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Faced with the many challenges of education in Africa, a boiling entrepreneurial dynamic is emerging and provides innovative solutions. Impact investors, characterized by their intention to generate a positive social…
Faced with the many challenges of education in Africa, a boiling entrepreneurial dynamic is emerging and provides innovative solutions. Impact investors, characterized by their intention to generate a positive social and/or environmental impact, can give decisive support to this dynamic. But it seems necessary to develop specific tools and a real partnership approach with the other stakeholders in the sector in order to bring out a new generation of private schools and education businesses that are responsible and fully oriented towards the continent’s development challenges.
From Education to Employment: the numerous challenges of the African continent
Despite tremendous progress since the early 2000s, African education systems are in a critical situation and are struggling to ensure successful learning and employment opportunities for young Africans. Primary school enrolment in Africa is gradually reaching generalization thanks to the massive effort made by African governments and their partners under the framework of Millennium then Sustainable Development Goals. Yet 34 million children are still not in primary school, particularly in fragile countries or in conflict situations. In addition, many national and international evaluations have shown that the majority of African students do not acquire basic knowledge and skills after completing primary school education. Schools face many human, material and pedagogical resource deficits and the large size of cohorts of pupils in many public schools produce more frustration than effective learning.
While a minority of the population accesses higher education and vocational training, these training courses are often considered too theoretical and disconnected from the needs of local or international employers. While youth unemployment rates in Africa are not higher than in other regions of the world, rates of informal employment and working poverty remain critical and constitute an increasing risk of social and political destabilization.
The Private Sector is Growing in the African education systems
The private education sector, in all its diversity, is gradually emerging as an important player in addressing these challenges. It is now estimated that about one in five students in Africa is enrolled in a private school. But this figure covers a very diverse sector, made up of religious schools, for-profit institutions, informal structures or schools directly managed by philanthropic organizations. We observe however a common dynamic across African countries: private operators are gaining ground and are increasing the range of training available in most educational cycles.
This gradual expansion of the private education sector represents both an opportunity and a considerable challenge for all actors in the education chain. States and their partners must strengthen their capacity to regulate these private operators and ensure that no educational institution, whether public or private, can break the needed trust between the school, the learner and society.
A new wave of African entrepreneurs is emerging, bringing promising solutions to educational challenges across the continent. From e-learning solutions to SMS-based course platforms and teacher coaching sessions, entrepreneurs have plenty of ideas to experiment with new pedagogical models and to overcome the material constraints that have long hampered the entire education system. With the boom of promising solutions to build the African school of tomorrow, the role of research and impact evaluation becomes key to select the most relevant and effective models for enhancing learning and inclusion for all. The role of education technology education is also becoming an important element of debate for all stakeholders in the education system (governments, entrepreneurs, teachers, parents and learners).
A new wave of African entrepreneurs is emerging, bringing promising solutions to educational challenges across the continent.
But ed-tech leaders are not alone in demonstrating innovation and dynamism, quite the contrary. Hundreds of creative entrepreneurs overcome complex logistical and institutional challenges to provide schools with textbooks, furniture and equipment that are key inputs for the ecosystem as can be digital tablets. In Niger, for example, Editions Afrique Lecture is the first company to provide high school students with preparatory textbooks for their baccalaureate. For these entrepreneurs, the strategic relationship with governments and other stakeholders in the education system is at least as important as the use of technology to provide services that are truly useful to local schools and students.
What role for Impact Investors?
Impact investors must support this entrepreneurial dynamism with appropriate return expectations depending on the maturity and size of the projects. Current research shows that most investors only support schools and universities that are already very well structured, and in many cases designed to provide educational services only to the wealthiest segments of the population. To a lesser extent, these investors have also supported innovative and more affordable educational projects, but these projects had to grow at a disproportionate speed to meet the investors’ profitability objectives. The well-known example of Bridge Academies in East Africa highlighted how difficult it was for a network of low-cost schools to scale up without deteriorating the quality of teaching… and the company’s relations with public authorities. The needs for impact investing initiatives in the education sector is pressing, especially in French-speaking and Portuguese-speaking Africa. Impact funds must find ways to support less advanced projects, for example in the technical and vocational education cycles where public actors are less involved. These investors must therefore develop financial and non-financial instruments (coaching, technical assistance) suited to this specific social sector, with a particular focus on the inclusion of young women and vulnerable populations.
The needs for impact investing initiatives in the education sector is pressing, especially in French-speaking and Portuguese-speaking Africa.
