On July 2 2012, Pearson, launched a $15 million Affordable Learning Fund to invest in private companies committed to innovative approaches, sustainable business models and improving learning outcomes for the poorest families in the world.  The first investment from the new Fund, is a stake in Omega Schools, a privately held chain of affordable, for-profit schools based in Ghana.   According to Sir Michael Barber, Pearson’s Chief Education Advisor and Chairman of the new Fund:

“Low-cost private education is an important, complementary element of education in developing countries and should be seen as an active partner with governments looking to ensure all children have access to a high quality education. We are convinced that affordable schools, operated on a for-profit basis, can make a big difference.”

Omega Schools was set up in 2009 by James Tooley and Ken Donkoh (a local entrepreneur from Ghana) as a for-profit business with a social mission ‘to create private schools that benefit low income families and empower aspirations of those at the bottom of the income pyramid’.  By 2011 the number of Omega schools had increased to 10, enrolling approximately 6,000 children and the company now plans to expand the chain across Ghana.

An important innovation pioneered by Omega Schools has been the introduction of the daily fee which caters for the many parents that cannot afford to pay monthly or termly fees.  This fee covers tuition costs, uniform, books, transport, a de-worming programmes and a hot meal. Each child also receives fifteen free school days a year and an insurance policy which guarantees that every child will complete their schooling even in the event of the death of a parent.

The popularity of this Pay As You Learn (PAYL) business model is highlighted by the fact that the demand for places at each new Omega School has been high and the same model is now being introduced by a number of competing private schools in the local area.  This example therefore helps to shed light on how the profit motive in education can help to benefit not only the children attending the school introducing a new innovation but also children attending different schools, which may subsequently copy or imitate the same innovation.  A process of continuous innovation which is normally associated with more competitive sectors of the economy is therefore slowly beginning to emerge in these new education markets.  Research published by the Monitor Institute (2011) identified Omega Schools as an ‘emerging phenomenon with high potential to counter the causes and consequences of global poverty’ (Monitor Institute, 2011, p.26).  Again, this is not simply referring to the potential of Omega Schools operating in complete isolation.  Instead it also takes into account the transformative effect that opening an Omega School could have on other schools operating in the local area.  After the multiplier effect has been taken into account, it becomes much easier to see how an innovation introduced in one school can be quickly imitated by other local schools and eventually across an entire nation.

To help support and develop this new chain of private schools the Omega Schools Foundation was also set up in 2009 which acts as the companies R&D department and helps to manage any philanthropic donations which the company receives.  To date, the Foundation’s research activities have been focused on addressing a number of questions including: What low cost methods could create quality lesson plans that could be used in low-cost private schools?  Could a computer lab for self and peer-learning be introduced into the low cost private schools without any significant premium on fees to parents?  What school design could be introduced to enable low cost schools to be built or upgraded at minimum expense?

The Omega Schools Pay As You Learn (PAYL) business model combined with very low overheads allowed the company to break even in 2011.  These ten schools are therefore financially self-sustainable and do not depend on any external funding from governments or international agencies.  This is a significant achievement and it confirms that when schools are given the space and freedom to develop they can flourish without government support.  This raises an intriguing question – what would be the state of education across Africa if there were no government schools?  Would there be more or less education and would the quality be higher or lower?

James B Stanfield, Director of Development, E.G. West Centre, Newcastle University (james.stanfield@ncl.ac.uk)