�the�country.�According�to�Section�23�(1)�of�this� law,�nA�person�or�an�institution�may�establish,�manage�and�operate�a�private�educational�institution�in�accordance�with�the�guidelines�issued�and�the�Regulations�made�in�that�behalf,�by�the�Minister�in�consultation�with�the�Education�Service�council�or�the�National�Accreditation�Boardo.�

Private� schools� just� like� all� other� businesses� are� also� required� to� register�with� the� Registrar�General^s�Department�depending�on�the�legal�structure�desired�by�the�proprietor�of�the�school.��

3.5�� Supervision�and�Co�ordination��

Private� Institutions�are�supervised�by� the�Regional�Director�of�Education�and� the�head�or� the�proprietor�of�any�school� is�required�to�offer�an� inspector�or�monitoring�officer�any�assistance�the� inspector�or�monitoring�officer�may�need� in� the�discharge�of�duties.�The�proprietor�of�a�private�school�cannot�close�down�the�school�without�the�prior�approval�of�the�Director�General�of�the�Ghana�Education�Service.�

The� schools� are� also� required� to� furnish� the�Ghana� Education� Service�with� information� and�returns�as�will�be�required�to�ensure�that�they�are�complying�with�the�laid�down�regulations.�

Private�schools�are�equally�required�to�notify�the�Minister�of�Education�and�GES�in�the�event�of�a�change�in�ownership�or�location�of�the�private�institution�and�closure�of�the�institution�for�a�period�longer�than�one�month�other�than�in�the�case�of�regular�holidays.�

If�a�private� school�which� fails�or� refuses� to� comply�with� the�Private�Schools�Regulations,� the�Minister� of� Education�may� take� action,� as� the�Minister� considers� appropriate,� including� the�closure�of�the�school.��

41992�Constitution,��Article�25,�Clause�2

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Final�Ghana�Country�Report:��Market�Research�Project�on�Low�Income�Private�Schools� ��

�� Prepared�for�IFC�by�CDC�Consult�Limited�������������������������������������23�����������������������������������������������������������������October,2010�

3.6� Governance�

Private� institutions�are�also�required�to�establish�the�following� in�accordance�with�regulations�of�the�GES:�

o A�Board�of�Governors�to�direct�the�general�policy�of�the�school�and�assist�the�head�of�the�institution�to�provide�quality�education�in�the�school.�

�o A�Parent�Teacher�Association�(PTA),�a�body�consisting�of�the�parents�of�the�pupils,�the�head�

and�teachers�of�the�school.���

3.7� �Enrolment�

Private� institutions� are� required� to� enrol� the� following� number� of� pupils� or� students� in� one�class:��

a) Not�more�than�forty�five�(45)�pupils�in�a�primary�school.�

b) Not�more�than�forty�(40)�students�in�a�junior�or�senior�high�school.��

3.8� Fees�

Fees� charged� in� private� schools� are� regulated� by� the� Ghana� Education� Service� Council� in�consultation�with�the�associations�for�private�schools�recognised�by�the�Ministry�of�Education.���Indeed� section� 23� (5)� of� the� Education� Act� 2008� states� that,� nthe� proprietor� of� a� private�educational�institution�shall�not�set,�change�or�raise�the�level�of�fees�without�the�consent�of�the�Ministero.� � It� is�however� important�to�state�that�this�has�not�been�adhered�to�by�the�parties.�The�proprietor�of�a�private�school� is�not�supposed�to�charge,�determine�or�revise�the� level�of�school� fees�without� applying� to� and� receiving�permission� from� the�Ghana� Education� Service�Council� to� do� so.� Proprietors� of� private� schools� cannot� levy� parents� for� the� purposes� of�infrastructural� development� or� rehabilitation� of� the� school� except� the� parent�teacher�association�of�the�school�decides�to�contribute�or�donate�teaching�and�learning�materials�to�the�school.�Private�schools�including�low�income�school�set�fees�that�they�deem�appropriate.�

3.9���Curricula�

The�curricula�and�syllabi�used�in�a�private�school�is�determined�by�the�Ministry�of�Education�and�are�the�same�as�those�in�a�public�school.�Pupils�and�students�are�also�required�to�participate�in�the�co�curricula�activities� (i.e.�games,�sports,�culture,�clubs�and�societies)�which�are�similar�to�those�in�the�public�schools.��

3.10� Staff�of�Private�Schools�

The�Head�of�a�private�school�is�required�to�be�a�professional�teacher�who�has�attained�at�least�the�rank�of�a�Principal�Superintendent.�This�provision�is�however,�not�adhered�to�by�the�private�schools�and�is�not�enforced�by�the�Ghana�Education�Service.��

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Final�Ghana�Country�Report:��Market�Research�Project�on�Low�Income�Private�Schools� ��

�� Prepared�for�IFC�by�CDC�Consult�Limited�������������������������������������24�����������������������������������������������������������������October,2010�

Private� basic� schools� employ� both� professional� and� non�professional� teachers� to� teach.�Professional� teachers� should� have� a� teacher^s� certificate� qA^� and� non�professional� teachers�should�hold�a�certificate�that�is�not�lower�than�a�General�Certificate�of�Education�or�Senior�High�School�with�passes�in�at�least�five�(5)�subjects�that�include�Mathematics�and�English.��

3.11� Private�Schools�Target�Market�and�Locations�

The�target�market�of�private�schools�in�general�are�perceived�to�be�the�elite�and�middle�classes�and�not�the�poor,�there� is�however�evidence�that�challenges�this�conception.� In�Ghana,�there�are�private� schools�which� target� the�poor�or� those� in� the� lower� income�areas�and� these�are�schools�in�grades�C�and�D�which�is�the�subject�of�this�study.��A�number�of�these�schools�are�also�not�recognized�by�the�Ghana�Education�Service�(GES).�

Private� schools� are� found� especially� in� the� urban� and� peri�urban� areas� of� the� country,� and�because� the� target� cuts� across� all� social� classes� they� can� be� found� in� different� locations.�Notwithstanding,�grade�A�and�B�schools�are�mostly�found�in�high�and�middle�income�areas�and�grade�C�and�D�schools�are�found�mostly�in�low�income�areas.��

3.12� �Low�Income�Private�Schools��

3.12.1� Introduction��

The�United�Nations�Millennium�Development�Goal�of�achieving�Universal�Primary�Education�for�all�children�by�2015�will�require�the�support�of�both�public�and�private�schools� (including� low�income�private�schools)� to�be� realized.� It� is�clear� that� low� income�private�schools�need� to�be�well�understood�and�supported�if�this�goal�is�to�be�attained.�As�part�of�this�process,�there�is�the�need�to�identify�what�constitutes�a�low�income�school�to�ensure�that�survey�results�under�this�research�assignment�constitute�a�true�reflection�of�what�pertains�in�low�income�private�schools.���

3.12.2� The�Concept�of�a�Low�Income�Private�School��

Defining�what�constitutes�a�low�income�school�is�a�critical�prerequisite�for�a�successful�survey.��In�our�effort�to�define�nlow�income�schoolo�we�reviewed�existing�literature�on�work�done�in�this�area.� � Especially�we� have� reviewed�work� done� by�Oxfam� International� and� reported� in� the�Oxfam�Education�Report;�Private�and�Public�Schooling� in�Ghana:� �A�Census�and�Comparative�Survey� by� James� Tooley� and� others� as� well� as� the� Cato� Institute^s� Publication� on� nPrivate�Education� is�Good� for� the�Pooro�which� is�na�study�of�Private�Schools�Serving� the�Poor� in�Low�Income�Countrieso.���

In�all�of� these�documents,� low� income�schools�were�described�as�private�schools�serving� low�income�areas.� In� its�efforts�erase�the�notion�that�private�school�education� is�for�the�elite,�the�Ghana� National� Association� of� Private� Schools� (GNAPS)� from� about� the� year� 2000� has�encouraged�some�of�its�members�to�carry�private�school�education�to�the�rural�poor.��This�has�resulted� in�the� initial�spread�of�Private�Schools� in�the�Ga�West�District�of�Accra�and�which�has�now�caught�up�with�other�parts�of�the�Country.�

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Final�Ghana�Country�Report:��Market�Research�Project�on�Low�Income�Private�Schools� ��

�� Prepared�for�IFC�by�CDC�Consult�Limited�������������������������������������25�����������������������������������������������������������������October,2010�

There�are�ongoing�programmes�to�support�low�income�private�schools�in�Ghana.�The�United�States�Agency� for� International� Development� (USAID),� Opportunities� Industrialisation� Centres�International,�Ghana,�the�Ghana�National�Association�of�Private�Schools�(GNAPS),�Opportunity�International� Ghana� and� The� Mitchell� Group� (TMG)� are� working� in� close� collaboration� to�support�low�income�private�schools�through�capacity�building�and�lending.�These�organizations,�with�the�enthusiastic�backing�of�the�Ghana�Education�Service�(GES),�have�come�together�with�the�shared�goal�of�developing�and�promoting�private�schools�which�provide�quality�education�to�poor�populations5.� The�program� targets� qemerging^� and� qunderdeveloped^�private� schools,�which�are�unaccredited�or�have�received�ratings�of�no�higher�than�qC^�or�qD^�by�the�GES.��

Using�the�GES�rating�as�a�basis� for� identifying� low� income�private�schools,� it�will�be� logical�to�consider�schools�with�the�qC^�or�qD^�rating�as�low�income�schools.�The�implied�assumption�is�that�low�income�earners�may�not�be�able�to�send�their�wards�to�private�schools�with�grades�higher�than�qC^�because�of�the�fees�charged�at�this�level.�

It�can�be�deduced�from�these�works�that�at�least�three�elements�must�be�considered�in�the�description�of�what�constitutes�nlow�income�private�schoolso:��

1. The�school�must�be�located�in�a�low�income�area;��

2. Majority�of�pupils�attending�the�school�must�be�wards�of�people�in�low�income�category�and���

3. The�school�must�be�a�private�school�with�the�definition�of�a�school�that�is�privately�funded�and�managed.�

The�Ghana� Statistical� Service� has� clear� clarification� of� low� income� suburban� and� rural� areas�which� implies� that� private� schools� in� those� suburban� and� rural� areas� could� potentially�constitute� low� income� schools.� � We� are� however,� aware� that� private� schools� located� in�suburban�and� rural�areas� close� to�big� towns� such�as�Accra�and�Kumasi�where� the� study�has�been�undertaken�do�not�serve�only�wards�of�those� in� low� income�group�although�majority�of�the�pupils�will�be�wards�of� low� income�earners�such�as�casual�workers� including�masons�and�artisans;�subsistence�farmers�and�factory�workers�among�others.��

It� is�also� insightful� to�note� that�not�all� families� located� in� the� suburban�and� rural�areas�near�Accra� and� Kumasi� or� any� urban� town� for� that�matter�may� be� in� a� low� income� bracket� and�therefore� can�afford� to� send� their� children� to� schools� that�are� considered�as� schools� for� the�elite�which� are� outside� the� suburban� and� rural� communities.� � � In� the� same� vein,� some� low�income�earners�have�made�financial�sacrifices�to�send�their�children�to�elite�(or�middle�income)�schools.�����

5 Supporting Private Education for the Poor: http://edufinanceghan.wordpress.com

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Final�Ghana�Country�Report:��Market�Research�Project�on�Low�Income�Private�Schools� ��

�� Prepared�for�IFC�by�CDC�Consult�Limited�������������������������������������26�����������������������������������������������������������������October,2010�

PART�III��Section�4.0� :� Findings���Low�Income�Private�Schools

Section�5.0� : Findings���Parents�with�Children�in�Low�Income�Private�Schools

Section�6.0� : Findings����Financial�Institutions�serving�Low�Income�Schools

Section�7.0� : Findings����Advisory�Services�Providers

Section�8.0� : Findings���Ghana�Education�Service,�Development�Partners�and�other�Stakeholders�

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Final�Ghana�Country�Report:��Market�Research�Project�on�Low�Income�Private�Schools� ��

�� Prepared�for�IFC�by�CDC�Consult�Limited�������������������������������������27�����������������������������������������������������������������October,2010�

SECTION�4.0:� FINDINGS�X�LOW�INCOME�PRIVATE�SCHOOLS�

4.1� Introduction�

Section� 4� presents� the� findings� in� respect� of� Low� Income� Schools� surveyed� in� the� targeted�zones,�Accra�and�Kumasi.��It�specifically�presents�findings�in�respect�of�the�spread�of�low�income�schools;� legal� registration,� accreditation� and� establishment� history;� enrolment� levels� and�gender� composition;� school� facilities� and� infrastructure;� teaching� staff� and� performance� of�schools;� financial�management�practices;� access,�demand� and�need� for� financing;�borrowing�and�repayment�capacity�of�the�schools;�awareness�and�use�of�business�advisory�services.�

4.2� Spread�of�Low�Income�Schools�and�Survey�Coverage�

Low�income�communities�are�spread�throughout�Ghana�with�the�majority�expected�to�be�in�the�three�northern� regions�of�Upper� East,�Upper�West� and�Northern�Regions;�Central� and�Volta�Regions.� � In�addition�there�are�pockets�of� low� income�areas� in�the�Greater�Accra�and�Ashanti�Regions�and�the�remaining�regions.�All�of�Ghana^s�ten�regions�have�private�schools.�The�three�Northern� Regions� put� together� for� example� have� a� total� of� 698� private� basic� schools�representing� 4.67%� of� private� schools� in� the� Country.� Ashanti� and� Greater� Accra� Regions�however�have�the�highest�concentration�of�private�schools� in�Ghana.� �The�two�regions�have�a�total�of�4,926�private�basic�schools,�representing�47.8%�of�private�schools6.��

The� low� income�private� schools� research�covered�136� schools� (terms�of� reference� requested�100)�selected� from�within�and�around�the�urban�areas�of�Accra�and�Kumasi.� �The�spread�and�quota�from�the�two�zones�along�school�levels�is�presented�in�table�4.1.��

Table�4.1:�Surveyed�Low�Income�Private�Schools�by�Categories�

Categories�of�schools� Accra Kumasi CombinedNos. % Nos. %� Nos.� %

Pre�School�Only� 8 11.0 6 9.5� 14� 10.3

Pre�School�&�Primary� 25 34.2 27 42.9� 52� 38.3

Pre�School,�Primary�&Junior�High�Sch.�

0 0.0 2 3.2� 2� 1.4

Primary�&�Junior�High�Sch.� 40 54.8 28 44.4� 68� 50.0Total� 73 100 63 100� 136� 100

4.3� Legal�Registration,�Accreditation�and�Establishment�History�

The� schools� are� registered� under� the�main� legal� structures� of� Sole� Proprietorship� registered�under� the� Business�Name� Registration� Act;� Partnership� and� Limited� Liability� Company.� � � As�noted�in�table�4.2�all�but�5�of�the�surveyed�schools�are�legally�registered.�

6 EMIS, 2008/2009

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Final�Ghana�Country�Report:��Market�Research�Project�on�Low�Income�Private�Schools� ��

�� Prepared�for�IFC�by�CDC�Consult�Limited�������������������������������������28�����������������������������������������������������������������October,2010�

The� challenges� of� school� accreditation� and� grading� by� the� Ghana� Education� Service�notwithstanding,� the� low� income�schools� included� in� the�survey�either� reported� the� rating�of�grade�qB^,�qC^�or�qD^.�A�handful�of�schools�included�in�the�survey�said�they�were�grade�qB^�schools�but�our�field�staff�were�of�the�view�that�these�schools�could�pass�for�grade�qD^�which�may�be�a�reflection�of�deterioration� in� facilities�after�the� initial�grading.� �The�GES�explained�that�school�grading�is�required�to�be�undertaken�every�two�years,�but�this�is�mostly�not�done�and�could�be�the�reason�for�this�observation.��

The�distribution�of�the�schools�on�the�basis�of�legal�registration�and�GES�grading�is�presented�in�tables�4.2�and�4.3�respectively.�

Table�4.2:�Legal�Status�of�Surveyed�Low�Income�Private�Schools�Legal�Registration�Status� Number�of�Schools Proportion�of�Schools�(%)Limited�Liability�Company� 14 10Partnership� 3 2Sole�Proprietorship� 114 84No�Legal�Registration� 5 4Total� 136 100

The� high� proportion� of� low� income� schools� operating� as� Sole� Proprietorships� (84%)� is�understandable�due�to�how�most�of�these�schools�started.�79%�of�the�surveyed�schools� from�Accra�zone�and�89%�from�Kumasi�zone�are�registered�as�Sole�Proprietor�businesses.�The� legal�registration�has�implications�for�the�continuity�of�the�business�and�ability�to�source�funds�from�formal�institutions.��

Table�4.3:�Grading�Status�of�Surveyed�Low�Income�Private�Schools�Grade� Accra Kumasi Combined

Nos. % Nos. % Nos.� %

Grade�B� 2 3 15 24 17� 13Grade�C� 23 32 24 38 47� 35Grade�D� 20 27 12 19 32� 24Unrecognized� (not� graded� by�GES)�

18 25 3 5 21� 15

Not�Known� 10 14 9 14 19� 14

Low� income� schools� are� spread� among� grade� C,� D� and� unrecognized� as� noted� in� table� 4.3�above.�15%�of�the�respondent�schools�are�unrecognized�and�19�representing�14%�claimed�they�do�not�know�their�grade�although�they�insisted�they�are�recognized�by�GES.���We�are�of�the�view�that�most�of�the�schools�that�stated�they�do�not�know�are�actively�unrecognised�schools.�

A� total� of� 68� out� of� the� 136� schools� representing� 50%� are� 10� years� and� above;� 31� schools�representing�23%� are�below�5� years� and�35,� representing�26%� are�between�5�10� years.�The�detailed�breakdown�on�location�is�presented�in�table�4.4.�

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Final�Ghana�Country�Report:��Market�Research�Project�on�Low�Income�Private�Schools� ��

�� Prepared�for�IFC�by�CDC�Consult�Limited�������������������������������������29�����������������������������������������������������������������October,2010�

Table�4.4:�Years�in�Existence�

Location�

Below�5years� 5���10�years� Above�10�years� Not�Indicated�

Nos.� % Nos. % Nos. %� Nos.� %

Accra� 14� 9% 19 6% 39 53%� 1� 1%

Kumasi� 17� 7% 16 5% 29 46%� 1� 2%

Combined� 31� 3% 35 6% 68 50%� 2� 1%�

4.4� Enrolment�Levels,�Gender�Composition�and�Drop�Out���

Enrolment� levels� in�the�surveyed� low� income�private�schools,�based�on�the�2009/10�academic�year� statistics�provided�by� the� schools� is�29,718�up�by�1,694� from�2008/2009� representing�a�growth�of�6%.�Average�enrolment�for�2009/2010�year�is�computed�as�218�pupils�per�school.�The�136�schools�are�mapped�on�to�ranges�of�enrolment�in�table�4.5.��Table�4.5:�Low�Income�Schools�Enrolment�Statistics�Location� Enrolment�Ranges�

Below�50 51�100 101�200 201�400� +401Accra��Nos.�of�schools�in�range� 7 13 26� 17 10Kumasi��Nos.�of�schools�in�range� 6 10 20� 16 11Combined�� Nos.� 13 23 46� 33 21

%� 10% 17% 34%� 24% 15%Median�Enrolment 40 82 150� 287 482

Source:�Low�Income�Private�Schools�Survey��

Enrolment� levels� in� the� surveyed� schools� are� high�with� about� 73%� of� the� schools� recording�minimum�enrolment� level�of�100.�The�enrolment�statistics�further� indicate�the�contribution�of�low�income�schools�to�keep�children�in�school.����

Analyses� of� the� gender� composition� of� the� enrolment� returned� a� significant� statistical�difference�between�female�and�male�enrolment.�Female�enrolment�for�the�low�income�schools�survey�constitutes�55%�compared�to�national�average�of�49.5%,�establishing�the�contribution�of�low�income�schools�in�enrolling�and�keeping�the�girl�child�in�school.�It�is�worth�commenting�that�low� income� parents�may� have� been� reluctant� in� sending� the� girl� child� to� school� if� the� low�income� schools� were� not� in� the� communities.� The� breakdown� of� the� gender� statistics� is�presented�in�table�4.6.��Table�4.6:�Gender�Composition�of�Low�Income�Schools�Enrolment�� Female�Proportion Male�Proportion

% %Accra�Low�Income�Schools� 56 44Kumasi�Low�Income�Schools� 54 46Combined�Low�Income�Schools� 55 45National�Statistics� 49.5 50.5

Sources:�Low�Income�Private�Schools�Survey;�EMIS,�Ministry�of�Education��

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Final�Ghana�Country�Report:��Market�Research�Project�on�Low�Income�Private�Schools� ��

�� Prepared�for�IFC�by�CDC�Consult�Limited�������������������������������������30�����������������������������������������������������������������October,2010�

Closely�related�to�enrolment�level�analysis�is�the�pupil�drop�out�ratio.��This�indicator�measures�the�ability�of�the�surveyed�schools�to�maintain�pupils�on�the�school�roster.�The�indicators�for��the�surveyed�schools�are�presented�in�table�4.7.���Reasons�for�drop�out�are�varied�but�in�recent�years� some� private� schools� have� lost� pupils� to� public� schools� due� to� the� introduction� of�programmes�such�as�school�feeding�and�capitation�grants.��Table�4.7:�Drop�Out�Ratios�for�Surveyed�Schools�Drop�Out�Ratio�� Accra� Kumasi� Combined�

Nos.� %� Nos. % Nos.� %Below�5%� 48� 66� 27 43 75 55

5%���10%� 11� 15� 24 38 35 26

10%���15%� 6� 8� 3 5 9 7

Above�15%� 5� 17� 5 8 10 7

Do�not�know� 3� 4� 4 6 7 5

Source:�Low�Income�Private�Schools�Survey�

��4.5�� Status�of�School�Infrastructure�and�Facilities���Availability�and�Adequacy��Availability��

In�assessing�the�status�of�infrastructure,�Enumerators�inspected�infrastructure�in�the�respective�schools� interviewed.� School� proprietors/managers� were� also� asked� to� comment� on� the�adequacy� or� otherwise� of� existing� infrastructure.� For� most� of� the� schools,� Enumerators�reported� infrastructure� that� they� consider� inadequate� for� the� school� requirements.� The�responses�obtained�from�the�proprietors/managers�in�respect�of�the�availability�of�facilities�and�infrastructure�is�summarized�in�table�4.8.��Table�4.8:�Respondent�Schools�with�School�Facilities�and�Infrastructure�Facilities�/�Infrastructure� Respondent�schools�

with�facilities��AccraRespondent�schools�with�facilities�Kumasi�

Respondent�schools�with�facilities���Combined�

% % %1. Classroom� 100 100 1002. Furniture� 100 94 973. Library� 11 16 134. Computer�laboratory� 44 41 435. Science�laboratory� 0 5 26. Teachers^�common�room� 21 27 247. Playground� 63 62 638. Access�to�electricity� 82 63 749. Access�to�water� 70 78 7410. School�bus� 0 11 5

Source:�Low�Income�Private�Schools�Survey��

Reasons� provided� by� the� low�income�schools�for�dropout:�� 87�schools�cited�inability�of�

parents/guardians�to�pay�fees;�

�� 86�schools�cited�relocation�

of�parents;��� 32�schools�cited�relocation�

to�another�school.�

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Final�Ghana�Country�Report:��Market�Research�Project�on�Low�Income�Private�Schools� ��

�� Prepared�for�IFC�by�CDC�Consult�Limited�������������������������������������31�����������������������������������������������������������������October,2010�

Infrastructure�remains�a�key�challenge�for�most�low�income�private�schools�especially�because�of� the� absence�of�medium� term� funding� facilities.� � The�Private� Schools�Unit�of� the�GES� also�commented�on�the�inadequacy�of�infrastructure�in�some�of�the�low�income�schools.��As�presented� in�table�4.8�all�136� low� income�private�schools�included� in� the� survey� have� classrooms� which� they�considered� adequate� for� their� current� operations� although�will�admit�this�could�be� increased.�16�(22%)�schools� in�Accra�and� 7� (11%)� in� Kumasi� operate� from� rented� premises.� The�main�issue�relates�to�the�conditions�of�the�building�which�in�a�number�of� the� schools�are�wooden� structures� that�may�not�be�habitable�under�hostile�weather�conditions,�thus�exposing�children�to�the�hazards�of�the�weather.� �There�are�adequate�sets�of� furniture� for� the�available�pupils� in� these� schools�as�well.� The� areas� of� inadequacy� are� library,� computer� and�science� laboratory.� Library� in� particular� is� essential� in�improving� the� reading�habits�of� the�pupils� � �as�well�as� their�vocabulary.�Out�of�the�136�schools�only�18�representing�13%�indicated�the�existence�of�a�library.���43%�of� the� low� income�schools�have�computer� laboratory�with�various�makes�of�computers�and� accessories.� This� is� relevant� especially� because� information� technology� has� become�indispensable�in�education�and�is�an�examinable�subject�at�the�BECE�level.��Most�of�the�schools�especially�at�the�Junior�High�School�level�will�require�funding�to�set�up�computer�laboratories.�

�32� out� of� the� 136� schools�representing� 24%� have�teachers^� common� room,� 7�schools,� (all� in� Kumasi)� have�school� bus.� � � School� bus� has�become� a� status� symbol� for�private� schools� in� Ghana� and�could� be� justified� by� schools�operating� in� urban� areas� due�to� poor� public� transportation�system�and�distances�travelled�to� school.� � For� most� low�income� schools,� the� buses�may� not� be� needed� because�pupils� are� normally� from� the�community.�School�buses�also�

serve�as�a�promotion�medium� for�the�schools.�Majority�of�the� low� income�schools�also�have�access�to�water�(74%)�and�electricity�(74%).�The�availability�of�these�amenities�suggest�that�low�

� 18� out� of� 136� schools�have�library;�

� 58� out� of� 136� schools�have� computer�laboratory;�

� 85� out� of� 136� schools�have�playground;�

� 100� out� of� 136� schools�have� access� to�electricity�and�water;�

� 23� out� of� 136� schools�operate� from� rented�premises.�

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Final�Ghana�Country�Report:��Market�Research�Project�on�Low�Income�Private�Schools� ��

�� Prepared�for�IFC�by�CDC�Consult�Limited�������������������������������������32�����������������������������������������������������������������October,2010�

income�schools�with�the�appropriate�financial�support�and��effective�management�could�have�the�same�facilities�that�middle�to�upper�income�schools�in�the�urban�areas�have.���Adequacy�In� analyzing� adequacy� or� otherwise� of� infrastructure� and� facilities,� respondent� schools�provided�a�measure�of�their�requirements�compared�to�availability.�Three�of�the�requirements,�classrooms,� furniture� and� core� text� books� have� been� analyzed� on� aggregate� basis� and�presented�in�table�4.9.��Table�4.9:�Input�Requirements�and�Availability�

Zone�

Requirements�Analyzed�(In�Units)�

Classrooms� Furniture� Core�Text�Books�

Available Required Available Required� Available Required

Accra� 695 924��

11,619���

17,432����

12,896��

16,120�

Kumasi� 489 589��

3,719����

4,988����

21,330��

31,513�

Combined���

1,184���

1,513���

15,338���

22,420����

34,226��

47,633�Gap� between� Required� and�Available�(%)� 22%� 32%� 28%

�The�greatest�need�areas�for�the�surveyed�schools�based�on�the�responses�obtained�(please�see�figure�4.1)�are� furniture�where� there� is�a�gap�of�32%;�core�text�books�with�a�gap�of�28%�and�classrooms�with�a�gap�of�22%.��Private�schools�are�usually�provided�with�core�text�books�by�the�government.� �The�Private�Schools�Unit�of� the�GES�however�explained� that� this�has�not�been�regular�over�the�past�2�years�due�to�budgetary�constraints.��Detailed�data�for�each�of�the�surveyed�schools�are�presented�in�the�excel�spreadsheet.����

Figure�4.1:�Gap�Analysis�of�Adequacy�of�Classroom,�Furniture�and�Core�Text�Books�

Page 33: Final Ghana Country Report - Edify · Final Ghana Country Report: Market Research Project on Low Income Private Schools Prepared for IFC by CDC Consult Limited 3 October,2010 Section

Final�Ghana�Country�Report:��Market�Research�Project�on�Low�Income�Private�Schools� ��

�� Prepared�for�IFC�by�CDC�Consult�Limited�������������������������������������33�����������������������������������������������������������������October,2010�

4.6� Teaching�Staff,�Qualification,�Compensation�and�School�Performance�

4.6.1�Teaching�staff�and�qualification��Private�schools�are�generally�considered�to�be�more�attractive�to�teachers�on�the�basis�of�salary�but�are� considered�by�most� teachers�as� lacking� job� security.�The� lack�of� job� security� is�even�more� pronounced� in� low� income� schools,� over� 70%� of� which� are� registered� as� sole�proprietorships� and� largely� controlled� by� one� individual.� Low� income� schools� are� also�sometimes� located� in�areas� considered�unattractive�by�most� teachers.�The� schools� therefore�have�difficulties�in�attracting�and�retaining�trained�and�qualified�teachers.��The�schools�surveyed�were�asked�to�estimate�the�proportion�of�teachers�with�qualifications� in�Senior� High� School� and� below;� Trained� Post�Secondary� Teachers;� Higher� National� Diploma�(HND)�as�well�as�Degree�and�above�at�the�various�educational�levels�of�Pre�School,�Primary�and�Junior�High�School�in�their�respective�schools.���

At�the�Pre�School�level�about�95%�of�the�schools�reported�that�they�have�teacher(s)�with�Senior�High� School� qualification,� 27%� have� Trained� Post�Secondary� Teacher(s),� 23%� said� they� have�teacher(s)�with�HND� and� 19%� of� the� schools� said� they� have� teacher(s)�with� at� least� a� First�Degree.���

At�the�Primary�School� level,�89%�of�the�respondent�schools�have�teacher(s)�with�Senior�High�School�qualification�and�below,�28%�of� the� respondent� schools�have�Trained�Post�Secondary�Teacher(s),�21%�have�HND�and�17%�have�a�minimum�of�First�Degree.�At�the�JHS� level,�74%�of�the�respondent�schools�have�teacher(s)�with�Senior�High�School�qualification�and�below,�32%�of�the�respondent�schools�have�Trained�Post�Secondary�Teacher(s),�37%�have�HND�and�38%�have�a�minimum�of�First�Degree.���

The� findings� indicate� that� the� proportion� of� schools� with� trained� teacher(s)� for� example�increased�from�27%�at�Pre�School�level�to�28%�at�Primary�School�level�and�32%�at�the�JHS�level.�In� the� same� vein� the� proportion� of� schools� with� teachers� holding� Senior� High� School�qualification�decreased�from�95%�at�the�Pre�School�level�to�89%�at�the�Primary�level�and�then�74%�at�the�Junior�High�School�level.�The�schools�employing�teachers�with�at�least�a�first�degree�also�increased�from�19%�at�Pre�School�and�Primary�level�to�31%�at�Junior�High�School�level.�The�analysis�did�not�cover�the�actual�number�of�teachers�with�the�qualifications�but�focused�on�the�number�of� schools� that�employ� teachers�with� the� specified�qualifications.� The�proportion�of�schools�that�employ�teachers�with�the�respective�qualifications�is�presented�in�table�4.10.���

���������

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Final�Ghana�Country�Report:��Market�Research�Project�on�Low�Income�Private�Schools� ��

�� Prepared�for�IFC�by�CDC�Consult�Limited�������������������������������������34�����������������������������������������������������������������October,2010�

Table�4.10�:�Analysis�of�Proportions�of�Schools�Reporting�Qualifications�in�School�Levels����������������������

School�Levels�and�Zones� Teachersj�Level�of�Qualification�&�Proportions�

Preschool� SHS Trained�Teachers HND� Degree�and�above

Accra� 96% 36% 17%� 15%

Kumasi� 93% 18% 29%� 23%

Combined� 95% 27% 23%� 19%

Primary� SHS Trained�Teachers HND� Degree�and�above

Accra� 87% 29% 28%� 19%

Kumasi� 90% 26% 13%� 14%

Combined� 89% 28% 21%� 17%

JHS� SHS Trained�Teachers HND� Degree�and�above

Accra� 74% 31% 28%� 31%

Kumasi� 73% 33% 46%� 45%

Global� 74% 32% 37%� 38%Source:�Low�Income�Private�Schools�Surveys��Low�income�private�schools�are�unable�to�attract�well�qualified�teachers�and�in�a�number�of�the�cases�do�not�meet�Ghana�Education�Service�guideline�of�a�headteacher�with�at�least�a�Principal�Superintendent�rank.�Ghana�Education�Sources7�indicate�that�out�of�a�total�of�47,792�teachers�in� the� total�private�basic� schools� sector,�only�10,980� representing�23%� are� trained� teachers.�What�the�private�schools�lack�in�qualification�(trained�teachers)�however,�is�compensated�for�in�commitment�on�the�part�of�most�teachers.��4.6.2� Teacher�Turnover�Teacher�turnover�in�the�surveyed�low�income�schools�established�combined�turnover�of�9%�for�Pre�Schools,�11%�for�Primary�Schools�and�9%�for�Junior�High�Schools.� �Accra�zone� low� income�schools� recorded� higher� staff� turnover� than� the� Kumasi� zone� schools� an� indication� of�more�employment�opportunities�in�Accra�zone.��The�results�are�presented�in�table�4.11.��Table�4.11:��Average�Teacher�Turnover�Analysis�Category�� Accra� Kumasi� Combined�

% % %

Pre�School� 12 6 9

Primary�School� 13 9 11

Junior�High�School� 12 6 9

Source:�Low�Income�Private�Schools�Survey�

���

7 Education Statistics (EMIS) 2009.

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Final�Ghana�Country�Report:��Market�Research�Project�on�Low�Income�Private�Schools� ��

�� Prepared�for�IFC�by�CDC�Consult�Limited�������������������������������������35�����������������������������������������������������������������October,2010�

4.6.3� Teacher�Compensation��Compensation�for�staff�in�low�income�private�schools�is�generally�low�and�is�a�reflection�of�the�qualification�of�the�teachers�as�well�as�the�general�low�income�status�of�the�areas.�Our�findings�on�the�average�teacher�salary�from�the�survey�are�presented�in�table�4.12.��Table�4.12:��Average�Monthly�Teacher�Salary�for�Low�Income�Schools�Category�� Accra Kumasi� Combined

GH¢ GH¢� GH¢Pre�School� 70 54� 62Primary�� 80 60� 70Junior�High�School� 111 78� 95

Source:��Low�Income�Private�Schools�Survey�

�The� lowest� reported�monthly� salary� level� for�Accra� zone� schools� is�GH¢35�and� the�highest� is�GH¢140;�lowest�for�primary�is�GH¢40�and�the�highest�is�GH¢175;�lowest�for�Junior�High�School�is�GH¢50�and�the�highest�is�GH¢300.����Average�salaries�for�Kumasi�zone�schools�are�generally�lower�than�Accra�Schools.��The�lowest�in�Pre�School�category�is�GH¢20�and�the�highest�is�GH¢120;�Primary�schools�recorded�a�minimum�of�GH¢30�and�a�maximum�of�GH¢120;� the� Junior�High�School�has�a�minimum�of�GH¢35�and�maximum�of�GH¢150.��The� reported� compensation� levels� of� teachers� in� low� income� schools� are� relatively� low� and�constitute�about�25%�to�40%�of�average�salaries�for�teachers�in�public�schools.��As�stated�earlier�however,�most�of�the�teachers�have�lower�level�of�qualifications.��For�a�number�of�the�schools,�the�compensation� levels�for�some�members�of�staff�are�below�the�monthly�minimum�wage�of�about�GH¢68.42�(minimum�daily�wage�is�GH¢3.11).���

4.6.4� Performance�of�Schools��The�research�sought�to�establish�the�academic�performance�of�the�low�income�private�schools�using� the�BECE� results�as�a�basis� for�assessing�performance.�The�average�performance�of� the�low� income� schools� is� compared� to�performance�of�national�pass� rate� as�presented� in� table�4.13.��

Table�4.13:�BECE�Pass�Rate�School�Types� � 2007/2008 2008/2009

Low�Income�Private�Schools� 98% 96%

National8� 62.17% 62.4%

Source:��Low�Income�Private�Schools�Survey�

Detailed�analysis�on�subject�performance�could�not�be�conducted�due�to�the�unavailability�of�data.�

8 www.news.peacefmonline.com/education

Page 36: Final Ghana Country Report - Edify · Final Ghana Country Report: Market Research Project on Low Income Private Schools Prepared for IFC by CDC Consult Limited 3 October,2010 Section

Final�Ghana�Country�Report:��Market�Research�Project�on�Low�Income�Private�Schools� ��

�� Prepared�for�IFC�by�CDC�Consult�Limited�������������������������������������36�����������������������������������������������������������������October,2010�

4.7� Financial�Management�Practices�in�Low�Income�Schools��

The� financial�management�practices� framework�discusses� findings� relating� to� funding�sources�for� low� income� schools;� relationship� with� financial� institutions;� financial� performance� and�financial�position.��4.7.1�Funding�sources�for�low�income�schools�As�is�the�case�of�most�SMEs,�low�income�school�owners�have�not�kept�records�on�investments�made�in�the�school.�The�general�feedback�from�owners�on�funding�source�is�the�use�of�personal�savings�and�financial�support�from�close�family�relations�to�finance�the�start�up�and�operational�costs�of�the�schools.��The�most�recurring�source�of�funding�for�school�operations� is� internally�generated�fund�which�recorded�62%�of�the�respondents�followed�by�personal�savings�of�the�proprietors.��The�source�of� funding�and� ranking� is�presented� in� table�4.14.� �On� financing� from� financial� institutions,�a�total�of�24�respondents�representing�18%�noted�that�they�had�received�financing�from�financial�institutions.���

A�tabular�presentation�of�the�surveyed�schools�and�their� funding�sources� is�disclosed� in�table�4.14.�

Table�4.14:�Funding�Sources�for�Low�Income�Schools��� Source�of�Funding�

Internally�Generated�

Funds

Owner(s)�Personal�Savings

Financial�Institutions�

Family�&�Friends

Others

Number�of�Schools�Using�the�Source� 84 74 24� 17 5

Percentage�of�Schools�(%)� 62� 54 18�� 13� 4�

Ranking� 1st 2nd 3rd� 4th 5th

Source:��Low�Income�Private�Schools�Survey�

�4.7.2�Low�income�private�schoolsN�relationship�with�financial�institutions�access�Access�to�financial�institutions�is�not�a�constraint�to�the�low�income�schools�surveyed.�Ghana^s�financial�sector�has�experienced�expansion�over�the�past�10�years�with�significant�expansion�in�number�of�universal�banks,�rural�and�community�banks,�savings�and�loans�companies.�Many�of�the� rural� and� community� banks� for� example� operate� mobile� agencies� in� or� around� the�communities�where�low�income�schools�are�located.���Respondent�schools�with�bank�accounts�and�financial� institutional�categories�are�presented� in�table� 4.15.� � Access� however,� goes� beyond� physical� access� to� include� the� availability� of�appropriate� financial� products� and� services� refined� to�meet� the� needs� of� the� low� income�schools.�When� the� researchers� asked� the� respondents�who� have� not� taken� loans� for� their�reasons,�different�responses�were�recorded�including�high�interest�rates�and�lack�of�collateral.�

Page 37: Final Ghana Country Report - Edify · Final Ghana Country Report: Market Research Project on Low Income Private Schools Prepared for IFC by CDC Consult Limited 3 October,2010 Section

Final�Ghana�Country�Report:��Market�Research�Project�on�Low�Income�Private�Schools� ��

�� Prepared�for�IFC�by�CDC�Consult�Limited�������������������������������������37�����������������������������������������������������������������October,2010�

Table�4.15:��Schools�with�Bank�Accounts�Use�of�Bank�Accounts��

Combined�Market Accra KumasiNos. % Nos. %� Nos.� %

Yes� 99 73% 53� 73%� 46� 73%�No� 37 27% 20� 27%� 17� 27%�Total� 136 100% 73� 100%� 63� 100%�

Categories�of�Institutions�where�accounts�are�held��

Commercial Bank / Universal Bank 51 52% 38 72% 13 28%

Rural & Community Bank 31 31% 5 9% 26 57% Savings and Loans Company 12 12% 6 11% 6 13%

Financial NGO 1 1% 1 2% - - Other 2 2% 1 2% 1 2%

Did not provide 2 2% 2 4% - - Total� 99 100% 53 100%� 46� 100%

Contrary�to�expectations�that�low�income�schools�will�patronize�rural�and�community�banks�as�well� as� savings� and� loans� companies,� the� research� indicate� that� 52%� of� the� schools� with�accounts�operate�with�universal�(commercial)�banks.�This�however,�may�not�be�surprising�given�the�changes�that�are�going�on�in�the�banking�industry�such�as�the�creation�of�SME�departments�in�the�banks�and�promises�relating�to�credit�extension.���4.7.3���Financial�Performance�and�Position�The�assessment�of� financial�performance�and�position�of� the� low� income� schools� focused�on�the� earning� ability� of� the� low� income� schools;� ability� to� collect� fees;� cost� structure� and�profitability;� asset� and� liability� profile.� The� basis� of� effective� financial� management� and�reporting�is�record�keeping.�However�record�keeping�has�remained�a�continuous�short�coming�for� both� private� (including� low� income)� and� public� schools.� � In� a� number� of� schools,� single�entries�are�maintained�and�in�others,�a�listing�of�receipts�and�invoices�on�transactions.��

Earning�ability�of�low�income�schools�Low� income� schools� are� constrained� by� the� economic� conditions� of� their� locations� in� the�amount�of�fees�they�can�charge�at�the�schools.�In�analyzing�the�school�fees,�a�four�block�range�of�fees�was�adopted:�GH¢30�and�below;�GH¢31�GHC50;�GH¢51�GH¢100�and�above�GH¢100,���The� analyses� (please� refer� to� Figure� 4.2� and� Table� 4.17)� indicate� that� 57%� of� Pre� Schools�surveyed�charge�fees�of�GH¢30�and�below�per�term�with�a�median�fee�of�GH¢20;�at�the�Primary�School�level,�45%�of�surveyed�schools�charge�below�GH¢30�per�term�also�with�a�median�fee�of�GH¢20.�At�the�JHS� level�however,�the�proportion�of�schools� in�the� fee�range�of�below�GH¢30�per�term�declined�to�18%�and�returned�a�lower�median�fee�of�GH¢19�per�term.����

Page 38: Final Ghana Country Report - Edify · Final Ghana Country Report: Market Research Project on Low Income Private Schools Prepared for IFC by CDC Consult Limited 3 October,2010 Section

Final�Ghana�Country�Report:��Market�Research�Project�on�Low�Income�Private�Schools� ��

�� Prepared�for�IFC�by�CDC�Consult�Limited�������������������������������������38�����������������������������������������������������������������October,2010�

The�proportion�of�schools� in�the�GH¢31�50�range�declined�at�the�Pre�School�and�Primary� level�recording�33%�and�40%�respectively�with�median�fees�of�GH¢40�and�GH¢40.50.�At�the�JHS�level�the�proportion�increased�to�33%�with�a�median�fee�of�GH¢45.��Figure�4.2:��Proportion�of�School�Levels�in�the�Fee�Ranges�

�Pre�Schools�and�Primary� further�declined� in�proportion�as�the� fee�range� increased�to�between�GH¢51�and�GH¢100�accounting�for�8%�and�12%�respectively.�The�median�fee�for�Pre�School�and�Primary�in�this�block�returned�GH¢68�and�GH¢72.5�respectively.�JHS�proportion�in�this�fee�range�maintained�33%�with�a�median�fee�of�GH¢60.��

At�school� fee� range�of�above�GH¢100�per� term,�only�16�schools�out�of� the�136,� representing�12%�were�identified.�2%�of�the�Pre�Schools�surveyed�are�in�this�range�with�a�median�of�GH¢130�per�term;�3%�of�surveyed�Primary�Schools�are� in�this�range�with�a�median�fee�of�GH¢132�per�term;�13%�of�JHS�in�the�survey�are�in�this�category�with�a�median�of�GH¢145�per�term.����Statistical�analysis�on�tuition�fee�for�Pre�Schools,�Primary�and�Junior�High�Schools�in�Accra�and�Kumasi� zones� show� statistically� significant� difference� between� the� fees� paid� in� Accra� and�Kumasi.�The�mean� tuition� fee�at�Pre�School� is�GHC42.03�and�GHC22.99� for�Accra�and�Kumasi�respectively.�With�a�standard�deviation�(std)�of�24.85�and�11.18�and�a�computed�Z�statistic�of�5.90,� the� results� of� pre�school� tuition� fee� in� the� two� towns� of� Accra� and� Kumasi� show� a�statistically�significant�difference�establishing� that� the� fees�charged�by� the�schools� in� the� two�towns�are�not�the�same.���The�mean� tuition� fee� at� Primary� school� is� GHC50.90� and� GHC29.99� for� Accra� and� Kumasi�respectively.�With�a�standard�deviation�(std)�of�30.01�and�11.49�and�a�computed�Z�statistic�of�5.50,� the� results�of�Primary� school� tuition� fee� in� the� two� towns�of�Accra�and�Kumasi� show�a�statistically�significant�difference�establishing� that� the� fees�charged�by� the�schools� in� the� two�towns�are�not�the�same.���The�mean�tuition�fee�at�JHS�is�GHC75.72�and�GHC44.46�for�Accra�and�Kumasi�respectively.�With�a�standard�deviation�(std)�of�42.04�and�18.40�and�a�computed�Z�statistic�of�5.75,�the�results�of�

Page 39: Final Ghana Country Report - Edify · Final Ghana Country Report: Market Research Project on Low Income Private Schools Prepared for IFC by CDC Consult Limited 3 October,2010 Section

Final�Ghana�Country�Report:��Market�Research�Project�on�Low�Income�Private�Schools� ��

�� Prepared�for�IFC�by�CDC�Consult�Limited�������������������������������������39�����������������������������������������������������������������October,2010�

JHS�tuition�fee�in�the�two�towns�of�Accra�and�Kumasi�show�a�statistically��significant�difference�establishing�that�the�fees�charged�by�the�schools�in�the�two�towns�are�not�the�same.���The� results� from� the� statistical� analysis� indicate� that� location� of� the� low� income� school� has�influence�over�the�level�of�fees�that�is�charged.��On� feeding� fees�charged�at�all�categories,�the�analysis�established�results�that�are�statistically�significant�reflecting�differences� in�price� level�of� foodstuff�at� the� locations.�The�computations�are�presented:�� Mean� Standard�Deviation� Computed� Z�

Statistics�

Feeding�Fees�Pre�School(GHC)� 37.59 30.49 14.06 10.09� 3.41

Feeding�Fees�Primary�School�(GHC)� 37.76 30.59 14.99 9.93� 3.33

Feeding�Fees�E�JHS�(GHC)� 40.14 34.02 15.72 10.05� 2.74(5%�level�of�Significance)��Low�income�schools�income�structure�Low� income�schools�generate� income�from�three�main�sources:�tuition,�feeding,�extra�classes.�Tuition�fees�is�the�highest�reported�component�of�income�but�its�definitions�is�not�standardized�among�the�schools.�Some�schools�lump�all�fees�charged�into�a�bulk�tuition�fee�and�others�have�clear�differences�among�the�various�categories�of�fees.�Average�composition�of�income�over�the�three�year�period�is�presented�in�table�4.16.��With�the�proportion�of�tuition�and�extra�class�fees,�any� change� in� school� fee� levels� or� enrolment�will� have� effect� on� the� revenue� base� of� the�schools.���Table�4.16:�Income�Structure��� Accra� Kumasi� Combined�

Tuition� 48% 28%� 44%

Feeding� 18% 32%� 20%

Extra�Class� 33% 39%� 34%

Other�Fees� 1% 1%� 1%

Average�Total�Income�(GHC����������53,546(USS38,247)�

����������������32,570�(US$23,264)��

�������73,754(52,681)�

Source:��Low�Income�Private�Schools�Survey�

��

Page 40: Final Ghana Country Report - Edify · Final Ghana Country Report: Market Research Project on Low Income Private Schools Prepared for IFC by CDC Consult Limited 3 October,2010 Section

Final�Ghana�Country�Report:��Market�Research�Project�on�Low�Income�Private�Schools ��

� Prepared�for�IFC�by�CDC�Consult�Limited�������������������������������������������������������������40����������������������������������������������������������������������������������������������������������������������������October,2010��

Table�4.17:�Analysis�of�Fees�Charged�by�Low�Income�Schools��

School�Fees� GH¢�30�and�Below�Between�GH¢31�XGH¢�50�

Between�GH¢�51�and�100� Above�GH¢�100�

School�Category�Pre�

School� Primary� JHS�Pre�

School� Primary� JHS�Pre�

School� Primary� JHS�Pre�

School� Primary� JHS�

Nos.�of�Schools�X�Accra� 25� 17� 3� 34� 28� 11� 11� 16� 17� 3� 4� 9�

Nos.�of�Schools���Kumasi� 51� 37� 10� 10� 20� 12� 0� 0� 8� 0� 0� 0�

Combined�

Number� 76� 54� 13� 44� 48� 23� 11� 16� 25� 3� 4� 9�

%� 57%� 45%� 18%� 33%� 40%� 33%� 8%� 12%� 36%� 2%� 3%� 13%�

Median�in�GHC� 20� 20� 15� 40� 40.5� 45� 68� 72.5� 60� 130� 132� 145�

Page 41: Final Ghana Country Report - Edify · Final Ghana Country Report: Market Research Project on Low Income Private Schools Prepared for IFC by CDC Consult Limited 3 October,2010 Section

Final�Ghana�Country�Report:��Market�Research�Project�on�Low�Income�Private�Schools� ��

� Prepared�for�IFC�by�CDC�Consult�Limited������������������������������������������������������41��������������������������������������������������������October,2010���

School�fee�collection�rates�School� fee� collection� remains� a� challenge� for�����������������most� private� schools� including� low� income�schools.� The� schools� have� adopted� different�strategies� to� address� this� collection� problem�including� daily� fee� payment�where� parents� are�encouraged� to� pay� fees� on� daily� basis� in� small�bits.� �In�other�cases,�they�are�allowed�to�pay�on�installment� basis.� � An� analysis� of� fees� that�remain�uncollected�at�the�end�each�school�term�is�presented�on�the�right.��

Out�of�the�130�schools�that�reported�delays�in�fee�collections,�72�are�in�the�Accra�zone�and�58�are�in�Kumasi�zone.�Low�income�schools�in�Accra�have�more�problems�with�collecting�fees�than�schools�in�Kumasi.�The�ability�to�collect�fees�on�location�basis�is�presented�in�table�4.18.��

Table�4.18:�Fee�Collection�Proportion� of� fees� not�collected�at�end�of�school�term�

Accra Kumasi�Nos.�of�schools Proportion�of�

schools�(%)�Nos.�of�schools Proportion�of�

schools�(%)�Below�10%� 23 32 20� 32Between�11%�20%� 22 30 20� 32Between�21%�30%� 15 21 9� 14Above�30%� 12 16 9� 14

Source:�Low�Income�Private�Schools�Survey��

The�ability�to�collect�fees�has�implications�for�cash�flow�management�in�low�income�schools�and�has�to�be�understood�by�all,�especially�school�management�and�financing�institutions.�This�has�resulted�in�loan�repayment�defaults�on�the�part�of�some�school�that�accessed�credit.��

Cost�structure�and�profitability��Using�common�size�ratio�analysis,�the�estimated�costs�and�revenues�for�different�revenue�ranges�of�the�low�income�schools�surveyed�is�presented�in�table�4.19.��

Table�4.19:�Combined�Common�Size�Ratios�X�2009/2010�Revenue�Range� Up�to GHC20,000 GHC20,001�X

GHC50,000�GHC50,001�X�GHC100,00�

Above�GHC100,000�

Average�Revenue�(GHC)� 7,982 31,774 74,451� 137,610

�� %� Amount Amount Amount� Amount

Staff�Costs� 42%� ����3,352� 13,345 �� 31,269��� 57,796 ��

Training�Costs� 1%� 80 �� 318 �� 745��� 1,376 ��

Admin.�Costs� 7%� 559 �� 2,224 �� 5,212��� 9,633 ��

Other�Expense� 6%� ���479� 1,906 �� 4,467��� 8,257 ��

�Total�Costs�

��4,470�

��17,793�

���41,693��

��77,062�

Source:��Low�Income�Private�Schools�Survey;�[US$�1:�GH¢1.4]�

Proportion�of�fees�not�collected�at�end�of�school�term�

Nos.�of�schools�

Proportion�of�schools�

(%)�

below�10%��43� 32�

between�11%�20% 42� 31between�21%�� 30% 24� 18above�30% 21� 15Source:�Low�Income�Private�Schools�Survey�

Page 42: Final Ghana Country Report - Edify · Final Ghana Country Report: Market Research Project on Low Income Private Schools Prepared for IFC by CDC Consult Limited 3 October,2010 Section

Final�Ghana�Country�Report:��Market�Research�Project�on�Low�Income�Private�Schools� ��

� Prepared�for�IFC�by�CDC�Consult�Limited�����������������������������������������42�������������������������������������������������������������������October,2010���

Based�on�the�cost�structure,�profitability�of�low�income�schools�before�interest�payment�and�taxes�is�estimated�at�a�maximum�of�40%�of�revenue�generated.�The�ability�of�low�income�schools�to�make�profit� is�driven�by� the� level�of�revenue�generated�and� the�ability� to�control�cost�such�as�catering�related�cost.�Majority�of� low� income�schools�do�not�assess�their�profitability�due�to�the�nature�of�record�keeping.�For�most�of�the�schools,�the�ability�to�pay�maturing�obligations�such�as�salaries�and�withdraw�money� for� the� needs� of� the� owner/proprietor� implies� that� nbusiness� is� progressingo.�There�is�however�no�doubt�that�low�income�schools�can�be�profitable.���

Asset�and�Liability�profile�of�low�income�schools�Accurate�asset�and�liability�profile�is�best�done�with�financial�statements�which�is�lacking�in�most�of�the� schools.� Balances� relating� to� assets� and� liabilities� were� therefore� obtained� from� abridged�versions� of� management� accounts� and� other� registers.� Low� income� schools^� asset� comprises�building;� furniture;� teaching�and� learning� items�and�debtors.�The� liabilities�component�comprises�loan� balances� for� those� that� have� borrowed� from� financial� institutions� or� friends;� outstanding�salaries�for�staff�and�statutory�payments.����

The� schools� have� very� high� assets� base� compared� to� liabilities� due� to� the� land� and� building�component�of�the�assets.�Land�and�building�represents�an�estimated�60%�of�the�total�asset�value.�Any� utilization� of� the� assets� for� collateral� or� business�merger� purposes� will� however,� require�valuation� to�determine� the� true�cost�of� the�assets.�Table�4.20�presents� the�aggregate�assets�and�liabilities�position�of�the�surveyed�schools.����

Table�4.20:��Asset�and�Liability�Profile�of�Schools�Description� Combined�

2009/10 2008/09� 2007/08Mean�Assets�of�Schools�(GHC)� 99,967 93,229� 83,010

Mean�Liabilities�of�Schools�(GHC)� 12,713 11,013� 8,943

Asset�to�Liability�Ratio�(%)� 786%� 847%� 928%�

� �Median�Asset�of�Schools�(GHC)� 40,000 40,000� 31,031

Median�Liability�of�Schools�(GHC)� 2,000 2,000� 2,000

Asset�to�Liability�Ratio�(%)� 2,000% 2,000%� 1,552%

Source:��Low�Income�Private�Schools�Survey;��[US$�1:�GH¢1.4]�

4.8� Demand�and�Need�for�Financing��

4.8.1�Schools�with�previous�credit�history��99�out�of�136�schools�have�accounts�with�financial� institutions.�It� is�further�estimated�that�all�136�schools�have�financial�institutions�available�to�them�given�the�spread�of�rural�banks�and�savings�and�loans� companies� in� the� Ashanti� and� Greater� Accra� regions� where� the� survey� took� place.� The�challenge�relates�to�the�appropriateness�or�otherwise�of�the�products�and�services�offered�by�these�institutions�for�low�income�schools.�In�analyzing�the�aggregate�demand�and�need�for�financing�we�reviewed� the� school�history�on� financing� in� respect�of� the�number�of� schools� that�have� sourced�credit� from� financial� institutions� in� the�past;�average� size�and� the� interest� rate.�The� findings�are�presented�in�table�4.21.��

Page 43: Final Ghana Country Report - Edify · Final Ghana Country Report: Market Research Project on Low Income Private Schools Prepared for IFC by CDC Consult Limited 3 October,2010 Section

Final�Ghana�Country�Report:��Market�Research�Project�on�Low�Income�Private�Schools� ��

� Prepared�for�IFC�by�CDC�Consult�Limited�����������������������������������������43�������������������������������������������������������������������October,2010���

Table�4.21:�Previous�Credit�History�� Accra Kumasi� Combined

Number�of�Schools�operating�Bank�A/c� 53 46� 99

Number�of�Schools�that�obtained�financing�from�institutions 15 18� 33

Average�Amount�of�loan�obtained�(GH¢) 3,594 6,333� 4,963

Average�Repayment�Period�(month)� 17 17� 17

Average�Interest�Rate�(%)� 43 35� 39

Source:��Low�Income�Private�Schools�Survey;�[US$�1:�GH¢1.4]��

The�average�loan�obtained�by�the�beneficiary�low�income�Schools�is�GH¢4,963�(US$3,545)�with�an�average�amount�of�GH¢3,594� (US$2,567)� for�Accra�Schools�and�GH¢6,333� (US$4,524)� for�Kumasi�Zone�Schools.�A�computed�Z�statistics�gave�1.56,�(at�5%�level�of�significance)�indicating�that�there�is�no�statistically�significant�difference�between�the� loan�amount�received�by�schools� in�and�around�Accra�and�Kumasi,�establishing�that�loan�amounts�are�not�dependent�on�location.��

4.8.2� Estimated�loan�demand�and�purpose�The� surveyed� schools� were� requested� to� estimate� their� financing� needs� with� a�minimum� and�maximum� range�provided� in� the�questionnaire.� In� all,� 119� schools� representing� 88%� of� the� 136�schools�surveyed�expressed�their�need�for�loan�facility.���Based�on�the�analysis�presented� in�table�4.22�on�the�next�page,�total�demand�as�provided�by�the�schools�is�estimated�at�GH¢3,980,032�(US$�2,842,880).�����������������������������������

Page 44: Final Ghana Country Report - Edify · Final Ghana Country Report: Market Research Project on Low Income Private Schools Prepared for IFC by CDC Consult Limited 3 October,2010 Section

Final�Ghana�Country�Report:��Market�Research�Project�on�Low�Income�Private�Schools� ��

� Prepared�for�IFC�by�CDC�Consult�Limited�����������������������������������������44�������������������������������������������������������������������October,2010���

Table�4.22:�Estimated�Loan�Demand�by�Surveyed�Schools�

Descriptions�� �� Accra� Kumasi� Combined�

Nos.�of�Schools�Surveyed� Total�Nos.� 73 63 136�

Schools�with�Bank�Accounts��

Number� 53 45 98�

Proportion� 73% 71% 72%�

Schools� that�have�Accessed� Loans� in�the�Past�

Number� 15 18 33�

Proportion� 21% 29% 24%�

Schools�in�Need�of�Loan��

Number� 60 59 119�

Proportion� 82% 94% 88%�

Estimated�Financing�Need�by�Schools� Total�(GH¢)

GH¢10,000�and�Below�

Number� 10 12 22� ��220,000�Proportion� 17% 20% 18%�

Between�GH¢�10,001�and��GH¢�20,000�

Number� 10 17 27� ��540,000�Proportion� 17% 28% 23%�

Between�GH¢�20,001�and��GH¢�30,000�

Number� 10 4 14� ��420,000�Proportion� 17% 7% 12%�

Between�GH¢�30,001�and�GH¢50,000�

Number� 14 10 24� ��1,200,000�Proportion� 24% 17% 20%�

GHC�50,001�and�Above�

Number� 15 17 32� ��1,600,032�Proportion� 25% 28% 26%�

Estimated�Total�Maximum�Financing�Needs�of�the�Respondent�119�Schools������������������GH¢���

3,980,032�

Estimated�Total�Maximum�Financing�Needs�of�the�Respondent�119�Schools����������������US$� 2,842,880

Source:��Low�Income�Private�Schools�Survey;�[US$�1:�GH¢1.4]��The�schools�have�multiple�needs�they�intend�to�apply�the�desired�loans�to�including�infrastructure,�school� vehicle,� repairs� to� existing� building� and� equipment.� 89� schools� representing� 80%� of� the�schools�in�need�of�loan�require�the�facilities�for�infrastructure�expansion;�48%�require�financing�for�repairs� and� 50� schools� require� financing� to� acquire� a� school� bus.� The� respective� needs� are�presented�in�table�4.23�on�the�next�page.��

Page 45: Final Ghana Country Report - Edify · Final Ghana Country Report: Market Research Project on Low Income Private Schools Prepared for IFC by CDC Consult Limited 3 October,2010 Section

Final�Ghana�Country�Report:��Market�Research�Project�on�Low�Income�Private�Schools� ��

� Prepared�for�IFC�by�CDC�Consult�Limited�����������������������������������������45�������������������������������������������������������������������October,2010���

Table�4.23:�Application�of�Desired�Loans�

Location� Accra� Kumasi� Combined�

Total�Schools�in�Need�of�Financing� 59 60� 119

Area�of�Need�/�Financing�Need�

Operational/Working�Capital�Needs�

Nos.� 7 13� 20

Proportion� 12% 22%� 17%

Repairs� and� Maintenance� �� Building� &�Equipment�

Nos.� 23 34� 57

Proportion� 39% 57%� 48%

Infrastructure�Expansion�Nos.� 50 45� 95

Proportion� 85% 75%� 80%

Teaching�and�Learning�Aids�Nos.� 11 8� 19

Proportion� 19% 13%� 16%

School�Vehicle/Bus�

Nos.� 21 29� 50

Proportion� 36% 48%� 42%

Furniture�and�Fittings�Nos.� 10 17� 27

Proportion� 17% 28%� 23%

Source:�Low�Income�Private�Schools�Survey�

�It� needs� to� be� clarified� that� infrastructure� expansion� for� example� can� be� expensive� and� the�estimates�provided�by�school�owners�may�not�be�adequate�for�the�work�required�to�be�done.�Each�low�income�school�will�have�to�be�assessed�on�its�own�merit�to�determine�actual�amount�required.��4.9����Borrowing�and�Repayment�Capacity�of�Low�Income�Schools��Do� low� income�schools�have� the�capacity� to�borrow�and�service� the�required� loan� facilities?�This�question�was�analyzed�from�the�perspective�of�the�schools�without�reference�to�the�willingness�of�the� financial� institutions� to� extend� credit� facilities� to� them.� The� analysis� was� based� on� the�assumption� that�every�business�with�a�good�cash� flow�has� the�potential� to�attract� financing.�On�that� basis� all� low� income� schools� have� the� capacity� to� borrow� and� service� loans� that� are�appropriate�to�their�cash�flows.��In�determining� the� schools^�maximum�one,� two�and� three�year� loan� size�an�estimated� free� cash�flow�approach�was�used�based�on�a�number�of�assumptions.� �These�are�discussed� further� in� the�subsection.��

Page 46: Final Ghana Country Report - Edify · Final Ghana Country Report: Market Research Project on Low Income Private Schools Prepared for IFC by CDC Consult Limited 3 October,2010 Section

Final�Ghana�Country�Report:��Market�Research�Project�on�Low�Income�Private�Schools� ��

� Prepared�for�IFC�by�CDC�Consult�Limited�����������������������������������������46�������������������������������������������������������������������October,2010���

4.9.1� Assumptions�and�approach�used�in�determining�potential�demand�for�loans�by�low�income�private�schools�

Revenue:���The� low� income�schools�were�categorized� into� four�revenue�blocks�on�the�basis�of�the�estimated�2009�financial�year�performance�(with�input�from�2009/2010�academic�year)�as�follows:��Table�4.24:�Revenue�Ranges�of�Low�Income�Schools�Nos.� Revenue�Ranges�GH¢� Revenue�Ranges�US$

1. � Revenue�of�up�to�GH¢20,000� Up�to�14,285

2. � Revenue�from�GH¢20,001�to�50,000� 14,286�E 35,714

3. � Revenue�from�GH¢50,001�to�100,000� 35,715�E 71,429

4. � Revenue�from�GH¢100,001�and�above Above�71,430

�Two�scenarios�of�revenue�base�were�created�as�follows:�

1. Average� revenue� for� schools�built�on� the� financial� information�provided�by� the� schools�or�as�computed�by�the�Research�team;���

2. Average�revenue�as�computed�in�(1)�above�enhanced�by�30%.��The�enhancement�is�to�account�for�possible�understatement�of� revenue�which� is�normally�attributed� to�poor� record�keeping�and�other�related�practices.��

�Expenses:�Average� expenses�were� also� categorized� into� four� different� elements:� staff� costs;� staff� training�costs;�administrative�costs;�and�other�expenses.� �For�each�of� these�costs�a�derived�proportion�of�revenue,�based�on�the�cost�structure�of�the� low� income�schools� is�used�to�estimate�the�expenses�for�the�revenue�block.�

�Free�Cash�Flow:�Deriving�from�the�assumption�that�revenue�and�expenses�are�cash�based,�an�estimated�free�cash�flow�was�adopted�for�each�revenue�block.��

�Estimation�of�Borrowing�Capacity:�In�estimating�the�borrowing�capacity�of�schools�in�each�revenue�block�an�average�loan�amount�was�determined�for�each�block�based�on�the�average�free�cash�flow�and�the�duration�of�the�loan.��It�is�assumed� that�75%�of� the�estimated� free�cash� flow� in�each� revenue�category�will�be�available� to�service�debt�obtained� including�principal� and� interest� repayments.� � This�will� ensure� a�minimum�debt� service� ratio�of� 1.33� times� (most� financing� institutions�will�demand�minimum�debt� service�coverage�of�1.30�times).��

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Final�Ghana�Country�Report:��Market�Research�Project�on�Low�Income�Private�Schools� ��

� Prepared�for�IFC�by�CDC�Consult�Limited�����������������������������������������47�������������������������������������������������������������������October,2010���

Annual� Interest� rate� is� assumed� at�35%.� � This�was�determined�by� considering�both� the� average�interest� rate�of�37%�at�which� low� income�private� schools�have�obtained� financing�and�declining�bank�interest�rates�since�the�beginning�of�2010.���Potential�Demand:�The� potential� demand� for� loan�was� determined� by� considering� the� number� (frequency)� of� low�income�schools�in�each�revenue�block�and�the�maximum�loan�amount�obtainable�for�1�year,�2�years�and�3�years.�

4.9.2� Estimated�Capacity�Based�on�the�analysis,�the�capacity�of�low�income�schools�to�borrow�under�the�average�revenue�for�schools�built�on�the�given� information�or�as�computed�by�the�research�team�(scenario�1)�and�the�30%�enhanced�revenue�model�(scenario�2)�is�presented�below:��Table�4.25:�Aggregate�Borrowing�Capacity�Borrowing�Time�Frame� Aggregate�Borrowing�Capacity

Scenario�1(GH¢)

Scenario�1�(US$)

Scenario�2(GH¢)

Scenario�2�(US$)�

1�Year� 707,395 505,282 919,518 656,799�

2�Years�� 1,208,260 863,042 1,570,774 1,121,981�

3�Years� 1,563,151 1,116,536 2,032,053 1,451,466�

�Source:�Consultant�Estimation�

The�scenarios�on� the�next� two�pages�provide�a� framework�within�which� the� indicative�maximum�loan� amounts�of� schools�will�be�determined.� � This� framework�notwithstanding,�each� school�will�have�to�be�subjected�to�a�detailed�appraisal�to�determine�actual�borrowing�capacity.�

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Final�Ghana�Country�Report:��Market�Research�Project�on�Low�Income�Private�Schools� ��

� Prepared�for�IFC�by�CDC�Consult�Limited�����������������������������������������48�������������������������������������������������������������������October,2010���

��� ��

SCENARIO� 1:� COMBINED� BOROWING� CAPACITY� OF�SCHOOLS� � ON� THE� BASIS� OF� ESTIMATED� REVENUE�PROVIDED�BY�LOW�INCOME�SCHOOLS�

�� �� REVENUE�RANGE� ��

��

%�of�Revenue�

Up�to�GHC20,000

GHC20,001���

50,000�

GHC50,001�X�100,000�

Above�GHC100,000� ��

Average�Revenue� 100%� ��������14,744� ��������31,774� ����������74,451�� �����������137,610�

�� �� �� ��

Staff�Costs� 42%� ����������6,192� ��������13,345� ����������31,269�� �������������57,796�

Training�Costs� 1%� �������������147� ��������������318� ���������������745�� ���������������1,376�

Admin.�Costs� 7%� ����������1,032� �����������2,224� ������������5,212�� ���������������9,633�

Other�Expense� 6%� �������������885� �����������1,906� ������������4,467�� ���������������8,257�

Total�Expense� ����������8,257� ��������17,793� ����������41,693�� �������������77,062�

�� �� �� ��

Estimated�Free�cash�flow�� ����������6,487� ��������13,981� ����������32,758�� �������������60,548�

75%�of�Free�cash�flow���1�year� 75%� ����������4,866� ��������10,485� ����������24,569�� �������������45,411�

75%�of�Free�cash�flow���1�year� 75%� ����������9,731� ��������20,971� ����������49,138�� �������������90,823�

75%�of�Free�cash�flow���1�year� 75%� ��������14,597� ��������31,456� ����������73,706�� �����������136,234�

One�Year�Loan�with�No�Moratorium�and�@�Annual�Interest�Rate�of�35%�

Highest�Loan�Amount� �������������4,056� �����������8,741� ����������20,482�� �������������37,856�

Total�Interest�Payment� ����������������809� �����������1,744� ������������4,087�� ���������������7,555�

Total�Payment� �������������4,866� ��������10,485� ����������24,569�� �������������45,411�

DSCR� ���������������1.33� �������������1.33� ��������������1.33�� �����������������1.33�

Two�Year�Loan�with�No�Moratorium�and�@�Annual�Interest�Rate�of�35%�

Highest�Loan�Amount� �������������6,928� ��������14,931� ����������34,987�� �������������64,668�

Total�Interest�Payment� �������������2,803� �����������6,039� ����������14,150�� �������������26,154�

Total�Payment� �������������9,731� ��������20,971� ����������49,138�� �������������90,823�

DSCR� ���������������1.33� �������������1.33� ��������������1.33�� �����������������1.33�

Three�Year�Loan�with�No�Moratorium�and�@�Annual�Interest�Rate�of�35%�

Highest�Loan�Amount� �������������8,964� ��������19,316� ����������45,260�� �������������83,656�

Total�Interest�Payment� �������������5,633� ��������12,140� ����������28,446�� �������������52,578�

Total�Payment� ����������14,597� ��������31,456� ����������73,706�� �����������136,234�

DSCR� ���������������1.33� �������������1.33� ��������������1.33�� �����������������1.33�

Potential� Demand� for� Loans�(GH¢)� �� �� �� �� �Total�Demand�

Frequency� ����������������119� ����������������12� ��������������������4�� �����������������������1� ������������������136�

Potential�demand�for�1�year�loan� ��������482,719� ������104,893� ����������81,927�� �������������37,856� �����������707,395�

Potential�demand�for�2�year�loan� ��������824,465� ������179,178� �������139,949�� �������������64,668� �������1,208,260�

Potential�demand�for�3�year�loan� �����1,066,659� ������231,794� �������181,041�� �������������83,656� �������1,563,151��� ��

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Final�Ghana�Country�Report:��Market�Research�Project�on�Low�Income�Private�Schools� ��

� Prepared�for�IFC�by�CDC�Consult�Limited�����������������������������������������49�������������������������������������������������������������������October,2010���

�� ��

SCENARIO�2:�BORROWING�CAPACITY�UNDER�ENHANCED�REVENUE(Base�revenue�increased�by�30%)�

�� �� REVENUE�RANGE� ��

��

%�of�Revenue�

Up�to�GHC20,000

GHC20,001��50,000�

GHC50,001�X�100,000�

Above�GHC100,000�

� ��

Average�Revenue� 100%� ��������14,744� ��������31,774� ����������74,451�� �����������137,610�

Average�Revenue�(increased�by�30%)� 100%� ��������19,167� ��������41,306� ����������96,786�� �����������178,893�

Staff�Costs� 42%� ����������8,050� ��������17,349� ����������40,650�� �������������75,135�

Training�Costs� 1%� �������������192� ��������������413� ���������������968�� ���������������1,789�

Admin.�Costs� 7%� ����������1,342� �����������2,891� ������������6,775�� �������������12,523�

Other�Expense� 6%� ����������1,150� �����������2,478� ������������5,807�� �������������10,734�

�� �� �� ��

Total�Expense� ��������10,734� ��������23,131� ����������54,200�� �����������100,180�

�� �� �� ��

Free�cash�flow�� ����������8,434� ��������18,175� ����������42,586�� �������������78,713�

75%�of�Free�cash�flow���1�year� 75%� ����������6,325� ��������13,631� ����������31,939�� �������������59,035�

75%�of�Free�cash�flow���1�year� 75%� ��������12,650� ��������27,262� ����������63,879�� �����������118,069�

75%�of�Free�cash�flow���1�year� 75%� ��������18,976� ��������40,893� ����������95,818�� �����������177,104�

One�Year�Loan�with�No�Moratorium�and�@�Annual�Interest�Rate�of�35%�

Highest�Loan�Amount� �������������5,273� ��������11,363� ����������26,626�� �������������49,214�

Total�Interest�Payment� �������������1,053� �����������2,268� ������������5,314�� ���������������9,821�

Total�Payment� �������������6,325� ��������13,631� ����������31,939�� �������������59,035�

DSCR� ���������������1.33� �������������1.33� ��������������1.33�� �����������������1.33�

Two�Year�Loan�with�No�Moratorium�and�@�Annual�Interest�Rate�of�35%�

Highest�Loan�Amount� �������������9,007� ��������19,411� ����������45,483�� �������������84,068�

Total�Interest�Payment� �������������3,643� �����������7,851� ����������18,396�� �������������34,001�

Total�Payment� ����������12,650� ��������27,262� ����������63,879�� �����������118,069�

DSCR� ���������������1.33� �������������1.33� ��������������1.33�� �����������������1.33�

Three�Year�Loan�with�No�Moratorium�and�@�Annual�Interest�Rate�of�35%�

Highest�Loan�Amount� ����������11,652� ��������25,111� ����������58,838�� �����������108,753�

Total�Interest�Payment� �������������7,323� ��������15,782� ����������36,980�� �������������68,351�

Total�Payment� ����������18,976� ��������40,893� ����������95,818�� �����������177,104�

DSCR� ���������������1.33� �������������1.33� ��������������1.33�� �����������������1.33�

Potential� Demand� for� Loans�(GH¢)� �� �� �� �� �Total�Demand�

Frequency� ����������������119� ����������������12� ��������������������4�� �����������������������1� ������������������136�

Potential�demand�for�1�year�loan� ��������627,440� ������136,361� �������106,503�� �������������49,214� �����������919,518�

Potential�demand�for�2�year�loan� �����1,071,842� ������232,930� �������181,933�� �������������84,068� �������1,570,774�

Potential�demand�for�3�year�loan� �����1,386,614� ������301,332� �������235,354�� �����������108,753� �������2,032,053��� ��

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Final�Ghana�Country�Report:��Market�Research�Project�on�Low�Income�Private�Schools� ��

� Prepared�for�IFC�by�CDC�Consult�Limited�����������������������������������������50�������������������������������������������������������������������October,2010���

4.10�����Socio�Economic�Conditions�of�Locations�

The� survey�of� low� income� schools�was�undertaken� in�80� communities� selected� from�within� and�around�the�two�towns�of�Accra�and�Kumasi.�Although�these�communities�are�physically�apart�they�have� similar� socio� economic� conditions.� The� districts� in�which� the� communities� are� located� are�predominantly� rural�with� over� 65%� of� the� labour� force� engaged� in� agricultural� activities�which�include:�crop�farming,�fishing,�livestock�rearing,�forestry�and�a�host�of�non�farm�economic�activities�such�as�petty�trading,�transport�business�(mainly�tro�tro),�dressmaking,�quarrying�and�construction�among�others.��

�In�the�communities�that�are�peri�urban,�the�economic�activities�are�more�formal�comprising�office�or� industrial� type�of�work.�There�are�also�a�sizeable�number�of�people�who�work� in� the� informal�urban�economy�trading�in�a�variety�of�items.�The�income�levels�of�the�residents�in�the�communities�are�generally�low,�ranging�from�GH¢50�to�GH¢300�(US$36�to�US$215)�a�month.���The�relatively�low�income� level� is�one�of�the�reasons�why� low� income�schools�tend�to�serve�the� interest�of�those� in�rural�communities�and�are�constrained�in�the�level�of�fees�to�charge.�

�The�road�networks� in�the�communities�on�the�outskirts�are�generally�poor�making� it�unattractive�for�vehicle�use.�The�road�network�in�the�urban�districts�and�semi�urban�areas�however,�have�much�better�surface�conditions�than�those�found�in�the�rural�districts.��

�The� communities� in� which� low� income� schools� are� found� are� also� characterized� mostly� by�uncompleted� buildings� and� very� poor� environmental� conditions.� The� uncompleted� buildings� are�normally� occupied� by�workmen� and� labourers� (some� have�migrated� from� other� poorer� areas),�some�sending�their�wards�to�low�income�schools.��Anytime�these�houses�are�completed�the�owners�ask�the�occupants�to�relocate�and�children�are�withdrawn�from�the�schools.�Some�of�the�areas�lack�electricity�notwithstanding�government�efforts�at�rural�electrification�and�water.���The�school�structures� in�such� low� income�areas�generally�reflect�the�socio�economic�status�of�the�area�and�are�mostly�of�made�of�wood.�The�schools�lack�basic�facilities�such�as�toilets�and�urinal�for�teachers� and� pupils,� limited� furniture� and� text� books.� � A� number� of� the� schools� in� these�communities�have�classroom�floors�that�are�not�floored�with�cement.���Given�the�socio�economic�conditions,�low�income�schools�are�unable�to�attract�and�retain�qualified�and�trained�teachers.����The� socio� economic� conditions� are� not�wholly� one� of� deprivation� and� poverty.� There� is� social�cohesiveness�and�engagement�of�communal�labour�to�improve�on�the�lot�of�residents.�Majority�of�the�residents,�both�men�and�women�are�very�hardworking.�It�is�this�desire�to�improve�on�one^s�lot�that�has�motivated�some�of�the�residents�to�send�their�children�and�wards�to�private�schools.���

Page 51: Final Ghana Country Report - Edify · Final Ghana Country Report: Market Research Project on Low Income Private Schools Prepared for IFC by CDC Consult Limited 3 October,2010 Section

Final�Ghana�Country�Report:��Market�Research�Project�on�Low�Income�Private�Schools� ��

� Prepared�for�IFC�by�CDC�Consult�Limited�����������������������������������������51�������������������������������������������������������������������October,2010���

SECTION�5.0:�� FINDINGS�ON�PARENTS�WITH�CHILDREN�IN�LOW�INCOME�PRIVATE�SCHOOLS�

5.1� Introduction�

The� section� presents� findings� relating� to� parents� and� guardians�with� children� and�wards� in� low�income�private�schools�surveyed.��The�analysis�cover�the�background�of�parents,�income�level�and�portion�of� income�spent�on�education.� �A� total�of�105�parents� from� the�Accra�and�Kumasi�zones�were�interviewed.�

5.2� Occupational�Background�of�Parents�

The�parents�who�send� their�wards� to� low� income�schools�are�mostly� resident� in� the� low� income�communities.�A�number�of�them�work�within�the�communities�and�others�work�outside�either�on�permanent�basis�or�as�casuals�and�temporary�staff�depending�on�availability�of� job�opportunities.��The�occupational�distribution�of� those� interviewed� is�presented� in� figure�5.1.�76%�of� the�parents�from�the�Kumasi�zone�are�self�employed�compared�to�44%�self�employed�from�the�Accra�zone.�Self�employment� is�varied�and� includes�petty� trading,�hairdressing�saloon,�selling�of�phone�cards�and�cooked� food.� �46%�of�respondent�parents� in� from�Accra�zone�are�private�sector�salaried�workers�compared� to�7%� in�Kumasi.�Private�salaried�workers� include� those�who�work�as�shop�attendants�and�clerks.�

Figure�5.1:�Occupational�Distribution�of�Parents�and�Guardians�on�Location�

0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

Student Public/CivilServiceSalariedWorker

PrivateSectorSalariedWorker

PrivateSector�SelfEmployed

Unemployed

0.02�0.08�

0.46� 0.44�

0�0.018181818�0.054545455�0.072727273�

0.763636364�

0.090909091�

Accra

Kumasi

Parents�and�guardians�of�pupils�attending� low� income�private�schools�cut�across�all� levels�of� the�social� and� occupational� ladder� although� majority� of� them� are� self�employed� in� the� informal�segment� of� the� private� sector� or� work� for� other� informal� and� small� businesses.� Some� of� the�respondent�parents�have�not�benefitted�from�formal�education�and�others�dropped�out�of�school�

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Final�Ghana�Country�Report:��Market�Research�Project�on�Low�Income�Private�Schools� ��

� Prepared�for�IFC�by�CDC�Consult�Limited�����������������������������������������52�������������������������������������������������������������������October,2010���

but�are�determined�to�provide�their�wards�with�quality�education�that�they�never�had�or�failed�to�take�advantage�of.��

5.3� Income�Level�of�Parents�

Disclosure�of�income�level�is�one�difficult�area�of�interview�conduct�and�most�respondents�are�not�specific�on� their� income� levels.�The� research� team�made�efforts� to�ascertain� the� income� level�of�parents�and�guardians�with�children�and�wards� in� low� income�schools�using�a�range�approach� to�make�respondents�more�comfortable�to�provide� indications�on�their�earnings.� �As�noted,�majority�of�respondent�parents�are�private�sector�self�employed.� �This�group� is� largely�made�up�of�artisans�including�carpenters,�masons�and�traders.� �The�monthly� income�range�distribution� is�presented� in�figure�5.2�for�the�Accra�and�Kumasi�zones.��Figure�5.2:�Monthly�Income�Range�Distribution��

One�needs�a�good�understanding�of�the�occupation�of�the�respondent�parents�to�understand�the�income� levels.� A� number� of� the� respondents� are� on� daily�wages� and� not�monthly� salary.�Most�artisans� for�example�work�on�what� is� termed� nby�dayo� (daily�basis)�and� sometimes�do�not�have�work�to�do� for�a�full�month.�For�most�of�these�people,�they�have�to�do�other�menial� jobs�on�the�side�to�enhance�their�earnings.�53%�of�the�respondents�from�Accra�zone�reported�that�they�earn�below� GH¢150� on� monthly� basis� compared� to� 38%� of� respondents� from� Kumasi.� � We� have�established�that�there� is�statistically�significant�difference�between�towns�and� income�range�with�the�p�value� (0.022)� less� than� the� level�of� significance�of�0.005.�Parents� in�Accra�earn�more� than�parents�in�Kumasi.�

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Final�Ghana�Country�Report:��Market�Research�Project�on�Low�Income�Private�Schools� ��

� Prepared�for�IFC�by�CDC�Consult�Limited�����������������������������������������53�������������������������������������������������������������������October,2010���

5.4� Basis�of�Choice�of�Low�Income�School�

Given� the�availability�of�public� schools� in�or� close� to�most�of� the� communities� in�which� the� low�income�schools�are�established�and�with�lower�school�fees,�there�should�be�good�reasons�why�low�income�parents�will�opt�for�private�schools.�Respondents�gave�various�reasons�for�the�choices�they�have�made.��Forty�four�(44)�parents�representing�42%�of�respondents�cited�the�performance�of�the�schools� as� the� main� factor� in� selecting� the� schools.� Performance� is� linked� to� the� effort� and�commitment�by�teachers,�level�of�discipline�and�genuine�interest�in�the�development�of�the�pupils.�Most�of�these�attributes�are�nonexistent�in�the�public�schools�located�in�low�income�communities�thus�convincing�parents�to�send�children�to�low�income�private�schools,�the�financial�commitment�notwithstanding.�Other�considerations�include�proximity�and�quality�of�teachers.���25%�of�the�respondents�however,�could�not�give�any�reason�for�their�choice.��To�them�it�may�be�the�issue�of�availability�and�access.��

The�factors�provided�are�presented�in�table�5.1.��Table�5.1:��Factors�Considered�by�Parents�in�the�Choice�of�Schools�Factors�� Accra Kumasi Combined�

% % %�No�reason�� 16 33 25�Level�of�School�Fees�� 2 0 1�Proximity�� 22 15 18�Quality�of�Teachers�� 16 4 10�Performance�of�School� 42 42 42�Others�� 2 7 5�

5.5� Estimation�of�Proportion�of�Income�Spent�on�Education�

Parents�with�wards� in� low� income�schools� incur�expenses�related� to� the�education�of�children� in�various� areas� including� school� fees� (tuition),� textbook� cost� and� transport� cost� in� some� cases.�However�majority� of� parents� do� not� keep� records� on� these� expenses� but�were� able� to� provide�estimates� on� education� related� expenditure.� In� estimating� the� proportion� of� income� spent� on�education,�the�research�team�adopted�an�approach�that�determined�the�median�of�the�education�related�expenditure.��The�median�was�thereafter�applied�to�the�monthly�income�ranges�to�estimate�the�proportion�of�monthly�income�spent�on�education.��The�results�of�the�analysis�are�presented�in�table�5.2.�

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Final�Ghana�Country�Report:��Market�Research�Project�on�Low�Income�Private�Schools� ��

� Prepared�for�IFC�by�CDC�Consult�Limited�����������������������������������������54�������������������������������������������������������������������October,2010���

Table�5.2:�Parentsj�Proportion�of�Income�Spent�on�Education��Income�Range� Below�

GH¢150�Between�GH¢150�and�GH¢250�

Between�GH¢251�and�GH¢350�

Between�GH¢351�and�GH¢500�

Above�GH¢500�

Median�Amount��Spent�on�Education�Per�Child�(GHC)�

72 72 72 72� 72

Proportion�of�Income�on�Education��Per�Child�

48%�and�above�

Between�29%�and�48%�

Between�21%�and�29%�

Between�14%�and�21%�

14%�and�less�

Number�of�Respondent�Parents��in�Income�Category�

46 41 11 3� 2

Percentage�of�Respondents�in�Category� 44% 39% 10% 3%� 2%

Mean:��1.252��� Standard�deviation:�1.281� P�value:�0.22��

�44%�of�parents�surveyed�earn�less�than�GHC�150�per�month�and�spend�about�half�of�the�declared�amount�(48%)�on�the�education�of�one�child.�In�the�event�of�more�than�one�child�the�proportion�of�income�spent�on�education�is�expected�to�increase.����The�analysis�established�that�there� is�statistically�significance�relation�between�a�parent^s� income�level�and�how�much�he/she�spent�on�school�fees�per�term.��This�is�supported�by�a�p�value�of�0.022.�The�general�conclusion�on� the� income�proportion� is� that� those�parents� in�higher� income�bracket�will�pay�less�of�their�income�on�education�and�vice�versa.����The�estimated�proportion�of� income�spent�on�education�could�be�one�of� the� reasons� for�default�and�withdrawal�of�pupils�by�some�of�the�parents�who�are�unable�to�pay�their�fees.��������������

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Final�Ghana�Country�Report:��Market�Research�Project�on�Low�Income�Private�Schools� ��

� Prepared�for�IFC�by�CDC�Consult�Limited�����������������������������������������55�������������������������������������������������������������������October,2010���

SECTION�6.0:��FINDINGS�X�FINANCIAL�INSTITUTIONS�SERVING�LOW�INCOME�SCHOOLS�

6.1� Introduction�

The� section�on� findings� from� financial� institutions�presents�a�brief�overview�of�Ghana^s� financial�sector�with�a� focus�on� the�microfinance�subsector.� � It�discusses� the�experiences�of� the�surveyed�institutions�in�dealing�with�low�income�private�schools�bringing�out�the�challenges,�constraints�and�expectations.�It�further�assesses�the�willingness�or�otherwise�of�the�financial�institutions�to�finance�low�income�private�schools�in�the�Accra�and�Kumasi�zones.�

6.2� Overview�of�Ghanajs�Financial�Sector��

Ghana^s�financial�sector�has�seen�a�lot�of�expansion�in�the�number�of�institutions,�branch�network,�technology�deployment� as�well� as�products� and� services�over� the�past� ten� years.� �There� are�29�universal� banks� currently� operating� in� Ghana.� The� branch� network� of� the� universal� banks� is�concentrated�in�the�Greater�Accra�and�Ashanti�Region,�with�63�percent�of�all�branches�(total:�about�700�as�of�December�2009)�concentrated� in�these�two�regions.� In�addition�to�the�universal�banks,�there�are�135�Rural�and�Community�Banks�(RCBs)�which�are�special�small�scale�banks,�established�and�managed�mainly� by�members� of� the� community.� The� number� of� branches�within� the� RCB�group�is�around�560.���In�addition� to� the�RCBs�and�of� relevance� to� the� low� income� schools�are�Savings�and�Loans�Companies�and�Financial�NGOs�which�together�with�the�RCBs� form� the�nucleus�of�Ghana^s�microfinance� sector.�The� Savings�and�Loans� Companies� serve� as� deposit� taking� institutions�which� also� extend�credit� to�most�of� the�operatives� in� the�Micro�and�Small�Scale�Enterprise�(MSME)� sectors.� The� Financial�NGOs� provide� credit� to� small� businesses�including�schools.�Examples�of�FNGOs�include�Sinapi�Aba�Trust,�ECLOF�and�ADRA�Microfinance� Programme.�Most� of� the� FNGOs� until� recently� had�access�to�significant�grants,�and�are�normally�the�first�choice�to� � �manage�grants� on� behalf� of� grant� providing� institutions� and� foundations� with�commitment�towards�social�interventions.��The� main� challenges� confronting� the� financial� institutions� include� poor� quality� loan� portfolios�resulting� from� a� combination� of� inappropriate� products� and�multiple� borrowing� on� the� part� of�clients;�reliance�on�customers^�deposits�most�of�which�are�short�term�in�nature�and�hence�can�only�finance�short�term�requirements�and�poor�understanding�of�some�sectors�of�the�economy�such�as�schools�and�agriculture�which�need�financing.�

6.3� MSME�Sector�and�Financial�Institutions�

Low� income�private�schools�fall� in�the�category�of�micro,�small�and�medium�sized�businesses.�It� is�encouraging�to�note�that�almost�all�financial�institutions�in�Ghana�have�made�statements�to�suggest�

Ghanaas� microfinance�sector� comprises�formal�institutions�such�as� rural� banks� and�savings� and� loans�companies;� semi�formal� institutions�including� financial�NGOs� and� informal�sector� comprising� Susu�Collectors.�

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Final�Ghana�Country�Report:��Market�Research�Project�on�Low�Income�Private�Schools� ��

� Prepared�for�IFC�by�CDC�Consult�Limited�����������������������������������������56�������������������������������������������������������������������October,2010���

they�are�SME� focused.�Most� financial� institutions�especially� the�universal�banks�have�designated�either� specific� departments� or� desks� as� SME� contact� and� service� point.� There� are� however,�numerous�complaints�relating�to�the�extent�to�which�the�financial�institutions�are�able�and�willing�to�support�small�businesses�which�by�extension�will�include�low�income�schools.�

6.4�����Institutions�Interviewed��

A� total� of� 18� financial� institutions� were� interviewed� to� determine� their� involvement� and� or�willingness� to� lend� to� low� income� private� schools.� A� summary� of� the� institution� categories�interviewed�is�presented�in�table�6.1.��Table�6.1:�Category�of�Institutions�Interviewed��Category�of�Financial�Institutions� Number�of�Institutions��in�

Category�Proportion�of�Institutions�in�

Category�(%)Universal�Banks� 1 6

Rural�&�Community�Banks� 4 22

Savings�and�Loans�Companies� 10 56

Financial�NGOs� 1 5

Others�(Finance�House/Susu�Company)�

2 11

Total� 18 100%

Source:�Low�Income�Private�School�Survey�

�The� surveyed� financial� institutions� are� located� in� and� around�Accra� and�Kumasi�with�operations�spread� through� branches� in� towns� in� the� regions.� Details� on� the� respective� institutions� are�presented�in�appendix�3.1.�A�review�of�the�focus�of�the�institutions,�products�and�services�provided�are�further�summarized�in�table�6.2.��Table�6.2:�Surveyed�Institution�Focus,�Products�and�Services�Category�of�financial�institutions� Focus�of�operations Products�&�Services�

Rural�&�Community�Banks� SME�and�individual�operations Savings;�Loans;�Money�transfers.

Savings�and�Loans�Companies� SME�and�Individual�operations Savings;�Loans;�Money�transfer�

Financial�NGOs� Micro�enterprises,�groups�and�individuals�

Loans�only;�Training�

6.5� Operational�Capacity�and�Liquidity�

Respondent�financial�institutions�were�asked�to�comment�on�their�operational�capacity�to�address�the� challenges�of� lending� and�monitoring� to� low� income� schools.� �All�of� them� stated� they�have�adequate� operational� capacity.� The� capacity� includes� the� availability� of� adequate� staff� with�experience� in� lending�to�SMEs� including� low� income�schools;�existence�of�operational�policies�and�procedures�that�guide�work�of�the�staff�of�the�institutions�and�general�SME�experience.���

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Final�Ghana�Country�Report:��Market�Research�Project�on�Low�Income�Private�Schools� ��

� Prepared�for�IFC�by�CDC�Consult�Limited�����������������������������������������57�������������������������������������������������������������������October,2010���

With�respect�to�capacity�building,�personnel�of�most�of�the�respondent� institutions�especially�the�rural�banks�and� savings�and� loans� companies�have� received� training�and�other� capacity�building�intervention� through�development�programmes.� �Capacity�building� including� training�has�been� in�areas�such�as�general�product�development,�risk�management�and�credit�administration.�The�major�challenge�with� capacity� building� for�most�MFIs� has� been� the� truncated� nature� of�most� of� the�training�programmes�and�absence�of� sector� specific� training.�Lending� to� low� income� schools� is�a�specialized�transaction�that�has�to�be�understood�by�staff�of�the�institutions�if�the�needed�support�is�to�be�extended�to�low�income�schools.��A� number� of� the� financial� institutions� that� attended� validation�workshops� to� present� the� draft�findings�on� this� research�admitted� that,� they�do�not�have�a�good�understanding�of� the�business�model�of� low� income�schools�and�this�has�affected�their�capacity�to�reach�out�to�the�schools�with�unique�products�purposely�developed�or�refined�for�low�income�schools.�It�was�agreed�that�offering�the� same� products� available� to� general� businesses� to� low� income� schools�will� not� change� the�structure�of�the�low�income�schools.��Liquidity��Surveyed�institutions�were�asked�about�the�adequacy�of�their�liquidity�position�to�carry�out�general�lending.� �All�of� the� institutions� responded� that� they�have� the�desired� liquidity� to� extend� credit.�However� the� liquidity�position�does�not�debar� the� financial� institutions� from� seeking� funding� for�purposes�of�on�lending�to��low�income�schools.��About�69%�of�the� institutions�stated�they�have�enough�funds�to�on�lend�on�medium�to� long�term�basis.��31%�noted�they�do�not�have�enough�funds�to�on�lend.��About�60%�stated�they�could�source�funds�for�purposes�of�on�lending�and�suggested�that�these�funds�could�be�underwritten�as�part�of�a�guarantee�system.�The�current�challenge�relating�to�liquidity�is�the�potential�mismatch�between�the�assets�and�liabilities.�The�structure�of�deposits�held�by�deposit�taking�MFIs�does�not�favour�medium�to�long�term�funding�which�is�what�is�needed�by�schools�including�low�income�schools.��

6.6�����Private�School�Lending�and�Practices��

Experience�with�lending�to�private�schools�94%�of� the� institutions�have�experience� in�dealing�with�private� schools� in�general�and�89%�have�experience� in�dealing�with� low� income�schools�described�as�schools�with�GES�grading�C�and�D.� In�the� case� of� 13� institutions� including� Sinapi� Aba� Trust� (SAT)� and�Opportunity� Savings� and� Loans�Company�(OSLC),�low�income�schools�constitute�a�special�sector�of�the�institutions^�operations�for�which�separate�departments�and�desks�or�designated�officers�have�been�established� � to�support�the�reach�out�process.�These�institutions�explained�they�have�a�good�understanding�of�low�income�private� schools� and� provide� support� through� the� development� of� appropriate� products� and�capacity�building�to�meet�the�needs�of�the�schools.�The�preferred�methodology�for� lending�to�the�school�is�individual�lending�methodology.��The�experience�of�the�financial�institutions�especially�Sinapi�Aba�Trust�and�Opportunity�Savings�and�

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Final�Ghana�Country�Report:��Market�Research�Project�on�Low�Income�Private�Schools� ��

� Prepared�for�IFC�by�CDC�Consult�Limited�����������������������������������������58�������������������������������������������������������������������October,2010���

Loans�Company�(which�are�partnering�with�other�stakeholders�such�as�IDP�Foundation)�is�relevant�for�the�documentation�of� lessons�on�what�works�and�what�does�not�work� in�this�segment�of�the�schools�market.�The�findings�on�the� involvement�of�financial� institutions�with� low� income�schools�further�indicate�that�financial�institutions�generally�do�not�avoid�low�income�schools.��

Number�and�Value�of�loans�The�14,�institutions�that�provide�loans�to�schools�have�among�them�a�total�of�169�loans�with�a�total�portfolio� value� of� GH¢1,897,211� (US$1,335,151).� The�minimum� and�maximum� loan� values� are�GH¢319� (US$228)�and�GH¢20,000� (US$14,286)� respectively.�Repayment�period� for� the� loans�and�interest�rate�recorded�a�mean�of�14�months�and�51%�per�annum.��With�the�exception�of�the�Financial�NGO�group�(in�this�case�Sinapi�Aba�Trust),� interest�on�private�school�loan�facilities�is�higher�than�other�business�categories.�Analysis�of�interest�rates�charged�by�the�institutions�is�presented�in�table�6.3.��Table�6.3:�Analysis�of�Interest�Rates�

��Overall�Average

All�Enterprises SMEs

Private�Schools�

Universal�Banks� 28% 28% 28% 28%�

Financial�NGOs� 36% 40% 40% 29%�

Rural�and�Community�Banks� 28% 27% 28% 30%�

Savings�and�Loans�Companies� 56% 56% 52% 60%�

Other�Lending�Institutions� 80% 72% 72% 96%��The� interest� rates� for� the� school� sector� as�presented� in� table�6.3� is� rather�high� for�most�of� the�institutions� and� this� is� attributable� to� the� perceived� risk� posed� by� the� low� income� schools� and�indeed�other�private�schools.�In�addition�interest�rates�of�MFIs�are�generally�higher�than�universal�banks� for� various� reasons� including� the� source� of� funding� from�MFI� perspective.� If� the� funding�sources� for� the� financial� institutions� remain� unchanged,� the� cost� of� lending� to� the� schools�will�remain�high�compared�to�other�businesses.�����6.7� Barriers�to�Accessing�Loans�by�Schools�

Respondent�financial�institutions�and�those�which�participated�in�the�validation�workshops�agreed�that� they� have� not� done� enough� to� support� low� income� private� schools.� Various� reasons�were�provided�to�explain�the�current�situation�including�barriers�that�work�against�lending�to�low�income�private�schools.�The�barriers�are�listed:�1. Schools�do�not�possess�standing�collateral�such�as�land�and�building:�most�financial�institutions�

will�only� lend�on� the�basis�of�collateral.�The� fact� that�most�of� the� low� income� schools�do�not�have�the�collateral�implies�that�these�institutions�cannot�access�loans.�In�a�number�of�instances�where� school�premises� could�be� suitable� to� serve�as� collateral,� the� school�proprietors�do�not�have�perfect�documentation�(and�title)�on�the�land�and�buildings.���

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Final�Ghana�Country�Report:��Market�Research�Project�on�Low�Income�Private�Schools� ��

� Prepared�for�IFC�by�CDC�Consult�Limited�����������������������������������������59�������������������������������������������������������������������October,2010���

2. Cash�flow�of�schools�is�very�low�and�servicing�a�loan�would�be�difficult:�financial�institutions�rely�on�a�borroweras�cashflow� in�determining�the�amount�of�credit�to�be�provided.�For�most�of�the�low� income�schools,�financial� institutions�consider�the�cashflow�to�be� low�thus�not�meeting�set�benchmarks.�

3. Risk�of�bad�debt�due�to�un�renewed�certification�from�GES:�Most�financial� institutions�will�only�give� loans� to� low� income� schools� that� have� GES� accreditation.� However,� some� low� income�schools�do�not�have�current�accreditation�or�are�not�recognized.�Financial�institutions�therefore�fear�that�the�schools�could�face�closure�by�the�Education�Service�authorities.�

4. Poor�Management� in� the� Schools:� Quality� of�management� is� a� key� indicator� considered� by�financial� institutions� in� lending� to� businesses.� In� the� case� of� low� income� private� schools,�management� and� governance� framework� remain�weak� and� in� other� cases� are� non�existent.�Financing� institutions�are� therefore�not� comfortable�with� these� schools� to�provide� them�with�credit�facilities.�

5. Profitability� level� of� schools� is� low:� low� profitability� has� implications� for� cashflow� and�most�financial�institutions�are�concerned�that�some�of�the�low�income�schools�have�low�profitability.�

6. High�Delinquency� Levels:� lending� to� low� income� schools�has� resulted� in�delinquency�and�as�a�result,�financial�institutions�do�not�want�to�extend�credit�to�low�income�schools.�For�some�of�the�schools� it�was� established� that� the� facilities�were� used� for� purposes� other� than� those� given�during�the�contracting�stage.��

7. Observation� of� a� Trend� of� Poor� Repayment� has� prevented� some� financial� institutions� from�extending�additional�credit.�

8. Strict� loan� Conditions:� Some� financial� institutions�maintain� a� strict� adherence� to� conditions�which�are�not�met�by�the�low�income�schools.�

9. Inadequate�disclosure�and�transparency�on�the�part�of�low�income�schools.�

The� barriers� could� be� removed� through� the� development� of� products� that� tie� in� with� the�peculiarities�of�the�schools�and�improved�appraisal�and�monitoring.��6.8� Requirements�for�Granting�Loans�to�Low�Income�Schools�

