Plenary: Microfinance and access to education (7th European Microfinance Award)

  • Sam MENDELSON, Arc Finance
  • Edgardo PÉREZ, Fundación Génesis Empresarial, Guatemala
  • Roshaneh ZAFAR, Kashf Foundation, Pakistan
  • John Robert OKWARE, Opportunity Bank Uganda Limited, Uganda


Sam MENDELSON opened the plenary by stating that access to education is a major determinant for future economic status. Unemployment in low income countries is widespread, especially among young people and is likely to grow in coming years. Solutions to increase access to education are needed which address the supply side - the number and quality of schools, as well as the demand side - providing low cost opportunities to access education. Mendelson explained the selection process which culminated in the three finalists present and that the High Jury would decide the winner later that day.

He concluded the introduction with a statement by Aryslady Cottes, a student from the Dominican Republic. Micro­finance enabled her to pursue tertiary education which will help her achieve her dreams to help her family, obtain a personal computer and complete her studies. She hopes that one day she will be able to give back what she was given.


Mendelson then introduced the three finalists of the 7th European Microfinance Award on Access to Education:

  • Fundación Génesis Empresarial offers customised loans for university and post-secondary vocational education training to low income families.
  • Kashf Foundation has a low cost private school program. It is a credit facility providing access to finance for low cost private schools as well as trainings for teachers and school managers.
  • Opportunity Bank Uganda Limited provides loans to families to enable them to send children to school. On the supply side the organisation provides loans to schools for quality improvement.

Roshaneh ZAFAR of Kashf Foundation explained the background of the school program. She stated that 25 million children do not attend school in Pakistan, the largest drop out ratio in the world and requiring urgent attention. Kashf took a broad approach by looking into scholarships directed to children as well as general education sector improvement. To invest in the supply side they first compared the government and private sector. Kashf Foundation decided to invest in low cost private schools due to quality reasons as it turned out that results of low cost private schools are slightly better compared to public schools. In public schools only 40% of the students are able to read and write up to grade-2 level compared to 70% in private schools. Moreover, a student only needs half a year at a private school to catch up after a transfer from a public school. Zafar stressed the need for impact monitoring to keep track of improvements made in infrastructure, management, curriculum and teacher quality and the results of the students.

The moderator asked Zafar about the biggest challenge to the program. She mentioned that many schools do not have a set curriculum making teaching-the-teacher programs inadequate to solve the issue. Another point she highlighted is the level of the schools and the need to customise instead of standardise their offer for each school. Lastly she mentioned that the institution needed 750 schools to reach sufficient scale.

Mendelson then asked Edgardo PÉREZ to paint a picture of his programme and explain why it focuses on higher education. Pérez mentioned that Fundación Génesis Empresarial exclusively works in Guatemala. The country has a population of 16 million of which 62% are poor and 25% are extremely poor. Education has always been a strategic pillar of his organisation but, over the years, it became evident that increased training was needed to make a lasting economic impact. This is why the foundation started a programme focused on technical careers. The programme now also focuses on high school enrolment which is very costly in Guatemala. The foundation has developed a financial product to smoothen the financial strain on the cash flow of Guatemalan families. In the future, the foundation aims to also offer financial services for primary education.

The moderator then asked how the foundation ensures impact. Pérez mentioned that the foundation smoothens cash flow issues of families. They offer a cash payment of school tuition at the beginning of the year if the school provides a 10% discount. This discount is transferred to the student which has to pay an interest of 17% on the loan. When asked to highlight on non-financial tools to complement loan products, Pérez mentioned that the foundation trains parents to promote education, especially in the rural areas where almost 80% of children drop out of school.

As main challenges Pérez mentioned that machismo in Guatemalan culture can be an important barrier for the programme as 70% of clients are women who feel increasingly empowered. Another issue is the use of children as land labourers by their parents. He suggested that training is needed to change perceptions among parents. Finally he mentioned that Guatemala has one of the highest incidences of malnutrition which limits children in their development.

Mendelson then asked John Robert OKWARE why his organisation chose to provide a very wide portfolio of services on both the supply and demand side of education. Okware stressed that this was born out of necessity as both the quality and number of schools were insufficient as well as the lack of opportunities for parents to send their children to school. On the question what the biggest success and challenge of the program were, Okware mentioned that the school loan has been very successful. Their insurance product has seen a low uptake so far as it is not well understood how it can improve the situation of a household.

Mendelson explained that Opportunity Bank recently has been acquired by a Fintech company and asked Okware what will change in the organisation. He replied by underlining it will bring digital efficiencies for the organisations.

The moderator asked the panellists whether it is okay to profit from educating the poor. Zafar stressed that although she recognizes the tension on this topic, education is a huge need while opportunity costs are currently too high. Pérez agreed with Zafar that there is a clear trade-off between the social and financial balance sheet. If you want a sustainable product, you cannot outperform on one or the other. Okware added that organisations need to be profitable in order to reach out to new people and to be able to provide non-financial services.

Mendelson questioned the panellists whether their organisations let the state off the hook by providing private education. Pérez firmly stated that his organisation wants to engage in access to education in order to make a difference. Zafar agreed with him, but did not rule out the important task that the government has in terms of setting quality requirements and codes of ethics. Okware added a practical argument. The need is simply bigger than his government is capable of meeting.

Mendelson concluded the session by asking the finalists what they will do with the prize. Zafar replied that her organisation would use the prize to train teachers, even beyond their own schools. Pérez mentioned that he wants to fight malnutrition by setting up service centres to teach parents about this issue. Okware would use the prize to improve the non-financial activities in order to reduce dropout rates.