To support the emergence of accessible and quality educational opportunities, impact investors will need to be innovative in building new partnerships with other stakeholders in the sector. Partnerships with foundations and other philanthropic donors will allow impact investors to reach young people from disadvantaged backgrounds. Scholarship or student loan schemes funded by these foundations could broaden access to quality private institutions whose social impact commitments will be guaranteed by the presence of an ethical investors as minority shareholder. In addition, partnerships between impact investment teams and philanthropic actors could be designed to support start-ups and other early-stage projects. The pioneering example of the Education Impact Fund in Côte d’Ivoire, resulting from a partnership between the Jacobs Foundation and the impact fund Comoé Capital, is a good illustration. This programme has benefited 6 promising start-ups and young companies in the Ivorian education sector, including a hospitality training centre located in the popular district of Yopougon and the start-up Etudesk, recently selected as one of the 10 most prominent Ed-Tech companies on the continent. The success of this investment programme relies on the targeted use of risk capital provided by a philanthropic donor and on a particularly committed investment team working alongside entrepreneurs. But there are many other strategies to explore. It would be relevant to partner with research institutions to measure and evaluate the long-term impacts of the education models supported by the investors. Thus, the development of blended finance instruments, mixing investments and grant funding support will be key to providing solutions adapted to the emergence of responsible and committed private education businesses.
To meet the challenges of quality, access and relevance of education in Africa, impact investors will have to design and mobilize innovative strategies and methods, tailored to the needs of a crisis-stricken social sector and a fast-paced entrepreneurial ecosystem. The active support of bilateral and multilateral development organizations will ensure the credibility and sustainability of these new models of mixed funding and innovative partnerships. Through their governance and practices, impact investors should pursue the dialogue with public authorities to ensure that they are well integrated into local educational ecosystems. Associated with expert philanthropic players, these new initiatives will have to support the best models of schools and ancillary activities combining economic sustainability and impact performance. It is only with this attitude of innovation, cooperation and partnership that impact investors will be able to make a relevant contribution to the challenges of education in Africa.
 See the data collected by UNESCO (2018): http://uis.unesco.org/sites/default/files/documents/fs48-one-five-children-adolescents-youth-out-school-2018-en.pdf
 See Page 10 (Fig. 6) of the above-mentioned: most of the countries severely affected by the non-enrolment of children in primary school are located in the Sahel or Central Africa.
In French-speaking Africa, the performance of students during primary school is evaluated by PASEC about every 3-5 years. http://www.pasec.confemen.org/
 Many reports have highlighted these deficits in school materials and equipment, as well as the size of classes that can reach an average of 50 children in Burkina Faso or Mali and up to 90 in Malawi and the Central African Republic. http://uis.unesco.org/sites/default/files/school-resources-and-learning-environment-in-africa-2016-en/school-resources-and-learning-environment-in-africa-2016-en.pdf
 On the issue of the relevance of education and the lack of adequacy between education and employment, see World Bank’s report (2014) : http://www.worldbank.org/en/programs/africa-regional-studies/publication/youth-employment-in-sub-saharan-africa. This phenomenon is also sometimes reflected in a higher unemployment rate for graduate students than for non-graduates in several African countries. Because their training is poorly adapted to the labour market, graduates have difficulty finding employment in skilled positions.
 The average youth unemployment rate in Sub-Saharan Africa is 6%, the world average 5%. But this figure hides far more precarious realities, with self-employment rates reaching 70% in the Democratic Republic of Congo or Ghana. The rate of working poverty could reach 80%, according to the ILO. https://www.un.org/africarenewal/magazine/may-2013/africa%E2%80%99s-youth-%E2%80%9Cticking-time-bomb%E2%80%9D-or-opportunity
 This figure is estimated by the team of the Report “Business of Education in Africa” (2017) https://edafricareport.caeruscapital.co/thebusinessofeducationinafrica.pdf
 See notably RFI’s article (2018): http://www.rfi.fr/afrique/20180301-ecole-privees-bas-prix-bridge-international-academies-lettre-fermeture-ong
 See the website of the partnership: http://www.edimpactfund.com/ but also the announcement of the first investments in 2018: http://www.ietp.com/fr/content/investissement-editions-vallesse . The complete portfolio of the six investments will be published soon.