A�review�of�requirements�for�granting� loans�from�the�surveyed�financial� institutions�suggests�that�some�of�the�requirements�such�as�the�submission�of�business�plans,�financial�records�and�cashflow�projections�will�be�difficult� for�majority�of� low� income� schools�unless� they� receive� support� from�business�advisory�service�providers.�A�summary�of�the�general�requirements� is�presented� in�table�6.4�

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Final�Ghana�Country�Report:��Market�Research�Project�on�Low�Income�Private�Schools� ��

� Prepared�for�IFC�by�CDC�Consult�Limited�����������������������������������������60�������������������������������������������������������������������October,2010���

Table�6.4:�Financial�Institution�Requirements�for�Granting�Loans�Requirements�for�granting�loans� Number�of�Institutions� %

Financial�Records�and�Cashflow�Projections�� 11� 25%

GES�Approval�of�School�Documents� 8� 18%

Registration�Document�of�Schools� 2� 9%

Business�Plans� 4� 9%

Cash�collateral/�Other�Collaterals� 4� 9%

Document�on�schools�ownership�Structure� 2� 5%

National�ID�for�Owners� 4� 5%

Schools�Register� 1� 2%

Bus�and�Canteen�Register� 1� 2%

Municipal�/Metropolitan�Permit�to�Operate� 1� 2%

Historical�Bank�Data�on�the�School� 1� 2%

School�Enrolment�Register� 1� 2%

Accreditation�Documents� 1� 2%

Open�a�Savings�Account� 1� 2%

Documented�Board�Resolution� 1� 2%

Loan�Application�Letter�� 1� 2%�

6.9� �Barriers�from�the�Perspective�of�the�Low�Income�Schools�Low�income�schools�in�listing�barriers�to�access�finance�from�their�perspective�noted�the�following:��1. High� interest� rates:�47%�of� respondent� schools�consider� the� rates� judged�by� the�MFIs� serving�

them�as� too�high.� In�cases�where�schools�go�ahead� to�contract� the� loans,� they�do�so�because�there� are� no� alternatives� to� them.� As� a� result� most� low� income� schools� will� not� want� to�approach�financial�institutions�for�loans.�

2. Absence� of� payment� flexibility:� 46%� of� respondent� low� income� schools� noted� the� lack� of�flexibility�in�respect�of�payment�as�a�barrier.�The�requirements�of�repayment�schedules�are�said�to� be� similar� to� those� of� other� businesses� which� generate� continuous� cashflow� instead� of�mapping� the�payment�schedules� to�cashflow�of� the�schools.�This� lack�of� flexibility� is� the�main�cause�of�default�on�repayment�schedules�provided�by�the�financial�institutions.�

3. Short�repayment�duration:�24%�of�respondent�schools�mentioned�short�repayment�duration�as�a�disincentive� in� borrowing� from� the� financial� institutions.� The� nature� of� low� income� school�cashflow� (timing� and� size)� as� well� as� the� purpose� for� loans� which� includes� infrastructure�expansion� and� acquisition� of� teaching� and� learning� materials� will� justify� loan� repayment�duration�of�at�least�36�months�instead�of�the�current�range�of�12�to�14�months�in�most�cases.�

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Final�Ghana�Country�Report:��Market�Research�Project�on�Low�Income�Private�Schools� ��

� Prepared�for�IFC�by�CDC�Consult�Limited�����������������������������������������61�������������������������������������������������������������������October,2010���

4. Other� challenges� reported� include� delays� in� disbursement� on� the� part� of� the� institutions;�demand�for�too�much�documentation�and�general� lack�of� interest� in�providing�facilities�to� low�income�schools�because�they�are�not�considered�as�attractive�businesses�to�be�financed.�

The�promotion�of� improved�relationship�between� low� income�schools�and�MFIs�will�contribute�to�the�removal�of�most�of�the�barriers�listed�by�each�group.�Schools�need�to�understand�the�business�of�financial�institutions�so�as�to�relate�to�them�effectively�and�the�financial�institutions�on�the�other�hand�also�need�to�improve�on�their�understanding�of�low�income�schools�to�partner�with�them.�

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Final�Ghana�Country�Report:��Market�Research�Project�on�Low�Income�Private�Schools� ��

� Prepared�for�IFC�by�CDC�Consult�Limited�����������������������������������������62�������������������������������������������������������������������October,2010���

�SECTION�7.0:� FINDINGS�X�ADVISORY�SERVICE�PROVIDERS�

7.1� Introduction���

The�section�on�Advisory�Services�Providers�discusses�the�demand�and�provision�of�advisory�services�to� low� income� private� schools.� The� section� discusses� available� services� from� the� providers;�willingness�of�providers�to�work�with� low� income�schools;�fee�ranges�and�challenges�perceived�by�the�providers�in�dealing�with�the�low�income�schools.��A�total�of�twenty�E�two�(22)�Advisory�Service�providers�were�interviewed�in�the�Accra�and�Kumasi�Zones.��

7.2� Legal�Structure�of�the�Establishment�

The� legal� status� of� advisory� firms� interviewed� is� in� three� main� categories:� Limited� Liability�Companies,�Sole�Proprietorships�and�Non�Governmental�Organizations.�Majority�of�the�businesses�providing� advisory� service,� (87.5%)� are� registered� as� Limited� Liability� Companies� and� the� other�12.5%� is� shared� respectively�between� the� sole�proprietorships�and� the�NGOs�as� shown� in�Figure�7.1.��Figure�7.1:�Legal�Structure�of�Advisory�Firms�

7.3� Staff�Capacity�

The�capacity�of�Service�Providers�was�assessed�on�the�basis�of�available�staffing.��Deriving�from�this,�the� firms� have� been� grouped� into� three� categories:� small� scale� as� employing� between� 1� to� 5�people;�medium�scale�as�employing�between�6�to�29�people�and� large�scale,�employing�above�30�people.� The� small� scale� and�medium� scale� firms� are� in� the�majority�of� firms�providing�business�advisory�services�as�shown�in�figure�7.2.����

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Final�Ghana�Country�Report:��Market�Research�Project�on�Low�Income�Private�Schools� ��

� Prepared�for�IFC�by�CDC�Consult�Limited�����������������������������������������63�������������������������������������������������������������������October,2010���

Figure�7.2:���Staff�Capacity�of�Advisory�Firms�

7.4� Range�of�Business�Development�Services�Provided����

General�Services��A� total�of� fourteen� (14)�main� service� areas� are�provided�by� the� surveyed�providers.� �A�detailed�presentation� of� the� service� lines� and� the� number� of� providers� is� shown� in� table� 7.1.��Accounting/Auditing� (13.3%),� Business� Management� Training� (20.4%),� Business� Management�Advisory� (16.3%)� and�Market�Research� (19.4%)� are� the�most� common� services� provided� by� the�Service�Providers.��

�Table�7.1:��General�Advisory�Services�Provided���Advisory�Services� Number�of�Service�Providers Percentage (%)Business�Management�Training�� 20 20.4Market�Research� 19 19.4Business��Management�Advisory�� 16 16.3Accounting/Auditing�� 13 13.3MIS�and�Accounting�Software�� 9 9.2Technical/Vocational�Training�� 9 9.2Facilitate�Access�to�Funds� 3 3.1Business�Plan� 3 3.1Equipment�Renting/Leasing�� 1 1.0Advertising/Promotion� 1 1.0Equipment�Hiring�and�Management�� 1 1.0Financial�Management�Training�� 1 1.0ICT� 1 1.0Skills�Training�for�Teachers� 1 1.0Total�� 98 100.0

Source:�Survey�of�Low�Income�Private�Schools,�July�2010�

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Final�Ghana�Country�Report:��Market�Research�Project�on�Low�Income�Private�Schools� ��

� Prepared�for�IFC�by�CDC�Consult�Limited�����������������������������������������64�������������������������������������������������������������������October,2010���

7.5� Business�Development�Services�Provided�to�Schools�

The� Research� Team� analyzed� the� services� provided� to� private� schools� by� the� Providers.� � The�analyses� as�presented� in� table�7.2� indicate� the�most� frequent� advisory� services�provided� to� the�Schools�are�Business�Management�Advisory� (18.2%),�Business�Management�Training� (16.4%)�and�Accounting/Auditing� (12.7%).� The� next� category� of� service�which� the� advisory� service� providers�provide�most�is�business�plan�development;�market�research;�MIS�and�Accounting�Software.����

Table�7.2:�Advisory�Services�Provided�to�Schools�by�Providers�Advisory�Services�for�Schools� Number�of�Service�Providers Percentage�(%)

Business��Management�Advisory�� 10 18.2

Business�Management�Training�� 9 16.4

Accounting/Auditing�� 7 12.7

Market�Research� 5 9.1

MIS�and�Accounting�Software�� 5 9.1

Business�Plans� 4 7.3

Access�to�Funds� 3 5.5

Technical/Vocational�Training�� 2 3.6

Proposal�Development�� 2 3.6

Equipment�Renting/Leasing�� 1 1.8

Advertising/Promotion� 1 1.8

Fund�Raising� 1 1.8

Skills�Training�� 1 1.8

Tax�Advisory�Services� 1 1.8

Financial�Management�Training�� 1 1.8

Human�Resource�Management�� 1 1.8

Skills�and�Curricula�Training�� 1 1.8

Total�� 55 100Source:�Survey�of�Low�Income�Private�Schools�Survey,�July�2010�

7.6� Fees�Charged�for�Business�Advisory�Service�

The� fees� charged� by� individual� providers� vary� and� is� largely� determined� by� the� type� of� service�provided.� �The�basis�of�fees�determination�also�varies�with�the�most�common�measures� including�daily,�monthly�and�lump�sum�rates.��The�details�are�presented�in�appendix�4.4�in�Report�Volume�2.��The�fee�ranges�for�various���services�are�presented�in�table�7.3.�������

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Final�Ghana�Country�Report:��Market�Research�Project�on�Low�Income�Private�Schools� ��

� Prepared�for�IFC�by�CDC�Consult�Limited�����������������������������������������65�������������������������������������������������������������������October,2010���

Table�7.3:��Fees�Ranges�for�Advisory�Services�Type�of�Service�� Fee Range Charged

(GH¢)�Accounting�/Auditing� Minimum�GHC100�per�month�/Minimum�GHC750�per�year for�

audit.�Business�Management�Training�� GHC40�E GHC250�per�dayBusiness�Management�Advisory�Services��

GHC200�E GHC500�per�dayGHC200��EGHC�1,200�per�assignment�

Advertising�and�Promotion�� GHC500�E GHC20,000�per�projectMIS�and�Accounting�Software� GHC1,000�EGHC 33,000�per�assignment/contract��Financial�Management�Training�� Minimum�GHC35�per�day per�headBusiness�Plan�Preparation� GHC2,000�E GHC5,000�per�assignmentProposal�Development�� GHC500�E GHC1,000�per�assignment�

Source:��Low�Income�Private�Schools�Survey;�[US$�1:�GH¢1.4]��The�fee�structure�as�per�table�7.3�shows�that�depending�on�the�type�of�service,�the�fees�charged�differ.�The�maximum� figures� show� that�Business�Management�Advisory�and�MIS�and�Accounting�software�cost�more�than�the�other�services.�The�fee�structure�also� largely�depends�on�the�type�of�service�being�provided�and� the� type�of�client� involved.�This�was�evident�during� the�survey�when�some�of�the�advisory�service�providers� indicated�that�they�sometimes�have�to�charge� lower�than�their�normal�consultancy�fees�to�assist�the�low�income�schools.�

7.7� Assessment�of�Willingness�to�Provide�Advisory�Service�to�Low�Income�Schools�

Almost� all� Service� Providers� stated� their�willingness� to� provide� advisory� service� to� low� income�schools.��Out�of�the�22�Advisory�Services�Providers�interviewed,�95.5%�(21)�of�them�indicated�their�willingness� to�provide�business�advisory�services� to� the� low� income�private�schools.�Some�of� the�Service�Providers�are�currently�providing�advisory�support�and�training�for�the�low�income�schools�and�have�acquired�the�needed�experience�for�working�with�low�income�schools.���

The�main� issue� raised�by� Service�Providers� however,� is� the� inability�of�most� of� the� low� income�schools�to�pay�for�advisory�services�provided�to�them�and�implement�recommendations.��This�is�the�major�drawback�when�it�comes�to�providing�service�to�low�income�private�schools.��Indeed�35%�of�the�86�Schools�that�do�not�use�Service�Providers�stated�cost�as�a�reason.�

Sampling�the�opinions�of�the�Service�Providers�on�the�willingness�of�the�low�income�private�schools�to�pay�for�advisory�services,�the�survey�results�show�that�40.9%�of�the�service�providers�are�of�the�view�that�low�income�private�schools�are�very�willing�to�pay�for�services�provided.�27.3%�are�of�the�view�that�low�income�private�schools�are�not�willing�to�pay�for�services�provided�to�them.�A�further�21.1%,� representing� 4� of� the� Service� Providers� could� not� gauge� the� willingness� of� the� private�schools� to�pay� for�services�but�rather�expressed� the�opinion� that� though� the� low� income�private�schools�may�be� interested� in�the�service,� lack�of�funds�prevents�them�from�availing�themselves�of�advisory�services.������

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Final�Ghana�Country�Report:��Market�Research�Project�on�Low�Income�Private�Schools� ��

� Prepared�for�IFC�by�CDC�Consult�Limited�����������������������������������������66�������������������������������������������������������������������October,2010���

A�graphical�depiction�of�Service�Providers^�assessment�of�the�willingness�of�low�income�schools�to�pay�for�advisory�services�is�presented�in�figure�7.3.���Figure�7.3:��Service�Providers�Assessment�of�the�Willingness�of�Private�Schools�to�Pay�for�Advisory�Services�

7.8� Specific�Areas�of�BDS�to�Offer�to�Low�Income�Private�Schools��

The�Service�Providers�were�asked�to�suggest�areas�that�could�be�helpful�to�the�businesses�of�the�low� income�private�schools.� �A�number�of�areas�based�on� the�experience�with�private�schools� in�particular�and�SMEs�in�general�were�provided.��These�are�presented�below.�

����������������

Indicative�Business�Advisory�Services�� Accounting/Auditing�Services� � Training�In�Management�� Financial/Credit�Management� � Human�Resource/Capacity�

Development�Training��� Business�Management�Advisory� � Market�Research��� Technical�Assistance� � Project�Management�� MIS�and�Accounting�Software�� � Technical/Vocational�Training�� Business�Plan�Development� � Fund�Raising��� Organisational�Design� � Communication�Management�� Enrolment�Management� � Equipment�Renting��� Training�in�General�

Management�� Training�in�Marketing��

� Training�in�Curricula�and�Syllabus�Improvement��

� Management�of�School�as�a�Business�

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Final�Ghana�Country�Report:��Market�Research�Project�on�Low�Income�Private�Schools� ��

� Prepared�for�IFC�by�CDC�Consult�Limited�����������������������������������������67�������������������������������������������������������������������October,2010���

7.9� Promotion�of�Advisory�Services�

Table�7.4�shows�the�medium�through�which�the�Advisory�Service�Providers�promote�their�services.�The�most� recurring�mode� of� promoting� advisory� services� is� by� word� of�mouth� (41.2%).� � The�Advisory� Service� Providers� indicated� that� getting� referrals� from� clients� is� a� major� means� of�promoting� their� businesses.� This� is� followed� by� Website/email� (15.7%),� through� Business�Associations�(13.7%)�and�Mass�Media�(11.7%).��

�Table�7.4:�Promotion�of�Advisory�Services�Advisory�Services� Number�of�Service�Providers Percentage (%)

Word�of�Mouth�� 21 41.2

Website/email� 8 15.7

Business�Association� 7 13.7

Mass�Media�(Radio/TV/Newspaper)� 6 11.7

Leaflets/Flyers� 4 7.8

Letters�� 2 3.9

Business�Directory�� 1 1.9

Business�Summit�� 1 1.9

No�Promotion�� 1 1.9

Total�� 51 100

7.10�� Ranking�of�Schools�Business�Development�Needs�

Respondents�were�asked�to�rank�the�importance�of�suggested�business�development�needs�for�the�Low� Income�Schools.� �The�result�obtained� from�the�analyses� is�presented� in�table�7.5�below.�The�top� three� services� that�were�most�mentioned�as�being� the�key�business�development�needs�are�Financial� Management� Services� (30.5%),� Business� Strategy� and� Plan� Formulation� (25.4%)� and�Information� Technology� Services� (15.3%),� thus� establishing� them� as� priority� areas� from� the�perspective�of�Advisory�Services�Providers.�

�Table�7.5:��Major�Business�Development�Needs�of�Schools�as�Perceived�by�Service�Providers�Advisory�Services� Number�of�Service�Providers Percentage(%)

Financial�Management�Services� 18 30.5

Business�Strategy/Plan�formulation� 15 25.4

Information�Technology�Services� 9 15.3

Accounting�Services� 8 13.5

Capacity/Human�Resource�Training�� 5 8.5

Market�Research�� 2 3.4

ICT�Research�� 1 1.7

Access�to�Finance�� 1 1.7

Total� 59 100

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Final�Ghana�Country�Report:��Market�Research�Project�on�Low�Income�Private�Schools� ��

� Prepared�for�IFC�by�CDC�Consult�Limited�����������������������������������������68�������������������������������������������������������������������October,2010���

7.11� Challenges�of�Low�Income�Private�Schools�

The�challenges�of�private�schools�as�perceived�by�the�advisory�service�providers�are�presented.�����������

7.12� Assessment�of�Demand�for�Business�Advisory�Services�

7.12�Awareness,�Understanding�and�Usage�of�Business�Advisory�Services��

To�assess�the�willingness�of�low�income�private�schools�to�use�business�advisory�service,�data�was�obtained� on� the� status� of� low� income� schools^� awareness,� understanding� and� use� of� business�advisory�services.��The�BDS�with�the�highest�awareness�and�use�is�Accounting�and�Auditing�Services.��This�relatively�high�awareness�of�accounting�and�auditing�services�could�be�attributed� to� it�being�the� service� requested�by�most� small�businesses.� � School�Proprietors� and�Managers� for�example�often�interact�with�Advisory�Service�Providers�on�financial�issues�than�issues�relating�to�information�technology,�which�for�most�of�the�low�income�schools�may�not�be�of�priority.��

�As�presented� in� table�7.6� the�usage�of�advisory�services� is�very� low�amongst� low� income�private�schools�with�accounting/�auditing� services� ranking�as� the�most�used�at�24.3%,� followed�by� legal�consultancy�(14.5%)�and�business�management�advisory�services.�The� least�used�service� is�market�research.��������

Challenges�of�Low�Income�Private�Schools�� Inability�to�retain�teachers� � Inability�to�expand�school�

infrastructure�and�poor�school�infrastructure�

� Marketing�Challenges� � Delays�in�advisory�service�fee�payments�to�Service�Providers�

� Poor�School�Management�� � Inability�of�schools�to�raise/access�funds�

� Lack�of�electricity�for�the�use�of�computers�

� Improper�school�records�keeping��

� Lack�of�appreciation�of�advisory�services��

� Poor�succession�Planning��

� High�pupil�turnover� � Competition�amongst�the�private�schools�

� Lack�of�teaching�aids� � Unqualified�staff�� Unempowered�parent�Teacher�

Associations��� Unmotivated�Teaching�Staff�

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Final�Ghana�Country�Report:��Market�Research�Project�on�Low�Income�Private�Schools� ��

� Prepared�for�IFC�by�CDC�Consult�Limited�����������������������������������������69�������������������������������������������������������������������October,2010���

Table�7.6:�Awareness,�Understanding�and�Usage�of�Business�Advisory�Services�Advisory�Service� Awareness�(%) Understanding�(%) Usage (%)

Yes No� Yes� No� Yes�� No�Accounting/Auditing�� 70.1 29.9 64.7 35.3� 24.3� 75.7Business�Management�Training�� 54.5 45.5 45.8 54.2� 14.5� 85.5Business��Management�Advisory�� 48.5 51.5 38.2 61.8� 6.9� 93.1Legal�Consultancy�� 53.7 46.3 43.2 56.8� 9.1� 90.9Equipment�Renting/Leasing�� 37.1 62.9 29.0 71.0� 2.3� 97.7Advertising/Promotion� 51.9 48.1 46.6 53.4� 8.3� 91.7Market�Research� 37.9 62.1 28.8 71.2� 0.8� 99.2MIS�and�Accounting�Software�� 33.3 66.7 22.7 77.3� 1.5� 98.5Technical/Vocational�Training�� 44.4 55.6 31.1 68.9� 3.1� 96.9

