Low-cost private schools in India are performing much better than public schools. Similar results are obtained in Africa.

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Education for All: an alternative solution

The failure of the UNESCO-World Bank programme Education for All based upon the development of public education system for reaching the target of an universal primary education before 2015 should oblige the international experts and the educational world to change a strategy which doesn’t work. James Tooley illustrates how this is feasible.

Article published on Outlook. Business, 23 August 2008

Schools for the poor

On Independence Day last year, I was the guest of honour at a private school in a Hyderabad slum. By an open sewer that ran along the unpaved road, schoolchildren and their parents cheered as I raised the flag. No one felt even one bit odd that this Brit should be doing this; no doubt, I’ll be doing the same this year too.

Watch out for these private schools for the poor. They’re part of a revolution that is lifting millions of underprivileged in India into the mainstream. But more than that, there’s a spectacular revolution about to hit these low-cost private schools too. By the time India celebrates its 75th anniversary, I predict there will be competing chains of schools offering high quality, low-cost educational opportunities to those at the bottom of the pyramid. Moreover, these chains will take on the world. In the current wave of globalisation, American brands like McDonald’s are pre-eminent. In the next one, low-cost school chains from India will be ‘colonising’ the West.

The concept of private schools for the poor may be unfamiliar to some readers; the accepted wisdom says that the poor need the state to provide them education. I visit government schools in poor parts of India frequently. It is not an edifying experience. Where there should be 10 teachers, only two or three will be present. And they won’t all be teaching either. Bright-eyed, eager young children greet me enthusiastically from the floor where they sit, doing nothing, wishing so much to be doing something. I’m not the only one to feel that the poor deserve much more than what government schools offer.

The poor’s alternative

It would all be deeply depressing if it wasn’t for the fact that the poor, in huge numbers, are already embracing an alternative. Several low-cost private schools are coming up across India. Charging fees of between Rs 100 and Rs 250 per month, they are affordable to parents on minimum wages. I know one woman who, 10 years ago, started a nursery in her community, then extended it to class 1, class 2, then beyond, persuaded by parents that their children didn’t want to leave her.

Or there’s my friend, not long out of college, who started an after-school tuition class, converting this into a small school when his students persuaded him that he was doing a better job than their current schools. He now has 1,700 students. In these low-cost private schools, the vast majority of teachers are teaching and the learning atmosphere is vibrant.

I first discovered low-cost private schools in Hyderabad in 2000. Inspired by the commitment of the entrepreneurs I met, I conducted research for five years across India, and also in Africa and China. The findings were remarkable. In poor areas of Hyderabad, 65% of schoolchildren were in low-cost private schools. In the deprived district of Mahbubnagar, Andhra Pradesh, 26% of rural schoolchildren were in low-cost private schools, rising to 67% in the towns. And private students outperformed those in government schools.

A child attending an unrecognised private school would be predicted to gain 16.1 percentage points higher in mathematics than the same child attending a government school. In English, the advantage would be even greater—16.9 percentage points higher.

Learning market

More market, less government in education—this is how poor parents see the way forward. And they see it for a good reason—low-cost private schools are better than the government alternative.

Low-cost chains enable economies of scale. This enables huge investments in R&D in innovative learning methods, something no individual school can afford on its own forward. And they see it for a good reason—low-cost private schools are better than the government alternative.

Better, but not quite good enough. Whatever their advantages, clearly, their quality can be improved; no one acknowledges this more than the school entrepreneurs themselves. They are hungry for new ideas and for investment because, coupled with the desire simply to improve children’s education, there is a powerful incentive.

The majority of these private schools are run as businesses, dependent on fee income for survival. But the market in which they operate is increasingly competitive. From the roof terrace of one low-cost private school in Hyderabad, I can see six others, all vying for the same customers. Entrepreneurs urgently need to differentiate themselves in this market.

But this is where it all gets really exciting—and from where I get my prediction about large-scale chains of schools emerging. This increasingly competitive market is ripe for consolidation.

Some entrepreneurs are realising that they can run schools more successfully than others in their neighbourhood. The less successful schools get taken over. Other flourishing entrepreneurs open new schools in adjacent neighbourhoods. Already embryonic chains of schools are beginning to emerge.

Fast forward five years. Investors have come forward, excited by the potential of this sector, and chains of low-cost schools are starting to spread across India. Their standardised models can quickly be implemented, even in difficult areas; economies of scale have brought costs right down. Just as in the low-cost private schools of today, the poorest of the poor are able to attend on scholarships subsidised by the schools, but most parents can afford to pay the attractive low fees.

Now, fast forward 10 years. Economies of scale have also enabled huge investments in R&D in innovative learning methods, which no individual school could possibly afford on its own. As a result, dramatic improvements in educational opportunities are offered to poor children.

Fast forward to 2022. Growing dissatisfaction with failing government systems in the US and Britain has opened up market opportunities for successful school chains to expand westwards. Low-cost chains will be welcomed—deep frustration over exorbitant fee increases in the private sector in those countries will see to that. And because low fee chains have always had a compelling need to keep costs down, the resulting technological innovation has made for much more attractive educational packages than in their higher priced cousins. In the high-cost schools, keeping expenditure low matters less—indeed, fee hikes are even welcomed by parents because they ensure social exclusivity.

Innovation and quality

Regulations could get in the way of this revolution. They don’t make life easy for investors. In 1993, a Supreme Court judgment set legislators against for-profit education. Though the ruling was partially revoked in 2002, it’s all still a bit unclear. And examination boards will only affiliate non-profit schools.

Why should regulations protect us from something that in other areas of our lives is seen as wholly desirable? The profit motive has spurred innovation, improved quality and extended access in the mobile phone industry, for instance. Policy reform can ensure the same in education.

Back to 2008, Independence Day. As this edition is published, I’ll be raising the flag again in a low-cost private school somewhere in a poor area of Hyderabad. And I’ll be feeling proud to be associated with a movement that has shown how entrepreneurs can transform an educational crisis into an opportunity.

But the story is only just beginning. Millions of lives will be touched as the entrepreneurial energy of those who have created low-cost private schools, nurtured through investment capital, will lead to superior education being offered to those who are normally marginalised. I find this prospect exciting. Which is why I’ve come to India to be part of this educational revolution.