Can innovative finance keep kids in school?
Kenyan parents know that when you invest in education, you invest in the future. But that future isn’t cheap.
FSD’s Financial Diaries found that education takes up 11% of the average Kenyan household’s budget, even more than the 8% spent on housing. That means parents are scrimping and saving every month to keep their kids in school. Unfortunately, it doesn’t always work: 57% of families in the study had a child sent home from school at least once during the year because they couldn’t keep up with school fees.
Poor families usually have fluctuating incomes which makes it difficult to accommodate large payments, like school fees. For some in secondary school, payments of KSh10,000 are expected at the beginning of each term—that’s over four times the median monthly income at once.
Inspired by the Financial Diaries, FSD tested an idea called “Flexipay” last year. It allows schools to send bills for school fees over text message and for parents to pay using mobile money on M-PESA’s pay bill function.
It includes add-ons, such as small loans or credit towards the full payment. This reflects the reality of paying school fees in Kenya: often unable to pay the full bill at once, parents pay in the increments they can afford.
At our small experiment in one rural school, parents loved being able to pay over the phone and students whose accounts had at least one paybill payment had fewer absences on average than their peers. There were also indications that being able to communicate with parents directly over SMS might delay teachers from sending students home for lacking school fees, a result we’ve seen in other parts of the world, too.
Innovative financing doesn’t make education affordable in Kenya but it does give parents options. And when parents have options, kids win.
Read more about Flexipay in this FSD blog post by Amolo Ng’weno and Julie Zollmann and in this this report by BFA. Also read “The unusual dynamics of school fee payment (non-payment) in a Kenyan school”, a blog by Eva Adongo, FSD Kenya’s Innovations Specialist.