Advancing Financial Inclusion to Improve Access to Education

Worldwide, 124 million children between the ages of 6 and 15 are not in school. While this number was on the decline from 2000 to 2010, the number of out-of-school children actually increased by 2.4 million from 2010 to 2015. Over 40 percent of the primary school-aged children currently out of school have never been to school and will likely never attend school.

For low-income families, education is the key to a better life for their children, yet it is among their biggest expenses and a significant source of ongoing stress. Even in countries where primary school is free, there are many costs, such as books, uniforms and exam fees, which add up to a significant burden for low-income families.

The situation becomes even more difficult when students move on to secondary school, which is not free in many countries and the high tuition rates make it beyond the reach of many families. When faced with constrained budgets, parents may be forced to choose which of their children can attend school. In such cases, boys are chosen over girls, exacerbating the significant gender gap in education.

While financial inclusion cannot solve the many complex reasons all children are not in school, better financial tools can help families manage the massive expense of education. The following are four ways in which financial inclusion can support the education sector:

  1. Make it easier for families to pay. Paying school fees is time-consuming and difficult. Digitizing school fee payments can help ease this process, particularly for those in rural areas far from the closest bank. At Bridge International Academies, for example, their operations are entirely cashless; everything from tuition payments to teacher salaries are paid via mobile money. In Cote d’Ivoire, the entire school registration process, including payment, is now done over mobile phones. The use of mobile money also provides more transparency, accuracy and tighter controls than cash.
  2. Make it easier for teachers to collect their salary. Teacher absenteeism is a significant challenge in the education sector in many countries. In Tanzania, for example, a survey found that 53 percent of teachers were not in the classroom when scheduled to be there, and 23 percent were not even on school grounds. Many teachers report their absences are due to the time it takes to travel and collect their salaries from the bank – up to three days per month. Distributing salaries via mobile money would remove one of the barriers keeping teachers from performing their duties in the classroom. Implementing a system of digitized salary payments could also improve government records on teachers and pave the way for better tracking of attendance, performance and employment.
  3. Make it easier and cheaper for families to save and borrow for school fees. Education finance products offered by banks and microfinance institutions are often limited to existing clients and require an established credit or salary history. Digital savings and credit products, like M-Shwari in Kenya, provide a much-needed service to parents struggling with school fees. In fact, school fees were cited among the top reasons for taking an M-Shwari loan, according to a 2014 survey. Other providers, including Econet in Zimbabwe, are beginning to experiment with similar offerings.
  4. Make it easier to collect money from family and friends. Funds from relatives, friends or even strangers can help make up education budget shortfalls, and digital finance is making that process easier. Products like M-Changa help Kenyans raise money for a variety of purposes, including education. An individual uses their phone to post a fundraising goal and solicits contributions, which can be made from anywhere in the world online or using mobile money. Amret in Cambodia is also piloting a domestic digital remittance product that allows family members to contribute toward a joint goal, such as education. The aim is to motivate family members to keep contributing until the goal is met. Digitizing remittance products provides transparency and security to senders and recipients alike.
Student pays school fees digitally in Kenya
Student pays school fees digitally in Kenya. Photo by Sue Pleming.

What’s exciting in the case of education is that the growth of digital financial services is not only supporting families to keep their children in school, an important objective in itself, but also providing parents with an entry point to other financial services.

BRAC in Bangladesh, for example, found that when they digitized school fee payments, most families needed to register for mobile money as they had never used the service before. Within three months, those same families were using mobile money not only to pay school fees, but also to pay bills and send and receive money from family. When provided with a clear use case (school fees) and a helping hand to guide them through the registration process and first uses (BRAC), these individuals quickly picked up on the benefits of mobile money and became regular users of the service. For children and adults alike, a little education goes a long way.


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