 See the startups selected at the famous Dubai Global Education Conference (22-24 March 2019) https://www.forbes.com/sites/mfonobongnsehe/2019/02/25/meet-the-10-african-startups-competing-for-the-next-billion-edtech-prize-in-dubai/#46d350f03e1b
 Also called blended finance. The term refers to the use of catalytic capital from public or philanthropic sources to increase private sector investment in developing countries and sustainable development
INTERVIEW. Matthieu Lougarre, Director of Agri Resources Madagascar, believes in the future of vanilla and its region of origin, SAVA. Provided that the quality of Madagascan vanilla is recognized and…
INTERVIEW. Matthieu Lougarre, Director of Agri Resources Madagascar, believes in the future of vanilla and its region of origin, SAVA. Provided that the quality of Madagascan vanilla is recognized and protected.
Flipflopi is the world’s first sailing boat made entirely from plastic waste and flip-flops collected from beaches and towns on the Kenyan coast. It works to raise people’s awareness of…
Flipflopi is the world’s first sailing boat made entirely from plastic waste and flip-flops collected from beaches and towns on the Kenyan coast. It works to raise people’s awareness of plastic pollution in the oceans and invites them to rethink their consumption behavior towards single-use plastics.
The current dynamics of the African population is unique and will inevitably have a significant influence on the global demographics of the 21st century, and on the development of the…
The current dynamics of the African population is unique and will inevitably have a significant influence on the global demographics of the 21st century, and on the development of the continent. Will Africa follow the lead of Asian countries, whose economic growth was largely due to a particularly high demographic dividend? The potential is immense, but the path(s) to achieve it are still uncertain…
An unprecedented population growth
Africa’s population more than tripled in the second half of the 20th century, from 230 to more than 800 million people today. In 2004, the United Nations projected the African population at 2.2 billion by 2100. Less than two decades later, Africa’s demographic trajectory has surprised everyone, including demographers, making these forecasts completely obsolete. The reason is simple: fertility has not declined as expected. The African continent has not followed the trajectory of Asia or Latin America, where the number of children per woman has fallen from an average of 5 to 2.5 between 1970 and today.
According to the most recent forecasts, it is as early as 2050 that the African population will exceed 2 billion people (reaching 2.4 billion to be more precise). This represents more than 42 million additional people each year by 2050, 3.5 million people more per month or 80 per minute. That’s the equivalent of the population of Dakar every month! By the end of the century, the continent will contribute 82% of the total population growth, representing 3.2 billion people out of a total of 3.8 billion.
The changes at work in African demographics are relatively simple. Indeed, since the mid-20th century, public health has improved, leading to both a sharp drop in infant mortality and an increase in life expectancy. At the same time, the average number of children per woman (the total fertility rate) remains the highest in the world. As a result, the continent has the youngest population on the planet, with more than 40% of Africans under 15 years of age.
This demographic boom, with a birth rate four times higher than mortality, may generate concern and uncertainty, especially if poorly managed. However, it should be remembered that population growth is not necessarily a disabling factor in itself, it is even desirable and sought after from an economic point of view.
The demographic dividend, a development opportunity…
The continent has not yet achieved the (much awaited) demographic transition, the key to the demographic dividend. This term refers to the economic benefit resulting from a significant increase in the ratio of working-age adults to dependants (children and the elderly). When birth rates fall sharply, the age structure changes in favour of a larger number of working-age adults. The corollary of this process is an acceleration of the economic growth through increased productivity, higher savings for households and a reduction of the cost of basic social services.
If this transition attracts so much attention, it is because economists and development actors have in mind the economic take-off model of the Asian Tigers and Dragons. In a quasi-consensual way, economists identify as a major basis for this economic take-off the achievement of a particularly high demographic dividend, which has ultimately made it possible to reduce poverty and inequality. However, the benefits of this dividend were made possible by significant upstream preparation: substantial investments in physical capital, particularly human capital, strong savings, sound management of the economy, a development policy geared towards exporting industries, etc.
In terms of its demographic dividend, the African continent seems to be following a slightly different trajectory. However, in the light of the Asian experience, what are the current African investment priorities to realize the full potential of the demographic dividend?