Source:�Survey�of�Low�Income�Private�Schools�Survey,�July�2010�

7.13� Factors�Considered�in�Choosing�Service�Provider�

Factors�considered�by�the�low�income�schools�in�choosing�a�service�provider�as�presented�in�figure�7.4�are�varied.�25.8%�of�the�respondents�depend�on�recommendation�or�referrals�from�colleagues�or� friends;� 19.4%� consider� cost� (affordability� of� the� provider);� existing� social� relationship� with�provider�(11.3%)�and�the�extent�to�which�the�service�is�perceived�as�relevant�(11.3%).��Figure�7.4:��Basis�for�Choosing�Service�Providers�

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Final�Ghana�Country�Report:��Market�Research�Project�on�Low�Income�Private�Schools� ��

� Prepared�for�IFC�by�CDC�Consult�Limited�����������������������������������������70�������������������������������������������������������������������October,2010���

7.14� Satisfaction�with�Advisory�Services�Received��

The�extent�to�which�Low�Income�Schools�will�be�interested�in�procuring�business�advisory�service�is�also�influenced�by�the�satisfaction�with�the�Advisory�Services�provided.��As�presented�in�figure�7.5,�79.2%�were�satisfied�with�the�services�provided�to�them�and�18.9%�indicated�that�they�were�okay�with�the�services�they�received�although�they�hold�the�view�that� it�could�have�been�better.�Only�1.9%� expressed� dissatisfaction� with� the� service� they� received.� Satisfaction� with� service� is� an�indication� of�willingness� to� use� services� in� the� future� and� eventually� pay� full� cost� for� advisory�services�received.����Figure�7.5:���Satisfaction�with�Advisory�Services�Received�

��

7.15� Analyses�of�Schools�that�did�not�use�Advisory�Service�

33.3%�of�the�Low� Income�Private�Schools�have�never�used�any�form�of�business�advisory�service.��The�reason�for�this� is�a�mix�of�the�absence�of�a�suitable�provider�(access�problem);�high�cost�and�the�use�of� in�house�resources.� �33.3%�of�the�schools�that�do�not�use�advisory�services�stated�that�although�they�need�it�they�are�unable�to�find�suitable�advisory�service�providers.�For�22.2%�of�the�respondents,� they� get� it� done� in�house� and� another� 22.2%� alluded� to� the� fact� that� it� is� too�expensive.�A�graphical�depiction�is�presented�in�figure�7.6.���������

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Final�Ghana�Country�Report:��Market�Research�Project�on�Low�Income�Private�Schools� ��

� Prepared�for�IFC�by�CDC�Consult�Limited�����������������������������������������71�������������������������������������������������������������������October,2010���

Figure�7.6:����Reasons�for�Not�Using�Advisory�Service��

7.16� Willingness�to�Pay�for�Advisory�Services�

More�than�half�(50.6%)�of�the�respondent�school�owners�said�they�are�willing�to�pay�for�advisory�services� and� 24.7%� indicated� their� unwillingness� to� pay� for� services.� Another� 24.7%� remain�undecided�on�their�willingness�or�otherwise�to�pay�for�advisory�services.�There�would�be�the�need�to�further�create�awareness�on�the�benefits�of�business�development�services�as�a�justification�for�payment�on�the�part�of�those�not�willing�to�pay�and�those�who�are�undecided.� It� is� important�to�also� state� that� willingness� to� pay� does� not� necessarily�mean� payment� for� full� cost� of� service�provided.��Figure�7.7:���Willingness�to�Pay�for�Advisory�Service�

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Final�Ghana�Country�Report:��Market�Research�Project�on�Low�Income�Private�Schools� ��

� Prepared�for�IFC�by�CDC�Consult�Limited�����������������������������������������72�������������������������������������������������������������������October,2010���

7.17� Importance�of�Advisory�Service�for�your�Business�

On�the�issue�of�whether�business�advisory�service�is�important�or�not�for�their�schools,�majority�of�school�respondents,�representing�61.2%�acknowledge�that�advisory�services�are�very�important�for�them�although�only�50%�expressed�willingness� to�pay.� � �A� further�27.1%�was�also�of� the�opinion�that�advisory�services�were�somewhat� important�for�them�with�only�1.2%� indicating�that�advisory�services�are�not� important�for�them.�Payment�for�service� is�therefore�the�main�constraint.�Figure�7.8�presents�the�ratings.��Figure�7.8:��Importance�of�Advisory�Service�to�Low�Income�Schools�

7.18� Need�for�Business�Development�Service�Areas�in�Low�Income�Schools�

Respondent� low� income�schools�were�asked�to�make�three�preferences�as�to�the�kind�of�business�advisory� services� they� require.� As� presented� in� Table� 7.7� shows� that� for� the� first� preference,�Accounting/Auditing,�Business�Management�Training�and�Business�Management�Advisory�Services�ranked� top� most.� For� the� second� preference,� Business� Management� Training,� Business�Management� Advisory,� Legal� Consultancy� and� Advertising/Promotion� were� the� most� selected�services.�In�the�case�of�third�preference�Advertising/Promotion,�Market�Research�and�Technical�and�Vocational�Training�were�the�favoured�choices.�

�Deriving� from� the� results,� the� services� that�are�more� likely� to�be� �demanded�by� schools� include:�(i)Accounting/Auditing� (ii)Business�Management� Training� (iii)Business�Management� Advisory� (iv)�Legal�Consultancy�(v)Advertising/Promotion�and��(vi)Technical/Vocational�Training.�

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Final�Ghana�Country�Report:��Market�Research�Project�on�Low�Income�Private�Schools� ��

� Prepared�for�IFC�by�CDC�Consult�Limited�����������������������������������������73�������������������������������������������������������������������October,2010���

Table�7.7:�Low�Income�School�Preferences�for�BDS�BDS�Service� 1st Preference� 2nd Preference� 3rd�Preference

Accounting/Auditing�� 58.3 3.0 �Business�Management�Training�� 19.0 31.3 1.8Business��Management�Advisory�� 10.7 25.4 9.1Legal�Consultancy�� 2.4 17.9 7.3Equipment�Renting/Leasing�� 2.4 7.5 9.1Advertising/Promotion� 6.0 14.9 47.3Market�Research� � � 10.9MIS�and�Accounting�Software�� � � �Technical/Vocational�Training�� 1.2 � 14.5

Source:�Survey�of�Low�Income�Private�Schools�Survey,�July�2010�

7.19� Conclusion�on�BDS�for�Low�Income�Schools�

Findings�on�BDS�Providers�The� survey� of� provision� of� business� development� and� advisory� services� to� low� income� schools�suggest�that�the�Providers� interviewed�expressed�strong�desire�to�work�with� low� income�schools.�Some�are�already�working�with�private�schools�including�low�income�schools�as�part�of�the�initiative�of� institutions� such�as� the� IFC,�Mitchell�Group/USAID�and�other�NGOs.�There� is� therefore�a�core�group�of�providers�to�support�an�expanded�intervention�programme�for�low�income�private�schools�in�Ghana.�The�main�challenge�remains�the�payment�for�services.��

�Findings�on�School�demand�for�Advisory�Services�On�the�use�of�advisory�services�by�low�income�schools,�the�survey�established�the�following:��1. Although� low� income� schools� are� aware� of� and� understand� advisory� services,� usage� is� very�

limited.��

2. The� preferred� advisory� services� providers� in� order� of� priority� are� individual� consultants,�consulting�firms�and�business�associations.�

��

3. The� recurring� reason� for� choosing� and�working�with� a� service� provider� is� affordability� and�referrals�from�family�and�friends.�

�4. About� 50%� of� the� respondent� schools� are�willing� to�pay� for� advisory� services;� 61%� consider�

advisory�services�as�very�import�for�managing�their�schools.�

Conclusion�It� is�evident�that�the� low� income�schools�require�advisory�services�which�would�go�a� long�way�to�improve� upon� management� of� the� schools� and� indeed� enhance� access� to� finance� even� as�operations� improve.� However,� the� schools� have� limited� capacity� to� access� and� use� advisory�services.�Some�of�the�low�income�schools�are�not�in�a�position�to�pay�for�market�rates�and�will�need�support�to�pay�for�services�on�cost�share�basis.���

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Final�Ghana�Country�Report:��Market�Research�Project�on�Low�Income�Private�Schools� ��

� Prepared�for�IFC�by�CDC�Consult�Limited�����������������������������������������74�������������������������������������������������������������������October,2010���

SECTION�8.0:��FINDINGS�XDEVELOPMENT�PARTNERS�AND�OTHER�STAKEHOLDERS�

8.1� Introduction��

Ghana^s� educational� sector� in� general� has� received� innumerable� support� from� development�partners,�international�and�local�Non�Governmental�Organizations�(NGOs).�Over�the�years�support�has�been� received� in�areas�such�as� inputs� for� teaching�and� learning;�vehicles�and�other� forms�of�grants�for�the�educational�sector.��A�significant�part�of�the�support�has�been�in�the�area�of�capacity�building.��The�main�development�partners�that�have�supported�education�sector�include�DFID�and�USAID.�Low� income�private�schools�have�received�support�from�Non�Governmental�Organizations�in�the�areas�of�training,�general�capacity�building�and�subsidized�loans.�

8.2� Overview�of�USAID�Support�

The�U.S.�Government�basic�education� assistance� through�USAID� seeks� to�expand� access� to,� and�improve�the�quality�of,�primary�education.�The�education�program�places�attention�on:� increasing�the�percentage�of� children�who�enroll� in� school,�especially�girls;�helping� to�ensure� that� children�who� complete� primary� school� are� able� to� read� at� grade� level� understanding;� improving� the�management�and�accountability�of�school�systems;� increasing�community� involvement� in�schools�and� education;� and� preventing� HIV/AIDS� in� the� education� sector.� Examples� of� USAID� activities�include:��

1. Increasing� access� to� education:� USAID� supports� the� establishment� of� complementary�education�centers�in�northern�Ghana�for�school�age�children,�particularly�girls�who,�for�varying�reasons,� are� unable� to� access� and� participate� in� formal� schools.� USAID� also� provides�scholarships�to�girls�at�risk�of�not�completing�their�primary�education.��

2. Improving�the�quality�of� instruction� in�primary�schools:�Using� funds�provided�under�the�U.S.�President^s�Africa�Education� Initiative,�USAID�helps�to�accelerate�the�acquisition�of� literacy�by�teaching�Grade�1�pupils� to� read� in� their� local� language�before�helping� them� to� transition� to�English.�

�3. Improving�management�and�accountability�of�schools:�USAID�provides�grants�to�districts�and�

training�to�help�them�improve�their�education�planning�and�management.��4. Increasing�community� involvement� in�education:�USAID�supports�efforts�to� increase�parental�

and� community� involvement� in� schools� as� well� as� increase� the� capacity� of� parents� and�communities�to�lobby�for�school�improvements.�

�5. Preventing�HIV/AIDS� and� reducing� its� impact� in� the� education� sector:�USAID� helps� teacher�

training�colleges�to�provide�HIV/AIDS�education�to�its�teacher�trainees,�so�that�they�are�better�prepared�to�address�HIV/AIDS�issues�in�their�schools�and�communities.�

��

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� Prepared�for�IFC�by�CDC�Consult�Limited�����������������������������������������75�������������������������������������������������������������������October,2010���

Most�of�the�support�is�directed�at�the�public�sector�schools�through�the�Ministry�of�Education�and�Ghana�Education�Service.��USAID�Private�Sector�Support:��Under�the�support�for�private�sector,�USAID�in�Washington�is�implementing�a�programme�in�Ghana�from�up�to�September�2013.�The�programme�is�managed�by�the�Mitchelle�Group�to�undertake�the�following.��� Provide�training�to�proprietors�of�private�schools;�

� Facilitate�access�to�loans�through�Opportunities�International�Savings�and�Loans;�

� Capacity�building�with�GNAPS;�

� Training�in�private�schools�management.�Indeed�as�part�of�its�support�for�low�income�schools,�the�Mitchelle�Group�is�working�through�local�service� providers� located� in� different� zones� of� the� Country� to� provide� training� to� low� income�schools.�The�programme�encourages�the� involvement�of�school�associations� in�the�determination�of�logistics�and�the�fees�to�pay�for�the�training�programme.����

8.3� Overview�of�DFID�Support�for�Education�

The�DFID�has�a�budget�allocation�of�£105�million�to�be�used�in�the�education�sector�of�Ghana�over�an�8�year�period�ending�in�2013.�Out�of�this�amount,�£�100�million�is�for�budgetary�support�in�the�education�sector�based�on�the�education�sector�strategic�plan.�The�other�£�5million� is�retained�by�DFID� for� projects� in� Technical� Assistance,� Consultancy,� Research� and� Studies� to� support� the�Ministry�of�Education.��

�DFID� is� currently� helping� the�Ministry� of� Education� to� access� The� Education� for� All� Fast� Track�Initiative.�The� initiative� is�a�global�partnership�between�donor�and�developing�countries�to�speed�the�progress� towards� the�Millennium�Development�Goal�of�universal�primary�education�by�2015.�All� lower�income� countries� which� show� serious� commitment� to� achieve� universal� primary�completion�can�receive�support�from�initiative.�

�8.4� Ghana�National�Association�of�Private�Schools�(GNAPS)��The�Ghana�National�Association�of�Private�Schools�(GNAPS)�was�established�in�1971�as�an�umbrella�association� for� all� privately� founded,� funded� and� managed� schools.� The� major� focus� of� the�Association�in�private�school�education�is�the�provision�of�quality�and�affordable�education.�This�is�achieved�through�advocacy,�support�for�school�registration,�upgrade�and�linkage�with�the�Ministry�of�Education�and�Ghana�Education�Service�among�others.���GNAPs� consider� the� setting� up� of� private� schools� as� the� best� thing� that� has� happened� to� the�education�sector,�noting�that�80%�of�the�pass�rates�from�BECE�examinations�are�from�the�private�schools.�The�private�schools�sector�thus�plays�a�significant�role�in�basic�education�in�Ghana.�In�the�

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Final�Ghana�Country�Report:��Market�Research�Project�on�Low�Income�Private�Schools� ��

� Prepared�for�IFC�by�CDC�Consult�Limited�����������������������������������������76�������������������������������������������������������������������October,2010���

view�of�GNAPs,�The�Ghana�Education�Service�perceives�the�private�schools�as�aliens� in�the�school�system�and�therefore�does�not�pay�the�required�attention�to�the�private�schools.�For� instance,� in�the�Ghana�Education�Service�System,�there�is�only�a�desk�serving�the�private�schools�and�GNAPS�is�in�consultation�with�the�Education�Service�to�make�this�a�unit.��

On�support�to�low�income�schools,�GNAPS�noted�that�it�has�in�partnership�with�USAID�(through�the�Mitchelle�Group)�and�private� consultants�organised� training� for� the�private� schools.�The� training�covered�school�proprietors�and�staff�in�the�areas�of�financial�management,�textbooks�management�system�and�other�aspects�of� school�management.�The�GNAPS�on� its�own�also�organizes� training�programmes�for�the�private�schools�which�are�patronized�by� low� income�schools.�The�Association�plans�on�organizing�more�training�for�the�low�income�schools��

GNAPS�Views�on�Strengthening�of�Private�Schools��GNAPs^�views�on�strengthening�low�income�schools�in�particular�and�private�schools�in�general�are�summarized:���

� Access� to� funding� should� be� expanded� to� the�member� schools� to� increase� and� improve� on�infrastructure.� GNAPS� facilitates� access� to� funds� for� its� members� through� the� issuance� of�introductory� letters� but� has� no� guarantee� system� in� place� to� facilitate� sustained� lending;�Sometimes,�some�of�the�banks�also�assist�the�schools�with�loans;��

� Access� to� sustained� training� in� various� courses� for� proper� school� management� and�improvement;�

� Donation�of� items� such�as� furniture,� text�books,�exercise�books�etc.� to� the� schools.� Supplies�from� the� Ministry� of� Education� and� Ghana� Education� Service� remain� inadequate� and�inconsistent.��

Grading�of�Schools�GNAPS�contends� that� the�Ghana�Education�service� for�a� long� time�now� (about�20�years)�has�not�done�any�grading�of�schools.�There�is�therefore�no�valid�and�reliable�data�on�the�grading�of�schools�available.� In� situations� where� some� grading� is� done,� the� schools� are� not� given� certificates� to�indicate� the� grade�of� the� school.�Currently�GNAPS�estimates� that� there� are�over�20,000�private�schools� in�the�country,�which� is�two�times�the�reported�statistics� from�the�Ministry�of�Education.�GNAPS�expect�the�GES�to�strengthen� its�capacity�to� inspect,�grade�and�monitor�the�operations�of�private�schools.��

Funding�GNAPS� consider� inadequate� funding� as� one� of� the�major� setbacks� of� the� private� school� sector,�especially� the� low� income� private� schools.� IFC� which� provided� some� funds� to� private� schools�together�with�its�partners�is�considered�too�rigid�in�its�requirements�for�accessing�these�funds.�This�only�makes�the�proprietors�of�such�low�income�schools�shy�away�from�participating�in�such�funding�arrangements�which�are�meant�to�support�private�schools.�Rather�than�rigid�terms,�GNAPS�would�prefer�a�more�simplified�process�to�be�used�to�get�basic�requirements�from�the�schools.�When�this�

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Final�Ghana�Country�Report:��Market�Research�Project�on�Low�Income�Private�Schools� ��

� Prepared�for�IFC�by�CDC�Consult�Limited�����������������������������������������77�������������������������������������������������������������������October,2010���

does�not�happen,�most�of� the� schools�would�withdraw�because� the� loan� sizes� they� require� are�small,� for� the� purposes� of� putting� up� a� fence�wall,� purchase� furniture� etc.� and�would� not� be�interested�in�any�rigorous�and�time�consuming�processes�to�access�such�loans.���8.5� IDP�Rising�School�Program��The�IDP�Foundation,�Inc.,�is�a�United�States�of�America�based�NGO�supporting�school�development�in�Ghana� through� its� IDP�Rising�School�Program.�The� IDP�Rising�Schools�has� launched�a�program�designed� to� boost� the� development� of� existing� but� very� poor,� non�government� schools� for�disadvantaged�children�throughout�Ghana.� � It� is�hoped�that�this�approach�will�build�a�sustainable�education�model� that� can�be� supported� through�microfinance� loans� and� capacity�building� to�be�replicated�throughout�Ghana,�Sub�Saharan�Africa,�and�the�developing�world.����The�main�objectives�of�the�IDP�Rising�Schools�Program�are�to:�1. Increase�enrolment�in�the�schools.�2. Improve�the�quality�of�education�offered�to�the�students.�3. Increased�sustainability�(and�profitability)�of�the�schools.�4. Create�a�positive�impact�on�the�Microfinance�Institution�(MFI).�5. Achieve�gender�equality�in�the�schools.�

The�IDP�Rising�Schools�Program�is�working�with�Sinapi�Aba�Trust�and�started�with�120�schools�with�plans�to�expand�to�7�regions�in�Ghana�and�reach�30,000�students�in�the�first�2�years.����

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Final�Ghana�Country�Report:��Market�Research�Project�on�Low�Income�Private�Schools� ��

� Prepared�for�IFC�by�CDC�Consult�Limited�����������������������������������������78�������������������������������������������������������������������October,2010���

�������������

PART�IV���

Section�9.0� :� Conclusions�and�Recommendations�

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Final�Ghana�Country�Report:��Market�Research�Project�on�Low�Income�Private�Schools� ��

� Prepared�for�IFC�by�CDC�Consult�Limited�����������������������������������������79�������������������������������������������������������������������October,2010���

SECTION�9.0:��CONCLUSIONS�AND�RECOMMENDATIONS�

9.1� Conclusion�

Results� from�the� low� income�private�schools�market�research�suggest�that�Ghana� is�experiencing�growth�in�the�private�schools�sector�and�this�is�expected�to�continue�given�the�overall�performance�of�private�schools�especially�at�the�basic�education� level.�At�the�basic�education� level,�there�are�a�total�of�14,925�private�schools�representing�30.65%�of�a�total�of�48,688�basic�schools�representing�30.65%� of� the� market.� The� Ghana� National� Association� of� Private� Schools� (GNAPS)� however,�estimates�that�there�are�about�20,000�private�schools.�We�estimate�that�about�40%�(5,970)�of�the�private�schools�on�roll�fall�in�the�low�income�private�schools�category�and�we�expect�a�year�on�year�growth�of�at�least�7%.��The� research� further� established� that� the� low� income� private� schools� are� providing� quality�education� in�some�areas�where�there�would�have�been�no�school;�achieving�high� female� (girl)�to�male� (boys)�ratio;�attaining�high�performance�by�way�of�school�performance�at�the�BECE� level�of�over�80%�pass�rate;�generating�employment�for�people�and�contributing�to�government^s�effort�to�meet�the�millennium�development�goal�number�two�of�nUniversal�Education�for�all�by�2015o.��The� above� notwithstanding,� the� low� income� schools� surveyed� have� a� number� of� constraints�emanating� from� two� main� sources:� � the� approach� to� management� of� the� school� by�owners/proprietors�and�inadequate�support�for�the�sector.�Linked�to�the�management�approach�is�the� lack� of� application� of� business� practices� to� school�management� in� areas� such� as� effective�financial�management,�record�keeping�and�promotion.��The�inadequate�support�for�the�low�income�schools�stem�from�general�lack�of�understanding�of�the�uniqueness�of�low� income�private�schools�by�policy�makers� as� a� result�of�which� there� are�no� specific� government�policies� to� support� low�income�private�schools.�It�is�important�for�all�stakeholders�including�policy�makers�to�note�that�low�income� private� schools� are� not� just� private� schools� but� constitute� effective� partners� in�government^s�effort�at�poverty�reduction�and�achieving�universal�education�for�all.����Financial� institutions� and� advisory� service�providers�have�demonstrated� support� for� low� income�schools� over� the� years.� � However,� this� support� has� generally� stemmed� from� a� purely� business�motive.� � Interest� rates� from�most� of� the� financial� institutions� are� comparable� to� all� businesses�dealing� with� financial� institutions� and� sometimes� even� higher� without� considerations� to� the�peculiar�needs�of� the� low� income� schools.� Loan� terms� remain� inappropriate� for� the� low� income�schools.� �Advisory�Service�Providers�who�are�key� in�supporting�the�schools�mainly�do�so�with�the�support�of�development�partners�and�NGOs�that�are�focused�on�supporting�low�income�schools.��The� survey�has�established� that� any� specific� support� received�by� low� income� schools�by�way�of�financing� and� capacity� building� is� influenced� largely� by� development� partners� and� non�governmental�organizations�such�as�the�USAID�and�its�partners.��

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Final�Ghana�Country�Report:��Market�Research�Project�on�Low�Income�Private�Schools� ��

� Prepared�for�IFC�by�CDC�Consult�Limited�����������������������������������������80�������������������������������������������������������������������October,2010���

Estimated�financing�needs�of�119�schools�which�expressed�interest�in�loan�facility�is�GH¢3,980,032�(US$2,842,880).�The�borrowing�capacity�of�the�schools�was�also�assessed�based�on�an�estimated�free�cash� flow�of� the�schools.�Based�on� the� financial� information�obtained�aggregate�borrowing�capacity� is�GH¢707,395� (US$505,282)� for�one� year� loan;�GH¢1,208,260� (US$863,042)� for� a� two�year� loan�and�GH¢1,563,151�(US$1,116,536)�for�a�three�year� loan.�When�revenue�was�enhanced�by�30%�to�take�recognition�of�possible�understatement�due�to�poor�record�keeping�on�the�part�of�the� schools,� the� aggregate� borrowing� capacity� increased� to�GH¢919,518� (US$656,798)� for� one�year�facility�and�GH¢2,032,053�(US$1,451,466)�for�a�three�year�facility.���Low� income� schools� could� be� good� businesses� to� be� financed� by�microfinance� institutions� and�other�formal�institutions.�Access�to�finance�and�business�advisory�services�will�greatly�enhance�the�performance�of�the�low�income�private�schools.��

9.2� Recommendations��

Two� main� categories� of� recommendations� are� presented.� Category� one� presents� options� for�addressing�the�access�to�finance�and�advisory�service�by� low� income�private�schools�and�category�two�focuses�on�recommendations�targeted�at�strengthening�the�general�operating�environment�for�low�income�private�schools.�

9.2.1� Options� for� Addressing� Access� to� Finance� and� Advisory� Service� by� Low� Income� Private�Schools���In�presenting�the�intervention�options,�the�issues�distilled�from�the�survey�are�recapped:��� Low� income� private� schools� are� like� other�micro� and� small� businesses� and� deserve� to� be�

supported�with�access�to�credit�and�business�advisory�services.�� Financial�institutions�especially�microfinance�institutions�do�not�understand�the�business�model�

of� low� income� schools;� they� perceive� them� as� high� risk� and� lack� the� capacity� to� develop�financial�products�with�features��that�are�suitable�for�the�low�income�schools.�

� Given� the�perceived�high� risk� in� lending� to�micro,� small� and�medium� sized�businesses,�most�deposit� taking�MFIs� are� either� unwilling� to� lend� to� low� income� schools� or�will� only� lend� at�interest� rates� considered� exorbitant� by� the� schools;� MFIs� are� unable� and� in� some� cases�unwilling� to� lend� beyond� 6� to� 12� months� due� to� asset� liability� maturity� mismatch;� most�Financial�NGOs�lack�adequate�funds�to�lend�beyond�6�months�and�will�lend�at�rates�considered�too�high�by�the�schools.��

� Most�low�income�private�schools�do�not�adopt�good�business�practices�and�are�generally�weak�on�business�documentation,�governance,�business�and�financial�management�practices.��

� Majority�of�low�income�private�schools�appreciate�the�importance�of�business�advisory�services�to�the�profitability�and�sustainability�of�their�school�businesses.�However,�they�consider�these�services�as�either�too�expensive�or�are�unwilling�to�pay�for�the�services.�

� The� schools� lack� the� capacity� to� implement� recommendations� emanating� from� business�advisory� services� and� will� need� extended� handholding� to� realize� the� benefits� offered� by�business�advisory�services.�

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Final�Ghana�Country�Report:��Market�Research�Project�on�Low�Income�Private�Schools� ��

� Prepared�for�IFC�by�CDC�Consult�Limited�����������������������������������������81�������������������������������������������������������������������October,2010���

�Deriving� from�the�above� issues,�there� is�the�need�to�adopt�an� intervention�model�that�addresses�the�issues�and�enhances�access�to�finance�and�business�advisory�services�by�low�income�schools.�In�this�regard�three�(3)�intervention�options�are�recommended�for�consideration.���Option�1:�Establishment�of�a�guarantee�fund�for�low�income�private�schools�For� purposes� of�mobilizing� financial� resources� for� investment� financing� of� low� income� private�schools,�Option�1�envisages�the�establishment�of�a�Ghana�Low�Income�Private�Schools^�Guarantee�Fund�that�will�provide�a�wide�range�of�guarantee�products� including:�partial�portfolio�guarantees�for� financial� institutions�already� lending� to� low� income�schools� to�encourage� them� to�expand�on�existing�portfolio;�institutional�and�portable�guarantees�for�credit�lines�to�be�utilized�by�investment�finance�providers�and�microfinance�institutions�to�get�access�to�local�long�term�funds�(for�example�from� pension� funds)� for� on�lending� to� low� income� schools;� and� other� guarantee� products� for�innovative�financing�schemes�such�as�micro�leasing.��In�addition� to�guarantees,� the�proposed�model�will� include�matching�grants� from� the�guarantee�fund�to�finance�improvement�of�the�capacity�of�the�partner�MFI�to�understand�low�income�schools,�appraise� and�manage� the� low� income� school� loan� portfolios.� � It� will� also� set� aside� a� specific�percentage�of�the�guarantee�fund�to�be�used�for� improving�the�capacity�of� low� income�schools� in�partnership� with� accredited� local� business� advisory� service� providers� in� key� school� capacity�deficient�areas�such�as�business�and�financial�management,�planning�and�governance.��The�funding�for�the�guarantee�fund�could�be�raised�from�development�partners�currently�involved�in�strengthening�low�income�schools,�the�International�Finance�Corporation�and�its�partners�as�well�as�other�interested�bodies.�The�fund,�to�be�run�on�a�full�cost�recovery�basis,�could�be�managed�by�an�independent�fund�manager�or�the�Eximguaranty�Company�based�in�Accra,�Ghana.�Microfinance�Institutions�and�other�Financiers� interested� in�financing�activities�of� low� income�schools�will�apply�for�consideration.��A�guarantee�fund�will�increase�the�confidence�of�MFIs�in�dealing�with�low�income�schools;�provide�a� reasonable� assurance� to� funding� organizations� to� approve� funding� for� on� lending� given� the�guarantee�provided�from�the�proposed�guarantee�fund�and�mitigate�the�lending�cost�to�low�income�schools.�The�main�challenge�will�be�the�ability�of�the�MFIs�to�recover�the�loans�from�the�schools�but�this�could�be�managed�through�effective�structuring�of� the�guarantees�and�MFI�capacity� in�areas�such�as�strengthening�through�the�guarantee�fund.����The�minimum�amount� for� the�guarantee� fund�could�be�pegged�at�US$3.0�million�which� is�about�105%�of�the�estimated�financing�needs�of�the�surveyed�schools.���Option�2:�Direct�On�lending�of�Funds�to�Financial�Institutions�The� model� under� option� 2� envisages� the� establishment� of� a� Low� Income� Schools� Fund� by�development�partners�and�other�funding�agencies� interested� in� low� income�private�schools�solely�for� direct� lending� at� concessionary� rates� to�microfinance� institutions� and� other� finance� houses�

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Final�Ghana�Country�Report:��Market�Research�Project�on�Low�Income�Private�Schools� ��

� Prepared�for�IFC�by�CDC�Consult�Limited�����������������������������������������82�������������������������������������������������������������������October,2010���

interested� in� lending�to� low� income�private�schools.�Given�that�most�MFIs�do�not�have�adequate�funds�to�lend�on�a�medium�term�basis�due�mainly�to�inadequate�funding�base�as�well�as�mismatch�between� loan� terms�and�deposit�maturity,� the�on� lending� fund�will�provide� interested�MFIs�with�the�needed�funds�for�on�lending�to�low�income�schools.�Based�on�current�needs�as�estimated�from�the�survey,�an�initial�fund�amount�of�US$3,000,000�is�recommended.���Under� this� arrangement,� it� is� proposed� that� 5� E� 7� financial� institutions� are� selected� through� a�bidding�process�to�receive�the�funding�based�on�their�activity�plan�on�low�income�school�financing.�The�arrangement�will�be�supported�by�a�memorandum�of�understanding�that�spells�out�the�targets�to�be�achieved�and�related�conditions.�The�cost�of�the� fund�will�be�negotiated�to�reflect�a�quasi��commercial�rate�and�the�final�lending�rate�set�within�a�predetermined�range�that�ensures�MFIs�are�motivated�and�low�income�schools�do�not�find�the�interest�rates�burdensome.�Fund�disbursement�for�on� lending�to� low� income�schools�will�be�carefully�managed�to�minimize�potential� losses�from�idle�funds.��Presently�there�are�two�institutions:�Sinapi�Aba�Trust�and�Opportunity�Savings�and�Loans�Company�that� are� engaged� in� significant� low� income� school� financing� and� could� serve� as� the� seeded�institutions�around�which�other�MFIs�will�evolve.��A�key�element�of�Option�2,�as�in�Option�1�is�strengthening�of�capacity�of�MFIs�and�the�low�income�schools�through�advisory�service�providers.�MFI�capacity�for�lending�to�low�income�schools�will�be�strengthened�through�training�and�hands�on�support� in�areas�such�as� loan�product�development,�appraisal�and�monitoring�among�others�on�a�cost�share�basis.�The�capacity�development�for�MFIs�will�be�provided�by� international�consultants�experienced� in� low� income�school�financing�working�with�national�consultants�as�an�approach�to�building�local�capacity�for�purposes�of�sustainability.����School�capacity�will�be�strengthened�in�areas�such�as�business�management,�governance,�financial�planning�and�analysis�as�well�as�other�emerging�need�areas.�Funding�for�the�services�will�be�built�into� the� interest� rate�and�paid� for�by� the�beneficiary�schools.�Low� income�schools� that�have�not�sourced�funding�but�are�interested�in�the�capacity�building�will�pay�directly�for�the�services.�Service�Providers�could�come� from�either�within�the�MFI� (as� is�practiced�by�Sinapi�Aba�Trust)�or� from�an�accredited� list�of�Service�Providers� (as� is�done�by� the�Mitchelle�Group).�There�will�be�a�need� for�Training�of�Trainers�for�the�selected�Service�Providers.����Option�3:�Establishment�of�a�Low�Income�School�Finance�Company�Option� 3� recommends� an� ambitious�model� that� seeks� to� set� up� a� finance� company� for� private�school� financing.� The� finance� company� will� ensure� that� beneficiary� schools� comply� with� basic�business�practices�(or�are�provided�with�the�capacity�through�accredited�business�advisory�service�providers)�as�a�condition�for�accessing�credit.�The�Low� Income�School�Finance�Company�could�be�owned�by�different� stakeholders�who�will�constitute� shareholders� including� international� finance�companies,� local�funding� institutions�(including�pension�funds),� international�NGOs�working� in�the�low�income�schools�sector�and�the�Ghana�National�Association�of�Private�Schools�among�others.��

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Final�Ghana�Country�Report:��Market�Research�Project�on�Low�Income�Private�Schools� ��

� Prepared�for�IFC�by�CDC�Consult�Limited�����������������������������������������83�������������������������������������������������������������������October,2010���

���The�proposed�finance�company�will�operate�two�main�service�lines:���1. School�Financing�Division�and���2. Specialized�Private�School�Capacity�Building�Division.���Operationally,�the�financing�division�will�provide�on�lending�funds�to�other�Financial�Intermediaries�such�as�rural�banks,�financial�NGOs�and�savings�and�loans�Companies�for�on�lending�to�low�income�schools.�It�could�also�provide�direct�lending�to�middle�to�high�income�schools�based�on�the�demand�from�these�schools.��The�Specialized�Private�School�Capacity�Building�Division�will�provide�training�in�school�lending�and�portfolio�management�to�participating�financial�institutions�to�build�capacity.�It�will�also�work�with�schools� that� access� funding� to�develop�business� and� school�management� capacity.�The� advisory�service�will�be�delivered�by�internal�staff�in�conjunction�with�accredited�and�independent�business�advisory�service�providers.����The�minimum�capital�for�setting�up�a�finance�house�is�GHC7,�000,000�(US$5,000,000).��

9.2.2�Recommendations� for�Strengthening� the�General�Operating�Environment� for�Low� Income�Schools��

Need�for�Clear�Policy�Framework�for�Low�Income�Schools�

There�is�the�urgent�need�for�stakeholders�in�the�educational�sector�to�develop�a�policy�framework�to�guide� the�operations�of� low� income� schools.� �This�could�be�done�as�part�of�a�general�private�educational� sector� policy� framework� or� as� a� standalone.� � The� recommendation� is� classified� as�urgent�due�to�the�critical�role�these�schools�take�on�in�the�sector�and�the�potential�for�accelerating�government^s� effort� to� meet� educational� needs.� � An� effective� and� well� managed� educational�programme�in�low�income�areas�will�contribute�greatly�to�poverty�reduction�and�avoid�a�situation�where�children�of� low� income�parents� remain� in� the�category�of� low� income.� �Our� impression� is�that� the� low� income� school� sector� is� being� led� by� development� partners� and�NGOs�with� some�involvement�of�Government�through�the�Ministry�of�Education�and�Ghana�Education�Service,�but�this�remains�inadequate.�We�understand�a�policy�framework�on�private�schools�is�in�progress�but�it�is�not�clear�whether�it�has�specific�provisions�in�respect�of�low�income�schools.��

Promotion�of�Partnership�between�Low�Income�Schools�and�Local�Financial�Institutions�

Low�Income�Schools�are�generally�small�businesses�which�need�the�support�of�financial�institutions�to�stabilize�and�expand� the�school�business.� �As�a�specialised�business,�MFIs�especially�Rural�and�

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Final�Ghana�Country�Report:��Market�Research�Project�on�Low�Income�Private�Schools� ��

� Prepared�for�IFC�by�CDC�Consult�Limited�����������������������������������������84�������������������������������������������������������������������October,2010���

Community� Banks,� Savings� and� Loans� Companies� and� Financial� NGOs� need� to� address� the�following:���

� Develop�understanding�of�the�low�income�school�businesses�especially�in�the�area�of�financing�needs;�cashflow�patterns�and�the�very�act�of�school�management.��An�improved�understanding�will�contribute� to� the�development�of� loan�products� that�actually�addresses� the�needs�of� the�schools.� A� cash� flow� based� lending� for� example�will� be�more� appropriate� for� these� schools�compared�to�collateral�based�lending�which�most�of�the�schools�are�not�able�to�afford.��

� Microfinance� institutions� are�encouraged� to� support� the�business� advisory�needs�of� the� low�income�schools�especially�through�the�training�of�school�owners�and�managers/administrators.��The�training� in�basic�business�management�principles,�record�keeping,�cashflow�management,�procurement�and�staff�administration�will�be�beneficial�to�the�schools�and�financial�institutions.��The�model�to�be�applied�could�be�either�of�the�following:�

1. Use�of�MFI�staff�for�school�capacity�building�as�is�done�presently�by�Sinapi�Aba�Trust�(in�partnership�with�IDP�Rising�School�Program);��

2. Partnership�with�business�advisory�services�providers�to�provide�capacity�building.�

The�provision�of�training�from�within�the�MFI�could�over�stretch�the�resources�of�small�MFIs�and�in�all�cases�will�require�that�Field�Officers/Training�Officers�of�MFIs�have�received�training� in�general�private�school�sector�management.��

Payment�of�Advisory�Services�by�Low�Income�Private�Schools�

Unwillingness�to�pay�for�advisory�service�is�not�limited�to�low�income�private�schools,�it�is�a�global�SME�problem.� �There� is�however�a�need�for�Advisory�Service�Providers�and�other�stakeholders�to�establish�a�linkage�between�business�performance�and�advisory�service�as�a�basis�for�improving�on�the� culture� of� non�payment� for� services.� � This� can� be� achieved� through� sustained� education� of�school�owners�using�the�vehicle�of�School�Business�Associations�and�Financial�Institutions.��A�fund�for�capacity�development�set�up�independent�or�preferably�linked�to�the�proposed�guarantee�fund�could�facilitate� initial�cost�share�at�different� levels�for�different�categories�of� low� income�schools.��Sustainability�of�the�fund�will�be�addressed�through�increasing�the�counterpart�funding�of�the�low�income�schools�as�performance�improves.�

The�Need�for�Increased�Monitoring�of�Private�Schools�in�General��

The�monitoring�framework�of�the�Ghana�Education�service�in�respect�of�private�schools�is�weak�and�needs� strengthening.� � Stakeholders� including� the�Ghana�National�Association� of� Private� Schools�(GNAPS)� have� complained� about� this.� � The� current� situation� in�which� private� schools� qemerge^�especially� at� the� basic� level�without� adequate� control� and�monitoring� has� to� be� addressed.� An�improved�monitoring� framework�especially�at� the�metropolitan,�municipal�and�district� levels�will�enhance�the�quality�of�the�schools�and�their�operations.���

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Final�Ghana�Country�Report:��Market�Research�Project�on�Low�Income�Private�Schools� ��

� Prepared�for�IFC�by�CDC�Consult�Limited�����������������������������������������85�������������������������������������������������������������������October,2010���

To�ensure�that�schools�are�not�established�without�the�knowledge�of�the�Ghana�Education�Service,�the�Ministry� of� Education� should� liaise�with� the�Ministry� of� Justice� to� prevail� on� the� Registrar�General^s�Department� to� register�only�schools�with�clearance� from� the�Ghana�Education�Service.�This�will�ensure�that�school�locations�are�known�to�the�GES�to�facilitate�monitoring.���

Promotion�of�Information�Exchange�

Information�exchange�among�stakeholders�in�the�private�education�sector�and�low�income�schools�sector�in�particular�is�highly�recommended.��The�exchange�will�facilitate�compilation�of�what�works�well�and�what�does�not�work�well;�development�of�subsector�averages�to�facilitate�lending�decision�making�by�microfinance�institutions�and�the�general�entrenchment�of�best�practices�among�others.�The� qexchange^� could� be� arranged� by� the� GES,� GNAPS� or� a� Unit� established� purposely� for� low�income�schools.��

Involvement�of�Metropolitan,�Municipal�and�District�Assemblies�(MMDAs)�in�Low�Income�Private�Infrastructural�Development�

The�MMDAs�are�encouraged�to�support� low� income�private�schools� in�their�administrative�areas.��There�are�areas�such�as�the�development�of�facilities�to�be�shared�by�schools�that�can�not�afford�to�acquire� these� infrastructures�on� their�own.� �Facilities�and� infrastructure� that�could�be�developed�include�playground,�computer�laboratory�and�science�laboratory.�This�could�be�undertaken�as�part�of�Public�Private�Partnership,� through�which� the� low� income� schools� could� for� example�use� the�facilities�and�pay�a�user�fee.� �Junior�High�Schools�for�example�could�use�computer� laboratories�to�prepare�students�who�are�expected�to�be�examined�in�ICT�at�the�BECE�level.�

�� �


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