Africa facing its possible demographic dividend
If we take the case of Europe, the demographic transition occurred more than a century ago. During this period, the population was able to adapt socially and economically in response to reduced mortality and fertility (Reher, 2011). Thus, with the decline in infant mortality, families’ investment in their children’s health and education and women’s participation in the labour market have increased. As for Asia and Latin America, they have experienced a fast transition rate due to the use of more advanced technologies such as vaccines, antibiotics and modern contraceptive methods from the beginning of their transitions. For example, it is estimated that the demographic dividend experienced by East Asian countries accounted for more than 20% of economic growth between 1960 and 1980 (Bloom and Williamson 1998, Bloom et al. 2000). This Asian demographic dividend largely explains the difference in development between many East Asian and African countries. In East Asia, the cumulative effects of a rapid decline in fertility and an increase in the labour force relative to children and dependent adults led to a recovery in economic productivity between the 1970s and 2000 (Bloom et al., 2003; Eastwood and Lipton, 2012). This has been possible above all because these countries benefited from strong political leadership and clear development plans, by investing massively in quality education and young people’s readiness for employability, Foreign Direct Investment’s attractiveness, and extending access to family planning services.
Africa could follow the same path. It is now in a historical demographic configuration that could enable it to benefit from its dividend. But this change in the age structure, as a result of the demographic transition, is a necessary but not sufficient condition for achieving the demographic dividend. Thus, it is crucial to make prior investments in education, health, family planning, urbanization, and the private sector, especially SMEs and governance. These investments must be made before the transition to an economically favourable age structure in order to benefit from the demographic dividend. These factors help to explain, for example, why Niger’s population is growing at a rate of 3% per year, while Botswana’s is growing at a rate of 1% per year. At the same time, the continent is threatened by a relatively short period of anticipated investment in these countries. This could prevent these important demographic changes from being fully exploited in a stable and sustainable manner (Reher 2011). These priority reforms and investments are already beginning to resemble emergencies.
The challenges of fertility and family planning
The control of African demography is still lacking financial and human resources due to weak political commitment, lack of data and insufficient research in this field. Furthermore, fertility and family planning issues have rarely been given priority in the past 30 years, coming second only to major public health emergencies: HIV/AIDS prevention, pregnancy management, obstetric and neonatal interventions, cholera and Ebola epidemics, etc.
As a result, many Sub-Saharan African countries are still in the early stages of their demographic transition. Yet, in order to achieve sustained and sustainable growth that improves people’s well-being, it is essential to reduce fertility levels today in order to accelerate demographic transition and reduce the dependency ratio. This transition is slower than in other developing regions. Although economic growth rates have been rapid and robust in recent decades, fertility levels continue to create a risk of unpredictability in the continent’s long-term development dynamics. This fertility decline is a complex process that can only be made possible at the family level through women’s access to information and voluntary use of modern contraceptive methods to meet their family planning needs. The information component is therefore an essential part of the process. About 25% of women in developing countries have unmet family planning needs, i.e. they want to avoid pregnancy, but do not have access to or use modern contraceptive methods (Darroch et al 2011, WHO and UNICEF, 2012). It should also be noted that the choice of spacing or limiting births depends directly on several factors, including the health and survival of existing children, knowledge of the health benefits of spacing births, the value of investing in the education of existing children, the opportunity cost for women to have additional children, etc.
Policies and programmes in the health and education sectors should be strengthened to help reduce the target size of the family. For the level of women’s education, their participation in the formal labour market and children’s health are negatively correlated with the desired fertility level. In addition, limited access to appropriate facilities and modern contraceptive methods, as well as the sometimes poor quality of counselling, are largely responsible for the failures observed (WHO, 2015). This reflects a real need to improve access and quality of family planning facilities in an effort to increase the voluntary use of modern contraceptive methods, which will lead to a more rapid decline in fertility in all countries. In West Africa, for example, there is always one inactive person for every working person, i.e. the dependency ratio is 100%. An increase from 4 to 5 times the current resources dedicated to family planning would allow countries to halve their level of dependency in twenty years’ time (Guengant, 2015).
Employment, a key issue
Sub-Saharan Africa has the youngest population in the world. The under-25s represent 67% of the population and the 15-24 age group alone represents 1/5 of the world’s youth population. More and more of them are migrating to urban areas due to deteriorating living conditions in rural areas (World Bank, 2015). But no matter where they come from or where they go, this young population has high expectations. Despite many efforts, job creation, especially for young people, in most African countries remains totally disconnected from population growth. And while this labour force is the continent’s most important competitive advantage, unfortunately three out of five of the unemployed are young people (ILO, 2017). Even the most skilled young people find themselves in low-paying jobs…when they can find them. This high level of unemployment represents a real shortfall and severely limits the potential for a demographic dividend. Worse still, this youth could represent a real threat to the stability of the continent because under-educated and unemployed young people are more exposed to illegal activities and in the grip of armed conflict and terrorism. This structural unemployment of young people is largely due to a mismatch between training, skills offered and employer requirements, a predominantly informal and insufficiently promoted entrepreneurship, a significant digital and technological divide, acute difficulties in accessing capital and the scourge of corruption.
Decision-makers must define educational programmes in the light of today’s and tomorrow’s jobs, in close consultation with private sector actors. In this respect, it is essential that school and academic training be rethought if we are to produce skills that meet employers’ expectations. This goes hand in hand with the integration of low-skilled young people into professional programmes. For most graduates, obtaining their first work experience is the most difficult step. To remedy this, incentives could be provided to companies that encourage, for example, internships, apprenticeships, etc.
Entrepreneurship is also a way forward. Historically, African states have considered entrepreneurship and innovation as a marginal component of the economy, as evidenced by the absence of a dedicated ministry in most countries. Obviously, in a context of scarce formal employment, coupled with a rapidly growing population of young people, the latter are more encouraged or even forced to show entrepreneurial ingenuity to earn a living. They are everywhere in African cities, trying to sell everything from phone cards to tissues, water bottles and handcraft products. Inside each neighbourhood, women run sewing or hairdressing workshops… while young men wash vehicles, carve wood or repair flat tires. In lively markets, they sell locally grown fruits and vegetables, imported second-hand clothing, mobile phones or household products. On the main arteries of cities or in the hinterland, they fill potholes on the roads or regulate traffic in exchange for a possible financial generosity from motorists. Although this entrepreneurship is very small and largely informal, it is the primary source of livelihood for young Africans (Welter, 2017). In this respect, the entrepreneurial question must be at the heart of public policy making. This includes a favourable regulatory framework and a simplification of business creation, a facilitated access to finance, the creation of incubators and accelerators, the allocation of investment grants, the promotion of entrepreneurship and initiative spirit, the support to research institutes, etc. It should be noted that these initiatives may not be effective if they are implemented in an uncoordinated and isolated manner.
It should also be noted that agriculture and SMEs are central to this reflection. The agricultural sector is the main source of employment on the continent (60% of the working population) and has the extraordinary potential to be a viable investment sector for young people if it is made attractive. This sector could thus make its transition from subsistence to commercial agriculture. As for SMEs, they constitute the backbone of African economies with nearly 90% of the entrepreneurial fabric and about 80% of jobs. The success of these companies is a prerequisite for the employment of young people. But they remain chronically confronted with a credit rationing that limits their growth and generally leads to dead-end entrepreneurial adventures. Consequently, conditions must be created to diversify financing options. These options are many and varied: microfinance, business angels, traditional bank loans, leasing, capital investment and in particular impact investment that prioritizes companies with high social and environmental added value, crowdfunding, equity loans, etc.
There is no doubt that today Africa is at a crucial turning point to benefit from the full potential of its demographic dividend. We are almost at the critical moment, when the working-age population will be at its peak. For the African continent to benefit from this demographic dividend, the measures to be implemented as a matter of priority (or even urgency) are numerous, in order to have a well-trained and healthy working age population in the medium term:
• The creation of a political and economic environment conducive to long-term investment
• Young people must be at the heart of public policy and development strategies
• Investments in education, health, family planning, women’s empowerment, skills development, innovation
• Facilitating access to finance, promoting youth employment, supporting the private sector in particular, entrepreneurship and the fabric of SMEs
The size of the dividend will depend on the pace of the demographic transition and public policies. It cannot be total and live up to expectations unless these reforms and prior investments are made. This is a duty of lucidity that seems essential if the African continent is to meet the aspirations of its young population and ensure its demographic dividend.
 The 12 million Africans born in 1955 could only hope to live to 37 years old, while the 30 million Africans born last year can hope to live to over 60 years old.
 The fertility level remains the highest in the world, with an average of more than 5 children per woman (UN population).
Jean-Michel Severino, President of Investors & Partners, Patrick Guillaumont, President of Foundation for Studies and Research on International Development (FERDI), and Sidi Khalifou, President of the African Entrepreneurs Club, discuss…
Jean-Michel Severino, President of Investors & Partners, Patrick Guillaumont, President of Foundation for Studies and Research on International Development (FERDI), and Sidi Khalifou, President of the African Entrepreneurs Club, discuss the issues that led these three institutions to join forces to launch a blog dedicated to African entrepreneurship.